Financial Answer Center
- Pre-Funding the Cost
- Your Pre-Funding Strategy Depends upon where You Are Now
- Monthly Investment Program
- Your Investment Objective
- Understand Risk
- Basic Strategies
- How Is Investing for College Different from Other Investing?
We strongly recommend that you consider pre-funding the cost of college by following these steps:
- Determine the amount of money you want to have saved by the time your child is ready to start college. This is determined by what you can afford, how much of the total college cost you want to fund, or both.
- Determine the monthly investment needed to complete the pre-funding program.
- Invest this monthly amount in an appropriate investment vehicle (see the section Investment Vehicles).
- Don't stop making the monthly investment until the last tuition payment is made sometime in the senior year of college.
This pre-funding strategy spreads the cost of college over a long period of time instead of waiting until the child begins college and incurring the cost over an intensive four-year period. This strategy helps you maintain your lifestyle in light of the college costs that are expected. It also enables you to benefit from the growth of your capital offered by a long-term investment program.