What is a 529 College Savings Plan?

A 529 college savings plan is a state-sponsored, tax deferred savings plan used for your child’s education.  The important part here is tax deferred.  That means you never pay taxes on the money you put in the 529, and any interest you earn on it, as long as it’s used for your child’s college education.  The 529 helps pay for tuition, books, housing and more.

Your child does not have to be 18 to use this money.  If they decide to postpone their college education, they can use this money whenever they choose, but it must be used for education purposes.  If your child does not go to college the money can with withdrawn, but penalties usually apply.

Every state sponsors a 529 plan, but some are better than other, so you need to do your research.  However, we recommend the New York State 529 plan for almost everyone, even if you don’t live in NY State.  The NY plan is very flexible and you can get some free money… yes, free money!  You can then link the NY State plan to Vanguard Mutual Funds, one of the most respected investment companies in the world, and a Fiscal Sanity favorite.  Your Vanguard fund can invest in mutual funds to earn you even more.  Additionally, if you are a NY State resident you will receive a tax break on the money you contribute.

Free money for your 529 Plan with Upromise

Upromise.com partners with hundreds of online retailers that will contribute money to your 529 plan everytime you shop.  That’s right the 529 plan is linked to your Upromise account and you can start receiving free money… yes, free.  Just shop at any participating online retailer and they will credit you back a percentage of your purchase.  Now, we’re not talking second rate retailers.  Some of the largest online retailers participate. Here is a short list of some of the websites with their percentages at the time of this writing:

• Zappos: 5%
• Circuit City: 2%
• Barnes & Noble: 3%
• Hotels.com: 3%
• 1-800-Contacts: 3%
• Best Buy:2%
• Drugstore.com: 5%
• GNC.com 8%
• Home Depot: 2%
• Kmart: 2%
• Office Depot: 2%
• Proflowers: 10%
• Sears: 2%
• Sports Authority: 4%
• The Body Shop: 4%
• Container Store: 3%
• Netflix: $12
• Vitamin World: 8%
• Zazzle: 8%

Buy flowers for your wife and receive 10% back from Proflowers!  Get healthy and buy vitamins from GNC or Vitamin World and get back 8%!  Sign up for Netflix and receive $12!  Buy everyday items and get free money!

Getting started with Upromise

The earlier the better when saving for your child’s future.  Getting started with Upromise is easy and free.  You just sign up and register your credit cards.  It’s so easy to get free money:

1. Click here to sign up for Upromise - it’s absolutely free.
2. Register your credit cards so they are linked to your account.
3. Shop at participating retailers, restaurants and online stores.
4. If you sign up for the New York State 529 plan link it to your account and invest your money with Vanguard Mutual Funds.

In addition to the free money you receive from Upromise partners, you can (and should) contribute a set amount of money to your 529 plan.  Upromise makes it easy to setup automatic deductions from your checking account to your 529 plan.

Once you setup your Upromise account, please come back here and leave some comments.  We would love to know what your think about this service.

Well if you listen to the worlds greatest investor, Warren Buffett,  you would be buying.  The market is essentially on sale.  With stocks and funds plummeting, now is the time to buy.  Wouldn’t you rather buy from your grocery store during a sale?

If you already have money in the market, now is probably not the best time to sell.  The secret to success in the stock market is buy low and sell high.  Selling now would be selling low.  But don’t fret.  The world  economy will grow.  It always does.  And so will your investments.

After the stock market crash of 1987, the market experienced a remarkable rebound.  As you can see from the chart below, by 1990, the Dow Jones Industrials was setting new highs.

So how do you get into the market the sane way?

Well, first let’s cover a very important point: You will never be able to time the market.  The changes of you buying at the lowest point and selling at the highest point is very, very low.  But you can buy “near” the low and sell “near” the high.

If you believe the market is near it’s low point then you should start dollar cost averaging your way into the market.  Take the amount of money you want to invest and divide it by six.  Then invest that about every month for six months.  For example if you have $6000 to put into the market. Put $1000 in every month for six months.  If the market goes down, you’ll buy more shares for your $1000.  If it goes up, you’ll make more on your previous investments.

Please use the comment form below to let us know what you think.