529 Account Facts, is This a Good Investment in Your Child’s Future?
Today I made a stop into a bank in my local area to inquire about what types of investments I should consider for the future of my children. This seems like an easy question for a financial management person to answer, right? I thought so too, until he started talking. One of the more popular investment trends for parents right now is something called a 529 account. The account allows parents to invest money tax deferred to save for their child’s college education. Depending on the child’s age, the money is invested into various different things. For children who are still fairly young, the money is initially invested into places that will yield them a higher rate of return and as the child reaches their teen years the money is then moved into less risky investments. The goal is for the family to have enough money by the time the child is of legal age for that child to use towards college. It sounds great on paper, but as we all know, children don’t always follow their parents wishes and end up attending the prestigious schools the parents had in mind.
With this in mind, I asked the simple question, “what happens if my child decides not to attend college? Where will the money go?” The answer that was given literally put me in shock. The financial counselor proceeded to explain to me that is my child decides not to attend school, they can certainly withdraw the money with heavy penalties and a lot of taxes to be paid OR the funds will be made payable without penalty once my child reaches the age of 59 1/2. I stared at him dumbfounded wondering when I told him I would like to invest in a retirement fund for my child. I may or may not have ask him, why in the world he thought I would like to put my hard earned money into some account for the bank to play with for 60 or so years. He proceeded to explain to me that this was the best option to invest in a child’s future because it will cover any and all college expenses, including meals in the cafeteria. I was amazed. We were discussing a fairly large amount of money and couldn’t believe he was justifying cafeteria meals as a viable way of spending it.
Calmly as possible, I told him that this was not the option for me, since I cannot predict the future I can’t be 100% sure my children will pursue a college career. He then proceeded to tell me that if they didn’t they would become the call center employees of the future and I may or may not have told him (politely) that we will be banking elsewhere. Needless to say, the important thing I learned is that before you make any type of investment in your children’s future, you should always know the answer to the “what ifs.” I would love for my children to attend the college of their dreams, but if attending college is not in their plan, then so be it. Many of the wealthy people of our time didn’t attend a day of college and the amount of money that we were discussing could have easily purchased them a small house (in Ohio.)
The bottem line is this. 529 accounts are a great way to save for your child’s future, if you can ensure that your child will in fact be attending on of the nation’s accredited colleges. Since I don’t know that for sure, I’d just assume put the money under my bed mattress and give it to them when they are ready. Of course I won’t, I’ll look for an investment that is right for my family. What do you think? Is a 529 account something that is in your child’s furture?
Tis the Season, Earnings Season That is
It’s time for the third quarter earnings season and most investors have been waiting on the edge of their seats to find out if their investments will pay off or go down the drain. With the country in recession, investors are among the many that can be hit with a huge financial downfall. As companies begin to announce their third quarter earnings and projections for the fourth quarter, investors must decide to hold tight to their current investments or move them to someplace that promises a larger financial gain.
It’s time to put some serious decision into what stocks you are willing to trade. Is it going to be worthwile to hold tight for another quarter and hope next year’s fiscal earnings will be better or should you trade the stocks you currently hold in hopes to make a larger profit. While the decision is ultimately your own, don’t simply rely on advice of the so-called experts. Not even Warren Buffet can predict whether or not a stock holding will profit from year to year. Given the countries current economic situation, third quarter earnings aren’t looking that great. However, that certainly doesn’t mean you should sell low and get out while you still can. Remember the old adage, buy low and sell high. Take this time to seriously think about what companies you think are in it for the long haul, then make your stock purchase wisely. If you incorporate your own company knowledge into your decisions, you may find that you decisions highly out weigh those of the experts.
What’s Money Made Easy About?
There are many people out there that simply aren’t good with money. (myself included at times) There is no rhyme or reason to this, it’s just simply that handling your finances can be harder than it sounds. You would think that an adult would be perfectly capable of making money, paying the bills, and dividing any remaining money into amounts that can be spent versus amounts that should be saved. However, there are countless people out there that have absolutely no savings, no retirement, and no assets. What is going to happen to these people when the day comes that they can no longer work? I’m sure it’s not anyone’s dream to have to work a 40 hour work week at the age of 80. I know that I for one plan to spend my golden years basking in the sun on a beach somewhere and praying I don’t get sun cancer. Money Made Easy is here to ensure that you are living your golden years exactly like you should, relaxing and enjoying the many things life has to offer. Money Made Easy is all about your finances, investments, and money management, but it’s written in plain English. There will be no second guessing when you read Money Made Easy, you will learn about various aspects of money and finances. Before you know it, you’ll be just as knowledgeable as Warren Buffet himself! Happy reading!