Comments on: Some Thoughts on Investing on Behalf of My Children http://www.thesimpledollar.com/2009/04/17/some-thoughts-on-investing-on-behalf-of-my-children/ Simple, applicable personal finance advice for the modern world Sat, 20 Mar 2010 00:41:24 -0700 http://wordpress.org/?v=2.8.4 hourly 1 By: Luis Fernando Imperator http://www.thesimpledollar.com/2009/04/17/some-thoughts-on-investing-on-behalf-of-my-children/comment-page-1/#comment-636736 Luis Fernando Imperator Wed, 22 Apr 2009 02:56:42 +0000 http://www.thesimpledollar.com/?p=3431#comment-636736 "I’m secure in my own knowledge that over the long run, the tendency of a diverse stock investment is to go up." well, this concept is flawed at least, and the fact is you never know about the future, neither the short or the long term. So, I'd be a little less agressive in the investments of my kids. Because stock markets are risky, yes, and they not always go up. Hope for the best for you and your kids always, but you should review your 'secure knowledge' once in a while. “I’m secure in my own knowledge that over the long run, the tendency of a diverse stock investment is to go up.”

well, this concept is flawed at least, and the fact is you never know about the future, neither the short or the long term. So, I’d be a little less agressive in the investments of my kids. Because stock markets are risky, yes, and they not always go up.

Hope for the best for you and your kids always, but you should review your ’secure knowledge’ once in a while.

]]> By: Sandy http://www.thesimpledollar.com/2009/04/17/some-thoughts-on-investing-on-behalf-of-my-children/comment-page-1/#comment-634769 Sandy Mon, 20 Apr 2009 20:38:35 +0000 http://www.thesimpledollar.com/?p=3431#comment-634769 Why are you so sure that we won't have the money? I've never had the intention of 100% college funding in the bank on my daughter's first day of college. THAT would be a luxury! No, I'm saying that we've had a plan, including CD's, Savings Bonds, Tuition Guarantee Program, and some company stock. PLUS Cash flow from not having a mortgage, PLUS DD part time work and savings, PLUS the hope of a few Scholorships. If all that isn't enough, then yea...we'd probably have to take out a loan. And if your plan is 100% stocks for your dear one's education....GREAT!!! I hope that works for you! All I've said is that my friends who had that plan are squirming now, and I kinda feel sorry for them. But 10 years worth of saving a similar amount to what I've saved in conservative places, is gone...POOF! But, we still have the savings plus compounded interest. I'm not arguing with you, Sarah...I just chose a different path than what corporate America would have you believe is the only way to fund education...and it's not the only way. Why are you so sure that we won’t have the money? I’ve never had the intention of 100% college funding in the bank on my daughter’s first day of college. THAT would be a luxury! No, I’m saying that we’ve had a plan, including CD’s, Savings Bonds, Tuition Guarantee Program, and some company stock. PLUS Cash flow from not having a mortgage, PLUS DD part time work and savings, PLUS the hope of a few Scholorships. If all that isn’t enough, then yea…we’d probably have to take out a loan. And if your plan is 100% stocks for your dear one’s education….GREAT!!! I hope that works for you! All I’ve said is that my friends who had that plan are squirming now, and I kinda feel sorry for them. But 10 years worth of saving a similar amount to what I’ve saved in conservative places, is gone…POOF! But, we still have the savings plus compounded interest.
I’m not arguing with you, Sarah…I just chose a different path than what corporate America would have you believe is the only way to fund education…and it’s not the only way.

