College Fund for Newphew

Ardentfrost · 10-21-2007, 02:18 PM

Just wondering if anyone has any first hand experience with investing into college for a child, nephew/niece, etc... I've done a little looking around, but haven't found any single good resource to give me the options.

Here's the situation: I have twin nephews almost a year old, and my mom is pregnant now to boot (due in March). My mother and her husband are especially bad with money, and my sister and her husband are working to get in a better financial place. Rather than just hope that sometime in the next 18 years my family suddenly becomes good with money, I want to start college funds for my nephews and new half-brother. I'd like to do the same when my brother and his wife decide to have kids.

Ideally I'd like the account to be moderate-risk interest bearing (in the 8-10% range or better on average), no access given to the parents (like, just me and the kid, and preferably only when the kid turns 18), and any amount of tax sheltering would be awesome, though that's probably impossible. I'm skeptical of using a government solution because who knows what'll happen to our economy in the next 20 years, and the 529 College Savings plans I've seen only apply to public schools in the state of the plan (that's also not good because I live in Georgia and they all live in South Carolina).

Anyone got any suggestions or information?

EDIT: How the hell did I misspell Nephew?

RMNIXON · 10-21-2007, 04:09 PM

Year old twins and mom is pregnant?

Lets change Newphew to NewMANY!

I am no expert, but the good news is long term, 18+ years you are talking about. What you probably want to look at is the Mutual Funds that fluctuate with the economy but over the long haul look good. Look at a 10 year record, not what happened in the last six months. The kind of solid stocks that earn well over time. Or any safe interest account is also good. I have money invested both ways.

And be a good brother!

7960 · 10-21-2007, 04:17 PM

Originally Posted by Ardentfrost

EDIT: How the hell did I misspell Nephew?

theyr'e only a year old so they are kind of new

edit: 529 is the way to go.

you can switch state plans

529 Plan FAQs - Kiplinger.com

New rules make it much easier to shift from one state's plan to another. In the past, this was allowed only when changing the beneficiary of the account. Now you can move money as often as once a year for any reason.

Contact the plan you'd like to switch into to get the forms you'll need to make the transfer. Because many states continue to improve their plans, it's smart to check out the options every year or so.

Ardentfrost · 10-21-2007, 04:40 PM

well, the other thing about the 529 is that it restricts full benefit to public schools. Not that my nephews or new brother are going to be going to private schools, but leaving the option more viable would be preferred.

I have been thinking about mutual funds, but how well does that translate into giving the money to the kid when he turns 18? If it's just my mutual fund, I gotta pay major taxes when giving it to the kid, and I don't know how ownership of those sorts of things works.

WickedLou9 · 10-21-2007, 06:04 PM

Originally Posted by 7960

theyr'e only a year old so they are kind of new

edit: 529 is the way to go.

you can switch state plans

529 Plan FAQs - Kiplinger.com

New rules make it much easier to shift from one state's plan to another. In the past, this was allowed only when changing the beneficiary of the account. Now you can move money as often as once a year for any reason.

Contact the plan you'd like to switch into to get the forms you'll need to make the transfer. Because many states continue to improve their plans, it's smart to check out the options every year or so.

Yeah we opened a 529 for Hannah when she was about 6 months old. We still won't have enough to pay for college...

It's ridiculous. I figured out I would have to start with like 5 grand and then contribue about 400 dollars a month until she is 18. Then we would have enough for college. How insane is that.

Ardentfrost · 10-21-2007, 06:13 PM

Originally Posted by WickedLou9

Yeah we opened a 529 for Hannah when she was about 6 months old. We still won't have enough to pay for college... It's ridiculous. I figured out I would have to start with like 5 grand and then contribue about 400 dollars a month until she is 18. Then we would have enough for college. How insane is that.

What's the return like? I'm not going to fully pay for the college of them, however if I can start saving now and give them a nice head start for the costs, maybe they can make up the rest of it in loans or from their parents (which is completely NOT going to happen in the case of my mom).

7960 · 10-21-2007, 07:00 PM

Originally Posted by Ardentfrost

What's the return like? I'm not going to fully pay for the college of them, however if I can start saving now and give them a nice head start for the costs, maybe they can make up the rest of it in loans or from their parents (which is completely NOT going to happen in the case of my mom).

$500/month from birth is $300k

4 year public university in 18 years will most likely going to average over $50k/year

depressing....

WickedLou9 · 10-22-2007, 12:07 AM

Originally Posted by Ardentfrost

What's the return like? I'm not going to fully pay for the college of them, however if I can start saving now and give them a nice head start for the costs, maybe they can make up the rest of it in loans or from their parents (which is completely NOT going to happen in the case of my mom).

It's a product from Fidelity that is based on age. So since she is only 9 months now it starts off probably close to 100% equty, so it should track the markets.. then as she gets older it will become more conservative