Newborn Milestones

The Future is Now

NewbornIt’s never too early to start saving for your child’s future. It may be difficult to imagine your child walking across the stage at a college commencement ceremony when he or she has never even taken a first step. Yet, the earlier you start planning for your child’s future, the easier it should be to make all of their dreams come true.

The cost of a college degree has been rising fast, faster even than the average rate of inflation. In 2008–2009, the national average cost at a regional public four-year university was $6,585 per year – almost 6.5% higher than 2007.1 A year of education at a regional four-year private college also rose in 2008 to $25,143, an increase of 5.9% from the year before.1

How will you afford to send your child to the college of his or her choice? It is possible. Scholarships will help, but they aren’t a guarantee and usually only cover a portion of total costs. Government-funded student education grants are great if you qualify for them, but in many cases they are limited to the economically needy. Student loans are also useful, but eventually they have to be paid back with interest. In this challenging scenario, a college savings strategy can be the key to opening the doors of opportunity.

Think Ahead, Save Later

Thinking ahead by starting to save for college early can play a significant role in how much you’ll have for your child’s education later. To help keep pace with mounting college prices, starting early and saving regularly lets time work to your advantage.

Regular Investing is the Key

Investing on a regular basis can have a big impact. The earlier you establish a savings plan, the greater the effect time will have on your investment in the long run.

A Little Now Can Mean a Lot Later

Systematic investing2 is a powerful tool that can help make a small amount go a long way.

For example, if you started investing $100 per month into a college savings plan when your son or daughter was born, by the time he or she reached college age, you would have saved over $43,323 assuming your investment grew at a hypothetical rate of 7%*.

Starting early is key. Waiting several years to start a savings plan can make a big difference in the amount you are able to accumulate. If you waited until your child was 10 years old to start investing that $100 per month, you would have saved only $17,409 assuming the same 7% rate of return. This is a prime example of how systematic investing over time can help you reach your college savings goal.

With an Automatic Investment Program (AIP), contributions can be automatically deducted monthly from a checking or savings account and deposited into your college savings plan. The amount of your systematic investment can be changed at any time to suit your investing priorities. Additional contributions can be sent through the mail.


1 Trends in College Pricing, The College Board, 2008
2 Systematic investing does not protect against loss in a declining market. It requires continuous investing regardless of fluctuating price levels. Investors should consider their financial ability to continue investing through periods of low price levels.

* For illustrative purposes only. Does not represent a return on any particular investment product.

Updated 12/08/2015