]]> By: Sarah http://www.thesimpledollar.com/2009/04/17/some-thoughts-on-investing-on-behalf-of-my-children/comment-page-1/#comment-634470 Sarah Mon, 20 Apr 2009 17:01:45 +0000 http://www.thesimpledollar.com/?p=3431#comment-634470 "But, when the time comes to start writing checks out to colleges, we’ll be able to just cash in these options and do it." Except that you won't ordinarily have enough money, Sandy. If you can come up with the extra cash through other means--in other words, if you aren't relying on the investments and their growth being enough for you--then you obviously have the luxury of not worrying so much about return. But that is not the scenario that most people are looking at. Why do you think the states closed those guaranteed tuition programs? They were too expensive for the state. The "safe" route is not a route which is effectively guaranteed to lose you money. Estimates of annual increases in college costs over the past few years have been 6-8%. Seriously, do you not understand that if you are getting a 4% return on your CDs (before taxes, if not in a 529!) you are effectively thus losing 2-4% on your college investments each year? Your strategy wasn't the "solid, conservative" strategy, it was the "take a loss and hope we can make it up elsewhere" strategy. Your friends in stocks weren't greedily chasing high returns, they were just trying to keep up with the rising costs. The fact is, there's no good solution for college investing. “But, when the time comes to start writing checks out to colleges, we’ll be able to just cash in these options and do it.”

Except that you won’t ordinarily have enough money, Sandy. If you can come up with the extra cash through other means–in other words, if you aren’t relying on the investments and their growth being enough for you–then you obviously have the luxury of not worrying so much about return. But that is not the scenario that most people are looking at. Why do you think the states closed those guaranteed tuition programs? They were too expensive for the state.

The “safe” route is not a route which is effectively guaranteed to lose you money. Estimates of annual increases in college costs over the past few years have been 6-8%. Seriously, do you not understand that if you are getting a 4% return on your CDs (before taxes, if not in a 529!) you are effectively thus losing 2-4% on your college investments each year? Your strategy wasn’t the “solid, conservative” strategy, it was the “take a loss and hope we can make it up elsewhere” strategy. Your friends in stocks weren’t greedily chasing high returns, they were just trying to keep up with the rising costs.

The fact is, there’s no good solution for college investing.

]]> By: DDFD at DivorcedDadFrugalDad http://www.thesimpledollar.com/2009/04/17/some-thoughts-on-investing-on-behalf-of-my-children/comment-page-1/#comment-634274 DDFD at DivorcedDadFrugalDad Mon, 20 Apr 2009 14:59:42 +0000 http://www.thesimpledollar.com/?p=3431#comment-634274 You hit it-- patience! As for the hit the accounts took, your kids look young enough for the market returns to come back a bit . . . You hit it– patience!

As for the hit the accounts took, your kids look young enough for the market returns to come back a bit . . .

]]> By: Sandy http://www.thesimpledollar.com/2009/04/17/some-thoughts-on-investing-on-behalf-of-my-children/comment-page-1/#comment-634224 Sandy Mon, 20 Apr 2009 14:10:34 +0000 http://www.thesimpledollar.com/?p=3431#comment-634224 I can see yourpoint, Sarah, but MY point is...I now have the money in hand, whereas my friends who put it in the stock market for their kids education DON'T. They have lost way more than they can make up in a couple of years. While we have always earned a low rate, at least it is always in the plus column, year after year. Yes, inflation is always a concern, and college prices do rise. But, when the time comes to start writing checks out to colleges, we'll be able to just cash in these options and do it. Our friends will just have to borrow more, as the stock market likely won't give them all their money back so quickly. And then they will be paying not only what they lost in the market, but perhaps a high interest rate on the loans that they will have to pay off over time. As it is, also, we'll have our mortgage paid off before my eldest in in college and the cash flow will be there for any additional costs that inflation creates. We'll finish with 12 years worth of mortgage payments...not so bad, I think. There are many ways to do college costs...We picked what works for us (safe investments and prepaid mortgage + what the girls have saved over the years and parttime jobs). Good luck to everyone with kids! Choose what works for your family! My hope is that my girls can graduate debt free (and they will be contributing, too!)so that they will have choices in their futures. Not just a mountain of debt with their brand new degrees. I can see yourpoint, Sarah, but MY point is…I now have the money in hand, whereas my friends who put it in the stock market for their kids education DON’T. They have lost way more than they can make up in a couple of years. While we have always earned a low rate, at least it is always in the plus column, year after year. Yes, inflation is always a concern, and college prices do rise. But, when the time comes to start writing checks out to colleges, we’ll be able to just cash in these options and do it. Our friends will just have to borrow more, as the stock market likely won’t give them all their money back so quickly. And then they will be paying not only what they lost in the market, but perhaps a high interest rate on the loans that they will have to pay off over time.
As it is, also, we’ll have our mortgage paid off before my eldest in in college and the cash flow will be there for any additional costs that inflation creates. We’ll finish with 12 years worth of mortgage payments…not so bad, I think.
There are many ways to do college costs…We picked what works for us (safe investments and prepaid mortgage + what the girls have saved over the years and parttime jobs). Good luck to everyone with kids! Choose what works for your family! My hope is that my girls can graduate debt free (and they will be contributing, too!)so that they will have choices in their futures. Not just a mountain of debt with their brand new degrees.

