Every September, millions of students start college throughout the world. College is an exciting time full of personal growth and learning but financially, it can be terrifying.
College and university studies in the United States can be expensive, especially for students who attend private schools. That’s why just thinking about college can be overwhelming for parents, from the moment their kids are born. After all, it’s never too soon to start thinking about your kids’ future!
When thinking about how to save for your child’s college studies, investing is a great option. In this post, we will discuss some of the best investing strategies when it comes to saving for your children’s future studies.
Today, private college or university tuition can cost over $100,000 (in some cases even close to $200,000!). This means it’s critical to start saving as early as possible. Having a saving and investment strategy is important to make sure you’re getting the best possible return for your money.
If you start saving when your child is young, being aggressive is a wise strategy. You’ll have 18 years until you’ll need the money. The Cherries platform can be a great tool for assessing investment risk and potential. As time goes on and college gets closer, you’ll most likely want to change your investment strategy. Choosing lower risk options that are more fluid is a smart choice as you approach the years when you’ll actually start paying tuition, room & board, books, and other expenses related to college.
Save steadily and regularly
When trying to save large amounts of money, it’s important to add funds regularly. Even if these are small amounts, this is a good habit to get into. Set aside a certain amount per week or month to add to your investment portfolio or savings plan.
Diversify your investments
As the saying goes: “don’t put all your eggs in one basket”. Instead, choose a variety of different investment and savings tools in order to keep your savings as safe as possible.
Where Should I Invest?
Good question. As with any new investment plan, doing research is important. Don’t be impulsive when starting a savings plan for college. This is a big decision and it’s an investment plan that will be with you for many years.
Of course, savings accounts are one option when saving for college. While this can be a comfortable way to save with little to no risk, it is not very effective or worthwhile. However, as part of a major investment and savings plan, it may be smart to keep certain sums of money in savings accounts.
In the meantime, there are special investment plans specifically for college savings. You may have heard of some of the most common, such as a 529 investment plan. A 529 plan is a tax-favored account. This means that you don’t have to report the money you earn on your investment until you withdraw it. With a 529 you also won’t pay taxes at all on funds you withdraw specifically for educational purposes. This is a big advantage. These plans are typically sold by state but do your research because can also purchase other states’ plans.
Using a platform like Cherries to plan stock investments for college is another smart move. You’ll be able to assess risk, track potential earnings, and make changes easily over time.
Saving For College – Final Thoughts
Saving for college can feel overwhelming for many parents. We get it; it can be scary to think about saving such a large sum of money! The good news is that you’re already thinking about it early, which puts you at an advantage.
We’ve provided multiple tools and tips to save effectively for your children. Make sure to choose your investment tools wisely and you’ll be on the right path to sending your children to college with no stress.