Archive for June, 2008

Time is of the essence – Part 6 (Kids Education Savings -Final)

Sorry to miss out on posting last week blog. Now I am back on track after a week long vacation break. Yes, a fun Road trip to Chicago from Houston with my family for a get-together and sight seeing. Road Trip, you might wonder at this current high gas price?!





Yep, you don’t believe it!! I came out as a winner compared to flying since its a last minute plan. You can expect a blog about it pretty soon. Let me jump right into core topic.




In the last few weeks, I been shedding lot of light and sharing as much information I know about Kids Education savings under Time is of the essence main topic. Starting with a
detail analysis , moving on to different investment paths and the previous post with various savings plans available for kids education savings. I have covered many points on Kids Education savings which I feel important and essential under financial planning.





This final post, I am going to share my own realistic approach on the same line. Many of you might know, I always like to walk the talk. It is my core belief. My previous post can stand as examples. Advice is not just for others, its for yourself. You can only advice others if you truly follow your own statement. People will only trust and believe a person if one do things they talk about. Anyway, let me reveal the strategy of my own son’s education savings plan.

My Approach


Time to share my secret. I started my son’s education savings as soon I heard my wife is pregnant. I opened a 12 month CD with $250 monthly deposit in DCU which yielded around 5% last year. I know its not big return. (I shared this idea when I talked about different investment routes – Kids savings Part 2 post)I just wanted to give a kick start and get to a habit to manage my monthly budget to putting aside this amount every month.





I sticked with my initial plan and it gradually become a part of my budgeting. I renewed the CD one more time last year which just got matured 2 months ago. I didn’t really jump to anything as I wanted to start a 529 investment plan.




I analyzed and did my own research, finally ending up opening 2 good funds which can return at least 10% year over year. I opened 2 different funds with 2 different companies in 2 different plans.





I decided to open 2 funds in 2 different companies to diversify and be on a safer side. I also plan to do 2 different plans, coverdell and 529 because I can reap the benefits of both for short term and longer run. That’s my idea.



My First Fund Choice




I happen to come across Permanent Portfolio funds currently managed by US Bank corp from Timothy Sykes(hedge fund guy). He recommended from his personal experience, a all time more than 10% return fund,
Permanent Portfolio Fund – PRPFX.





I did my initial research and found the fund to be amazingly interesting. I was astonished with their return as of date more than 10% year over year and 100% since the inception. See the chart below.




It had really interesting combination of holdings from Gold, Silver, Swizz Franc, US Stocks and Bonds. Check out the detail fund information from their fund fact sheet. I opened a monthly Automatic investment Coverdell plan with a $100 initial deposit. They charge $35 as opening account fee from that initial deposit. Every month I signed up for auto draft of $150 from my $250 savings.


Second Choice


You all know Vanguard is one among the top 3 fund management companies. They have really good funds and at the same time reasonable growth and return funds. I was initially debating whether to go with Vanguard or TRoweprice since I have International Market fund with them.


After my detail analysis, I found TRoweprice don’t have a good fund for 529 which has performance proven for long with good return. So I decided to do Vanguard this time. I planned to do 529 Aggressive Growth Portfolio which is 100% with blend pattern. It also has good return as of last year with 10% year over year. Check out the chart below. Check out the detail performance of the portfolio by check their fund sheet.


Since Vanguard as a Minimum $3000 deposit, I used my matured CD amount directly as opening deposit. My initial 2 years CD savings served a real good purpose as a initial opening amount to kick start 529 fund in Vanguard. I also signed for monthly automatic addition of $100 to this account which totals my $250 allocated in my monthly budget for my son’s education savings.


I hope to maintain these 2 funds and use them when needed. i also plan to add one more in the future to be better situation to handle the need. Better to be planned and cautious now then sorry later..


This concludes the series of Kids Education savings blogs. I hope it was useful and informative. Let me know what do you thing. I am planning to shift gear from “Time is of the Essence” topic and post blogs which are in my list for a long while on different areas. Watch out..

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