Most people are familiar with IRA and 401K plans. Financial planners always advise their clients to contribute to these programs for retirement and many of us have used the tax deferred benefits to significantly reduce our income taxes each year. However, why don’t we hear more about 529 plans?
According to a recent article in the Journal of Financial Planning, American families are leaving an estimated $237 billion on the table by not investing their college savings in 529 plans under normal market conditions. The primary benefit for most families is not its tax advantages; it is the fact that it encourages investing instead of using a savings account.
The article continues that middle and upper-middle-class families stand to benefit the most from increased adoption of 529 plans. The average family saving for college would see a benefit of $4,044 per child.
West-Cal Reverse has a program called a Limited Equity Share System that allows home owning families to diversify investments by transferring from their residential real estate equity into a 529 plan and then invest for maximum effect. This can be a game-changer for college financing.
According to Douglas Solorzano, an advisor with DAS Wells Fargo Advisors in Century City, Los Angeles, CA, a well-managed stock portfolio has returned 9% per annum over the last 30 years. A $100,000 contribution, using a LESS program to create a lump sum, into a 529 portfolio when a child is born, could grow to nearly $500,000 by the time he or she is ready to go to college.
In these difficult times, we ask you to be safe, but to continue to have hope and plan for you and your family’s future. Learn more at www.less.reverseurthinking.com
Marc has 36 years in financial services and 6 years in teaching.
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