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Interests in CollegeAmerica are sold through unaffiliated intermediaries.  © 2011 American Funds Distributors, Inc. AI-999...
She wants to be a doctor AI-90016 <ul><li>CollegeAmerica ® </li></ul><ul><li>A 529 college savings plan </li></ul><ul><li>...
Agenda <ul><li>An academic decision </li></ul><ul><li>An educated choice </li></ul><ul><li>Building your plan  </li></ul>©...
An academic decision AI-90005 © American Funds Distributors, Inc. V1
529 college savings plans <ul><li>Flexibility </li></ul><ul><li>Tax advantages </li></ul><ul><li>Oversight </li></ul>© Ame...
This hypothetical example assumes an 8% average annual rate of return (compounded monthly) for both investments. The examp...
An educated choice AI-90002 © American Funds Distributors, Inc. V1
Why CollegeAmerica? <ul><li>Designed for use with advisers </li></ul><ul><li>Competitive operating expenses </li></ul><ul>...
Account value at age 18 if your beneficiary is currently a  … How your monthly investment can grow Never too early … or la...
AI-90009 Building your plan © American Funds Distributors, Inc. V1
<ul><li>Invest in a single fund </li></ul><ul><li>Select an investment foundation  </li></ul><ul><li>Build a customized po...
The American Funds difference <ul><li>Long-term, value-oriented approach </li></ul><ul><li>Extensive global research effor...
Three foundation choices © American Funds Distributors, Inc. AI-34644 Building your plan ABC Foundation SM Conservative Eq...
Enrollment is a long way off This sample asset allocation is for illustrative purposes only.  © American Funds Distributor...
Shorter horizon or increased stability This sample asset allocation is for illustrative purposes only.  © American Funds D...
Enrollment is near This sample asset allocation is for illustrative purposes only.  © American Funds Distributors, Inc. AI...
© American Funds Distributors, Inc. AI-34645 Growth funds AMCAP Fund ® EuroPacific Growth Fund ® The Growth Fund of Americ...
American Funds in CollegeAmerica © American Funds Distributors, Inc. AI-34646 Bond funds American Funds Mortgage Fund SM A...
Planning for college <ul><li>An academic decision </li></ul><ul><ul><li>529 college savings plans </li></ul></ul><ul><li>A...
Investors should carefully consider the investment objectives, risks, charges and expenses of the American Funds and Colle...
Depending on your state of residence, there may be an in-state plan that provides tax and other benefits not available thr...
© American Funds Distributors, Inc. The return of principal in bond funds, as well as in funds with significant bond holdi...
© American Funds Distributors, Inc. Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or ...
© 2011 American Funds Distributors, Inc. AI-99997
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Collegeamerica

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A 529 College Savings Plan

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  • CollegeAmerica is sponsored by Virginia College Savings Plan. Figures are past results and are not predictive of results in future periods. Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value. Interests in CollegeAmerica are sold through unaffiliated intermediaries.
  • [ Note to presenters : You can tell your own opening story about how you (or someone you know) paid for college. You can also use the following excerpt from the book Next by Michael Lewis. New College in Oxford, England, was built in 1386. In the ceiling of the common room of the college were giant oak beams. At the end of the 19th century, the time had come to replace the oak beams. The folks at New College had a problem; they did not know where they would get the wood to replace the beams. The Oxford forester informed them that the man who had built the original ceiling back in the 14th century had also planted the trees to replace the beams. They stood on Oxford University land, waiting to be cut down.] That brings us to our subject today … Planning for college. Everyone wants to help their children, grandchildren, nieces and nephews realize their dreams — whether it’s to become an astronaut, an artist, a teacher or a doctor. Before you know it, today’s toddlers will be ready for college. And putting a child through college takes planning and foresight.
  • Today we’ll discuss how: 529 college savings plans provide higher education savers with an unmatched combination of benefits. CollegeAmerica, a 529 college savings plan offered by American Funds, is an attractive option for many investors. You can work with your adviser to build a CollegeAmerica plan appropriate to your higher education savings objectives.
  • An investment in higher education is an investment in the future — for your child, grandchild or even yourself. A 529 college savings plan can help brighten that future by providing a variety of benefits and tax advantages for most higher education savers. Because of these benefits, 529 plans have become the savings vehicle of choice for millions of investors. That’s why, as of the end of 2010, investors had established more than 10 million college savings accounts containing assets totaling more than $100 billion.
