- Pre-Funding the Cost
- Your Pre-Funding Strategy Depends upon where You Are Now
- Monthly Investment Program
- Your Investment Objective
- Understand Risk
- Basic Strategies
- How Is Investing for College Different from Other Investing?
There are several kinds of risk. The two that we will discuss here and that you need to consider are market risk and inflation risk.
Market Risk
Cash-type accounts (bank accounts) are designed to provide safety of principal. You put a dollar in—you get a dollar back with some interest. The value of your account increases because your principal earns interest and your interest earns interest.
Bonds, or notes (less than ten years to maturity), are designed to pay you a fixed rate of interest over the life of the bond. They typically pay a higher return than cash accounts. When the bond comes due (matures), you get your principal back in full (assuming it doesn't default). Prior to maturity, the value of the bond can go up or down depending primarily on the direction of interest rates.
Common stocks offer the potential for even a higher rate of return; but the value of your investment is subject to even greater volatility over the short-term. The stock's volatility is subject to market conditions and the financial well-being of the company you've invested in.
To sum up, market risk is the measure of how much the value of your investment can vary.
History shows us that investing in common stocks means that risk in the short term is greater than the risk in the long term. It suggests to those who need their money soon, not to invest in stocks.
Inflation Risk
The higher the inflation rate, the higher the cost of college will be when your child attends. If you do not put your money in investments that stay ahead of inflation, your college investment strategy will not be effective because your investments will actually lose value over time.
- ARE NOT A DEPOSIT
- ARE NOT FDIC-INSURED
- ARE NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY
- ARE NOT GUARANTEED BY THE BANK
- MAY GO DOWN IN VALUE
Important information about procedures for opening a new account
To help the government fight the funding of Terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account.
What this means to you: When you open an account, we will ask you for your name, address, date of birth and other information that will allow us to identify you. We may also ask to see your driver's license or other identifying documents.
Investment products are offered through Osaic Institutions, Inc., Member FINRA/SIPC. Insurance products offered through Osaic Institutions, Inc.
