What is the best way to save for my daughters college education? She's 15 months old.?

Question

We live in California.

Answer 1

There are some good suggestions above about education savings plans. The only thing I noticed missing was no one mentioned how much money you would need based on interest rates/etc.

Let's say you have 18 years to save. Let's say your very conservative and get 4.5% interest on the money. Let's say your daughter is going to need $50,000. You can search for 'compound interest calculator' on yahoo to play around with the numbers. Based on the assumptions above, you will need to save about $155 a month. She may not need $50,000, or you may be able to get a higher interest rate, both of which will lower how much you need to save. Please note 155x12 months x 18 years = $33,480. THe reason it works out to $50,000 is because of compound interest.

You may not be able to save enough to pay for her entire education. That is fine. She can do what most have to; work while going to school. But do save what you can afford. At least that way you can help her out.

Best of luck.

Answer 2

Education IRA - each parent and each grandparent can contribute up to $500 per year. The contribution and all earnings are tax exempt if the money is used for education.

529 college plan - I don't know if California has one, but if it does, you can contribute to that. Earnings from 529 college plans are federal tax exempt if used for education. On the state level, generally the earnings are only exempt if it is the 529 plan of the resident state (in your case, California). Some states may also allow tax deductions currently for the contributions. For example, in New York, you can deduct up to $10,000 in contributions made to the New York 529 plan.

You can also just put money away into CD's, bank accounts, mutual funds, etc., but the earnings on those investments will be taxable when they are earned. Only the two plans above will provide you with tax free earnings.

Answer 3

you can open a 529 college savings plan. Make sure you are saving for your own future first. Your daughter can always get low interest loans or grants for higher education but there is nothing available to you if you fail to save enough for your own retirement. If you have a Roth IRA you can use some of the money to help her with college in the future.

Answer 4

I would recommend investing in something you know will still have value when your daughter is ready for college. Gold, I believe, is just that. Gold is up about 250% in the last five years, silver up 310% and they expect both to keep going for several years to come. You can invest in it directly or set up an IRA that gives you tax breaks too (depending on YOUR age the IRA may or may not be better). I know of a great company that does both. Their website is www.goldira.com and their phone number is on the site.

Answer 5

If you save 100 dollars a month X 12 (1year) = 1200 a year.
Take that times 18 years = $ 21,600.00
If you can save 200 dollars a month X12 (1 year) =2400 a year
Take that times 18 years = $43,200.00

Even if you can only save $50.00 a month X 12 (1 year)= 600.00

Do what you can for now..Chances are good that later on you will be able to save more. Good luck.

Answer 6

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Answer 7

ETFs.