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College funding, new born

Old 05-05-2019, 10:45 AM
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Default College funding, new born

first Grandchild is coming soon. I know very little about investing so I need some guidance. I would like to start an investment with 5k and add to it each month. Maybe $500/ month .
Old 05-05-2019, 10:49 AM
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Id be lookong into 529 plans and if your state has prepaid tuition plans also.
Old 05-05-2019, 10:52 AM
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That's pretty generous.


Old 05-05-2019, 10:58 AM
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How about just a brokerage account? A newborn today will most likely have “free” college by then. 5k down w 6k a year added........maybe won’t feel the need to get that liberal arts degree.
Old 05-05-2019, 10:58 AM
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Originally Posted by Shipwreck1 View Post
That's pretty generous.


It will be a good start but probably not enough in 18 years.
Old 05-05-2019, 11:03 AM
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Originally Posted by rbhankins001 View Post
Id be lookong into 529 plans and if your state has prepaid tuition plans also.
this. Just be on the same page with the parents.

In our case we are doing 529’s for our 2 kids. Grandparents are contributing to those accounts.

For my niece, they hold the account. BIL and ex SIL are financial idiots, and other grandparents aren’t able to contribute. We are fortunate and able to basically handle our own, and instructed grandparents on that side to focus on niece if a choice must be made.
Old 05-05-2019, 11:11 AM
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Sound advice
Old 05-05-2019, 11:37 AM
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I would open a Schwab brokerage account and buy SPY stock only. The bank that runs it buys proportional stock of the S & P 500 so it mirrors it. The cost of them to manage it is VERY low. Put the cash in then buy the stock at market when the funds clear. No need to try to time the market. Reinvest dividends.

You also may want to set up a trust for the funds to protect the child's interest. See an attorney.

Alabama's 529 plan managers panicked during the last bust and sold stock and put it in bonds. So they sold at the low point. Bought much higher later and people got screwed (parents). I just quite looking at the loses I had and it bounced back very well.

I truly believe that the whole college experience to change drastically by the time the GD goes to college. Students loans are keeping many schools propped up now, IMO. It is not a sustainable proposition. MOOC courses will probably be accredited in the future and the whole landscape could change. A 529 would limit the options. YMMV.
Old 05-05-2019, 11:40 AM
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Nice to see. Set up a 529 plan with your broker and co-ordinate with their parents. What's your plan for the next grandchild.
Old 05-05-2019, 12:20 PM
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Originally Posted by fireisland1 View Post


It will be a good start but probably not enough in 18 years.
This could get expensive with several more little ones? 🐣🐣🐣🐣🐣🐣
Old 05-05-2019, 12:34 PM
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529's are really the only way to go. It is the only investment vehicle in which the earnings are tax free. If you do a 529 in New York, the first $10,000 is also NYS income tax deductible, which could be worth up to $875/yr.
Based upon the anticipated pace of college expense growth, a private 4 year college with tuition, room and board is projected at $494,000 in 2020 - and that might be low as if the last 20 year rate were extrapolated it would be closer to $570,000.
The grandchild will be extremely happy 18 years from now with almost half the tuition in a college savings account.
It took my kids to actually attend college to realize how lucky they are that their 4 years of private college and two years of grad school are being fully paid for by their parents.
Old 05-05-2019, 12:54 PM
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Set up a Trust.
Old 05-05-2019, 01:11 PM
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Originally Posted by rbhankins001 View Post
Id be lookong into 529 plans and if your state has prepaid tuition plans also.
I'd look hard at the prepaid tuition plans. Here in Florida we have "Florida Prepaid," which you can go the 529 route or a fully paid tuition route. I did the fully paid 4 year university route for my kids. If you buy when they are infants its just a hair under 30K if you do the lump sum. You can also do payment plans for 5-18 years where you will pay more over time with interest, etc. You can do 2 years at community college & 2 years university if you want also. We have the option in Florida of doing the prepaid and also a 529 plan that can be used toward education expenses. Some states reciprocate so your child/grandchild can attend school there based on your chosen plan.

