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NEWS 464 - 4 Comments
From: Jackzilla Entered on: November 10, 2007 7:12 AM
Bert, BigPoppa - What are you guys doing for your little ones?  I know Michigan has some kind of educational fund you can throw money into (like you would a retirement account) but I gotta look more into it.
From: Ross Entered on: November 10, 2007 9:32 AM
Actually I have been looking into this quite a bit recently, because it's pretty confusing at first.  But I think I have a decent handle on it now.  Each state has their own College Savings "529" plan that works almost exactly like a 401(K), except it's for college instead of retirement.  Michigan's plan is excellent, according to what I've read, as it has both tax incentives and a pretty low expense ratio.  You don't have to use the plan that's in your state, but usually the tax writeoff makes it worth it, plus there are sometimes additional incentives if your kid goes to school in-state, but it's not required by any means.  In your case, it's a no-brainer - for Michigan, you sign up at www.misaves.com .  What I like about many of these plans (Michigan included) is if you don't want to play stockbroker with your kid's college fund and actively manage it yourself, you can put the money into an age-based portfolio.  What that means is that as your child ages and gets closer to needing the money, they will adjust the amount of money that's in mutual funds vs less risky instruments like bonds.   Michigan actually seems to have some pretty varied options in this respect that I wish Illinois' had.   I haven't signed up yet because we still don't have Logan's social security number yet (another example of slothful government workers) but it's my first order of business once we do.
From: Jackzilla Entered on: November 10, 2007 11:00 AM
Good stuff, Bert.  I need to look into the Michigan plan for sure.  Heck, we even have Anna's SS# already. Maybe I'll study up on Sunday when I have some time.
From: BigFatty Entered on: November 11, 2007 8:13 AM
Thanks for bringing this up.  I must admit, this was far back in my mind, which it really shouldn't.  I looked at these a few years ago when I was studying Financial Planning.  The programs seem to be much better these days. Bottom line Jack, the Michigan plan is a no-brainer for you.  It is low-cost, excellent tax benefits, it is easy, and flexible.  You are not going to find a better way.  My only criticism (which is not too major) is that there is only one company to choose from TIAA-CREF.  I would like to see a choice of major fund companies to choose from (I am partial to Vanguard), plus I have a personal bias towards investing with insurance companies.  TIAA-CREF is a good company with its own investment division, so I really can't fault it.  When I get Vivien all registered, I am going to sign her up!  I also think I will look into finding a way to encourage gifting from family and friends.  On b-days don't buy a toy, throw $20 into her college fund!  Of course, this will work until she is a bit older.  How happy would her birthday be if all she opened was envelopes of deposit slips?