be worth a look, although I don't think they're available in Michigan . . . yet.
"One bank even offers a CD with its interest rate linked to the inflation rate of college costs—not a bad idea!"
"All things considered though, I still lean toward the following method: Purchase on a monthly basis a well-selected equity mutual fund for your child."
"Professional money management, the traditionally higher rates of return associated with long-term ownership, dollar cost averaging, forced savings . . ."
While Tom strained to prolong his display of knowl-edge, Roy resumed, "A child under the age of fourteen is currently allowed to earn six hundred and fifty dollars a year of investment income tax-free. The next six hundred and fifty dollars of investment income will be taxed at his or her own rate—in most cases, fifteen percent. Anything over that amount will be taxed at the parents' top rate. Those amounts, by the way, are indexed to inflation and increase occasionally. After the age of fourteen—"
"All investment income is taxed at the child's rate," I remembered from earlier discussion.
"Now think about that for a moment." Roy paused.
"On top of all of the advantages Tom listed, equity funds are also ideal from a tax perspective. They normally pay a small annual dividend, depending on how much you've invested, of course, of much less than the six-hundred-and-fifty-dollar limit—therefore, no taxes payable! And if the fund is redeemed after the child turns fourteen, any capital gains are taxable in his or her hands, not the parents'.
"Even though the law now permits you to take penalty-free, but not tax-free, withdrawals from your IRA to pay for