Looking for advice for College Investments for Child

[capone]

I am looking for advice for easiest way to invest money for my child's college fund. My Daughter is 11 years old we have set aside money every year and reinvested it into a CD. We are not happy with the performance of the CD. So were looking for other ways to invest the money. I was reading up on 529 college plan is that a good option? Does anyone else have a better option?

Thanks, Matt

 

[DeFormula]

The MET (Michigan Education Trust) contract is working great for us. I have two kids and bought each of them a contract back in '05. They are both in college now and the burden is easy now because we bought those contracts. Def look into it. It isn't for everyone but for us was worth way more than if we had gone the 529 route and invested the money in a mutual fund or whatever.

 

[sofa king]

College will be free soon...That's what I heard anyways, Bernie, Clinton, right?

 

[mrvids]

Check the other states versions of the MET. I think my friend invested in Indiana's version and it's good at any college, not just those in the state you purchased it in.

 

[ShadowRuleZ]

Using the Michigan 529 makes it deductible on Michigan state taxes. I treat ours like I do our regular retirement, decided on a ratio of stocks/bonds dependent upon how many years I have to go. You can always just pick a target date fund as well if you prefer set it and forget it. A bit on the late side but later is better than never.

 

[DeFormula]

Check the other states versions of the MET. I think my friend invested in Indiana's version and it's good at any college, not just those in the state you purchased it in.

MET is good at any college as well, but it gives the best value for Michigan state universities, i.e. U of M, State, Ferris, Michigan Tech, Western, etc.

 

[DeFormula]

Using the Michigan 529 makes it deductible on Michigan state taxes. I treat ours like I do our regular retirement, decided on a ratio of stocks/bonds dependent upon how many years I have to go. You can always just pick a target date fund as well if you prefer set it and forget it. A bit on the late side but later is better than never.

The only potential issue I see with the 529 is if the market tanks at the wrong time, kinda like between 08-12. If my kids were in college the investment in the 529 would have been worth half what it was in '05. The MET is guaranteed tuition and using that example, was worth about double by 2012 with the crazy tuition increases. They were actually worth about 20% more one month after I bought them!

Also, MET contracts are tax deductible and are transferable to other family members.

 

[The Man]

I really really need to do this.....Anyone have a guy I can call that can better explain some of this stuff for me? My kids are 5 and 7 and so far all they have a savings accounts making .03 percent...

Sent from my XT1254 using Tapatalk

 

[ShadowRuleZ]

The only potential issue I see with the 529 is if the market tanks at the wrong time, kinda like between 08-12. If my kids were in college the investment in the 529 would have been worth half what it was in '05. The MET is guaranteed tuition and using that example, was worth about double by 2012 with the crazy tuition increases. They were actually worth about 20% more one month after I bought them!

Also, MET contracts are tax deductible and are transferable to other family members.

That's what the asset allocation is (stocks/bonds), you do it based off your tolerance for risk. With such a short time frame, you should probably lean more towards bonds over stocks. You can compare against the target funds to see if it matches what you want. I'm comfortable with this approach based on how I handle my retirement so it seemed logical to me. A four year slump should only be scary if you have four years or less to go and you somehow have all your eggs in that basket. That said, I've been lucky with the total stock market index in the 529 for my kids. I've got one that's up 75% since I opened it and the other is up 40%. I'm starting to switch to bonds now that I'm getting closer to when they'll need it.

MET sounds reasonable, you know what you're getting out of it, but you might be able to do better.

For taxes, I was referring to using other out of state tuition plans, whether they are 529 or something else. The other states are not deductible on Michigan taxes as far as I know.

 

[derbydad276]

fwiw my daughters boyfriends parents did the MET for him and will graduate with no debt

 

[99SaleenSpeedster]

My parents set up a MET for me and I graduated with no debt. My wife still has a good amount of college debt, so that makes me even more grateful for what my parents did for my brother and I.

Our son is 2 and we started a 529 plan for him about a year and a half ago. I've thought about investing in other ways as well in case the stock market tanks, but still haven't made a final decision on which route to go. For his birthday, my parents and my wife's parents also donated to the 529 plan.

We also put $50/month into a savings account for him at DFCU. At the end of the year, DFCU's customer loyalty program also put $50 in.

 

[lucky7]

College is a massive, massive waste of money now. Just like pensions, 401ks and IRAs - someone's going to steal it before they even get to college age. Welcome to America.

 

[SPD-101]

I am looking for advice for easiest way to invest money for my child's college fund. My Daughter is 11 years old we have set aside money every year and reinvested it into a CD. We are not happy with the performance of the CD. So were looking for other ways to invest the money. I was reading up on 529 college plan is that a good option? Does anyone else have a better option?

Thanks, Matt

Hi Matt,

First off I tell all my clients that if you have saved any funds for college expenses you are already one step ahead. Each family/person/situation is different.

Also, you should have not saved for her in CD's. Poor return and most of the time you are actually lose buying power of the dollar once you factor inflation in.

A few things to think about. Will your daughter be working during college? Will she receive any scholarships? Will she try the first to years at a community college and transfer or attend a full four year university? All of those are future questions that you cannot predict.

The met or a 529's are good sources of savings for college. The main factor with the met is you are buying what a credit is now for the future and with your daughter at the age of 11 already this may be the best route. If you invest into a 529 now and the market goes down at the time of her attending college you may possibly lose principle. That is just an example as we are looking at 7 years away from attending a school so the market can go down and come right back up.

 

[capone]

Thanks everyone for the information.