What We're Buying for College Funding
How Morningstar analysts invest for their own children.
When you read a Morningstar mutual fund analyst weighing in on the best way to save for a child's education, it's a good bet that he or she is speaking from experience. That's because six in our cadre of more than 25 analysts have had children within the past six months, another analyst is expecting a child in June, and several more have children under the age of 3. So we thought it made sense, given that we recently wrote about how to pick a 529 plan and how to choose among various college-funding vehicles, to tell you what some of our analysts have done to invest for their own children.
Investing toward a child's education is every bit as complex and difficult as other types of investing, such as investing toward retirement. First, when a baby's born, the investment time horizon is long term but not as long as it is for a young worker who's just starting to invest toward retirement. Plus, the dollar goal is a moving target based on where college tuition and other education expenses will go; it's difficult to know just how much to invest. There's also an array of savings vehicles to choose from, including Coverdell accounts, 529 plans, UGMA accounts, and so forth. And yet, unlike with 401(k) plans, for instance, you pretty much have to make all the investment decisions yourself.
So maybe it's of some comfort that even people who think about such matters all day find investing toward an education to be difficult. Moreover, within our group there have been quite different solutions to the puzzle. I've polled the new parents around the department, and here are some of the things we came up with.
Todd Trubey does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.