In Dire Straits? Here's Money for Nothing, College for Free!

Welcome to the Eleventh episode of WhatTheFs, inspired by and with apologies to Mark Knopfler & the Dire Straits band! 
Never have I ever sung publicly before, maybe not even in private 😔, but this knock-off on their popular song contains a simple but relevant message on how to use the power of long-term investing & compounding to get money for college, for free.

For an average person in the US, and even globally, college fees & expenses for their kids are the second biggest spending they would do in their lifetimes, right after investments in their home. Currently, four years at a top-notch private school can set a family back by close to a quarter million dollars per college going child, as not everyone is eligible for grants or aid! That's a significant amount and can come as a nasty surprise if you are not prepared for it, leaving you scrambling at the last minute, dipping into regular savings, retirement funds, or seeking student loans. 

It is August, time to make tuition payments for colleges in the US, and I was thinking about how useful our 529s (savings vehicles in the US specifically designed for college, now even school, funds) have been in helping with our boys' college fees. We started investing in these as soon as they were born, and while we may not have maximized it every year, I am happy to confess that what I tried to sing (more like screeched! - sorry Mark :-), is something we have personally benefited from greatly.

So how does this College for free thingy really work? I made some assumptions, did some simple math, and have explained those in this episode too! Assuming you start as soon as they are born (you can start later too) using the 529 route, and invest regularly in aggressive stock-weighted options, your money can grow in 20 years to provide you with gains & earnings that alone are sufficient to pay for four years of college in a private school! All your gains are tax free if used for higher education...and in some states, you also get breaks for investing in the state plans.

There are other options for saving & paying for college, and I have only focused on the main one, the 529s. You can find more details, information, comparisons etc at this excellent site savingsforcollege.com

Money for Nothing, College for Free: Hope you like this episode…pls do share with your friends & social circles, and do drop me your feedback and review comments!

This is Rak, signing off on the latest in WhatTheFs, my Weekly Take in Five on Fads, Films, Finance & Fun, with Friends!

See you again next week…till then, happy listening!
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