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I have a few questions about saving for my DD's future.
First the Gerber Grow up plan. Have any of you gotten for your children. I just signed up today for the $15,000 plan but I feel weird taking out LIFE insurance on a baby, I dont know why it just feels strange, but I like that it build cash value to help with college later on.
Also I want to set up a savings account for her to use when she goes to college. I'm lost on where to start. I'm not a wealthy person but I was thinking of putting $50 a pay into an account so $100 a month as well as an annual deposit of $2000. Does that sound like enough? Should I make it a CD or just a custodian account?
Any advice would be helpful, i'm trying to be the best I can be, and I know when I left home all I had was the moeny I had earned from working so I want to be sure to have a nice little nest egg for DD so she doesnt have to take out a bunch of loans and things.
I have a few questions about saving for my DD's future.
First the Gerber Grow up plan. Have any of you gotten for your children. I just signed up today for the $15,000 plan but I feel weird taking out LIFE insurance on a baby, I dont know why it just feels strange, but I like that it build cash value to help with college later on.
Also I want to set up a savings account for her to use when she goes to college. I'm lost on where to start. I'm not a wealthy person but I was thinking of putting $50 a pay into an account so $100 a month as well as an annual deposit of $2000. Does that sound like enough? Should I make it a CD or just a custodian account?
Any advice would be helpful, i'm trying to be the best I can be, and I know when I left home all I had was the moeny I had earned from working so I want to be sure to have a nice little nest egg for DD so she doesnt have to take out a bunch of loans and things.
Thanks Mommys and Daddys!
I think that's plenty of money for her to start college . Once she is old enough you could do like my parents did by taking away a portion of her allowance, and paycheck when she gets a first job to sock away in there as well or at least in her own account. But unless she is going to an ivy league school that's a good amount for a solid school . And even if she does if you factor in scholarships and such she would still end up loan free =D.
I have a few questions about saving for my DD's future.
First the Gerber Grow up plan. Have any of you gotten for your children. I just signed up today for the $15,000 plan but I feel weird taking out LIFE insurance on a baby, I dont know why it just feels strange, but I like that it build cash value to help with college later on.
Also I want to set up a savings account for her to use when she goes to college. I'm lost on where to start. I'm not a wealthy person but I was thinking of putting $50 a pay into an account so $100 a month as well as an annual deposit of $2000. Does that sound like enough? Should I make it a CD or just a custodian account?
Any advice would be helpful, i'm trying to be the best I can be, and I know when I left home all I had was the moeny I had earned from working so I want to be sure to have a nice little nest egg for DD so she doesnt have to take out a bunch of loans and things.
Thanks Mommys and Daddys!
Come to our lair, the investing board of C/D. You will get what's best for you. Some folks come there all the time looking for input and go out with a bunch of answers.
Well, I have a handful of investment accounts and have been mulling converting one of that into a future kiddie account, exactly as my father did.
He opened an "accumulation" account on the day he got married. He told me that. He didn't get to use that on me but he needed it for my brother and he didn't have any major headache to put him through college.
My opinion is that whatever you can afford to save towards college now is going to help later. Not sure if you are aware of 529 college savings plans, but here's a link, in case you aren't familiar and wanted to explore a different option: An Introduction to 529 Plans
I think most finanical planners would agree that the Gerber plan isn't the best deal for most parents.
I know that you are really young so this isn't on your radar - but you really should only be worrying about funding your own retirement before funding her education. Sound selfish? The truth is that she will be able to get scholarships, financial aid and loans for her education..... none of those thing exist for retirement!
The Gerber plan isn't the best but having life insurance on kids isn't about getting "rich" when they die. Yes, you want to have some money to pay for a funeral, etc. if that were to happen but most good life insurance policies for kids have a component where they can buy more life insurance as adults without having to submit to medical exams. Since you don't know what will happen to their health, you have just secured the right that they can take care of THEIR families.
