Hey biz just passing through. Having a baby in January. I remember some financial guy saying put $2k per year towards college fund. Is that accurate? And what kind of account should it go into? Just a regular savings or what?
I can easily put aside $200 per month but I have a feeling it's more involved than just sticking it in savings. Educate me lads
>>1013866
If you're in the US. Make sure to get some bonds, enough that the interest amounts to $2K per year. Then make sure to file taxes for your kid every year. It'll save you a fair amount in taxes and he can use that money to pay for college. Kids under a certain age don't pay tax on the first $1K of income and only 10% on the next $1K.
>>1013930
So basically a one time purchase of bonds that earns 2k interest? What would that be roughly? My savings is pretty small at the moment
Do I go through a broker to buy them or what? And can I cash them out at anytime?
>>1013975
No you hold them until maturity because it's the interest you want. They'll be in the kids name but if they're earmarked for school when you cash them it provides further tax benis. Talk to your broker about specific options available to you.
>>1013866
See if you can prepay for state college. In Texas we can pay a certain amount and guarantee college funding in advance.
here you go:
http://www.texastomorrowfunds.org/
>>1013981
Thanks a lot. One last question, I don't have a broker. Lol. What's the best way to find one?
>>1013984
Im not sure I want to commit them to a certain state tho. What if they want to go to MIT or some university in the UK?
>>1013986
Then let them borrow the money.
>>1013866
Look up Iowa 529 Plan. Good way to manage college plan and your money goes in untaxed and can be used for school/school housing untaxed. Like 401k withdrawing it holds penalties.
>>1013866
Google UGMA account (uniform gift to minors). You can put money aside in an account in your kids name and it doesn't fence you in to a certain college/group of colleges. So if your kids don't go to college or want to go to a 2 year program or tech school, they just get the money. Just dump 2k a year in there and put it in an index fund just like you would for a regular brokerage account.
>>1014202
So it is flexible and I guess the advantage is that the first 850 goes untaxed the next 850 gets taxed at the minors rate
So are these investments? I mean, do they grow by some % each year
>>1013986
Generally, the funds can be used for college at any state. So the state shouldn't matter.
>>1013866
Look up Smart529