]]> By: Reflection http://www.thesimpledollar.com/2009/04/17/some-thoughts-on-investing-on-behalf-of-my-children/comment-page-1/#comment-633258 Reflection Sun, 19 Apr 2009 18:58:13 +0000 http://www.thesimpledollar.com/?p=3431#comment-633258 Everyone needs to remember that with stocks, you don't lose money until you sell as long as that stock doesn't go to $0. Hopefully the 529 is fairly well diversified or invested in some sort of fund rather than individual stocks. If that is the case you may be seeing a decrease in value right now but if you sell and move to something conservative you are merely locking in your loss. If, on the other hand, you hang in there and continue to contribute you are essentially getting a discount on your shares. (What once cost you $100 now costs $50, that's 50% off!) When the market recovers eventually (and odds are in the next 15 years it will do so) you have more shares and it allows your earnings to be much higher. Good for you for holding your ground and keeping your heart out of the decision! Everyone needs to remember that with stocks, you don’t lose money until you sell as long as that stock doesn’t go to $0. Hopefully the 529 is fairly well diversified or invested in some sort of fund rather than individual stocks. If that is the case you may be seeing a decrease in value right now but if you sell and move to something conservative you are merely locking in your loss. If, on the other hand, you hang in there and continue to contribute you are essentially getting a discount on your shares. (What once cost you $100 now costs $50, that’s 50% off!) When the market recovers eventually (and odds are in the next 15 years it will do so) you have more shares and it allows your earnings to be much higher.
Good for you for holding your ground and keeping your heart out of the decision!

]]> By: Sarah http://www.thesimpledollar.com/2009/04/17/some-thoughts-on-investing-on-behalf-of-my-children/comment-page-1/#comment-632765 Sarah Sun, 19 Apr 2009 06:19:58 +0000 http://www.thesimpledollar.com/?p=3431#comment-632765 I'm kind of shocked by all the people preaching putting the kids' college tuition in bonds or CDs as the "safe" choice. Honestly, have you people heard of inflation? Do you not understand that college costs have outstripped even inflation by a substantial margin in the last twenty years or so? We are in a peculiar spot right now, but in general if you are lucky enough to be getting 4% on a CD you are actually losing money with respect to the growth in college tuition. It's not "safe"; it's effectively a *loss*, even if it doesn't look like one because the numbers are going up on your statements. The college saving timeframe is an awkward one. I'm not sure anyone has the ideal strategy for saving for those costs. But people should not kid themselves that going into CDs or bonds is the "safe" choice, nobly eschewing greater possibility of gain for solid returns. Slow and steady doesn't win the race when the finish line is receding faster than you're advancing! I’m kind of shocked by all the people preaching putting the kids’ college tuition in bonds or CDs as the “safe” choice.

Honestly, have you people heard of inflation? Do you not understand that college costs have outstripped even inflation by a substantial margin in the last twenty years or so? We are in a peculiar spot right now, but in general if you are lucky enough to be getting 4% on a CD you are actually losing money with respect to the growth in college tuition. It’s not “safe”; it’s effectively a *loss*, even if it doesn’t look like one because the numbers are going up on your statements.

