Do you think its a good idea to open an education fund for your child(ren)? An account you can put money into weekly/monthly in order to save for your childs education?
nyaaaaah...
saving, planning, edumakation...
whyyyyyy?
Do you think its a good idea to open an education fund for your child(ren)? An account you can put money into weekly/monthly in order to save for your childs education?
i thought of this but than i dont want to earn any interest on it. there are many financial institutions offering education saving investments but all involve interest.
Re: Education Fund
I think its a wise idea and me and my husband would like to do so for our kids Inshaallah. Education plays a big role in my life and I would want my kids to have the best education possible no matter what academic field they choose.
Re: Education Fund
Ive got a few friends who have invested for their children in funds like Roth IRA's and things of that nature...
A college fund in my opinion is a good idea. You dont have to tell them about it so they can appreciate it when you give it to them but its less burden for you in the future. Especially if your child is particularly ambitious and wants to go far, you would want to support them. Almost all of my friends have done this and I like the idea myself too. I probably will do this when I have kids Inshallah.
Re: Education Fund
in illinois u can also pay tuition now to lock in todays rates, a prepay.
of course with 529s u can also save more.
Lol i was wondering that… why is it even a question.. but then the interest thing… :hinna:
i guess one can always just keep cash in the bank (literally–bank locker). o buy gold for the sole purpose of being able to liquidate it in the future?
Re: Education Fund
I've always wanted to open maybe a separate account for education, but again i think i'll just be paying interest on it. The other thing is, if you have a mortgage.. is it better to just put the money there so u reduce the interest on your loan..
We had someone come and visit us in regards to this and the idea seemed pretty neat... basically u save till the child finished grade 6 and then the money you have saved gets given back to u yearly till the child completes highschool.. then once they start uni, they get bigger increments back..
it sounded pretty good.. but gotta way up the odds
nyaaaaah...
saving, planning, edumakation...
whyyyyyy?
well our parents raised us without having a separate account for education..
obviously they must have planned for the eductions (otherwise why move here) but to have an account.. and save, thats a whole different story. When you have to think about a mortage... hmm
well our parents raised us without having a separate account for education..
obviously they must have planned for the eductions (otherwise why move here) but to have an account.. and save, thats a whole different story. When you have to think about a mortage... hmm
My parents set aside money for education for myself and my siblings.
although unfortunately after all that hard work, certain individuals who were trusted with it embezzled a huge chunk of it, and at that point other investments helped pay for our education.
saving is tough, but slow and steady. it is funny how if u just start taking some amount out, u will start getting used to living without it, just liek our expenses seem to increase as our income increases, when less is available to us we adjust accordingly.
so start small, and see how it goes.
Re: Education Fund
The idea of having a separate savings account for child's education seems pretty good to me. I think I'll do it for my child/ren inshAllah.
My parents set aside money for education for myself and my siblings. although unfortunately after all that hard work, certain individuals who were trusted with it embezzled a huge chunk of it, and at that point other investments helped pay for our education.
saving is tough, but slow and steady. it is funny how if u just start taking some amount out, u will start getting used to living without it, just liek our expenses seem to increase as our income increases, when less is available to us we adjust accordingly.
so start small, and see how it goes.
taking the amount away is not the issue.. i guess we just dont want to be making a loss (in terms of interest on the mortgage).. but i am definately for saving money for education...
My parents didnt really have to worry about money for education when we were growing up.. as Uni is on the HELP system.. and back in my day, public highschools werent THAT bad... but times have changed.. and our education system will probably be americanised by the time my daughter gets to Uni or highschool...
Honestly, I thank my parents for bringing us up here... free education (to an extent)
Re: Education Fund
if the rate of return on educational funds investment is higher than interest rate on mortgage then?
if you look at the prepaid example, teh rate of increase in tuition def outpaces rate on my mortage.
deoending on state, 529 savings can reduce taxable income, teh savings grow tax deferred, and withdrawl of the funds for education usage is exempt from fed tax.
Re: Education Fund
^ yeah thats what we have to calculate... :)
i thought of this but than i dont want to earn any interest on it. there are many financial institutions offering education saving investments but all involve interest.
you can put the money in a basic checking account which doesnt pay any interest. there are tons of ways of depositing money in a bank without receiving interest
i guess one can always just keep cash in the bank (literally--bank locker). o buy gold for the sole purpose of being able to liquidate it in the future?
Keeping cash, even in a safe deposit box, may not be a safe option due to various reasons.......and if you buy a lot of gold, that may not be safe either and you'll end up paying zakat on it anyway.
I have opened a savings account (not a 529) for Maha and will be putting money in it every now and then. Unfortunately that account offers interest on it but it's really low (.25%, I think). It's really hard to avoid interest while living abroad. If you choose an account that doesn't pay interest, then you end up paying interest on your home mortgage. Sometimes the payments that you receive from other companies (i.e. insurance etc.) or even our paychecks, those accumulate interest in the company's account as well, so it's really very hard to avoid it.
Re: Education Fund
When each of our boys was born, we opened a college savings/investment account and my hubby has amounts taken out of his paycheck and automatically deposited into each of their accounts. With the cost of college today and the projected cost when my boys go, we will need over 1 million to educate all 3. That isnt an amount we can just pull out of the bank.
There seems to be a bit of confusion about college funds here in this thread...you dont PAY interest, you EARN it and the money increases. And you dont pay taxes on the money that you deposit into a college fund. So its a good thing all around.
When each of our boys was born, we opened a college savings/investment account and my hubby has amounts taken out of his paycheck and automatically deposited into each of their accounts. With the cost of college today and the projected cost when my boys go, we will need over 1 million to educate all 3. That isnt an amount we can just pull out of the bank.
There seems to be a bit of confusion about college funds here in this thread...you dont PAY interest, you EARN it and the money increases. And you dont pay taxes on the money that you deposit into a college fund. So its a good thing all around.
I was just about to mention something to that effect. Talk to an accountant or a consultant at a bank and discuss various options. There are accounts availale that if you open in baby's name, they are completely tax free. However, there are variations. Some the parents have a stake up to a certain age. Some they don't, only kid gets access at age 18 i think. Also some accounts, let's say you have put in $10K. You are not able to withdraw without a fee. So be sure to look into what suits you & your plans. And in the meantime it doesnt hurt to just open up a savings account in your child's name and put $$ into whenever possible. At least all the cash gifts can be put in savings until you decide what to do with it.