Getting a Head Start on College Savings – Pierson Wealth Management

Before you throw your hands up and send junior job hunting, consider a few strategies to prepare for higher education costs.
First, take advantage of time. The time value of money means the money in your pocket today is worth more than the same amount tomorrow because it has more earning potential. If you put $100 a month toward your child’s college education, after 17 years, you would have saved $20,400. But that same $100 a month would be worth over $32,000 if it generated a hypothetical 5-percent annual rate of return. The earlier you start, the more time your money has to grow.
Second, don’t panic. Every parent knows the feeling – one minute, you’re holding a little miracle in your arms, the next, you’re trying to figure out how to pay for braces, piano lessons, and summer camp. You may feel like saving for college is a pipe dream. But remember, many people get some sort of help in the form of financial aid and scholarships. Although it’s difficult to forecast how much help your student may get in aid and scholarships, these tools can provide a valuable supplement to what you have already saved.
Finally, weigh your choices. There are a number of federally and state-sponsored, tax-advantaged college savings programs available. Some offer prepaid tuition plans, and others offer tax-deferred savings. Many such plans are state-sponsored, so the details will vary from one state to the next. A number of private colleges and universities now also offer prepaid tuition plans for their institutions. It pays to do your homework to find the vehicle that may work best for you.
As a parent, you teach your children to dream big and overcome obstacles. By investing wisely, you can help fund their higher education—and smooth the way for them to pursue their dreams.
This hypothetical example is for illustrative purposes only. Actual results will vary based on market conditions, fees, expenses, and other factors. All investments involve risk, including possible loss of principal.
Advisory services offered by Investment Advisory Representatives of RFG Advisory, LLC (“RFG Advisory “or “RFG”), a registered investment advisor. Pierson Wealth Management and RFG Advisory are unaffiliated entities. California Life License #212121

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