Your family started to grow, and you have a baby, or a toddler, or a young child, the time to start planning for their future is now. When you can plan ahead of time, and with a well planned investment you can insure your children with have a bright future.
If you talk to your broker he can advise you on several options, and here are just some for you to evaluate: You can start a 529 plan, these are state sponsored, tax sheltered accounts where you and family members can deposit and see grow and stay tax free as long as the money is used for educational expenses, such as; tuition, books, boarding, school supplies and the like. And if your children don’t use all the money you can change the beneficiary to their children.
All states have 529 plans, and you use this invested money in any school in all states. Some states have tax deductions to residents who want to attend college, or want to add it to their 539 plan. If you want to start with the lowest cost supplier of 529 plans, we recommend New York’s 529 plan, which to start only asks for $25, when other plans require at least $3000. If your children get a scholarship, they can withdraw from their account all or some of the money, and they will have to pay taxes, but only on the gains, your main deposit will not be taxed, and also if your child decides not to go to school, they can withdraw too, with some paperwork, and the gains will be taxed at 10%, and again, your mail deposit will not be taxed.
If you feel like using a 529 plan your money will be trapped and not available to your children, then you always have the option of a trust fund. This time you can define what percentage of your deposit will be available to your children and when. For example you can decide that at 25 years, they will get ½ of the amount and the other half once they reach 30. But trust fund does get taxed.
It’s always a good idea to plan for your and your family’s future. Talk to your financial adviser, he/she will help you advising you the best option to save or invest.