Call Our Offices
Your Money.
Your Life.
Your Way.

ABC's of Investing for College

Download This Resource

Invest early. Invest often. Invest for growth. These are the basic principles of saving for your child’s college education. The earlier you begin a savings program, the more time you have to benefit from the power of compound interest. For example, if you start saving $200 per month when your child is an infant with a 7% rate of return, you could accumulate as much as $86,000 by the time he or she reaches age 18 (assuming no taxes or inflation). These savings can go a long way toward helping your child get a solid start in life.

It is also worth remembering that you need not amass the total cost of a college education by your child’s freshman year. You can continue to add to your investments, allowing time for potential growth until your child’s final year.

Even if you begin investing later in your child’s life, it is still worthwhile to “think growth.” Many parents invest too conservatively to obtain the capital they need in the number of years available. However, there are growth strategies for all planning horizons. Let’s look at a few of them:

Infancy to Age 10. If your child falls into this age group, you have eight to 18 years to save the funds you need. More aggressive investments, such as stocks and stock mutual funds, may offer the potential for a greater return over time. Although equities are generally considered higher risk than certain fixed-income investments, with time on your side, you are more likely to experience greater portfolio growth over the long term.

Ages 10 to 14. If your child is in this age bracket, you have four to eight years to invest. A balanced portfolio combining growth stocks, stock mutual funds, limited maturity bonds, and bond funds may offer the best of both worlds¾the benefit of potential equity growth, along with the reduced risk of bonds and bond funds.

Ages 14 to 18. With less than four years to enrollment, you may want to consider investments that offer both income and liquidity. Securities, such as Treasury bills, limited maturity bonds, and bond funds, offer the potential for relatively conservative growth, reduced risk, and liquidity.

Regardless of your planning horizon, a well-diversified portfolio will help you spread your investment risk. As your child nears college age, consider reducing your stock holdings and shifting the funds into short-term bonds or fixed-income securities that will mature when tuition is due. Bear in mind, you may not want to pull out of growth investments completely. Remember, you have three years to go until you receive the senior year tuition bill. For assistance in optimizing your child’s college fund, consult a qualified financial professional.

*Note: Investment returns and principal values of stocks and mutual funds will fluctuate due to market conditions. Therefore, when shares are redeemed, they may be worth more or less than their original cost. The principal value of bonds may fluctuate due to market conditions. If redeemed prior to maturity, bonds may be worth more or less than their original cost.

Your turn – What would you like to know about ABC's of Investing for College?

Strong Valley wants to provide useful and meaningful information to our clients, to our professional network, and to the broader community of people we serve. We’d love to hear your questions about ABC's of Investing for College or about any other topics you care about. You can call our office directly, or use the contact form below to send us your questions and/or suggestions.  And if you found the information helpful or entertaining, we hope you'll share the Strong Valley story with others.

We love to hear your questions, ideas, and feedback!

Copyright © 2024 Strong Valley Wealth & Pension, LLC
Investment advice offered through Integrated Partners, doing business as Strong Valley Wealth & Pension, a registered investment advisor. The information on this website has not been approved or verified by the United States Securities and Exchange Commission or by any state securities authority. Registration as an Investment Adviser does not imply a certain level of skill or training. Strong Valley Wealth & Pension, LLC offers some securities through M.S. Howells & Co. Member FINRA/SIPC. M.S. Howells & Co. is not affiliated with Strong Valley Wealth & Pension.
The link you have selected is located on another server. The linked site contains information that has been created, published, maintained, or otherwise posted by institutions or organizations independent of this organization. We do not endorse, approve, certify, or control any linked websites, their sponsors, or any of their policies, activities, products, or services. We do not assume responsibility for the accuracy, completeness, or timeliness of the information contained therein. Visitors to any linked websites should not use or rely on the information contained therein until they have consulted with an independent financial professional. Please click “Continue to Link” to leave this website and proceed to the selected site.