Saving for college is an important financial goal to start planning for when your children are young.
How much you will need depends on various factors like the number of children you have and their ages, whether you expect them to attend private or public college and expected tuition inflation.
So what type of investments should you be making?
With college tuition rising faster than inflation, stocks are the best investment to help your education-savings portfolio keep pace long-term. The 529 college savings plan is a state-sponsored, tax-deferred account that allows you to sock away money for college. You can then invest the money, and it may be used at any school you choose and for all qualified higher education expenses, including room and board.
Another good option is a prepaid plan. A handful of states offer prepaid plans, which allow residents to pay now at today’s rates for in-state public tuition tomorrow.
This calculator can help you figure out if you’re saving enough for your future education expenses.