Date: Tue, 3 Jan 2006 10:19:41 -0600
From: zxcvbob 
Newsgroups: misc.invest.financial-plan
Subject: Re: Investing for Education
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jasontyip@yahoo.com wrote:
> I'm hoping someone can offer their opinion on what I should be doing to
> invest for my newborn's future college education.  Some background, my
> wife and I (both 30) have been making contributions to our Vanguard
> Roth IRA for the past 6 years.  We live in California.  Are there any
> investment similar to an IRA, that could possibly offer tax benefits?
> Pros/Cons? Any advice would be greatly appreciated.  Thanks.
> 
> Jason


Series I savings bonds.  The I and EE bonds I bought for DD's education 
have more than doubled in value.  The Fidelity Blue Chip Growth fund I 
was contributing to for 14 years has only appreciated about 20% (I 
picked a loser of a fund.)  If you purchase the bonds in your name 
rather than Baby's, you don't have to pay federal income taxes on the 
interest when the bonds are cashed in the same year she has college 
expenses (I don't know all the restrictions.)

Savings bonds are safe and tax efficient.  If you want higher returns 
and a little higher risk, do a search on "Coverdell savings account", 
and invest in a good mutual fund (maybe an index fund) thru a Coverdell 
account.

Don't put all the money in one place; mix it up a little.

Also, remember that saving for your retirement comes first.  Baby can 
get a student loan to help pay for her education, but you can't borrow 
for retirement.  If you are well-off when the time comes, you can pay 
off that student loan for a graduation gift. :-)

Hope this helps,
Bob