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In 1999, the average annual cost for a four-year education at a private college or university in 1999 is $104,488; $48,495 for a public college. By 2017, those costs are estimated to increase to $298,243 and $138,420.
Paying for college tuition is a big concern for many Americans. It won't be long before it will cost $100,000 for a 4 year public college. We already know private schools have already reached this number.
According to a study by Louis Harris and Associates, eighty
percent of parents polled stated that they would give up their
vacations to save for college. Seventy nine percent said they
would work overtime or even work a second job to help pay
tuition costs.
Paying for your child's college education is a long-term
goal many people share. Long-term goals are generally defined
as those that can be achieved over your lifetime. They are
best facilitated by:
- Adopting a practical lifestyle that stays within your
means
- Investing the same amount of money each month
- Investment education to instill the confidence to weather
periods of market decline
- The discipline to continue investing regularly even when
share prices drop
Long-Term Goals
Most people have fewer long-term goals but they are lofty
in size and require disciplined commitment. For example:
- Paying for children's college education
- Funding a long and active retirement
Investing Strategies
- Dollar cost average--invest the same amount of
money each month, buying more shares when prices are low
and fewer shares when prices are up; results in a lower
cost per share over time.
- Diversify--spread your money across many different
securities, increasing your chances that one or more of
the securities will perform well at any given time--and
minimizing your risk.
- Asset Allocation--approximately 91% of your investment
portfolio's performance is determined by how your assets
are allocated, so it's important to allocate your money
across different asset classes, such as stocks, bonds, and
cash--as opposed to simply diversifying holdings within
one particular asset class.
Investment Selection
With long-term goals, you can be more aggressive in where
you invest your money, since there will be time to recoup
any losses and take advantage of bargain buying during down
markets. The following are your basic choices:
- Stocks--represent ownership in a company, and generally
offer the best growth opportunities over the long term
- Bonds--represent your loan to a government or corporation,
and generally offer steady, fixed income
- Cash--represented by short-term instruments, providing
more downside protection for your investment but less opportunity
for growth
As a general rule, riskier investments offer higher returns.
However, by investing in all three categories, you combine
riskier investments (stocks), with moderate-risk investments
(bonds), and low-risk investments (cash). This strategy maximizes
your return potential while minimizing your overall investment
risk.
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