Learn More about this State-Sponsored Investment Account for Educational Costs
As a parent, you want the very best future for your children – but what happens when that future comes at a substantial cost? If you dream of a private school college education for your kids, it just might.
For parents who are hoping to cover the partial or full costs of college, a 529 college savings plan may be a useful tool. Designed specifically for educational costs, a 529 plan is a state-sponsored investment account that offers many advantages. However, it is easy to make missteps with these plans that could cost you big down the road, so it’s important to learn all you can before starting one.
Understand Plan Variations
As with many other financial instruments, it often pays to shop around. All fifty states and the District of Columbia offer at least one 529 plan, and you are not necessarily limited to choosing your state’s plan. You will want to consider the differences among plans, especially in these categories:
Stock returns are volatile, but nearly a century of bull and bear markets shows that the good times have outshined the bad times.
- From 1926 through March 31, 2020, the S&P 500 Index experienced 17 bear markets or a fall of at least 20% from a previous peak. The declines ranged from —21% to —80% across an average length of around 10 months.
- On the upside, there were 17 bull markets or gains of at least 20% from a previous trough. They averaged 56 months in length, and advances ranged from 21% to 936%.
- When the bull and bear markets are viewed together, it’s clear equities have rewarded disciplined investors.
Five Considerations Before You Purchase a Larger Home
A lot has been written and discussed over the years about the benefits of downsizing your home when you reach a certain point in your life, typically retirement or when your grown children move out. However, there are many people in a different phase who are currently facing the exact opposite scenario – upsizing.
As you contemplate upgrading your starter home, maybe your family is growing and requires more room, or you would simply like a more spacious floor plan, upsizing is a big step. The decision to purchase a larger home, and likely take on a larger mortgage payment, requires thoughtful consideration.
Below, we discuss five things you may want to think about as you make this important move.
1. Understand ‘Why?’
People upsize their homes for a variety of reasons. You may want to upsize because you need more bedrooms for your growing family, you may be running out of storage space and in a desperate search for more, or you may have experienced a recent increase in your income and want to upgrade your lifestyle. Whatever the reason, make sure it is clearly defined. Ask yourself whether you are trying to achieve an intrinsic goal by upsizing, rather than an extrinsic one, in keeping up with the neighbors’ upgrades, for example.
Your Future Is Closer Than You Think
Does your retirement feel like a lifetime away? If so, you are not alone. Many millennials are very focused on their careers, paying off student loans, and juggling a social life with growing family commitments.
These things are all important and deserve attention, but failing to put energy into retirement planning is a mistake that can cost you dearly in the not-so-distant future. Why? It’s all about the magic of compound interest. The longer your time horizon to save, the better chance investments have to earn interest upon interest; theoretically increasing at an exponential rate.
With an eye toward maximizing compounding in your retirement planning strategy, here’s how to get started saving right now.