-2. Consider a 529 College Plan

There are two types of 529 plans; pre-paid plans and savings plans. A pre-paid account allows parents to buy tuition credits for future use. The disadvantage of a pre-paid plan is that funds can only be applied towards tuition and not room and board.

A 529 savings plan consists of mutual funds’ investments which grow over time. Most plans consist of numerous investment options. Experts generally suggest investing more aggressively in stocks while the child is young and tapering off to a more conservative portfolio as your child gets older.