Buy shares in good times and bad, regardless of market conditions. Consistency is crucial. Avoid the temptation to invest less when markets are down and more when markets are up. Before employing this strategy, consider your financial ability to continue to buy shares during bear markets. Another strategy for college planning is to open a special tax-favored account in your child s name.
Unearned income includes interest, dividends, capital gains and other earnings from investents.
Be aware that you cannot take the money back. Assets placed in a custodial account are current, irrevocable gifts that belong to the child now and always. If your children plan to attend college within a year or so, consider the Hope Tuition Credit. The credit applies to the first two years of college. Consult your tax adviser regarding your specific situation.