Comments on: Help a Reader: Save and Invest for Kids

By: Jaynee

Jaynee — Wed, 12 Nov 2008 20:37:16 +0000

jrh – I already have $13+ in the Upromise account and I only started a few months ago. So I should easily pass the $20 minimum.

By: jrh

jrh — Fri, 17 Oct 2008 15:12:32 +0000

@Jaynee

I used to use Upromise….until I ran the numbers. Make sure you actually get more than $20 back a year in rewards. If you eat out a lot, you probably do, but we never did. They charge a yearly $20 fee ON TOP of the normal management fees of Vanguard (at least it was Vanguard when we were in it).

By: Jaynee

Jaynee — Thu, 16 Oct 2008 17:01:47 +0000

We currently have two 529 plans set up – a different one for each child. Is it easy to transfer to another 529 plan should the one we want not have good ratings (they were both started under corporate 529 contribution programs). One is in NJ and the other is somewhere like Nevada. However, we’d like to switch the 529 plans to ones that are linked under Upromise, of which I’m a member, in order to earn a few extra 529 bucks when I buy groceries.

Thanks for the recommendations, everyone!

By: Adrienne

Adrienne — Wed, 15 Oct 2008 12:53:45 +0000

I am a fan of College Savings Iowa (though I live in RI). You can deposit small amounts and the Vanguard Funds have great options.

Todd – The assets are considered the PARENTS (or whoever is the owner of the account) and this is better for Financial aid as parents are expected to contribute a much lower % of their assets.

By: Mr. ToughMoneyLove

Mr. ToughMoneyLove — Tue, 14 Oct 2008 21:40:40 +0000

It depends on how you intend to help your kids pay for college. I was able to cash flow it because we had so little debt. If that won’t work for you, then go the 529 plan. If it will, then consider investing in I-Bonds (you as joint owner) so that tax is deferred and principal is safe until kids learn to invest at 18. If you want that money to stay invested until kids retire, go Roth IRA.

By: jim

jim — Tue, 14 Oct 2008 18:52:46 +0000

I also vote the 529 plan and it’s important for them to calculate the rate of return they need so that the investments they pick in that 529 plan aren’t too aggressive or too conservative. She can always mix it up, some in a CD or even a savings bond (Series I are federal tax free if used for education), to get a nice safe return. The crucial part is determining how much, rather than how.

By: Todd Horton

Todd Horton — Tue, 14 Oct 2008 16:52:48 +0000

Ditto on the 529 Plan. The assets are considered the kids so it will be better for financial aid, plus the earnings and withdrawal are tax free when used for school expenses. Can’t beat that combination.

By: jrh

jrh — Tue, 14 Oct 2008 15:38:54 +0000

My 2 cents:

529 Plan – it’s pretty much an expense you know you will have and in a way it’s a cost avoidance, as well (not taking out as many student loans). Also, looking at it from a perspective of investment on your return in your child’s future career – those with college degrees and beyond make much much more than those that do not have a post-secondary degree. Tax-wise, it’s the same treatment as a Roth. I recommend picking a fund that has a target date, so they take care of the asset allocation/risk for you. We have a Fidelity 529 (index funds option) for both of our kiddos (5 and 7).