The first decision you need to make once you have decided to start putting money aside for college, is where to save or invest it. Certificates of Deposit (CDs)? Savings bonds? Stocks? Mutual funds? A state-sponsored college-savings plan? The answer depends primarily on the amount of time you have left before you’ll start writing tuition checks.

In this booklet, we’ll describe the best choices for your long-term investments— funds you don’t need to touch for five years or more—and short-term savings. But, because it’s fairly common for parents to get a late start at saving, we’ll work backward, starting with the safest choices for short-term money, including money-market mutual funds, CDs and government bonds, and progressing to investments that provide better returns but involve a little more risk, such as growth-and-income, long-term-growth and aggressive-growth mutual funds.

All of those investments are among your choices for college savings that you can keep in a Roth Individual Retirement Account (IRA) an Education Savings Account, more commonly known as a Coverdell ESA (and formerly called the Education IRA), a custodial account or ordinary taxable account in your own name.

If you’re willing to give up some investment discretion, you might want to consider what many believe is the best college-savings vehicle: state-sponsored college-savings plans, which give you many of the same investment choices in a convenient— and tax-free—package. Before we begin discussing specific types of investments, let’s consider why and how your strategy should change with the time you have left before college. In this instance, it makes most sense to begin with a look at the long-term.

Download Where to Invest Your College Money?

PDF format, 190KB, 20Pages.

By the Editors of Kiplinger’s Personal Finance magazine

WHERE TO INVEST YOUR COLLEGE MONEY

• Creating a college fund portfolio based on your time horizon
• College investment vehicles
• State-sponsored college savings plans

About the Investor Protection Trust:

The Investor Protection Trust (IPT) is a nonprofit organization devoted to investor education. Over half of all Americans are now invested in the securities markets, making investor education and protection vitally important. Since 1993 the Investor Protection Trust has worked with the States and at the national level to provide the independent, objective investor education needed by all Americans to make informed investment decisions.

The Investor Protection Trust strives to keep all Americans on the right money track. For additional information on the IPT, visit www.investorprotection.org.

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