Investment Advice: How to Send Your Child to College

Start saving a small amount at a time. At $25.00 a year you'll have close to $12,000.00 by the time your child is ready to leave the nest. You can make it automatic by signing up for monthly electronic transfers. Be sure to diversify your schooling portfolio: stash cash in a 529 savings plan like program. These programs have been earmarked for college. Spread the rest among mutual funds, bonds, and savings accounts. You are not obligated to opt for your home states 529. Remember, some plans have better returns than others, so go feel free shop around.

Ten years to go

Now that your child is older is likely that you've gotten a break on some expenses, like diapers and daycare. Before he or she finds new ways to drain your wallet, funnel those newly available funds into a college account. Since you are already used to using the money for child care you won't even notice the difference in your bottom line.

As college looms closer gradually move your mix of investments to a more conservative stance. Once your child is 8-9 years old, shift about half your college portfolio into less risky investments like bonds. Adjust the asset allocation in your 529 savings plan or any mutual funds, as well.

Five years to go

Consider prepaid tuition: Opt for the 529 prepaid education range and you can lock in today's tuition at your state's public schools. No matter how high the fees by the time your child applies, it will stay the same for you. You can buy shares worth a particular unit, such as a semester. These programs usually guarantee a good return without much risk. This makes them best for those with five years are fewer on to college. If your child decides to go elsewhere, the money is usually refunded.

Sign up for a reward great car that contributes to your 529 savings plan to enhance other relatives sign up as well. That way, a percentage of their purchases will be contributed to the fund.

One year to go

Seek scholarships: With more than three billion dollars to be had, raking in scholarship cash is the best way to give your bottom line a boost. Increase your child's chances of getting the money by focusing on funds with less competition. Ones with specific eligibility requirements will draw fewer applications. Your child's guidance counselor can help you find local grants or search for scholarships to online.

Leave your IRA alone

You can make early withdrawals for some education expenses without paying a 10% penalty. You will still have to fork over income tax. Moreover, the move can limit the benefits you get from tax credits and deductions for education.