Today’s young parents are a smart lot. Modern families are more child-centered than the previous generations. They plan well ahead, especially, when it comes to their children’s education. Education is getting costlier by the day and you need to plan ahead to meet the future educational expenses of your kids. While other financial investments, such as retirement plans are also given due importance, investment plans for college students seem to be their number one priority.
There are also several websites like mutualfundhelper.com that provide a detailed view on mutual fund investments, their benefits and the risks involved in them. However, the information on investment plans for college students is scarce in the internet when compared with other investment options.
The investment industry has been for quite some time promoting the qualified tuition plans like 529, which is a tax-free plan that help you save to meet the expenses at college. Let us have a detailed look at how the plans can be of help in the future. When it comes to exploring the 529 plan, there are two types namely Prepaid Tuition Program and College Savings Plan, which could be handy at the time of need. Before choosing either of the benevolent financial plans, it is important to thoroughly examine the advantages and disadvantages of both and choose the one that best fits your lifestyle.
In general qualified tuition plan enables you to save money for expenses to be met at schools or colleges. It can be utilized for both undergraduate and vocational programs. Prepaid Tuition Program option involves in setting aside a fixed sum as agreed by the program manger to meet the expenditure of a specific time period. This however is limited to a few schools and can be used by the student to cover the expense with the fund. In case the participant prefers a different school, then the sum invested can be withdrawn as per the contemporary market value and utilized to meet the expenses at the school preferred by the participant.
College Savings Plan on the other hand is also called as the classic version of the qualified tuition plan is almost similar to that of an IRA or 401(K)s. It enables the specified recipient to use the funds at any eligible school. While the sponsors offer a variety of choices, you need to wise while picking your choice. The major difference between the two options is that the investment burden of the college savings plan must be shouldered by the participant of the program. While both College Prepaid Plans and College Savings Plans are tax free investments, the sum utilized for qualifying education expenses alone are tax free and any remaining amount is taxable in the future.
It is wise to consult a financial expert, if you are planning to invest for the educational purposes of your children. Different states offer different plans and your financial consultant will be able to provide you with accurate information and guide you to the right plan you may require.
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