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Savings Guide 2006

Savvy savers

  There's more to saving than stuffing your extra cash in a mattress.
Savings: The next big thing
Money market accounts 529 accounts
Christmas/vacation clubs Savings bonds
Money market mutual funds Treasuries

Who it's for

They're great for anyone with kids, says Mark Oleson, director of the Office of Financial Success at the University of Missouri at Columbia. Think of it as the IRA for your child's college tuition.

"It's nice for someone who has a little, and it's nice for someone who has a lot," Oleson says.

And it doesn't count against your child's assets when he or she applies for financial aid, thanks to provisions in a new law passed in February 2006.

Technically, as with a lot of investments, the principal is not protected. But with many state plan options, you can elect to make your investments as conservative or aggressive as you want.

If one child elects not to go to college, you can use it for another. And if none of them go, you can take the money, but the income is subject to a 10 percent penalty and taxes, says Barry Picker, partner in Picker, Weinberg & Auerbach CPAs.

While that seems like a lot, it may be more money than you'd set aside if you didn't have the plan, says Oleson.

Trying to figure out which options best match your savings strategy? Here are several key points to compare and contrast at a glance.

minimal usually none yes no no complete
$1,000 - $50,000 yes no no no liberal
minimal usually 0 yes no no complete
$500 - $5,000 often yes no yes partial
$500 - $5,000 usually yes no no with penalty
minimal usually 0 no yes yes highly restricted
approx $25 yes yes no no restricted
minimum $1,000 yes yes no no restricted

-- Posted: Oct. 1, 2006

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