The Wall Street Journal reported on Wednesday (December 5, 2007), that:
"...Purveyors of 529 college plans are targeting more conservative savers...Virginia (one of the many examples)...is sponsoring a multi-bank 529...product (CD's and other conservative options)...that will be FDIC insured...(up to $100,000)..."
Bad idea if you are conservative but still want to save for college costs for your children or grandchildren who still have 10+ years to go. Please don't do this before talking with a CERTIFIED FINANCIAL PLANNER(tm) professional about the risks of inflation. Yes, you may keep the dollars safe from loss of principal but it will be far from safe in its ability to pay for those college costs.
Put $14,000 into a 529 plan's CD option today and that would pay for one year of tuition, books, room and board at a public college but leave it in that same CD for 10 years and it may be enough for 1 month or so of that first year's college expenses in the future. Yikes!
This is a fine idea only if you have already saved a substantial sum in a 529 plan and want to move it to a safer investment vehicle than a money market (which most plans have available) before college starts. But remember, that you will not use all of your college savings in year one if you planned properly to fund more than one year of college costs, so matching the fund investments with the liability (the year when needed) has merit too.
Oh, by the way, forget about saving for college if you have not already estimated how much you will need for retirement and are putting that aside already. College expenses may come sooner than retirement but the retirement numbers are so much larger that they need to be saved/invested for first.
An Introduction
Hi. Welcome to BourGroup and my blog. Phil
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.