Graduation

 

"In addition, one word of caution here," Roy warned

us. "Don't forget equity funds are long-term investments. If you choose them as a way to save for your child's edu-cation, it's best to begin the program when the child is young so there is time to ride out market fluctuations. Also, once your child is within a few years of college, I advise you to look for a good time to redeem the funds. As you know, markets don't go straight up, and if you wait to cash out until the day you actually need the money, Murphy's Law will guarantee that the markets will be down! That advice also holds for equities held inside your retirement plans."

"Makes sense," Tom concurred.

"All right, let's wrap up this section by looking at what may be the most popular, not to mention the most cost-efficient, way to save for your children's college education: Get family members, grandparents being one possible choice, to do it for you!"

"Makes even more sense," a thoughtful Tom concurred again.

"This advice is really all academic—pardon the pun. My kids are sure to be offered full scholarships," I proclaimed confidently.

"Nothing personal, Dave, but I'd do some saving just in case," Roy countered.

"I know you're anxious to move on, Roy, but I have a technical question," Cathy said apologetically. "How do we establish investments in our children's names?"

"In most cases you set up something called a custodial account. Parents—I'm assuming they've named themselves as custodians—select and manage the investments in the account. Be careful here, because once you've placed