If you have children at home, there’s a good chance you’ve thought about them going to college or to a trade or technical school. Or, maybe you’ve set that as a goal for yourself.
Let time be your ally
Starting early is usually good investing advice, but it’s especially valuable when saving for education. Investing over a long period helps your savings grow. That’s because your money has more time to benefit from compounding. Letting your money work for you that way can significantly cut down on your total educational costs.
Related Resources:
Use Homestead Funds accounts designed for educational expenses
Since education is so important, the government allows us to save for these expenses in accounts with special tax advantages. Two of these accounts are the Coverdell ESA (Educational Savings Account) and UGMA/UTMA accounts. It is also possible to use funds in a retirement IRA for college without incurring penalties. This can be a good strategy for some people, but there are restrictions, so you should discuss the option with a tax advisor.
Account types appropriate for this goal:
Choose your investment type
It’s important to select investment types that align with your investment goals and time horizon. Equities carry a higher degree of risk (meaning they are more volatile), but historically have delivered higher long-term returns. As time goes on, you’ll want to consider an asset mix with fewer equities and more fixed-income funds. Homestead Funds offers funds across these categories to help meet your investment needs.
Related Resources:
Debt securities are subject to interest rate risk, credit risk, extension risk, income risk, issuer risk and market risk. The value of U.S. government securities can decrease due to, among other factors, changes in interest rates or changes to the financial condition or credit rating of the U.S. government. Investments in asset-backed and mortgage-backed securities are also subject to prepayment risk as well as increased susceptibility to adverse economic developments. High-yield, lower-rated, securities involve greater risk than higher-rated securities.
Equity securities generally have greater price volatility than fixed-income securities. The market price of equity securities may go up or down, sometimes rapidly or unpredictably. Equity securities may decline in value due to factors affecting the issuer or equity securities markets generally.
Homestead Advisers does not offer legal or tax advice. Please consult the appropriate professional regarding your individual circumstance.
Let’s Get Started
Once you’re ready, start here.
The sooner you begin investing, the more time you have to reach your goal.
See Account Types
Learn More About Our Funds