When thinking about college planning, one thing Alexander Joyce, ReJoyce Financial, can tell you is that most people feel its never enough. Most people wish they had started sooner and most people don’t know what investment option is best for their college funding needs.
Alexander says, “A lot of college savors look to the 529 plan which is structured by each individual state. What college savors will want to do before committing to a college savings plan is understand what level of risk they want to take. Just like anything in life the higher the risk the higher the potential reward. It is important to know that college savings is naturally a more conservative investment due to it being classified as a targeted investment. Meaning you NEED an amount of money by a specific time or date. A 529 plan is a perfect example of this. But, not the only option. Although with the new tax reform they have been made to be a lot more broad as to the use of the fund, comparing or taking place of the Coverdell educational savings plans.
There is also a large argument for adding an additional level of equities, in fact some say you would be better off buying or funding a mutual or exchange traded fund to fund college. Given that fact, looking back at the market the last 10 years with some funds averaging 10-15%. Those who did so funding education did exceptionally well. Again, those who did so took more market risk exposing the principal to loss or gain.
What is most import is to be realistic and be honest with yourself about what level of risk you want to take when funding education. Also try to be honest with yourself about the likely hood of your child going to an expensive college….Or college at all. There is a strong argument for trade schools. When drawing a conclusion on a plan or course of action. STICK TO THE PLAN, the best you can. We believe consistency wins the race!”