Old 05-05-2019, 01:56 PM
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I paid roughly $130k for my son's college education. He graduated a year ago. This was out of state (WVU) but should give you an idea of the scam we call college. Without some type of reform, you're probably lookjng at $250k. Good luck.
Old 05-05-2019, 02:08 PM
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Originally Posted by cotts4x4 View Post
I'd look hard at the prepaid tuition plans. Here in Florida we have "Florida Prepaid," which you can go the 529 route or a fully paid tuition route. I did the fully paid 4 year university route for my kids. If you buy when they are infants its just a hair under 30K if you do the lump sum. You can also do payment plans for 5-18 years where you will pay more over time with interest, etc. You can do 2 years at community college & 2 years university if you want also. We have the option in Florida of doing the prepaid and also a 529 plan that can be used toward education expenses. Some states reciprocate so your child/grandchild can attend school there based on your chosen plan.
I just looked at the FL pre-paid plans earlier today, what I can't figure out are the following:

1. Is this run by the State or a some private company?
2 Are the funds I paid insured?
3. If my child gets accepted to the most expensive university in FL, will my plan cover it?
4. If my plan would cover #3 above, then what happens when she attends the cheapest school in FL? Am I refunded some money or did I subsidize someone else's kid to go to Univ of Miami?
5. Are private schools like Univ of Miami included in these FL pre-paid plans?
Old 05-05-2019, 02:19 PM
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Originally Posted by Gary999 View Post
I would open a Schwab brokerage account and buy SPY stock only.....
You also may want to set up a trust for the funds to protect the child's interest. See an attorney..
A. Investing in the spy for college? Great idea now but what would you do on a Bear market? How would transition that account going into high school. How would you pay taxes? Who's name do you save under?

B. An trust for college savings using an attorney??? That's what a 529 is but far, far better. Removes assets for grand dads estate yet he remains in control and can recover the assets if desired. Just about no other structure exists which does that. AND he can name a successor owner such as son or daughter in law.

OH and it's tax free.
Old 05-05-2019, 02:25 PM
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Originally Posted by On the Half Shell View Post
I just looked at the FL pre-paid plans earlier today, what I can't figure out are the following:

1. Is this run by the State or a some private company?
2 Are the funds I paid insured?
3. If my child gets accepted to the most expensive university in FL, will my plan cover it?
4. If my plan would cover #3 above, then what happens when she attends the cheapest school in FL? Am I refunded some money or did I subsidize someone else's kid to go to Univ of Miami?
5. Are private schools like Univ of Miami included in these FL pre-paid plans?
1 Most of these are state run
2 no no and no
3 yes for state universities
4 no. You are buying an assurance the child can go to any fla state school. This is a most excellent question. You aren't subsidizing anyone else but this in an extremely important area to discuss prior to investing.
5 No.... But you can use your credits for private colleges both in and out of state. In most cases at the highest tuition payout rate, see 4
Old 05-05-2019, 02:29 PM
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Originally Posted by On the Half Shell View Post
I just looked at the FL pre-paid plans earlier today, what I can't figure out are the following:

1. Is this run by the State or a some private company?
2 Are the funds I paid insured?
3. If my child gets accepted to the most expensive university in FL, will my plan cover it?
4. If my plan would cover #3 above, then what happens when she attends the cheapest school in FL? Am I refunded some money or did I subsidize someone else's kid to go to Univ of Miami?
5. Are private schools like Univ of Miami included in these FL pre-paid plans?
5. In my case, my parents set up the Florida prepaid with the 4 year university plan, I ended up going to a private school, I forget the exact amounts but tuition was like $300 a credit hour and Florida prepaid covered around $60 a credit hour. Fortunately they also had a 529 that helped a lot, and I took loans out for the rest. For my child I only did a 529.
Old 05-05-2019, 02:29 PM
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Originally Posted by fireisland1 View Post
first Grandchild is coming soon. I know very little about investing so I need some guidance. I would like to start an investment with 5k and add to it each month. Maybe $500/ month .
Your employer might have a 529 plans available that will do deductions from your payroll through a service like Gradvisor.com. Also, there are online guides that rank various 529 plans based on return, expense ratio, etc. You can invest money in 529 plans outside of your state based on performance. Choose a good one and start putting some money away. Great idea.

Old 05-05-2019, 02:35 PM
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What if the child does not go to college? What happens to the 529? My sons grandmother left him $5000.00 in a 529. Thankfully he did go to college and graduate in Petroleum Services for both E&P and Safety. What happens if said grandchild goes to college but doesn’t require all of that money for tuition. My son qualified for TOPS so that was a help but his apartment rent, utilities, food, tuition and books cost us $65000.00 total for 4 1/2 years. He was able to graduate debt free. Also, as mentioned above, what happens if other grandchildren come along. I’m glad you are able to do this. Us, not so much, we have 9 grandkids and the parents are not done yet, also have one last child getting married next year.

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