As for saving for college, I think it would be best to talk to a financial planner and look at all aspects of your finances to make the "best" determination for you but typically a 529 plan, especially if you live in a state with matching funds, is a good way to go.
I am assuming you live in Ohio based on your name. Here is the information for the Ohio 529 plans. It looks like you can deduct up to $2000/year on your taxes for contributions to a 529 plan, as can grandparents, aunts, uncles, etc. if they also live in Ohio and put money into a 529 for your kids.
If you just put money into a savings account, the interest earned on that money is taxed, what little bit there really is, but with a 529 the money grows tax free and can be used tax free for qualified education expenses, which is where the advantage lies.
Well I was recently speaking to someone about this. On first thought, a 529 would look the best. BUT when financial aid is considered, the percent of the 529 that is considered available is very high. My buddy who I respect in terms of financial acumen, recently was advised by his financial advisor to to put more money into his own retirement savings. The amount of his own retirement savings expected to be contributed was much lower than the 529. So you can disperse or borrow against retirement money and still qualify for aid.
I am not a financial adviser. I don't even play one on tv. But this is a good thing to ask your financial adviser.
The thing with the 529, if she so chooses (i pray not) to not go to college then from what I read in the link ewea gave is that your penalized heavily. I hope she chooses to go to college but it's not a 100% sure thing. Talking to a financial advisor sounds like the road to take. Thanks!
The thing with the 529, if she so chooses (i pray not) to not go to college then from what I read in the link ewea gave is that your penalized heavily. I hope she chooses to go to college but it's not a 100% sure thing. Talking to a financial advisor sounds like the road to take. Thanks!
I definitely agree talking with a financial advisor is your best bet. I am reasonably sure the 529 can be applied towards post-HS education in a wide variety of settings (not just traditional college), but that may vary by state, I'm not sure. Either way, I think it's great that you're thinking about DD's future!
Well I was recently speaking to someone about this. On first thought, a 529 would look the best. BUT when financial aid is considered, the percent of the 529 that is considered available is very high. My buddy who I respect in terms of financial acumen, recently was advised by his financial advisor to to put more money into his own retirement savings. The amount of his own retirement savings expected to be contributed was much lower than the 529. So you can disperse or borrow against retirement money and still qualify for aid.
I am not a financial adviser. I don't even play one on tv. But this is a good thing to ask your financial adviser.
That is usually NOT good advice unless you are going to be 59 1/2 when your child goes off to college. It is good advice if your child is going to college soon and you are trying to reduce your taxable income but to put college savings money into a 401K or IRA's mean you pay tax on the withdrawals and a penalty for early withdrawal. There are some provisions in a Roth IRA for spending for educational expenses but there are limits to that as well. Also, any withdrawals from a retirement account DOES show up as income on your taxes so it looks like you have more money then you do for financial aid for the next year.
Quote:
Originally Posted by OhioChic
The thing with the 529, if she so chooses (i pray not) to not go to college then from what I read in the link ewea gave is that your penalized heavily. I hope she chooses to go to college but it's not a 100% sure thing. Talking to a financial advisor sounds like the road to take. Thanks!
You are not penalized heavily after age 65, it is just taxed as ordinary income, just like IRA withdrawals would be. You can also change the beneficiary on the account to another child, to yourself, to a future grandchild. As long as the money is spent on educational expenses, there is no tax. Say you want to go to culinary school when you retire, you could use the funds for that, for example. It doesn't have to be a 4 year college. Yes, it does diminish federal aid having that money available, but if you have the money available, you don't need the aid either.
Like I said earlier, talk to a financial planner in your area for the best information because none of us know your entire financial picture. I will say that saving for a child's education without securing your own retirement first is a bad idea no matter where you are or what your financial situation is.
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. Once she is old enough you could do like my parents did by taking away a portion of her allowance, and paycheck when she gets a first job to sock away in there as well or at least in her own account. But unless she is going to an ivy league school that's a good amount for a solid school 
. And even if she does if you factor in scholarships and such she would still end up loan free =D.
