How to Save for College Tuition

Description

This video by TV360 shows you how to save for college tuition and calculating the interest involved.

Transcript
How to Save for College Tuition Real Questions Ameer: Hi my name is Ameer. I’m 29. I’m from Southfield and my daughter is 11-years-old by the time she’s 18 I would like to save $15,000 for her for a college tuition. So how much would I have to save per year if I put the money in a Safe Money Market account or any 4% annually? Susan Feitelberg: Hi Ameer. There’s a special type of investment account called the 529 plan. They allow to put money away each month for your daughter’s education. With the 529 sometimes you can get a state tax deduction and all the money in the plan will grow tax free until you take it out and pay her tuition. What you want to remember is that if you do take it out for something other than her college tuition you’re going to pay taxes on the earnings as well as a 10% penalty. I would be careful putting money into an account that’s running a low rate such as 4%. Even if it wasn’t a 529 plan because as the cost of college is increasing about 6% a year and you want to make sure that you’re earning more than 6% so that your money can grow.
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