Best way to save for college ?

529?

Life insurance with cash option ?

Is there anything else I should be looking into?

 

Thanks in advance.

ESA (Education Savings Account)

In addition to saving for college, how about the student helping to work his way through college, too.

Seems such a foreign concept to hear students working their way through anymore.  

you're talking my language now.... only do a 529 plan IF your state allow tax deductible contributions... otherwise you can outperform easily in a regular custodial account (529 plans have terrible investment options even when you can choose them)....I'd stay away even knowing that the contributions can come out tax free for college expenses ... also if your kid gets a scholarship and you don't use the funds then you are s.o.l  and get taxed and penalized when it comes out anyway...  cont......

I have a 4-month old and put a couple hundred/month into a custodial account that I manage (been a broker for years) but i also got him a whole life insurance policy right away and put in $2400/year as well.

 

This strategy automatically gives me an asset allocation of stock/bonds and the bond piece (insurance) is guaranteed with a 7.25% annual dividend and base rate of 4%/year (massmutual)

Thanks for the response Craig

I'm pretty sure the Missouri 529 is tax duductable, which makes it instantly attractive (especially short term)

How does the whole life policy work? Is there a fixed term (like 20 years) that requires an annual premium and if not dead in those 20 years you get the cash (hopefully more than you put in) ?

Thanks again

My recommendation would be to take advantage of both, if you have the discretionary income of course.

Cash value in life insurance policies is free to take based on IRS rules, when done correctly. The way it works is you take a "policy loan", you don't cancel the policy and take the cash value. The policy loan allows the whole life to stay "in force" without lapsing, as long as its either "paid-up" (no more premiums needed to pay insurance costs) or you continue to pay premiums to at least cover the insurance costs.
The best way to do this is to "overfund

The best way to do this is to "overfund" the policy by paying more than annual premiums so that the cash value builds up faster.
I.e. my sons policy has insurance costs of maybe $30/month but I pay ,as said earlier, $200/month which allows that excess $170 each month to go straight into cash value. Multiply that by 12 then by 18 years of premiums at 4-7% and you have your guaranteed cash value at age 18(which an illustration will show you)

At that point you can take a policy loan up to your entire cash value, and as stated before keep the policy in force by simply paying the monthy premium or if it's paid-up meaning all insurance has already been paid for in those 18 years. (if a policy is paid up, then all 120 years of life insurance costs are paid for in the 20 years or whatever timeframe you choose, so the policy never lapses)

I always choose policies paying premiums to age 65, except my wife has one while life paying more premiums but for only 10 years.

The policy for my son has around 250-300k death benefit, which is obviously not important to me, however it couldn't be any lower with how much $ I am wanting to pay in premiums. Otherwise the policy would "mec", a term we use that means too much money would build up in the policy and isn't allowed by IRS basically. ( IRS already allows significant contribution limits to life policies and this loophole of a "policy loan" without being taxed on gains or the loan at all because they wanted to promote the use of whole life for people to build their own pensions since so many US conpanies don't offer them anymore.

Any other ?'s feel free to ask

oh also you can choose 10 year 20 year pay to age 65 or pay to age 100 when buying insurance.

start booking bets

Thanks for the info Craig

Couple more questions if/when you got time. Instead of a whole life policy for me and my wife, would it be better to just get a term policy (simply for disaster in the next 20 years) that is about 1/4 the cost and place the rest in a 529 and Roth IRAs for both of us? Both would be tax deductible every year as well, which ads value up front.

Any thoughts would be great or other ideas. Hope all is well in your world bro

What type of return are you looing for?  5% yearly? 10%?

Market is at an all-time high.... never a big fan of entering into an investment when things are on the high end. But if you do.

You and your spouse can each give $13,000 a year tax free to each child.

Setup a brokerage account and invest in blue chip dividend paying stocks... highly recommend at least 1 stock in the utilities field. Have the account setup to roll over all dividends.

The downside to a term policy is you lose all of the money you pay if you live past the term. The upside is large if you were to pass soon .... but odds are against that and am sure your kids and spouse don't want that.

Real estate is the best investment on the table in my opinion. Each market is different... but there are places that 10% yearly with 50-100% return on price is very much a reality. Its something I would highly recommend.

Real estate 

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