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College Fund Help

shana+chrisshana+chris member
10 Comments Second Anniversary
in Money Matters
Hey,

I'm looking for a little advice regarding a college fund for my daughter. Currently, my husband and I are ony able to contribute $30/wk to my daughter's college fund. Right now our investments are being deposited into a traditional savings account. I'm second guessing if that is our best option. Is it better to purchase CDs? Invest in a 529 plan? My concern is that currently my husband teaches as an adjunct professor and may eventually take on teaching full time, which would give our daughter the option to attend that university for free. And then there's always the possibilty she won't attend college. Would we take a loss or large penalty with a true "college" fund? Forgive me if I sound ignorant as I truly have no clue on where to go from here :) any advice would be greatly appreciated!
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Re: College Fund Help

  • maple2maple2 member
    Ninth Anniversary 500 Comments 25 Love Its Name Dropper
    Both a savings account and a cd will keep your principle safe, but neither will help your money to grow much beyond your weekly contributions.  Since college is still a long way off, you probably want to choose something a bit more aggressive (more risk and more reward) at least for now.  In terms of the 529, the exact details will depend on the plan you choose.  Most states have their own plans and there are other entities that have 529s as well, so there are a lot of choices.  I think in most cases you can get your principle back without penalty if it is not used for college, but there are penalties on any interest that has accrued (you should double check this, though).  So, in that sense it wouldn't be much different that if you had kept it in a savings account--your principle is protected--even if she doesn't go to college.  We also have university affiliations that my provide tuition support depending on where our kids go to school, so we have decided against a 529 plan.  Instead, we are looking into mutual funds.  There are no tax advantages like there are with the 529 plan, but there are also no risks associated with not using them.  I know 529s can be transferred to another family member, but if both of our kids end up not needing $$ for college, we would rather have access to it than have to pass it on to our grandkids.
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  • srgwsrgw member
    1000 Comments Third Anniversary 5 Love Its Combo Breaker
    My dad & mom got mutual funds for my sisters and I. All my sisters' mutual funds did really well. Mine tanked and only had 2K in it when I needed it. Apparently I have no useful info. 
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