Flipbook_College_2017 - page 14-15

Tax-advantaged savings vehicles have limitations on the amount you can save each
year, whereas taxable accounts aren’t constrained by contribution limits.
You don’t want to gamble with your child’s education, so you should generally choose investment
vehicles that have risks with which you are comfortable. Remember that the more potential for growth
offered by an investment, the more risk it may carry.
If you start saving for college when your child is young, you have a longer time horizon and may
choose to take a more aggressive approach to investing. If you have a shorter time frame, you may want
to take a more conservative approach.
Savings accounts, CDs, and money market funds are
relatively safe ways to save for college, but the potential
for growth is very limited. The Federal Deposit Insurance
Corporation insures CDs and bank savings accounts at
FDIC-insured institutions for up to $250,000 per depositor,
per institution. CDs generally provide a fixed rate of return.
To increase performance potential over time, you might
choose to invest in stocks, bonds, and mutual funds. With
thousands of mutual funds available, you should be able
to find funds that are appropriate for your time frame and
investment objectives.
The return and principal value of stocks, bonds, and
mutual fund shares fluctuate with changes in market
conditions. Shares, when sold, may be worth more or
less than their original cost. Bonds are subject to interest-
rate, inflation, and credit risks. As interest rates rise, bond
prices typically fall. If not held to maturity, bonds may be
worth more or less than their original cost. A bond fund’s
performance can be affected by the risks associated with
the underlying bonds in the fund.
Money market funds are neither insured nor guaranteed
by the FDIC or any other government agency. Although a
money market fund attempts to maintain a stable $1 share
price, you can lose money by investing in such a fund.
Mutual funds are sold by prospectus. Please consider
the investment objectives, risks, charges, and expenses
carefully before investing. The prospectus, which contains
this and other information about the investment company,
can be obtained from your financial professional. Be sure
to read the prospectus carefully before deciding whether
to invest.
Sample Asset Allocation Models
Stocks
80%
Bonds
15%
Bonds
50%
Stocks
30%
Cash
alternatives
20%
Cash
alternatives
5%
These hypothetical portfolios are shown for illustrative purposes only. They are examples, not recommendations.
Asset allocation is a method used to help manage investment risk; it does not guarantee a profit or protect against
investment loss. Investments offering the potential for higher rates of return also involve a higher degree of risk.
Other Savings Vehicles
Aggressive
allocation
Conservative
allocation
College 10+ years away
College 2+ years away
Only
55%
of parents are “extremely”
or “somewhat” conf ident that they will
be able to meet future college costs.
Source: Sallie Mae, 2016
1,2-3,4-5,6-7,8-9,10-11,12-13 16-17,18-19,20
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