I want to save $150 a month for College for my 25 months old. What kind of account should I open? Where?

Answer 1

I can only share what I have found to be best for my family. I have opened a 529 college savings plan for each of my 4 children. I live in NY and they offer one of the best plans in the US. Most, if not all of the states have a plan that they sponsor. Click on the following site http://nysaves.uii.upromise.com/ and you will be able to explore all of the ins and outs of the NYS plan. I am a proponent of the 529 plan for the following major reasons: Tax free investment growth- not tax deffered. In other words- whatever growth I obtain through my investments is for me to keep and use. As long as I use the money for higher education expenses there are no tax implications. If one of my children decides not to go to college I can transfer the account balance to any of my three other children with no penalities. I can even decide to put the money in one of my future grandchildren's name if they exist and I so choose. The money that I put into the account is tax deductible for NYS tax, though not for federal. The key when comparing state sponsored programs is to make sure they offer low expense (less than .75%) investment options with little to no annual fee ($50) charged by the plan administrator. Make sure that there is no sales load payed to company investing the money. No load is the only way to go in my opinion. You can use another states plan if you choose to. You are not obliged to use the plan your state sponsors. Use the following site to research/locate your state sponsored plan: http://www.collegesavings.org/locator/index.htm
The only potential drawback to using a 529 plan is that the money accumulated may affect your child's ability to get the maximum amount of financial aid. Money in your name counts less towards your child then money in your child's name. Because my wife and I both work and own a home - this most likely means that my children aren't going to get very much no matter whose name is attached to the money. So I opted to save a portion of their savings in their name.
I could go on and on. My answer is clearly not the end all when it comes to college savings options. It is just the one I went with after many hours of research and thought.
Good luck,
Jimbo

Answer 2

Here is what I do... Given the following information...

529 tax advantage is set to stop 12/31/2010 or 2011. Your child will not start college before then. What if you don't need the money for whatever reason? There's a penalty to remove it.

So, I'd start an account in your name, not you child. It would kill you in the financial aid calculation. I'd try ETF's with because they have low cost over mutual funds and make most taxes long term, deferred. That would save you about 1% rate of return. This way, the money can be spent on anything, not just school. If you do the math and you are in the 20% capital gains bracket, the taxes you would pay are very close the the lower earnings you would have at the lower ROR. That makes it a push and you have flexibility for spending your money.

Again, don't lock it up for a set purpose. It may not be needed for that purpose.

Answer 3

The best thing you could do for that amount of money (max $2,000 a year) is to set up a Coverdell account. As long as the proceeds are used for educational purposes, withdrawals from Coverdell Accounts are free from federal and most state income taxes. This gives you a huge advantage.

Additionally, based on your time horizon you're gonna want to choose something more aggressive than an account earning just 5%. Take a look at the age based mutual funds.

Note that 529 plans are an excellent option if your going to contribute much larger amounts of money. Due to lower costs and much more investment flexibility, Coverdell's are a better choice when working with smaller amounts of money.
Good luck.

Answer 4

First make sure you are saving sufficiently for retirement. You can always take out a college loan, but there is no such thing as a retirement loan.

After saving for retirement, I'd consider Roth IRA for yourself, Coverdell, 529 in that order.

Answer 5

Speak with a financial adviser at one of the major brokerages such as Fidelity, Schwab etc. They will be able to offer and explain several options available to you.
If you are interested in fixed interest, look at one of the (FDIC insured) on line banks such as ING or Lydian. They offer higher rates than the commercial banks. You may also want to check your local SAVINGS (not commercial) banks.

Answer 6

I'd go with a 529 plan for college savings.

Check with your state's 529 plan to see if they offer some tax breaks. If not, then you have tons of choices (49 other states).

Answer 7

1) Brokerage.
2) TD Ameritrade.

Answer 8

loosen up, Mommy. My 23 month old is in basic terms commencing to truly communicate. 2 months in the past he exchange into precisely liek yours with speech and now daily impulsively he says numerous new issues. the two that or he has been talkign and that i in basic terms did not understadn what he exchange into announcing. as lengthy as she is babbling and conversing in different techniques, there isn't any reason to panic. Undressing herself as quickly as she has discovered how is generic. purely a sparkling trick she has discovered. she would be in a position to furnish up earlier too lengthy, perchance you additionally could make it a pastime to place them back on by utilising herself? Our son hs those days began potty training. One mornign he exchange into sitting on the potty one minute however the subsequent exchange into runnign around hte front room in his pants yet no diaper. i exchange into annoyed with my husband for it and he exchange into annoyed with me. Ended up that NEITHER one people had executed it, David had placed his very own pants back on.

Answer 9

If you want safe guaranteed earnings. Citibank has a really good online account paying 5% per year. www.citibank.com

Answer 10

Some states have apre-paid educational program.It locks in todays tution for you child. I know Ky does this but I don't know what other states do. Good for you for thinking of you child in the long term.