College Savings Plan- Keeping Money Safe in an Iffy Market

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By Doug Walker, CCPS, Principal, Mountain State College Planning Associates
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I have fond memories of the ‘90’s, particularly those halcyon days when huge one-day spikes in the stock market seemed the norm. Sure made for great headlines. Every time you turned around, it seemed like there was another market record being set that day and all of us hoped the wave of profits would never end.

Unfortunately, those days are long gone and wise investors who are saving to send their children to college and don’t want to dip into their retirement know that a slow, steady, and safe plan to build wealth can make for a profitable outcome and a predictable income. Your goal should always be to ensure that your money be there when you need it.

What is safe money?

How do we ensure that your money is there when you need it?  By investing  in “safe” money plans, which include CDs, savings accounts, money market accounts and a variety of insurance products. With these saving vehicles, there are no illusions, no devastating surprises and nothing causing your money to disappear from in front of your eyes when you need it the most. 

In the case of college planning, retirement or funding some of life’s biggest moments (such as a wedding), there are safe ways to grow and protect your assets.  But as always with investing, there is a word of caution -- Uncle Sam and the markets can make a significant dent in your much hoped for savings.  It’s always best to remember to “have a plan”.  A well thought out savings plan, utilizing safe money products and planned with an investment professional who is a specialist in their field, will leave you knowing how much money will actually be in your accounts when you need it. 

What is “risk” money?

Investment styles, opportunities and the economy have changed. If you have decided to use these types of plans to pay for college or retirement, you must understand the risks involved.  For us in the college planning industry, we recommend eliminating the risky strategies that may have seemed to work in the past, and to look at wise alternatives that will guarantee growth and return.    

One of my favorite quotes comes from Fidelity Investing, which says, “Investing involves risk, including risk of loss.  Diversification does not ensure a profit or guarantee against loss.”   “Risk” money plans include the plans we have been told are the best and they often include plans that our friends, the government and Wall Street promote the most. Plans we’ve all heard of including IRA’s, 401(k)’s, 403(b)’s, 529’s, all of which are driven by the stock market.

Newest trends

In a recent article by CNN’s Blake Ellis entitled “Obama’s latest rescue plan: Annuities” Ellis, reviewed the Obama administration’s proposed new rules to help retirees make their savings last throughout their lifetime by investing in annuities. Annuities are investments that pay out fixed amounts of income at a future date and many investors plan on using these kinds of plans to fund their retirements and children’s college. Depending on the type of annuity, you can receive payments on a monthly, annual or lump sum basis. Advisor World, Bloomberg, Business Week and many other trade magazines have similar articles (no matter what your stand on the current administration, that are worth a closer look and discussion with your advisor to see if this kind of investment is right for you.

Seek wisdom!

The definition of wisdom in Webster’s dictionary is, “good judgment and knowledge.” Part of being a wise investor is taking the time to do your own research before you decide who to work with in the long term. The right college or investment planner can become a valuable and trusted asset to you and your family, so do your research and talk to as many as you need to ensure that you have found the perfect match for your needs.

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