The college saving timeframe is an awkward one. I’m not sure anyone has the ideal strategy for saving for those costs. But people should not kid themselves that going into CDs or bonds is the “safe” choice, nobly eschewing greater possibility of gain for solid returns. Slow and steady doesn’t win the race when the finish line is receding faster than you’re advancing!

]]> By: Sandy http://www.thesimpledollar.com/2009/04/17/some-thoughts-on-investing-on-behalf-of-my-children/comment-page-1/#comment-632522 Sandy Sun, 19 Apr 2009 00:43:08 +0000 http://www.thesimpledollar.com/?p=3431#comment-632522 I'm super conservative when it comes to things financial. From the time my oldest (now 15 1/2)was a baby, I started buying savings bonds, our state also had a Tuition Gauarentee program we bought into til it closed additional contributions, we also opened CD's making 4% for 60 months, plus we have stock from the company my husband works for. When I got the annual statement from the Tuition Guarentee program the other day, I perused the stock market, bond market, and money market funds and their returns over the years since inception. Funnily enough, my little savings bonds and CDs have made more than ANY of the stock and bond holding made. I feel real sorry for all of those who put their money on stocks, thinking it will never go down. Many friends of ours with kids close to college age like mine are really upset, as 3 years is too short to make all of that back up. For me, slow and steady wins the race. And my girls will have a good education without (hopefully) much in the way of debt at the end. Check out what your state might offer in terms of Guarenteed Plans, and eye up their CD rates if they offer them. I’m super conservative when it comes to things financial. From the time my oldest (now 15 1/2)was a baby, I started buying savings bonds, our state also had a Tuition Gauarentee program we bought into til it closed additional contributions, we also opened CD’s making 4% for 60 months, plus we have stock from the company my husband works for. When I got the annual statement from the Tuition Guarentee program the other day, I perused the stock market, bond market, and money market funds and their returns over the years since inception. Funnily enough, my little savings bonds and CDs have made more than ANY of the stock and bond holding made. I feel real sorry for all of those who put their money on stocks, thinking it will never go down. Many friends of ours with kids close to college age like mine are really upset, as 3 years is too short to make all of that back up.
For me, slow and steady wins the race. And my girls will have a good education without (hopefully) much in the way of debt at the end. Check out what your state might offer in terms of Guarenteed Plans, and eye up their CD rates if they offer them.

]]> By: Generation Y Investor http://www.thesimpledollar.com/2009/04/17/some-thoughts-on-investing-on-behalf-of-my-children/comment-page-1/#comment-632020 Generation Y Investor Sat, 18 Apr 2009 15:20:32 +0000 http://www.thesimpledollar.com/?p=3431#comment-632020 I agree that it can be very frustrating investing money regularly only to see the balance stagnate or drop. But I really think you're doing the right thing for you and your children. I think years down the line when your kids are getting ready for college you'll be happy you stuck to your plan and invested regularly. -Gen Y Investor I agree that it can be very frustrating investing money regularly only to see the balance stagnate or drop. But I really think you’re doing the right thing for you and your children. I think years down the line when your kids are getting ready for college you’ll be happy you stuck to your plan and invested regularly.

-Gen Y Investor

]]> By: Bill http://www.thesimpledollar.com/2009/04/17/some-thoughts-on-investing-on-behalf-of-my-children/comment-page-1/#comment-632003 Bill Sat, 18 Apr 2009 14:56:30 +0000 http://www.thesimpledollar.com/?p=3431#comment-632003 Way too much stress around all these struggles with saving...saving...saving. More creative approaches like attending community colleges,access to online courses and living at home can make huge differences amounting to tens of thousands in savings. Way too much stress around all these struggles with saving…saving…saving. More creative approaches like attending community colleges,access to online courses and living at home can make huge differences amounting to tens of thousands in savings.

