C
Claire
Guest
I'm going to be starting a 529 plan for my 7 month son.
I'm torn as to which plan is better.
Both plans you can use at any college in the country from a community college to Harvard. Both plans can be used for tuition, room and board, books, etc. Tuition in my state (WA) has been increasing 7% a year over the past 10 years.
Plan A: Prepaid Tuition. I purchase tuition for 18 years from now at today's price. If I purchase 1 year of tuition, he gets a year paid for in 18 years. (The tuition price is going to be based off the most expensive state school in my state, but can be used at any school anywhere). The downfall I see with this plan is that what if tuition is capped or only goes up 1% a year? That isn't a good return.
Plan B: Investment fund. This plan is basically a mutual fund with tax benefits. I put money in in a plan (I can be conservative or more risky with the investment). In 18 years whatever money is in there can be used for any college related expense as well.
In Plan B,. the downfall I see is if the stock market performs really badly over the next 18 years and I don't get good return either. Plus, what if tuition just skyrockets?
Which plan would you choose and why?
It's $5000. We probably won't be adding a lot over the years. It was a gift, and we want to use the money the best way possible.
I'm torn as to which plan is better.
Both plans you can use at any college in the country from a community college to Harvard. Both plans can be used for tuition, room and board, books, etc. Tuition in my state (WA) has been increasing 7% a year over the past 10 years.
Plan A: Prepaid Tuition. I purchase tuition for 18 years from now at today's price. If I purchase 1 year of tuition, he gets a year paid for in 18 years. (The tuition price is going to be based off the most expensive state school in my state, but can be used at any school anywhere). The downfall I see with this plan is that what if tuition is capped or only goes up 1% a year? That isn't a good return.
Plan B: Investment fund. This plan is basically a mutual fund with tax benefits. I put money in in a plan (I can be conservative or more risky with the investment). In 18 years whatever money is in there can be used for any college related expense as well.
In Plan B,. the downfall I see is if the stock market performs really badly over the next 18 years and I don't get good return either. Plus, what if tuition just skyrockets?
Which plan would you choose and why?
It's $5000. We probably won't be adding a lot over the years. It was a gift, and we want to use the money the best way possible.