How do you allocate the resources available to meet all the financial needs?

Estimates are that it will cost between $150,000 and $200,000 to educate a child in the not too distant future. Depending on ages and the schools chosen, this will require a lump-sum investment today between $20,000 and $70,000, or annual payments of $2500 to $10,000. These payments will vary by rates of return assumptions and results. The factors parents face in attempting to figure out how much to save include time and the rate of return after taxes. This is compared with the projected cost of the education expense in the future. Any available resources, such as current savings, projected financial aid, or scholarships, are subtracted when determining this amount. Professional financial advisors can easily run the calculations that these projections entail and provide a reasonable investment plan for you to follow. Most advisors recommend that college funds be invested in asset classes that have growth characteristics, such as mutual funds or stocks. The best approach is often a diversified portfolio that includes a high percentage of monthly savings or a lump-sum investment in growth mutual funds. Tax deferral may also be an important consideration unless assets are invested in the child's name or some type of custodial account. The percentage of assets in the growth category should be reduced somewhat as the child gets closer to college and liquidity and stability become more important issues. The ownership of the investment program is also an important consideration, particularly because of the large amount of money being set aside and the fact that unused or unneeded education funds could be important retirement assets for the parents.