]]> By: joan http://www.thesimpledollar.com/2009/04/17/some-thoughts-on-investing-on-behalf-of-my-children/comment-page-1/#comment-631991 joan Sat, 18 Apr 2009 14:30:35 +0000 http://www.thesimpledollar.com/?p=3431#comment-631991 I was putting money into my 401K, and the money just kept disappearing. Were there more stocks, No, there were fewer. So, how can money that isn't there anymore, or stocks that aren't there anymore rebound? Please explain to this blond how my 401K can ever regain the money it lost. I was putting money into my 401K, and the money just kept disappearing. Were there more stocks, No, there were fewer. So, how can money that isn’t there anymore, or stocks that aren’t there anymore rebound? Please explain to this blond how my 401K can ever regain the money it lost.

]]> By: Michele http://www.thesimpledollar.com/2009/04/17/some-thoughts-on-investing-on-behalf-of-my-children/comment-page-1/#comment-630960 Michele Fri, 17 Apr 2009 21:06:26 +0000 http://www.thesimpledollar.com/?p=3431#comment-630960 I invest $2000 per year for each of our children (age 7, 4, and 2) in an ESA account. If I were to put in more than that, I would use a 529. I am probably more conservative than most, though. The majority is in CDs earning 4%-5% interest, with a small percentage (about 15%) in a stock mutual fund. I know I am losing out on potential returns, but frankly I don't think 18 years is that long of a time horizon to weather the ups and downs of the stock market. I guess I'm one of the few people who actually did not lose money on my kids' college education this year. Of course, I know it might not hold up in the next 11 years when my oldest goes off to school. But I am happy with 4-5% tax-free returns. I invest $2000 per year for each of our children (age 7, 4, and 2) in an ESA account. If I were to put in more than that, I would use a 529. I am probably more conservative than most, though. The majority is in CDs earning 4%-5% interest, with a small percentage (about 15%) in a stock mutual fund. I know I am losing out on potential returns, but frankly I don’t think 18 years is that long of a time horizon to weather the ups and downs of the stock market. I guess I’m one of the few people who actually did not lose money on my kids’ college education this year. Of course, I know it might not hold up in the next 11 years when my oldest goes off to school. But I am happy with 4-5% tax-free returns.

]]> By: BloggingBanks http://www.thesimpledollar.com/2009/04/17/some-thoughts-on-investing-on-behalf-of-my-children/comment-page-1/#comment-630953 BloggingBanks Fri, 17 Apr 2009 20:58:12 +0000 http://www.thesimpledollar.com/?p=3431#comment-630953 Patience is a virtue indeed. If I had a fixed amount of time like 15 years, I wouldn't put it all in stocks. Maybe, if I could find a CD yielding 5% for 15 years I could put 50% in CDs and 50% in stocks. That way in 15 years my CD will be worth 10K ( assuming reinvestment at 5% annualy) and hopefully my stock index funds won't go to zero.. Patience is a virtue indeed. If I had a fixed amount of time like 15 years, I wouldn’t put it all in stocks. Maybe, if I could find a CD yielding 5% for 15 years I could put 50% in CDs and 50% in stocks. That way in 15 years my CD will be worth 10K ( assuming reinvestment at 5% annualy) and hopefully my stock index funds won’t go to zero..

]]> By: Wilhelm Scream http://www.thesimpledollar.com/2009/04/17/some-thoughts-on-investing-on-behalf-of-my-children/comment-page-1/#comment-630916 Wilhelm Scream Fri, 17 Apr 2009 19:59:17 +0000 http://www.thesimpledollar.com/?p=3431#comment-630916 My parents invested enough to cover the entire cost of my university education. I start in October. About two or three years ago, they sat me down and talked through my university fund and said that they were taking it all out of the stock market and putting it in fixed-rate bonds so it'd be safe and I could access it when they matured (which is evry soon now!) and was I OK with that? I personally think they left it a little late, but then I'm very conservative with investing. You just have to think about how long they have to recover their value. My parents invested enough to cover the entire cost of my university education. I start in October. About two or three years ago, they sat me down and talked through my university fund and said that they were taking it all out of the stock market and putting it in fixed-rate bonds so it’d be safe and I could access it when they matured (which is evry soon now!) and was I OK with that? I personally think they left it a little late, but then I’m very conservative with investing. You just have to think about how long they have to recover their value.

