Money Management Skills

(backadmin) #1


Lecture 6: Investing in Education


% 0DQ\VWDWHVRIIHUORZIHHSDVVLYHLQYHVWPHQWRSWLRQV$QGPDQ\


 SODQV RIIHU DJHEDVHG LQYHVWPHQWV WKDW ZLOO UHGXFH VWRFN


allocations in order to lower your level of risk as your child gets
FORVHUWRDJHZKHQ\RX¶OOWDNHRXWWKHIXQGVWRSD\IRUVFKRRO

% The government provides an additional incentive when parents
FRQWULEXWH WR FROOHJH WXLWLRQ 7KH $PHULFDQ RSSRUWXQLW\ FUHGLW
HVVHQWLDOO\JLYHV\RXDIUHHGROODUVSHUVWXGHQW<RXSD\LWXS
front, but you can credit it dollar for dollar against your tax liability
LI\RXULQFRPHLVEHORZDERXWGROODUVIRUPDUULHGFRXSOHV
7KHQ\RXFDQWDNHSHUFHQW RUXSWRGROODUV RIIWKHQH[W
GROODUVIURP\RXUWD[HV$ERYHWKDWDPRXQWLWPDNHVVHQVHWR
SD\IRUVFKRROH[SHQVHVIURPWKH$OVR\RXFDQ¶WXVH$PHULFDQ
RSSRUWXQLW\FUHGLWPRQH\IRUURRPDQGERDUGEXW\RXFDQXVHD

% $IWHU\RX¶YHXVHGXSWKH$PHULFDQRSSRUWXQLW\FUHGLWIRUWKH¿UVW


IRXU\HDUVRIDVWXGHQW¶VFROOHJHHGXFDWLRQ\RXFDQWDNHDGYDQWDJH


RIWKHOLIHWLPHOHDUQLQJFUHGLW7KLVJLYHV\RXDSHUFHQWWD[FUHGLW


XSWRGROODUVZRUWKRIH[SHQVHVVR\RXUPD[LPXPFUHGLW


LVGROODUV$OVR\RXFDQXVHWKHOLIHWLPHOHDUQLQJFUHGLWIRU


JUDGXDWHHGXFDWLRQRUHGXFDWLRQWRLPSURYH\RXUMREVNLOOVDQG\RX


GRQ¶WQHHGWREHDIXOOWLPHVWXGHQW7KHUHLVDQLQFRPHOLPLWVR


KLJKHUHDUQHUVZRQ¶WEHHOLJLEOH


% 7KHOLIHWLPHOHDUQLQJFUHGLWFDQRQO\EHXVHGIRUWXLWLRQDQGIHHV


+LJKHUHDUQLQJSDUHQWVPLJKWEHEHWWHURIIXVLQJDWXLWLRQDQGIHHV


GHGXFWLRQZKLFKUHGXFHV\RXUWD[DEOHLQFRPHDPRXQW7KHWXLWLRQ


and fees deduction will allow you to reduce your income by up
WRGROODUV%RWKWKHOLIHWLPHOHDUQLQJFUHGLWDQGWKHWXLWLRQ
DQGIHHVGHGXFWLRQDUHFDSSHGSHUWD[UHWXUQZKLOHWKH$PHULFDQ
RSSRUWXQLW\FUHGLWLVFDSSHGSHUVWXGHQW

% The Coverdell education savings account allows a smaller annual
FRQWULEXWLRQRIGROODUVSHUVWXGHQWSHU\HDU8QOLNHSODQV
KLJKLQFRPHSDUHQWVPD\QRWEHHOLJLEOHIRUD&RYHUGHOO7KHPDLQ
advantage of the Coverdell is that you can use the money for private
HOHPHQWDU\DQGVHFRQGDU\HGXFDWLRQZKLOHWKHLVRQO\IRUFROOHJH
Free download pdf