King bell
VIP Contributor
There are different factors to consider when deciding on what is the best way to handle saving for college. It's always a personal decision that should be made after considering your individual financial situation, current and future career plans, academic interests and more.
There are also major differences between saving versus investing in this particular scenario, which you need to consider. For one, investing provides a long-term opportunity to save and grow your cash flow, while saving is always fraught with risk. By keeping your savings in an investment vehicle like the Roth IRA or a 401(k) account (which are both tax-advantaged accounts on which you can deduct after-tax contributions), you're not only reducing your federal income tax burdens but also lowering your overall college costs, since the money invested is free of state and local income taxes.
However, investing also comes with its own set of risks. For some, that's a risk worth taking, especially when the end goal is long term financial security. Investing for college may prove to be the best option for you when you consider the long-term value of your savings versus one-time savings or paying with loans or grants.
There are also major differences between saving versus investing in this particular scenario, which you need to consider. For one, investing provides a long-term opportunity to save and grow your cash flow, while saving is always fraught with risk. By keeping your savings in an investment vehicle like the Roth IRA or a 401(k) account (which are both tax-advantaged accounts on which you can deduct after-tax contributions), you're not only reducing your federal income tax burdens but also lowering your overall college costs, since the money invested is free of state and local income taxes.
However, investing also comes with its own set of risks. For some, that's a risk worth taking, especially when the end goal is long term financial security. Investing for college may prove to be the best option for you when you consider the long-term value of your savings versus one-time savings or paying with loans or grants.