Savings to Investing for kids education

**Augustine** · 10-26-2013, 04:54 AM

You could start by saving money on a regular basis to make it a habit, and then you can go for low risk investments until you are comfortable with making advanced investment decisions...

**disneysteve** · 10-26-2013, 05:12 AM

You have 16-17 years to save, which is great. That is plenty of time to smooth out bumps in the road that come with investing. You don't want inflation to eat into your buying power, as you mentioned. You also don't want taxes to eat away at your money. I'd suggest a tax-efficient investment like a total stock market index fund. At this age, you could go 100% stock or if you want to be more conservative, put most in stocks but some in bonds and fixed income, so maybe 80/20 or 70/30.

**snafu** · 10-26-2013, 06:12 PM

What country are you living in? What are their rules for education investments? Is savings for children's schooling part of your culture?

If you were buying equities [stock] would you be buying in your home country's stock market or the [USA] NYSE? What is your risk tolerance? You need to be able to sleep without worrying about investments. The stock market is like a roller coaster, it goes up and down often merely on emotion. Bonds and income producing investment are abysmal just now and often lose buying power to inflation. Most infuriating is that what happened in the past 12 months has no bearing on what will happen in the next 12 months and the next 12 years will certainly be full of bumps.

As your investments on behalf of your son grow and he get's to high school, you can change out investment products to those that are more conservative. We used DCA [Dollar Cost Averaging] to investment a specific amount each month in a portfolio and adjusted the allocation from time-to-time.

**ekonstan** · 10-27-2013, 05:40 AM

I just moved to The Netherlands and I am still not quite sure how the system works here. The good thing is that, as an expat, I do not have to pay tax for income from investments for the first 8 years. This is why I do not want to loose time.

So from what I get from your comments, investing the money is the way to go and not put them into Savings account.

Maybe invest a bit more offensively for the first 8-10 years and change to a more conservative scheme later on. Is this right?

**Jerry91** · 10-27-2013, 10:31 PM

You can definitely save the money rather than investing it. You can open up a savings account specially intended for your son's education. Try to save a fixed amount of money every month. Make sure that you do not take out any funds from that account for any other purpose.

**Chris Leese** · 10-28-2013, 07:17 AM

You need to determine what you are comfortable with. It is great that you want to start now as you have time on your side. I agree that inflation will "eat" away at savings but if you are not comfortable with investing than perhaps you could determine an appropriate split between savings and investing. Be sure you educate yourself on what you are investing in and are ok with the risks.

**feh** · 10-28-2013, 08:46 AM

As Steve said, with a horizon of 17 years, the rule-of-thumb is to be fairly aggressive. Probably 80-100% equities and 0-20 fixed income (ie. bonds, CDs, cash).

However, you need to do what you're comfortable with, and you need to be willing to ride the ups and downs. If you're the kind of person that would sell if the market drops substantially, then a high percentage in equities would not make sense.

In other words, what is your risk tolerance?

Savings to Investing for kids education