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HOW TO FUND YOUR KID'S ENTIRE COLLEGE EDUCATION IN 1 YEAR

7/9/2014

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Editor: Crass Cash
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Regardless of whether you stopped at high school or college.  We all know the feeling of cramming for an exam.  Well the good news is that you can cram for a college savings plan as well.  How do you cram 4 plus years of college savings into one?  

There's a special savings provision in the 529 plan that allows for a child or grandchild to receive the maximum gift amount (tax exempt that is) of $14,000 from two people (parents or grandparents) for 5 years all up front.  So assuming you or the grandparents have the funds, they can contribute up to $140,000 ($14,000 x 2 x 5 = $140,000) in one year to a 529 college savings plan!  

Giving a child $140,000 for college education is a big head start in life.  It's another way that the rich get richer.  This isn't a tool for the rich though since there's actually a cap on the exemption.  However, they use it because they have the ability.  If you do this while the child is say 1 or 2.  How much will it be worth when they're ready to go off to college?

Well assuming that you get a late start is they receive the money when they're 2 years old rather than 1.  Also assuming a 7% return for the first 13 years and then switching to bonds with a 3% return for the final 4 years of high school.  You'd want to do this to protect yourself from market volatility and not have to withdraw all of it when they need to pay for expenses.  

With all of these assumptions you end up with a whopping $561,759 in untaxed dollars for college!  SO WHO WANTS TO GO TO HARVARD??
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    This website was created due to the atrociously misguided financial advice that I've heard over the decades.  Financial freedom is not intellectually strenuous, but it takes discipline. 

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