College Education

Your Children’s Education is One of the Most Important Things You Will Ever Pay

Annual college education costs in 2007 ranged anywhere from $9,000 to over $30,000. These costs continue to increase by as much as 5% per year. But not being ready to afford it when the time comes is much more costly than the annual tuition.

Sure scholarships, grants and loans can help, but your child deserves the opportunity to attend the college of his or her choice without being forever burdened by debt. The best way to help your child achieve his or her dream, you need to start saving and investing as early as possible.

Simple Capital Can Help

With Simple Capital, you can start investing today to help your children pay for college education or other future needs.

Coverdell Education Savings Account

With a College Education Savings account the money you invest can be used to pay for your child’s qualified expenses from kindergarten through high school, as well as for higher education.

You can contribute up to $2,000 a year.
Earnings can grow tax-free.
Withdrawals for qualified expenses are free from federal tax.
There are income restrictions. If your income exceeds certain limits, you will not be eligible to contribute.
You can change investment options as often as you wish.

UGMA/UTMA Account

UGMA/UTMA custodial accounts let you take advantage of your child’s lower tax rate while saving for your child’s education.

There are no contribution limits.
For children under age 19 and full-time students under age 24 whose earned income is less than one-half of their support, the first $900 of earnings is tax-free. Earnings between $900 and $1,800 are taxed at the child’s rate; earnings above $1,800 are taxed at the parents’ rate.
There are no income limits. You can contribute no matter how much you earn.
The beneficiary gains control of the assets at age of majority, which is age 18 or 21 in most states.

Parents’ investment account

Saving for your child’s education through a parents’ investment account allows you maximum control of the assets.

There are no contribution limits.
Earnings are taxed to the owner.
There are no income limits. You can contribute no matter how much you earn.
You maintain control of the assets and decide when withdrawals will be made.

Get Started

The sooner you start the best chance you have to accumulate the money you will need to put your children through college.

With college costs currently between $9,000 and $30,000 per year and raising, you need to start accumulating and growing your money as early as possible.

Even if your budget is a concern, the important thing is to get started. Simple Capital allows you to set up a program of systematic long-term investing with as little as $50.00 per month. Such a program can be an effective way to accumulate the money you’ll need to pay for college.

The sooner you start, however, the more time you have to benefit from the growth potential offered by a portfolio of stocks. (Of course, a dollar cost averaging program doesn’t ensure a profit or protect against a loss.)

The Cost of Waiting

Even a few years of wait can make a huge difference when it comes to investing. That is because of the power of compounding. Over long time periods, potential stock market gains can allow your money to grow considerably. Consider this example:

Assuming yearly college cost increases of 5%, an 8 year old child will need approximately $90,000 to attend a 4-year public college ($215,000 for a private college). Let’s see what happens if the parents start investing at different times.

Starting now. Assuming a 10% average annual gain, parents must start making monthly investments of $405 to reach their goal.
Starting two years from now. Assuming a 10% average annual gain, parents must start making monthly investments of $555 to reach their goal.

The cost of waiting = $18,000. By beginning now, you would actually need less money to reach your goal than if you start two years from now.