The Crummey Trust is a trust fund that might cover college expenses

For much money think Crummey Trust

When you hear the term "trust fund baby" it is usually referring to a Crummey Trust. This is the type of trust that you set up for a minor. Unlike with a custodial account, the person who sets up the trust fund can determine when the beneficiary is allowed to take control of the money. A Crummey Trust is usually established to hold a significant amount of money and is relatively expensive to establish. Plus, the trust is considered the asset of the beneficiary, which means it can hurt your chances of receiving financial aid. However, if you have a trust fund to begin with then there's a good chance you won't qualify for financial aid anyway.

Investing For College

If you choose to use a 529 Plan then most of your investment decisions are done. Once you pick which investment track you want to follow within your plan, the fund manager will take care of all the day-to-day decisions. Like a mutual fund you just keep adding money over time. However, if you plan to open a Coverdell or simply to invest on your own, you'll learn that investing for college is different than for other goals such as retirement. The biggest challenge is that you don't have as much flexibility over when you need the money. You can always defer retirement for five years but not so with a college education. Incorporate the following tips for your own investment strategies.

Set annual goals

You need to know what your goal is before you start investing. Figure out how much college will cost when your child is ready to attend. Be sure to plan for both private and public college educations. Once you have a goal you can set targets for your investment strategy. Plus, as you get closer to your goal you can switch to an increasingly conservative strategy to make sure you don't risk what you worked so hard to build.

Start early to give your money time to grow

The hardest part of investing is often getting started. You need to fill out paper work to open accounts and select investment options, but the sooner you begin the better your chances are of reaching your goal. Time is on your side. Once you get your investments started you might want to consider making an automatic investment each month. Mutual funds, for example, let you set up automatic investment so that each month a certain amount of additional shares are purchased. But don't be tempted to set these mechanisms up and then forget about them. Pay attention and don't get complacent especially as the time for when you need the money approaches.

1. What are guaranteed schlarships and how to get one
Guaranteed Scholarships Do Exist I have often warned students and parents that there is no such thing as a guaranteed scholarship. Scholarships are competitio...

2. Useful tips for saving money for college
Save Money By Spending Money You're probably familiar with airline frequent flyer programs. The idea is simple: You earn frequent flyer miles that you eventua...

3. Modified adjusted gross income and paying for college
How do I figure out my modified adjusted gross income (MAGI) to see if I qualify to contribute to a Coverdell ESA? The Coverdell Education Savings Account as we...

4. Strategies for saving money and paying for college
Purchase zero coupon bonds strategically These bonds are issued at a discount from their face value. After a specified maturity date the bond can be redeemed fo...