3 Ways to Invest in Your Child's Future

Setting your child up for a successful future is an important topic of discussion that many parents consider and carefully plan for.  The good news is that you don't need to be one of the wealthy to start investing in your child's future.  The following are some options to think about and potentially further research to see if they fit with your future plans and goals.

College Savings Plan

 

Creating a college savings plan for your child is a popular option among many parents.  With the growing expenses involved with sending your child to college it is easier to get a head start on saving when your child is younger so that the associated costs are not such a hit later on.  The 529 college savings plan can be used for educational related expenses using tax free withdrawals.  Every state offers at least one form of a 529 plan so you may want to further research your options.  Under President Trump's tax plan that passed you can now also use funds from your child's 529 plan to cover private school tuition for grades K-12.

Coverdell Education Savings Account

Another option when it comes to saving for your child's education is starting a Coverdell education savings account.  While similar to a 529, the Coverdell education savings account can also be used for additional educational related expenses such as uniforms and tutoring.  One main difference is that the Coverdell education savings account limits annual contributions to $2,000.  For those wanting to set aside more per year towards their child's education savings, the 529 plan may be a better suited option.  As similar to the 529 account, withdrawals are tax free as long as the funds are being used to cover what's considered appropriate educational expenses.

Invest in Bonds

 

For parents looking for a more secure way to save for their child's future education, investing in bonds can be an attractive option.  Treasury bonds are backed by the federal government so they are a solid bet for many families looking to invest in their child's future.  For Series EE and Series 1 bonds interest is tax free when it is used for qualifying educational expenses.  If you also have a 529 plan for your child or end up getting one later you can cash out your bonds and deposit the money into a 529 plan easily.

Saving for your child's education is something that is recommended to start as early as possible.  Knowing how much you need to invest each year towards these future expenses can be confusing.  It is recommended that you save for at least 1/3 of the child's future educational expenses, as the other 2/3 of the costs can be made up with grants, loans, or even scholarships.  Research potential schools and what costs are involved to get a better idea of what your individual savings plan may look like.  When it comes to investing Harry I Martin Jr and The Martin Group know what it takes to make solid investments work.  Be sure to research all of your options to make the most informed decision for your family when it comes to saving for college.