College is expensive. If you want to pay for your child’s college education, you would be well off to start saving early. Since you have 17 or 18 years, time is on your side. Take advantage of the time to let your college investment funds to grow.
If you start investing the day the baby is born, at 10%, $1000 will grow to $5000. And you need all the growth you can get. As college time approaches, you will want to start moving funds to more conservative investments. Just like any other investing, you want to diversify your investments.
You should also look into section 529 plans. There are couple different kinds of section 529 plans. One is a tax exempt savings account, and the other is a prepaid tuition plan. The prepaid tuition plan locks in future tutuion rates which might be good since colleges seem to raise rates faster than cost of living increases. Tuitions seem to rise as the economy goes down. This is because the states reduce college support. So as your investments fall in value, an college tuitions increase, the prepaid tuition plan becomes a great deal.
But if you think you can invest well, and increase your money, you might want to look at the tax exempt savings account. So while the prepaid tuition plan locks in tuition rates, the tax exempt plan doesn’t But the tax exempt plan has the potential to grow faster.
The money in the section 529 plans in controlled by the account owner. So if the child decides not to go to college, they wont have access to the money as they might with a UGMA account.