Begin an account for your child in their first year. • Assemble a team – Try to get relatives involved. They can give college money as gifts for Christmas or birthdays. Tip: Let your child pitch in as well.
a higher interest rate. • Online banks tend to have higher interest rates. • Look into using mutual funds and other investments. Warning: As the interest rate rises, so does the risk!
• Some cover the entire tuition but most only cover a portion of the bill. • You don`t have to pay them back! Tip: Take advantage of your college’s financial aid office!
cash or cash equivalents. • You pay no income tax on the money you deposit into your IRA. Warning: Taking money out of an IRA before you hit age 70 will incur penalties.
Traditional IRA, the deposit limit applies to both accounts combined. o The limit is still $5000 or $6,000. It doesn`t double just because you have two accounts.
deferred until the money is withdrawn. • Withdrawing money before you reach the minimum age (60) will result in penalties. • Some employers match a percentage of your contribution
(ISA) • Divided into two components – Cash and Stock shares. • It's possible to transfer funds from the cash to the stocks component, but not the other way around.
much in other countries, since it refers to a US law. • However, other countries have similarly functioning accounts. • The term has become common enough that these accounts are sometimes referred to as 401(k)`s.
to compound and accumulate to a greater extent. • If your employer matches 401(k) contributions, add the maximum percentage that your employer will match to ensure you get as much of a return as possible. • If you put money into an IRA or 401(k), leave it there; taking it out results in penalties and fees.
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