Request: Student College Savings Account Guidance

ritholtz

I am looking for guidance on student college savings account. I need to start doing lot of thing financially (student collage tax saving account, life insurance, mortgage insurance, investing 401k and investing money in bank account). Met a person in Edward Jones. He is asking for 5% commission to start student education saving account. If I open account with 20k, i am going to start with negative 5% lost from day one. I am looking for some alternatives where i won’t loose much money to start saving for student education.

Thanks

fivetalents

@ritholtz said in WELCOME NEW USERS !!! Ask your questions here! (flame-free) !!!:

I am looking for guidance on student college savings account. I need to start doing lot of thing financially (student collage tax saving account, life insurance, mortgage insurance, investing 401k and investing money in bank account). Met a person in Edward Jones. He is asking for 5% commission to start student education saving account. If I open account with 20k, i am going to start with negative 5% lost from day one. I am looking for some alternatives where i won’t loose much money to start saving for student education.

Thanks

Hello @ritholtz. This is a question better suited as a separate thread in the finance forum. Would you mind if I moved your post there as a new thread? I think you’d get much feedback there.

ritholtz

@fivetalents
Sure. Feel free to move it to appropriate forum.

Thanks

fivetalents

@ritholtz said in Request: Student College Savings Account Guidance:

@fivetalents
Sure. Feel free to move it to appropriate forum.

Thanks

Done. And I should have said it’s own thread (not forum), sorry.

You shouldn’t have to pay a commission at all. There are so many alternatives, depending on how much risk you want to take.

If you’re interested in investing the money in mutual funds, stocks, bonds, or CDs, then look no further than a good discount broker. You can invest in many mutual funds, ETF’s, and new-issue CDs free of charge. Normal trading commissions would apply for stocks and bonds. Here are a couple of places to get started:

http://www.schwab.com/public/schwab/investing/accounts_products/accounts/college_savings/529_plan

https://www.fidelity.com/529-plans/overview

Disclaimer: I do have accounts (regular brokerage & Roth IRA) at both Schwab and Fidelity. I’m satisfied with the service at both places.

Here’s an article that’s pretty easy on the eyes with some other names and reviews:

https://www.nerdwallet.com/blog/investing/best-online-brokers-for-stock-trading/

We decided against putting money away in an account designed specifically for college. The penalty is too high (10%) if your kids don’t go to college, or try to go and don’t do well enough to continue. In our case, it was the right decision, but YMMV.

meed18

google your state’s 529 program and start there. no need to go through edward jones and give them your money. they won’t do anything with it that you can’t do on your own.

ritholtz

Hi gwraigty and meed18,
Thanks for the information.

mom2jel

This is what I did…
Took two $5k gifts from a grandmother and put them into a Vanguard mutual fund account that I liked (Healthcare) around 15-18 years ago. We never added any more to it, and haven’t taken out anything; account is in my name. I just looked and it is at $112k. (Oldest son had full scholarship, so his share of this I decided will be towards a home down payment).
Also set up 529 account through our state with T.Rowe Price, return hasn’t been that great - but the tax advantages are good. I make sure to pay the college directly from the 529 account online so that the IRS doesn’t get excited.

Is this college fund for a young child? or yourself?
My personal opinion is to stay away from investment brokers, since you are here asking then you are smart enough to do it yourself.
If I were you, I would split the college savings between your state’s 529 and a good mutual fund. I’m partial to Vanguard and Mairs & Power funds because of their low fees. Fidelity, T.RowePrice are good too. Get the latest issues of Money or Kiplingers Magazines from you library and browse through them, they always have lists of top mutual funds. Once you find a few that you like, you can run the numbers on Morningstar to get another perspective.

Mortgage Insurance - don’t purchase (and if required by lending company, find out at what point you can drop it).
401k - only do if your employer matches; Roth IRA is better for the tax savings when you retire.
Life Insurance - only purchase if you have a home, spouse, children. Make sure it’s high enough to cover paying off the mortgage and your spouse can stay home with the children until they are 18. Chances are you won’t use it, so don’t make it too high that the yearly payment is a stretch for you. Check with your employer if they already offer this, you might be able to raise the $ by making a deduction from each paycheck.
Again - these are my personal opinions.