]]> By: Jamie http://www.thesimpledollar.com/2009/04/17/some-thoughts-on-investing-on-behalf-of-my-children/comment-page-1/#comment-630910 Jamie Fri, 17 Apr 2009 19:48:14 +0000 http://www.thesimpledollar.com/?p=3431#comment-630910 Everything is going to be fine. My parents could never afford to pay for my college education at all. This fact only motivated me to work harder in high school. I ended up getting a full ride to a state university. Clearly you care deeply about your kids. Your love and involvement in their lives will help them succeed more than anything. Everything is going to be fine. My parents could never afford to pay for my college education at all. This fact only motivated me to work harder in high school. I ended up getting a full ride to a state university. Clearly you care deeply about your kids. Your love and involvement in their lives will help them succeed more than anything.

]]> By: Nick http://www.thesimpledollar.com/2009/04/17/some-thoughts-on-investing-on-behalf-of-my-children/comment-page-1/#comment-630902 Nick Fri, 17 Apr 2009 19:34:22 +0000 http://www.thesimpledollar.com/?p=3431#comment-630902 Regardless of how well (or poorly) you invest this money for your childrens' education, you are still going to be giving them something that many families across the country are simply unable to give their children. My dad was able to save money (and put aside money my grandparents gave for that purpose) into a savings account throughout my life. He moved over half of it into aggressive mutual funds when I was in Junior High. Junior year of High School was when 9/11 happened and, well, you can guess what happened with those mutual funds around that timeframe. We took a gamble and left it in those funds and used the portion that was in savings first, waiting for the funds to recover a bit before using them for tuition. I've never done the math to analyze those decisions (mainly I was too young to understand) and I don't really care to because everything turned out alright in the end. The money left didn't quite cover college, but we made it through with scholarships, luck, hard work, and a tiny bit of help from family. Other people I graduated with had over $100k in student loans and I felt blessed to simply graduate flat broke. (Literally - the last month's living expenses were put on my credit card and paid off with my first paycheck.) My dad did the best he could with what he knew at the time and I'm thankful for that. Regardless of how well (or poorly) you invest this money for your childrens’ education, you are still going to be giving them something that many families across the country are simply unable to give their children.

My dad was able to save money (and put aside money my grandparents gave for that purpose) into a savings account throughout my life. He moved over half of it into aggressive mutual funds when I was in Junior High. Junior year of High School was when 9/11 happened and, well, you can guess what happened with those mutual funds around that timeframe.

We took a gamble and left it in those funds and used the portion that was in savings first, waiting for the funds to recover a bit before using them for tuition.

I’ve never done the math to analyze those decisions (mainly I was too young to understand) and I don’t really care to because everything turned out alright in the end. The money left didn’t quite cover college, but we made it through with scholarships, luck, hard work, and a tiny bit of help from family. Other people I graduated with had over $100k in student loans and I felt blessed to simply graduate flat broke. (Literally – the last month’s living expenses were put on my credit card and paid off with my first paycheck.)

My dad did the best he could with what he knew at the time and I’m thankful for that.

]]> By: viola http://www.thesimpledollar.com/2009/04/17/some-thoughts-on-investing-on-behalf-of-my-children/comment-page-1/#comment-630895 viola Fri, 17 Apr 2009 19:21:40 +0000 http://www.thesimpledollar.com/?p=3431#comment-630895 Trent, if you're really concerned about their future and can't stomach the current turns in the market, invest in CDs and roll them over. Will your return be less? Yes. Will their future be safe? Definitely. The promise of higher return and taxable deduction is more attractive to you than the real security of low-return but safe options. That doesn't make you a bad person, I'm just being honest. Trent, if you’re really concerned about their future and can’t stomach the current turns in the market, invest in CDs and roll them over. Will your return be less? Yes. Will their future be safe? Definitely.

