Also, if your older child has a part-time job, encourage him or her to put some of those earnings aside for college. Strategies for Funding College Tuition Growth Stocks and Growth Mutual Funds. This is a long-term approach to investing. The word to look for here is growth. When assessing the growth potential of a particular stock, consider looking for long-term appreciation rather than dividends.
Dividends are taxable, but capital appreciation result in no tax until the stock is actually sold.
Investing in just one or two stocks is always risky. If you'd like to participate in the growth potential of the stock market with less risk, consider a growth mutual fund. Money invested in such a fund is professionally managed and is usually diversified over many stocks. This helps reduce risk. Also, you can start investing in mutual funds with a relatively small amount of money.