Early Years (0-4 years)

Planning your child's financial future today can help you ease the burden of tomorrow's tuition bill. Stocks and bonds, which historically have provided the highest rate of return, have become an attractive investment for parents today. With stocks and bonds comes some risk, but by investing when your child is young, the performance of your investment over the long-term may average out. The time horizon method will help ride out the occasional bear market. For example, if you annually invest $1200 per year, for 18 years, at an 8% average annual rate of return, the investment will be valued at an estimated $48,009 according to www.SallieMae.com.

If you start early, you can allow your investment to grow in more growth-oriented investments, which typically offer the highest possible rate of return over time. As college gets closer, you may want to choose a more balanced approach, moving away from aggressive growth and growth funds into fixed income and growth of income to avoid steep or frequent price fluctuations. When your child is a year or two away, or when your child is currently in college, you may want quick and easy access to your money in a money market account, while reducing your exposure to risk, if possible.

What's It Going to Cost?
The Student Loan Marketing Association (Sallie Mae) offers investors easy to use calculators to estimate future college expenses. These will provide you with a ballpark estimate based on expected cost increases. You can access these calculators on the web at www.collegeanswer.com/paying/content/pay_college_costs.jsp.

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