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Just wondering what others have done with the money that their kids are saving for college. Did you leave it in a savings account at .01% interest? What about adding to a 529 account that as parent's were already funding?
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Just wondering what others have done with the money that their kids are saving for college.

This is money the child has earned or has been given ? Who has designated it for college ?

Did you leave it in a savings account at .01% interest?

Their money so it wasn't up to me. At that point in time, ING had CDs without minimums so at least one laddered CDs.

Right now, I would look at low minimums for accounts for minors. Firstib has accounts for kids with a $100 minimum - https://www.firstib.com/personal/bank/accounts-for-kids/

Look at discover.com & their savings accounts. Depositaccounts.com has more info.

What about adding to a 529 account that as parent's were already funding?

I would never do this. Kid's money, not mine. 529 have owners and the beneficiaries can be changed.
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dudeman95: "Just wondering what others have done with the money that their kids are saving for college. Did you leave it in a savings account at .01% interest?"

Is it earned income (i.e., IRA eligible) or other income or gifts?

How old is the child/how long until the child starts school or needs the funds.

How certain are you that the child will attend college?

How much does the old understand about investing?


"What about adding to a 529 account that as parent's were already funding?"

I would not do that; it might be considered theft. Converting the child's funds to the parents' funds is rarely, if ever, a good idea.

Not exactly what you asked, bit I would also get familiar with the FAFSA (federal) application form and CSS application form that private schools use (if that is a possibility) to determine expected family contribution (a/k/a EFC) which in turn is used to calculate financial aid.

The FAFSA has (or, at least as of a few years ago, had) room for long term planning to own certain assets that are not reportable for purposes of calculating expected family contribution (a/k/a EFC), and like taxes, there is nothing wrong with arranging one's finances, permissibly, so as to minimize EFC just like taxes.

"Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes."
Gregory v. Helvering, 69 F.2d 809, 810 (2d Cir. 1934)


"Over and over again courts have said that there is nothing sinister in so arranging one's affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant."
Commissioner v. Newman, 159 F.2d 848, 851 (2d Cir. 1947) - dissenting opinion

Both courtesy of Judge Learned Hand (also a member of the best named judiciary first team).

Regards, JAFO
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Re-posted to correct font and to supplement:

dudeman95: "Just wondering what others have done with the money that their kids are saving for college. Did you leave it in a savings account at .01% interest?"

Is it earned income (i.e., IRA eligible) or other income or gifts?

How old is the child/how long until the child starts school or needs the funds.

How certain are you that the child will attend college?

How much does the old understand about investing?


"What about adding to a 529 account that as parent's were already funding?"

I would not do that; it might be considered theft. Converting the child's funds to the parents' funds is rarely, if ever, a good idea.

Not exactly what you asked, bit I would also get familiar with the FAFSA (federal) application form and CSS application form that private schools use (if that is a possibility) to determine expected family contribution (a/k/a EFC) which in turn is used to calculate financial aid.

The FAFSA has (or, at least as of a few years ago, had) room for long term planning to own certain assets that are not reportable for purposes of calculating expected family contribution (a/k/a EFC), and like taxes, there is nothing wrong with arranging one's finances, permissibly, so as to minimize EFC just like taxes.

"Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes."
Gregory v. Helvering, 69 F.2d 809, 810 (2d Cir. 1934)


"Over and over again courts have said that there is nothing sinister in so arranging one's affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant."
Commissioner v. Newman, 159 F.2d 848, 851 (2d Cir. 1947) - dissenting opinion

Both courtesy of Judge Learned Hand (also a member of the best named judiciary first team).

See also, Paul Newman as Anthony Lawrence in The Young Philadelphians.

Regards, JAFO
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Hi Dudeman95,

To add to the other great input you have already been given...

First off, what does your kids think?

Then, you need to consider how soon they will they need it. If they will need it soon (3 years or so), then the regular rule applies that cash is the only way protect the principal. So, yes, the savings account or cd making not much.

As others have said, kids money needs to stay kids money. But, if they are a minor then an adult will have to be a co-owner on a savings account or it can be a brokerage UGTMA with it converting to the minor when they turn 18.

I started UGTMA accounts for both of my kids when they were first born to ensure that they could afford to go to college when the time came. When they got old enough to have money "of their own" they wanted it in a separate account. The oldest did a really nice job selecting a few companies three years ago. The younger one isn't as interested in investing, but has indicated an interest in an account of her own (she turns 18 on Monday).

Vicki
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My son was fine with it because he see's that the 529 plan is getting 15% returns and his savings account is .01%.

Forget the 529 option, I was just curios what the savvy savors do to help their kids earn more than what a savings account pays. If the majority just stick with a normal savings account, that's ok. Just wondering.

thanks
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My son was fine with it because he see's that the 529 plan is getting 15% returns and his savings account is .01%.

No idea of his age but the 529 can also go negative and can be given to someone else. So just curious, are you getting a tax break from your state for putting his money in your 529 ?

Forget the 529 option, I was just curios what the savvy savors do to help their kids earn more than what a savings account pays. If the majority just stick with a normal savings account, that's ok. Just wondering.

I think you wanted confirmation of your choice. Even my money in the 529 started getting moved to safer ground(a semester's worth at a time) when each kid hit 9th grade. I would have to go back to the years for each but it took discipline and in at least one case was very much the right choice to do.
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Stocks.. When you say kids money I'll take it they are in their single digit years...
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