The promise of higher return and taxable deduction is more attractive to you than the real security of low-return but safe options. That doesn’t make you a bad person, I’m just being honest.

]]> By: Kristen @TheFrugalGirl http://www.thesimpledollar.com/2009/04/17/some-thoughts-on-investing-on-behalf-of-my-children/comment-page-1/#comment-630886 Kristen @TheFrugalGirl Fri, 17 Apr 2009 19:11:16 +0000 http://www.thesimpledollar.com/?p=3431#comment-630886 I just wanted to say that it was lovely to see pictures of your kiddos...I don't think I've ever seen one of your daughter! I just wanted to say that it was lovely to see pictures of your kiddos…I don’t think I’ve ever seen one of your daughter!

]]> By: CathyG http://www.thesimpledollar.com/2009/04/17/some-thoughts-on-investing-on-behalf-of-my-children/comment-page-1/#comment-630849 CathyG Fri, 17 Apr 2009 18:09:06 +0000 http://www.thesimpledollar.com/?p=3431#comment-630849 You really need to decide IN ADVANCE to choose a date when your child is close enough to needing that money to TAKE IT OUT OF STOCKS and put it into something safer. I won't pretend to know what that timing is, but please make sure you do it. Our stocks took a long time recovering from the 2001 downturn so we felt like we needed to let them grow a bit more, but we lost the equivalent of 3 years of private tuition/fees in the past year, and we are now scrambling to find money to get our 2 girls through college - one is halfway through, the other is just starting next year. So please, while your kids are still toddling around: read around to find the advice which tells how many years prior to needing it is a pretty safe timeframe, make a calendar reminder for that date, then TAKE IT OUT and put it into safe cash investments. And then don't look at the market again until they graduate. It might go up pretty high and you'll feel like you missed out, but it might crash and take everything with it. Pleae learn from my hindsight. You really need to decide IN ADVANCE to choose a date when your child is close enough to needing that money to TAKE IT OUT OF STOCKS and put it into something safer. I won’t pretend to know what that timing is, but please make sure you do it.

Our stocks took a long time recovering from the 2001 downturn so we felt like we needed to let them grow a bit more, but we lost the equivalent of 3 years of private tuition/fees in the past year, and we are now scrambling to find money to get our 2 girls through college – one is halfway through, the other is just starting next year.

So please, while your kids are still toddling around: read around to find the advice which tells how many years prior to needing it is a pretty safe timeframe, make a calendar reminder for that date, then TAKE IT OUT and put it into safe cash investments.

And then don’t look at the market again until they graduate. It might go up pretty high and you’ll feel like you missed out, but it might crash and take everything with it.

Pleae learn from my hindsight.

]]> By: FupDuckTV http://www.thesimpledollar.com/2009/04/17/some-thoughts-on-investing-on-behalf-of-my-children/comment-page-1/#comment-630835 FupDuckTV Fri, 17 Apr 2009 17:47:25 +0000 http://www.thesimpledollar.com/?p=3431#comment-630835 I personally have avoided 529 plans like the plague. Say after 12-18 years of investing for my children's education, they up and say I'm going into the military or I'm not going to school. Crap, now I have all this money locked up in 529 plans. The advice I was given, (if you haven't maxed out your contribution) put the money into a Roth IRA, that way you can draw out the principle without penitalty if you need it. (I'm not a financial investor, but I trust my money to Bernie Madoff). I personally have avoided 529 plans like the plague. Say after 12-18 years of investing for my children’s education, they up and say I’m going into the military or I’m not going to school. Crap, now I have all this money locked up in 529 plans. The advice I was given, (if you haven’t maxed out your contribution) put the money into a Roth IRA, that way you can draw out the principle without penitalty if you need it. (I’m not a financial investor, but I trust my money to Bernie Madoff).

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