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How Individual Stock Investors Can Save For College

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February 04, 2012 - How Individual Stock Investors Can Save for College - by Morningstar Investment Research

My wife and I are trying to save for college for our two daughters. However, I'm primarily a stock investor and don't like the idea of having to stick with a preset menu of investment options, as I'm required to do with a 529 College Savings plan. Is there an equivalent to IRAs for college savers that would allow me to invest in the securities of my choice?

For better and for worse, the deck has been stacked in favor of 529 plans for college savers, according to Morningstar director of personal finance Christine Benz. However, the question points up the key drawback of 529 plans: Even though many plans offer broad suites of investment options, they don't give you the same latitude to select your investments that you might have within an IRA or brokerage account. Assuming you'd like to exert more control over your investments while also saving for college, you could consider the following options, or possibly some combination of them.

For Retirement-Portfolio Withdrawals, Your Mileage Is Likely to Vary

Managing one's finances in retirement doesn't lend itself well to straight-line analysis. You might retire into a good market or a weak one; you might decide that you're bored and want to go back to work or you may end up spending part of your nest egg to help grown children. Although guidelines like the 4% rule might be a starting point when gauging the via bility of your retirement plan, in reality, very few retirees maintain static withdrawal rates. Several studies have looked at how retirement-portfolio withdrawals might be adjusted upward or downward to account for market fluctuations. But retirees' changing personal situations and preferences might also drive varying rates of withdrawals during retirement. Of course, some scenarios can't be anticipated. But thinking through the range of possibilities is a key component of creating a realistic retirement-spending plan. As a follow-up to her article last week on the 4% withdrawal rate, Christine Benz offers some of the key variables to bear in mind when creating such a spending plan.

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