Whenever you go to a wedding and want to purchase a gift, there is usually a list of stores that the couple is registered at. You’ll go to the store, look up their registry, and purchase an item on their list that hasn’t already been taken. Recently the idea of a gift registry has expanded to monetary gift registries for weddings, gift registries for baby showers, and now there are even monetary gift registries for college savings.
Most 529 college savings plans allow parents to invest money on behalf of their children to pay for college on a tax-advantageous basis. Depending on your 529 plan, the money could be invested in stocks, bonds, CDs, or just about anything. Freshman Fund has brought a unique take on the idea of a 529 college savings plan.
Freshman Fund allows parents to setup a 529 savings plan for their children and then invite friends and relatives to contribute to their child’s college education. Imagine for a moment that you have a child who was having their one year old birthday. Friends and Family members might buy them a toy to play with or a new outfit that they’ll inevitably grow out of in a few months. Either way, the gift given is usually forgotten about within a year.
Imagine for a moment that your friends and family invested that money on behalf of your child into their 529 savings plan. If you were to receive 10 $25 gifts for your child, you would have $250 deposited into your account. Over the course of 18 years, that money would grow to $1,922 if it were invested into a decent mutual fund. That’s a lot better than a few toys or items of clothing that will be gone in a few months.
The monetary gifts from friends and family members won’t replace your personal college savings for your child, but it’s a great way to reduce the amount of money that you and your child will have to pay for school. There’s no reason why a few decent sized gifts throughout the course of your child’s childhood couldn’t pay for a semester or two of college.