Now that we’re tucked into our houses, apartments, or places of abode, either through quarantine or “stay-in-place” orders, enjoying the benefits of social distancing and at-home children, college planning likely occupies a lower position on the “honey-do” list than it once did.
Makes sense. When considering the worldwide threat to our very existence and the massive blow to our personal wealth, why plan?
After all, you’ve likely experienced a 30% or more decline in your 401k balance. That’s a loss that will never be recouped. Sure, if you can stick it out long enough, what’s left might grow back into what once was. But, you’ll never be back to where you were and could have been.
If only you had worried about the return of your money, not the return on your money, you wouldn’t have lost a penny in the recent downturn. Our grandparents and great-grandparents who followed the advice of Will Rogers (who quoted Mark Twain) had it right.
Retirement, let alone raiding the retirement fund to help pay for the kids’ education, seems hopeless right now. It’s not, though…
Now, let’s look at 529 plans. These plans are the financial vehicles that Wall Street and our financial advisors tell us have the greatest “odds” of having the money for school when we need it most. Yet, one of the very first questions asked of parents is where, of the options available under the plan, do they want to invest the funds?
That doesn’t sound like a savings plan to me. If I have a chance of losing money, of having less when I need it, less than the amount I’ve actually contributed to it, I’m not saving, I’m gambling.
Since the investment options are tied to the market, I wonder how 529 plans have fared lately. Perhaps the same as the 401k plans?
These are just the vehicles those in the “know” tell us to put our hard-earned money. These are the vehicles that bend to unknown market forces, vehicles that restrict access to and use of your money, vehicles outside your control.
And, these are the vehicles to which you entrust your money???
If you had access to a financial vehicle that has weathered depressions and recessions alike without loss, a vehicle with few restrictions on access to your money and no restrictions on use of your money, a vehicle that remains in your control, where would you have placed your money? In 401k and 529 plans? Or, in that vehicle, a vehicle that had, and will continue to have, a net positive gain year-in and year-out?
That vehicle will be of utmost importance to you moving forward through and out of the pandemic. It’s where you’ll need to save your money, safely assured of the return of your money, unworried about the return on your money.
This vehicle is of even more importance because the colleges and universities likely will have even less financial aid available to award. Why? Because their endowment funds were invested in the market, just like your 401k and 529 plans. Their losses were so much greater than ours, not in percent, but in amount.
College planning is now even more important than you may have otherwise believed. Not only does your student need to be the most attractive to schools as possible, you need to save your money in a vehicle that won’t negatively impact the financial aid for which you qualify.
Do you know how to make them more attractive? Do you know how to find the right school at the right price for your child, based on academics, size, location, and budget? Do you know what steps to take when throughout your child’s high school career? Do you know the entire process is so much more intense than it was when we were looking at schools?
If your confused and worried, please contact us to schedule your next (or first) college planning campaign meeting. We look forward to assisting you on your journey.