You may already be familiar with some of the college investment vehicles available to you, such as Coverdell Education Savings (ESA) and Custodial accounts. Either one of these options may offer an excellent starting point for a comprehensive college plan. Use these simple steps to help you create a blueprint to maximize your college savings and minimize risk.
Get ready to start saving smart for school.
The longer you wait, the fewer options may be available. Start looking at saving for college today.
College tuition, fees, and associated expenses (like housing) have risen at a rate that’s outpaced inflation. It’s a realistic possibility that education could be even more expensive by the time your child is ready for college. It’s a good idea to get a picture of college expenses now so you know how aggressively you’ll need to save.
Determine the costs.
The Janus Henderson College Planner can help provide a snapshot of college costs specific to your chosen institution. Even if you're not quite sure where your student will be attending, you can estimate general costs for in-state and out-of-state tuition and room and board for each state.
Determine funding options.
When funding an education strategy, consider all sources of potential savings such as your student contributing via work savings, or gifts from family members. Also keep in mind that scholarships, work-study opportunities and loans are options to help fund higher education.
Working backward from your goal will simplify your approach.
Knowing how much money you'll need and when you'll need it will drive decisions today and tomorrow. A specific goal helps you define your:
Time horizon: How long will you keep your money in the investment? If it's college you're saving for, consider how many more years you can invest before you will need to start paying for tuition. Tailor your investment mix based on this schedule.
Risk tolerance: How you invest should be influenced by how much risk you are willing to take. Understanding your risk tolerance helps define which investments will be best. The asset allocation planner can help you discover your risk tolerance.
Investment vehicle: Finding the right type of account that matches your strategy is critical. You have many options, including tax-deferred education savings accounts, custodial accounts and even retirement accounts that can be used for certain educational expenses.
Consistent investing over 5, 10 or 20 years can make a big difference towards any investment goal. It’s one of the simplest – and most powerful – investment plans you can make to impact your financial future.