Dian's Column
Dian's Archive


Long-term Savings Ideas

Most of us need some direction and advice when it comes to our long-term financial goals like saving for our children's college education and our own retirement. But before getting that professional advice, it's wise to do a little research on your own.

With this in mind, The Vanguard Group recently introduced two brochures, both are a part of their PlainTalk financial skills for life, series. The first publication titled, "Save for College" states that setting a savings goal is the first step to ensure there are enough funds to send your child to college. Depending upon the college and when the child will attend, the estimated cost of a four-year college education can range from thousands to hundreds of thousands of dollars. ( current costs for a number of colleges can be found at www.collegeboard.com .)

The "College" brochure offers information about the pros and cons of the various college savings programs including 529 Savings Plans, Education Savings Accounts, UGMA/UTMA accounts, and Series 1 and Series EE U.S. Savings Bonds. Also included is a chart showing suggested asset allocations for the conservative, moderate and aggressive investor all based on a child's current age. For instance, if a child is between ages 6 and 10, the suggested asset allocation blend for an aggressive investment portfolio would be 35 percent invested in bonds and 65 percent in stocks. A conservative asset allocation blend would be just the opposite.

Move up the age profile to between those ages 11 to 15 and the asset allocations for bonds increases to 75 percent for the conservative portfolio and 50 percent for the aggressive one.

The second publication, titled "Manage Your Retirement," covers topics ranging from sizing up your current financial situation to looking at your portfolio; and tapping your assets to finding professional advisers.

Having enough in savings and investments, as well as managing those monies with an eye toward the future, is imperative as Americans now are living longer than ever. Today, there's a 20 percent chance that a man age 65 will live until he's 90. A 65-year-old woman has a 32 percent chance of reaching 90. According to the brochure, two spouses who are each age 65 have a 45 percent chance that one of them will live to be 90.

Knowing how to tap your assets and which ones to sell---or hold on to--- is more important than ever as retirement isn't necessarily measured in years anymore, but decades.

The brochure also points out a few investment myths. One common myth, for example, is that stocks are too risky an investment for retirees. That's not necessarily true---provided you're comfortable with equity investing.

Each of these free publications can be obtained by calling 800-240-8654 Monday through Friday ( 8 a.m. to 8 p.m. EST ) and Saturdays ( 9 a.m. to 1. p.m. EST).

Sticking to the subject of college savings, here are a couple of Web sites that also offer worthwhile information:

BabyMint (www.babymint.com )and Upromise (www.upromise.com ). If you like the idea of saving money for college every time you charge something on your credit or debit cards, these sites are worth visiting.

Both offer spending-back savings, typically from 1 to 10 percent of the total dollar amount spent, when you shop and pay by credit or debit cards at the merchants and retailers affiliated with them. At Upromise, for instance, 2 percent of what you've charged at Staples gets added into your college savings plan; at Land's End, buyers get 3 percent back; The Sharper Image credits 5 percent; on any Kleenex products, 5 percent comes back to you; and at ExxonMobil, 1 cent per gallon.

For a glimpse of the various 529 plans offered in each state across the nation, visit www.babymint.com .

529Insight.com . For those who don't mind paying $17.95 for a one-year membership, 529Insight.com was created to educate consumers about the costs and opportunities available to them regarding the dilemma of how to save for college.


Dian Vujovich is a nationally syndicated mutual fund columnist, author of a number of books including Straight Talk About Mutual Funds (McGraw-Hill), and publisher of this web site.

To read more articles, please visit the column archive.

[ top ]