Anyone using mutual funds for college savings?

[bsr8j]

I did a quick search and saw that a lot of folks here are either using 529 plans or simply saving for retirement. My wife and I are leaning towards starting mutual funds for our girls. Is anyone else taking that route?

My great-grandparents and grandparents contributed money to a mutual fund that was managed by my parents when I was born. That fund ended up paying for every single college expense I had (four years at a state school--UVa), buying my wife's engagement ring, and provided the down payment for our first house. I still have and contribute to that fund.

What we like about the mutual fund is that it doesn't have to be used for college and that the money will be our girls' once they are old enough. While we fully expect the girls to go to college, we want to make sure they have some nest egg money of their own when they're older. All of our parents want to contribute to the girls' education funds, so we're looking to get those started ASAP.

[kijip]

I think it is a great idea, especially if you have relatives contributing. That said I would not save for college with my own funds until I was quite sure I was maxing out my retirement contributions and had carefully figured out that I would have enough to retire on. One of the best things you can go for your girls is to make sure you are not financially dependent on them later in life.

Also, I would be careful not to assume that the money you save for your children will go as far as the money that your family saved for you. Education costs have consistently risen at a rate higher than inflation and in many cases the returns on mutual funds. For all but the very well off, most families will need to assume some student/child contribution to education costs be that working through school or winning scholarships or taking on some student debt. It is great if you can do it (education, downpayment on a house etc) but you need to be realistic about what you can afford while still saving for your own future needs.

[lilycat88]

We have a relatively small amount in actual "education" savings vehicles. We have more in a Coverdell acount so that it can be used for private elementary school than in a 529. DD has an investment account that includes mutual funds as well as some cash. I like that the money isn't "restricted". If you go that route, though, make sure it's set up in a way that you control when and how your children get it. I don't know about you but DH and I absolutely do not want DD to be handed access to as much money as she's likely to have in it when she's 18. We have the account set up so she's older when she gets it OR she can use it for education expenses prior to the age we set. If we're deceased, it is still hers but there are still some restrictions on when she gets the money...1/4 at a certain age...1/4 at a certain age...etc.

[cvanbrunt]

We have ShareBuilder accounts for both our daughters. We put monetary gifts in and invest a set amount every month. I think they are invested in and S&P 500 index fund.

[blisstwins]

We have 529s with a fair amount in them and we contribute monthly+ all gifts the kids receive. I have a little money per child set aside outside of the accounts because I would also like for them to have some non-restricted money, but honestly, I feel like college costs are so crazy and we are not going to qualify for aid, and they are twins...I just want money to be there for college. We save the max for retirement, but I feel like college is super important and there is a tax benefit to a certain amount with the 529.