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Saving for College in a Turbulent Market
Let’s face it, there’s a lot of uncertainty and instability in the world right now – look no further than the ups and downs of the stock market. This volatility may keep some investors on the sidelines, while others may try to time the market, which can be risky.
If you’ve been thinking about saving for your child’s post-secondary education, you may be surprised to learn that now is the ideal time to start investing with Edvest, Wisconsin’s direct-sold College Savings Plan. An account can be opened with as little as $25, and setting up recurring contributions is simple.
Continuing to invest through regular, ongoing contributions – even in challenging times – can potentially make a difference. This investment strategy, often called dollar-cost averaging, is when people invest their money in equal portions, at regular intervals, regardless of the ups and downs in the market. It may help to minimize the impact of market volatility, while potentially enhancing returns over the long haul.
For example, let’s say you have $1,200 to contribute to your Edvest account at the beginning of the year. You decide to invest $100 every month via recurring contributions rather than investing it all at one time. Throughout the year, when the market is up, your $100 will buy fewer shares, but when the market is down, your $100 will buy more. Over time, this strategy could lower your average cost per share, compared to going with a lump-sum investment where you may purchase all your shares when they are more expensive than the average. See chart below for breakdown and click here to learn more about the potential benefits of dollar-cost averaging.
Don’t let the market’s unpredictability keep or delay you from investing in your loved one’s future. Opening an Edvest account and setting up recurring contribution – even in small amounts – can potentially add up to big savings down the road.