New Parents and Investment

The same discipline, the same practicalities apply to young parents. The sooner you start saving for your child's college education, the less amount you have to save to achieve your goal.

So the first thing a parent needs to do is when they have their child is apply for social security number. And then consider opening up a 529 plan. And a 529 plan allows you to save up to, actually up to a couple of $100,000 in one year if you life. But you can save in it, in whatever amount you can save and the 529 plan typically will invest in, similar to a target fund. In other words, it would invest appropriately in a mutual fund knowing that in 18 years, you will need that money for college. And there is a lot of tax benefits, it grows tax free and then when you use it, when your child is 18 and you take, withdraw it for college there are no taxes as well.

So it's a wonderful benefit for parents because if you don't have to pay taxes along the way your money grows even faster. And of course when you pay 18 years later, you are probably in a better financial position and you will get that tax benefit. You don't have to pay for the withdrawals and for the college education.




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