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Investing with Education Savings Plans
When most people invest in an education saving plan they invest in what are called 529 plans. These are plans usually offered by universities or by the state to help families try to develop the funds to allow their children to attend college. The plans were first offered in 1998 when the internal revenue service created the option. Many of the funds allow you to attend a college outside of your state, even if the fund is specifically run through your state. This means that you could attend a college or university in Indiana even if you were raised in Utah. One of the real benefits of using the education savings plans is that they have significant tax benefits. Your plan could be mostly tax exempt, or it could only be taxed when it is withdrawn. There are two basic five twenty nine plans. The first is called a savings plan, which is allot like a retirement fund. Another option is a prepaid plan, which allows you to pay for a portion or all of a college education before hand. In such troubled economic times you need to know about the plans available. You need to know about plans that will help you to save for your child's education. However, you also need to realize that these plans are based on the performance of the market. Before you invest in anything you need to consult a financial adviser and get their advice. This is especially true for things like a child's college education that are so important. You don't want to invest everything in only one thing either. It might seem responsible to invest in just one educational fund for your children, but in such challenging times this could be a terrible mistake. You need to diversify your investments, putting money into lots of different areas so that you do not loose everything when the market goes down. Always consult a financial adviser before you make any kind of considerable investment, and especially in the midst of a recession.
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