Are you struggling with how to pay for your children’s college education? Here’s one idea worth considering….a 529 college plan. Saving to cover the ever-rising costs of a university education can be daunting, but one way parents can potentially bridge that gap is by investing through a 529 college savings plan.
Alex Viega, writing for the Associated Press, has a few suggestions if you’re considering one:
First, FIND THE BEST PLAN FOR YOU.
Each state offers a 529 college savings plan, and although they differ in some respects, each enables investors to use investment proceeds to pay for college costs without having to pay federal taxes on those gains.
You’re not limited to investing in your own state’s plan, but keep in mind that most states also offer their residents a state tax deduction or credit. Some also throw in matching grant programs or scholarships. You’ll want to consider which plan offers the most attractive investment options.
Second, GET STARTED EARLY.
Although no investment plan is without risk, the earlier you begin investing, the greater the likelihood that you’ll be able to weather market swings and reap a larger return. And you’ll need as much time as possible, given the growth in college costs.
Next, KNOW THE RISKS.
Historically, stock and bond investments have produced greater long-term returns than bank accounts. But taking the investment approach to saving for college can expose investors to losses.
And finally — GET THE FAMILY INVOLVED.
Anyone can contribute to a 529 plan for a single beneficiary. So parents can set up an account and invite relatives to pitch in.