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Start early to save for your child's education

A 529 college savings account can make tuition more affordable

You’re totally sleep deprived. More than a little overwhelmed. A fragile little human is crying for reasons that completely mystify you. And now you’re being told you need to start your newborn’s college fund before it’s too late.

As easy as it may be to ignore that investment advice … don’t.

“Opening a 529 college saving plan account to save for your child’s education when he or she is a newborn can give you more time to invest in their college fund,” said Matthew McCarthy, principal at The Vanguard Group, which manages the assets of New York’s 529 College Savings Program Direct Plan. Upromise Investments serves as Program Manager for New York’s 529 College Savings Program.

He and others are quick to say that it’s never too late to start saving, but starting early can give you a greater chance of success.

“Even if you experience modest growth in your 529 plan account, opening an account before your child turns 1, as opposed to waiting until he or she is, say, 8 or 9 years old, can make a big difference in your return,” he said.

And while many experts encourage any form of saving for college, they often see extra advantages when you save with a 529 plan versus other investment options.

“A 529 plan offers benefits you can’t get in other college savings vehicles, the fees can be low, and you can typically choose from a wide range of investment options – all of which help makes it an efficient and attractive way to build your college fund,” said McCarthy.

Perhaps the single most compelling feature of the New York plan is the state income tax deduction it offers to New York residents.

“New York’s plan offers an annual deduction of up to $5,000 to state residents who are account owners,” McCarthy said, “and $10,000 for married couples filing jointly. And that feature is available every year you make contributions to the program.”

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