A Gift That Keeps on Giving
Congratulations! You’re expecting a new addition to your family, or maybe you are celebrating the birth of a newborn. Open a 529 Plan as soon as possible.
Dan Solin's Newsletter, May 11, 2017
Congratulations! You’re expecting a new addition to your family, or maybe you are celebrating the birth of a newborn. Here’s advice that will change your life and your child’s forever.
Open a 529 Plan as soon as possible. 529 college savings plans are funded with after-tax dollars. They’re run by individual states. They’re a wonderful vehicle for saving for a college education.
The primary benefit of these plans is that, when the funds are used for qualified college expenses, withdrawals (including appreciation) are free of income tax. That’s a big deal.
Some states offer state tax deductions if you contribute to the plan run by that state. A few states offer this deduction if you contribute to the plan of any state. You can find sound advice about selecting a 529 Plan here.
Here’s what I want you to do. Tell friends and family you’ve set up a 529 Plan. Ask them, in lieu of gifts for the newborn or annual birthday presents, to contribute to this Plan. You’ll be surprised how quickly the fund will accumulate assets.
Giving your child a college education without the burden of student loans is the gift that keeps on giving. The key is to start early and contribute regularly.
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Ask Dan
Question from Sarah:
I’m worried about the performance of my index fund portfolio in a bear market. Do actively managed funds outperform when the market tanks?
A number of studies have found no evidence of outperformance by active mutual fund managers in a bear market. A 2008 study by Standard & Poor’s concluded, “the belief that bear markets favor active management is a myth.”
Recommended resource of the week
Each week I’ll recommend a resource that provides sound investing advice.
This week’s pick is: https://whitecoatinvestor.com
Why I like it
White Coat Investor is run by Jim Dahle, MD. Jim is a board certified emergency physician. His web page is a rich source of sound financial advice for all investors.
