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college fund

We started a small college fund for our son, its up to about $30,000. My son just accepted a full athletic scholarship. We figured there was a chance that he would get a scholarship but sisnt want to count our chickens before they hatched so we prepared for the fact that we would have to pay his full tuitioin, no we dont have to pay that and we have $30k sitting in a savings account. I have refinanced my home from a 30 year mortgage to a 20 or maybe a 15 my husband takes care of that lol. But in this econmy should i leave the money in a savings, so I invest in stocks, a cd or some kind of fund. What is the best thing to do with it in an economy like this.

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beccastar89

Asked by beccastar89 at 9:58 PM on Jan. 16, 2010 in Money & Work

Level 2 (5 Credits)
Answers (6)
  • I'd keep it in the savings account. Your son might loose his scholarship due to an injury or something. Or a disaster might happen. I wouldn't risk investing it.
    SaraP1989

    Answer by SaraP1989 at 10:34 PM on Jan. 16, 2010

  • I'd invest it in a diversified portfolio of safe stocks and mutual funds including companies from other countries. I suppose it depends on what you want it to yield. For a cd, the rate varies and can be up to 4 percent or so but if you do stocks, mutual funds, etc, the yield can be more like 10-14 percent. We invest with Smith Barney and took a loss two years ago but are steadily gaining everything back. Depends on how fast you'll need the money too. If your son's scholarship is 100 % and you won't need to get at the money, invest it for five or ten years for optimum results. A savings account is worthless. At very least do a cd w/o penalties should you need to tap into it.
    Anonymous

    Answer by Anonymous at 11:26 PM on Jan. 16, 2010

  • I'm with SaraP on this. Does a full ride scholarship cover his books, and housing? What about transportation, and food? Or will he be working to cover that stuff?

    Anyway I would hold onto it until you know for certain that he doesn't need it.

    On a different note, I feel like you saved that money for him and it should be kept for him. Maybe as a wedding gift or a down payment on his first home? That's just my opinion though and I totally understand if you two decide to use it for something else.

    If you are going to use the money, I would definitely invest in mutual funds. The stock market actually went up more than 30% last year (didn't see the media reporting that did ya?) since it's lowest point in mid-march. When you invest you buy LOW and sell high and the stock market is definitely low right now.

    Or you can put a chunk towards your mortgage. Make sure you have six months worth of expenses just in case though.
    Anonymous

    Answer by Anonymous at 1:12 AM on Jan. 17, 2010

  • Never put money in the stock market that you aren't willing to lose. If you're okay losing 30K then you can invest in stocks, if you aren't, don't put it there! You could put some of it in the stock market - whatever amount you are okay with losing should that happen. I'm a fan of Suze Orman and she recommends and 8 month "emergency fund" - if you don't have one, you could just keep it in savings to cover that.
    missanc

    Answer by missanc at 9:44 AM on Jan. 17, 2010

  • Does his scholarship include housing, food, clothes, supplies? Keep the money where it is in case he needs it for school items. He could also get hurt and lose the scholarship and then how will he or you pay for the tuition, books and everything else he will need.
    tyfry7496

    Answer by tyfry7496 at 3:40 PM on Jan. 17, 2010

  • I would definitely put it in a CD that you can earn interest on...maybe not even all of it...just keep out 10 for him incase something major happens and he needs it. Otherwise I see it as a way for you to put a chunk towards retirement!! YAY for you...good job...get the house paid off...and have 15-20K in a CD that you can tap into in 10 years (or earlier if an emergency arises)...Having a cushion for when you retire is your best bet! Not many people can afford to put money away in this amount. congrats to you!
    sweetstkissez22

    Answer by sweetstkissez22 at 3:55 PM on Jan. 18, 2010

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