Thread: College Fund

Speaking on a purely financial note (woo hoo I get to use my college education in finance that cost me a bundle!)...

if this is something you are interested in doing, I would suggest you look into your state's options for tax deferred college savings plans (often called 529's). These plans are similar to an IRA in that they are investment based and usually have a higher ROI than a regular money market or CD - of course this fluctuates with the market, but given that these kids are (I assume) quite young, you will have plenty of time and market fluctuations will not greatly affect the overall return on investment. And because these plans are given special tax breaks, the return will be higher as you won't have to pay such high taxes on the capital gains the investment made once the kids are ready to go off to college. On thing to note, however, is that the money NEEDS to be used for a higher education in order to benefit from the special tax provisions given to the account- if your god children were to choose not to go to college and you wanted to take the money out for, say, a car, you will pay your state's full capital gains tax on the returns of the 529.


Ask your bank's financial planner to give you more information that's specific to your state's tax laws if you think this may be an avenue you want to pursue.

As for asking the family to contribute, you can suggest, but ultimately this is something you would be doing out of the kindness of your heart. So ityou can't expect anyone to contribute or be as inspired by the selfless thought as you are. Perhaps some will be more than happy to help out, but others may not. However, I see no problem in asking them in a non-pressuring way if they are interested in contributing.