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This 1 page Document was uploaded by an elite notetaker on Saturday December 19, 2015. The Document belongs to a course at a university taught by a professor in Fall. Since its upload, it has received 6 views.
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Date Created: 12/19/15
Investment Strategies for Educational Costs Author: Katherine Dordick Saving for educational expenses is difficult to do for even one child, so determining investment strategies that address this issue is essential for individuals who would like to cover the cost of education for their children and grandchildren. A recent study from Millionaire Corner shows that 12 percent of grandparents and 34 percent of parents contribute financially to the education of their grandchildren and children, indicating that investment strategies foreducational expenses is necessary. Educational costs are a significant factor contributing to personal debt, according to the same Millionaire Corner study. Twenty eight percent of individuals surveyed list education costs as a factor contributing to their personal level of debt. Well planned investment strategies that include education can assist in reducing this percentage. One of the easiest investment strategies for education is a 529 savings plan. They are operated by either the stateor specificeducationalinstitutionsto assist families in saving for college expenses. Where did the number 529 come from? It comes from Section 529 in the IRScodethat allows forthese savings vehicles. One common misconceptionof 529 plans is that theymust be used in the statethat they are held. Most plans allow the funds to be used at the college of your choice, regardless of residency. There are certainrules regarding which institutions are eligible under the rules of the 529, so be certain to investigate this before making the decision on schooling if your investment strategies plan to use assets within a 529 to fund educational costs. There are a few distinct advantages to the use of 529 plans as one of many investment strategies. Many states offer tax breaks for contributions to an individual’s own states 529 plan. It is important to researchthe potentialtax benefits of the 529 in each state, including your own, when making the decision on which 529 plan to use. Keeping control of the assets is another advantage. The named beneficiary, the student, has no rightsto the funds at all. Compared to an UTMA/UGMA, this allows for a much higher degree of control over the assets. Many parents and grandparents have the desire to fund all or a portion of a child or grandchild’s education and this can be accomplished through systematic investment strategies that include an educational savings component. Investment Strategies
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