5000.00 to invest

[Outrage]

Anyone have any ideas, funds, or stocks they recommend to invest 5000.00 in an UTMA account for my daughter. I am trying to make as much gain as I can long term to help pay for her college tuition.
Thanks

[bill]

I am no person t give advise but here is a link to read and think about:
http://www.fairmark.com/custacct/regret1.htm

[flatscat1]

I'm in this line of work. I don't know your situation fully, but you should not rule out the option of holding these funds in a 529 college savings account instead of a UTMA/UGMA account.

There are distinct advantages and differences both between 529's and UTMA's, including investment choices. 529's are designed for college savings, you maintain control, and most providers have portfolios in place that adjust as to your child's financial needs, timeline, and risk.

Talk to your financial advisor and he'll be able to fill you in on specifics.

[flatscat1]

You might also find this handy. You can select your specific college, your child's age, how much you have saved now and it will tell you how much you need to save per month/year in order to pay for college. It's cool and pretty handy.
http://www.enroll529.com/pyxisCSC.html (http://www.enroll529.com/pyxisCSC.html)

[Reel-tor]

Was a recent article in newspaper (or maybe WSJ) that Congress passed new tax law which now subjects all kids between 14-18 to same tax rate as parents tax rate. Prior law allowed tax rate based solely on kid's income. This has been referred to as "middle income parent's tax trap".

[Outrage]

Thank you all for the help. This is a great web site, especially people like you who give a helping hand.
Thanks

[TTguy]

The above tax law mentioned is called the kiddie tax. The age has been raised to 18. There are more details to mention, but I would look into a 529 plan instead.

[Bug_Power]

Long term....Look at mutual funds....short term Money Markets. A good high yield Mutual fund will out perform most 529 plans.

[flatscat1]

529 plans are composed of mutual funds, similar to a 401K plan. The plan we use has numerous investment options (funds) from Oppenheimer, MFS, Merrill Lynch and Franklin Templeton. You can choose age-based portfolios or comprise your own. Funds are diversified across size and style and include international.

When you take into account the tax FREE compounding AND withdrawl aspects of 529 plans, I believe they make better sense than a traditional mutual fund portfolio. If you kids are young, the power of compounding over a decade or more combined with not having to pay tax on the appreciated portion is pretty sweet.

[flatscat1]

Furthermore, most 529 plans offer automatic rebalancing, which can add significant alpha to a portfolio in times of increasing volatility, like we are currently in. With a portfolio of mutual funds outside of a plan, you can not rebalance without paying transaction fees and load fees, depending on how long you have owned the funds.

[TTguy]

I agree with flats....dont take the advice of bug. You do have the investment options in 529 plans. Therefore, as a performance comparison goes, it depends on how you invest your money in the 529. The tax advantages flats mentioned are also why the majority of people trying to put away money for college are using 529's and, and not brokerage accounts with mutual funds, UTMA/UGMA accounts (kiddie tax), or IRA's.