Investing in a 529 College Savings Plan

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Start at www.savingforcollege.com for the basics on what 529s are, and for information about other tax-advantaged ways to invest—such as the Coverdell Education Savings Account. Under "College Savings 101," click on "College Calculator" to see how much money you need to save (depending on where you think your kid will go to college) and how much you need to set aside in order to get to that goal. Click on "529 Plans," and you get information on all the different plans states offer (including prepaid tuition plans, which are also sometimes called "529s," even though they don't involve individuals' picking investments). This site also will also recommend financial advisors, but remember that advice costs money (often a fair amount), and it is completely possible to invest in a 529 without consulting a financial expert. Plenty of people do it!

The site www.morningstar.com offers a more in-depth and critical analysis of all the 529 plans. From home page, click on "College Saving" under "Personal Finance" at the bottom of the page. You'll have to register, but it's free. Under "529 Data," you'll find detailed information about each of the plans, including which funds they invest in. You can also compare plans, plus read a lot of smart Morningstar commentary. Articles include "Are 529 Plans All They're Cracked Up to Be?" and "Extreme College Funding."

The National Association of Securities Dealers (a trade group) also runs a 529 website. From www.nasd.com, click on "Investor Information" in the top right corner, then "College Savings Center." You'll find information about all the different ways to save for college, as well as information about educational tax credits (tax info is also at www.irs.gov). There's also a great "Expense Analyzer," which lets you type in the specifics of the plans you're looking at to see how they stack up to each other.

The states' individual 529 plan websites have tons of information about their own plans, obviously, but they also often have added features, such as "tax advantage calculators." These show residents of that state the full effect of the tax benefit. Here are a few examples: http://www.missourimost.org
http://www.kentuckytrust.org/cgi-bin/save2.cgi
http://www.aboutchet.com

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