How to Fund Your College Education by Investing | Phil Town | Summary and Q&A

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November 30, 2017
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Rule #1 Investing
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How to Fund Your College Education by Investing | Phil Town

TL;DR

Investing in a college savings plan can help alleviate the financial burden of rising college costs, but it's essential to start early and consider alternative investment strategies.

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Questions & Answers

Q: Why have college expenses increased so dramatically in recent years?

College expenses have risen faster than the cost of living, resulting in exorbitant tuition fees and mounting student debt. The exact reasons for this increase vary, but factors such as decreased government funding and increased administrative costs contribute to the phenomenon.

Q: Is it possible to save for college while also saving for retirement?

Balancing saving for college and retirement is challenging, but it is essential to start as early as possible to maximize savings in both areas. Prioritizing long-term investing strategies and considering alternative investment options can help achieve this balance.

Q: What are the advantages of a 529 college savings plan?

529 plans offer tax advantages by allowing earnings to grow tax-free as long as the funds are used for educational expenses. They also have the flexibility to change beneficiaries and can be used for vocational schools as well.

Q: Why consider alternative investment strategies for college savings?

While 529 plans provide tax benefits, they limit investment options to indexes, mutual funds, and bonds. Exploring alternative investment strategies, such as Rule One Investing, can potentially yield higher returns and help meet college savings goals.

Summary & Key Takeaways

  • College expenses have skyrocketed in recent years, making it crucial to save for college early to avoid excessive student debt.

  • Saving for college presents unique challenges, as it requires balancing retirement savings with limited available funds.

  • A popular option is a 529 college savings plan, which offers tax advantages but limits investment choices and potential returns.

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