Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Hi, my daughter just inherited about 20 k from grandfather.she's 8 yrs old.Just wondering the best place to put money for 10 years for possible college fund. pros & cons for college funds & should I put in something safe because this will be most of her savings or go for growth. thanx
The biggest con for a "college fund" is that is all you can use it for without penalty. I would put it into a money market account that is well allocated but more bonds than stocks. That way you have access to the money if needed for something other than college like a wedding, down payment on a house, etc. A college fund is simply a money market that you can only use for education expenses. There are some tax benefits and unless you live in a state that has a good matching program, college plans are too restrictive.
Since it's her money and the tax rate would be really, really low it should remain liquid but under some kind of private bank management. It's enough to send half somewhere and half somewhere else, and see how they grow.
At her age you can be extremely high risk with half, such as my son's Asian fund back in the day. Pretty much paid his way through. And be conservative and long term with the other half.
I wouldn't be high-risk at all. 10 years is NOT very long. The market it way too unpredictable. I would just get her some CDs at your bank and just keep rolling the money into new CDs as they mature (make sure your bank is FDIC).
CDs are SAFE, SECURE, and INSURED whereas "the market" is not. You can lose her $20K overnight in the market. With a CD, you're guaranteed a return on her money and her money will still be there when she turns 18. The amount she'll gain on the CD may not be a ton of money but she'll be guaranteed to have more than what she has now whereas with "the market" she may have a lot less or even zero when she turns 18.
Remember that this is her money not yours and if you do something risky like putting it in "the market" and lose a bunch, she may be pretty peeved at you when she finds out! You should also let her know about the money now and let her know what you're doing with it and why.
Series I savings bonds - www.treasurydirect.gov. Super-safe, AAA rated savings bonds, that is as safe as you can get. You can buy $10K per year, per individual.
I agree... I think Savings Bonds or CDs are the best bet. I never understand why everyone screams "invest in stocks/bonds".. Has anyone looked at the history of the stock market? Lately, it's even worse!
I worked at a company and we had several guys who had lost their "stock market" jobs when it all hit the fan several years ago. They all thought it was a big joke and so hilarious that their former jobs consisted of "playing with other people's money all day" and would take insane risks with other people's money and didn't really care if they gained or lost because "in the end, it all evens out anyway and [we] still get our big year-end bonus"
I wouldn't trust the money in my piggy bank to anyone "in the market". I certainly wouldn't take my child's inheritance money and give it to them.
Hi, my daughter just inherited about 20 k from grandfather.she's 8 yrs old.Just wondering the best place to put money for 10 years for possible college fund. pros & cons for college funds & should I put in something safe because this will be most of her savings or go for growth. thanx
It depends. Is this money she is inheriting necessary for her college? Or, are there existing plans to finance her college education?
If this money isn't critical, by all means, stick it in stock mutual funds, perhaps a tax efficient mutual fund or an aggressive growth fund.
It actually might make sense for her to gift it to you (sounds crazy?). That way those assets are yours, not hers Why?
Something to consider, perhaps to find a work around, if those assets are hers, it could reduce the likelihood that she would qualify for financial aid at college time. This as opposed if those assets were the parents' assets which are weighed not as heavily.
I wouldn't be high-risk at all. 10 years is NOT very long. The market it way too unpredictable. I would just get her some CDs at your bank and just keep rolling the money into new CDs as they mature (make sure your bank is FDIC).
CDs are SAFE, SECURE, and INSURED whereas "the market" is not. You can lose her $20K overnight in the market. With a CD, you're guaranteed a return on her money and her money will still be there when she turns 18. The amount she'll gain on the CD may not be a ton of money but she'll be guaranteed to have more than what she has now whereas with "the market" she may have a lot less or even zero when she turns 18.
Remember that this is her money not yours and if you do something risky like putting it in "the market" and lose a bunch, she may be pretty peeved at you when she finds out! You should also let her know about the money now and let her know what you're doing with it and why.
cds are garbage all they do is guarantee you get killed by inflation
10 year isnt super long but it's not that short either
put it in some vanguard index funds- if everything goes wrong it will still be worth more than the cds would have been
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
