3-4% annually is a reasonable assumption for the inflation in college costs. However, I agree with previous comments that saving in a 529 based on the cost of Stanford is very likely to overshoot the mark. Public schools will be less, as would less-competitive private schools. I'd think about aiming for the cost of your in-state public universities (which are high relative to other states already) and then be prepared to cash flow or use other investments for the difference if your kid gets into Stanford or the like.
Are you assuming a 10% annual rate of return in your investments? That's probably way too high. I know 18 years until college seems like a really long time now, but it's not like retirement, where you save for several decades and then have several more decades to use it. If you actually intend to use the funds for college (as opposed to just using this as another tax-advantaged account), you'll want to shift into more conservative investments around the time your kid is in high school. If you hit a couple of bad years at the wrong time, it can really do a number on your overall returns, and you won't have decades to make it back.
Are you assuming a 10% annual rate of return in your investments? That's probably way too high. I know 18 years until college seems like a really long time now, but it's not like retirement, where you save for several decades and then have several more decades to use it. If you actually intend to use the funds for college (as opposed to just using this as another tax-advantaged account), you'll want to shift into more conservative investments around the time your kid is in high school. If you hit a couple of bad years at the wrong time, it can really do a number on your overall returns, and you won't have decades to make it back.
Statistics: Posted by smwisc — Sun Dec 08, 2024 7:33 am — Replies 3 — Views 306
