Investing in age-based savings plans 529 for college your child may seem like the pinnacle of responsible investment in the future of your child. An age 529 plan generally invests your money in high-growth investments - stocks and others - to start. As the year of your child's first year of college approaches, they are supposed to realize that if they lose money in the stock market, they have no time to recover, then they are supposed to transfer your investments in something much more secure and guaranteed. This is how they are supposed to work. Like many families who have invested their money based on the age of the 529 savings plans for their children discovered in 2008, these plans are actually happens to be somewhat different from what they promise to do. Many people had their college funds wiped out when the market craters. They could promise to invest in something safe, their definition of security may be radically different from yours though. There are other things you need to know about the 529 savings plans as well.
The companies promoting 529 savings plans like to tell you how a rose can assigned any college funds for your child to a finance company run by professional and caring conservative who will invest your money in a way that will beat the stock market. If you choose a good and reputable institution, you might actually see these results as well. What they do not tell you in a way you ever noticed is that you're likely to lose a lot of what you earn their pay management fees and annual fees. You pay these even if they do not beat the market. 529 savings plans sold by investment advisers generally have the most special taxes. Direct sold plans have the lowest ones.
Although 529 plans savings can be a great idea to invest exclusively in colleges for your child can be risky. You never know when markets will start to head south. Diversify your investments - putting your money in CDs and savings accounts, could be a good idea too. Choosing a prepaid tuition plan can be a good idea too. This is when you lock in a couple of years or a few semesters of college for your child at today's prices. There is a private college 529 plans that allow you to do this with private colleges as well. There's just one little problem. If your child does not attend the university or the public exactly one private college, you entitled to a choice, you will lose big-time. You no longer have a price guarantee.
It shows you is that there is no guaranteed response easier when it comes to investing. Investing always need your close supervision.
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