October 23, 2018
As a parent, one of the expenses you may be dreading most is paying for your child’s education. From the moment they learn their ABC’s to the day they receive their diploma, chances are that you’ll be footing the bill nearly every step of the way.
With this in mind, it never hurts to get a little help when building up your savings. One option you should seriously consider is using investments to secure that college fund.
Imagine having an additional source of income to go with the paycheck you already earn from your current job. If you play your cards right, this additional income would require only a minimal amount of effort and money on your part. This is the benchmark you should aim for when seeking out passive income.
One of the biggest arguments in favor of investing on the side is its role as passive income. Investments can take many forms ranging from:
By choosing the right investment instrument, you can speed up your ability to earn money for all kinds of financial goals — including a full college education.
This is not to say that investments will result in instant wealth and success. The best investment will vary depending on your situation, which includes factors such as your priorities and risk tolerance.
To build an effective investment portfolio, you must do your homework on the best instruments available to you. Consider exactly what you need from an investment: Are you looking for higher returns, or greater security in the long term? Would you rather go with a tried-and-tested brand, or take a risk with a more innovative venture?
When embarking on any type of risky investment venture, one of the most important factors to consider is time. The U.S. Securities and Exchange Commission recommends that you draw up a comprehensive plan first, taking into account things such as future emergencies and your financial comfort zone.
In the case of parents saving for college, experts recommend that you base your financial decisions on your child’s age. The older the child, the more conservative the instruments you should choose. Otherwise, one bad investment could undo years of your hard work.
Ideally, your instrument of choice must reach maturity just as your child hits his or her college years. Look for investments designed for long-term performance, such as bonds and prepaid plans. Arrange your budget in such a way that your other financial goals — like paying off your mortgage or saving for retirement — aren’t compromised in turn.
If you are strapped for time, however, you may consider a product that delivers results within a short amount of time without skimping on security. Examples include short-term portfolios comprised chiefly of bonds and other low-risk instruments. Note that you may be unable to assemble such a portfolio without advice from a trusted financial expert.
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