September 16, 2008
Michael Sheehan

Physician's Money Digest, August31 2003, Volume 10, Issue 16

As 529 college savings plans havemushroomed, physician-parents arefinding they're not limited to the planoffered by their state. But more choicesalso mean more confusion. Expertssay to look at your state plan first,because you may get a state tax breakon contributions; then weigh yourinvestment options. Some states offerjust a few; others have a more extensivemenu to pick from. The bearmarket has increased the popularityof guaranteed-principal funds, whichoffer a fixed interest rate. Althoughclose to 30% of all 529 dollars arenow going into these funds, expertscaution against them for very youngchildren. If your child is 10 years ormore away from college, it's unlikelythat your investment will beat theinflation rate in tuition, which is currentlyabout 6% a year for private collegesand 10% a year for stateschools. For up-to-date facts on 529plans, visit www.collegesavings.org orwww.savingforcollege.com.