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Stock Investing for College

The possession of a bachelor's degree sufficiently increases your chances of earning more in your future job. Calculated over the years the difference between what you earn by possessing a bachelor's degree and a high school diploma can result in a high number. Therefore, the financing in your children's education should not be viewed as another expense to cover, but instead as an investment in their future financial well being.

Long-term investing is in the base of realizing the benefits of education saving. Therefore, the grabbing of growth-oriented opportunities (e.g. domestic and international equity mutual funds) may be the recommended investments you should strive to. In order to increase the returns on you investments you can combine the latter with fixed-income mutual funds. In this way you will greatly increase the chances of achieving your long-term savings goals.

Tuition fees at private and public universities greatly differ. However, they are not fixed over the long-term. That is why, even if you now have the money to provide for your child's education needs, tomorrow inflation rates may greatly increase tuition fees and reduce the value of the education assets you have allocated. It has been proven that tuition fees will continue to rise in the near future. Therefore, you should find ways for your resources to keep the pace of the rising tuition fees.

How can this be done?

One of the ways in which you can avoid your resources lagging behind the pace of tuition increase is through the investment in stocks. You can include in your portfolio for education financing small- and large-capitalization stocks. Historically, most of them have managed to beat money market funds and government bonds despite the fact that they haven't managed to outpace inflation rates. However, you should keep in mind that past performances are not an indicator of future successes, but still you can make some reasonable conclusions based on them.

Since bank accounts provide lower rates of returns, you should consider the investing in stock markets in order to be able to meet the education expenses of your child. Stocks provide for greater returns and at the same time the amount of contributions you should make is lower than that you should make in a traditional bank account.

Therefore, the next time you make a consideration on how you are going to finance your children's education, include the option of stock investing in your plans.

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