  • A 529 college savings plan facilitates saving for college with an attractive combination of benefits, including: Flexibility You can open a 529 plan for anyone — a child, grandchild, stepchild, spouse or friend. And if a return to school is in your future, you can even establish an account for yourself. There are no income limits. You can contribute no matter how much you earn. Assets in a 529 savings plan can be used to pay for a variety of higher education expenses, including tuition, room and board, books and supplies. Though most plans are administered by individual states, investors can choose from any state’s plan regardless of their state of residence. In addition, account assets can be used to pay qualified higher education expenses at thousands of eligible institutions nationwide, not just schools in the state where the account owner or beneficiary lives. Depending on your state of residence, there may be an in-state plan that provides tax and other benefits not available through CollegeAmerica. Tax advantages Earnings in 529 accounts can grow free from federal tax. If you withdraw money from your 529 college savings plan account for purposes other than higher education, your earnings will be subject to federal income tax and possibly a 10% federal tax penalty. A number of states allow a deduction from or a credit against state taxes for all or part of a contribution to certain 529 plans. Oversight The account owner rather than the beneficiary maintains oversight of account assets and determines the timing and amount of distributions. Account owners can change the beneficiary to another member of the previous beneficiary’s family without penalty.
  • 529 plans offer significant tax benefits because dividends and capital gains are not taxed as long as plan assets are used to pay for qualified educational expenses. This represents a potentially significant advantage over saving for college in a taxable account — namely, a bigger college-savings nest egg. Consider the following example. This chart illustrates the value of investing in a tax-free account by showing the growth after 18 years of a hypothetical $100-per-month investment in a tax-free account as well as an account taxed at 25%, where both earned 8% a year compounded monthly. The taxable account assumes a 25% tax rate because the typical mutual fund investor falls into the 25% tax bracket. Your tax rates may vary. In dollar terms, this means that assets in the 529 plan would exceed those in a taxable account by almost $10,000, nearly the cost of one semester of college at a public university. Of course, if investors withdraw money from a 529 college savings plan and use it for something other than higher education expenses, they’ll face taxes and penalties. The results shown here are not intended to represent an investment in a specific fund, and, of course, a program of regular investing does not ensure a profit or protect against loss. Investors’ investment experiences will differ.
  • When it comes to significant savings challenges like higher education, good planning can help you meet your goals. Let’s talk about how CollegeAmerica can help you meet the higher education savings challenge.
  • CollegeAmerica is the nation’s largest 529 college savings plan and the only one to feature the American Funds. With CollegeAmerica, investors get: A program designed for use with your adviser CollegeAmerica was designed to allow you to work together with your financial adviser to customize a program appropriate to your needs. Competitive operating expenses CollegeAmerica provides exceptional value for shareholders, with operating expenses that are competitive in the mutual fund industry. In addition to fund expenses, you will incur a $10 fee for each CollegeAmerica account established as well as an annual $10 account maintenance fee. The fees of the American Funds available through CollegeAmerica are described in each fund’s prospectus and the CollegeAmerica Program Description . Diverse investment options Investors can choose a single fund from 25 of the American Funds, select from any one of our model portfolios — we call them foundations — or design a portfolio of American Funds that fits their financial plan, time horizon and tolerance for risk. Experienced investment management Only CollegeAmerica offers the experience and knowledge of American Funds. For 80 years, American Funds has invested with a long-term perspective and a consistently prudent approach. Low start-up amounts Minimums are higher for the money market fund.
  • When it comes to college savings, getting an early start is key. However, it’s never too late to begin saving for educational objectives. Doing so could potentially reduce the amount you’ll need to borrow to pay for higher education. Just look at how a monthly investment can grow over time. Importantly, you can invest up to $13,000 a year ($26,000 for married couples) for each beneficiary without gift-tax consequences. Under a special election, you can accelerate up to five years’ worth of investments and put up to $65,000 ($130,000 for married couples) into CollegeAmerica at one time without gift-tax consequences. Once a CollegeAmerica account’s value reaches $350,000 per beneficiary (across all plans administered by Virginia College Savings Plan) through contributions, growth or transfers, no more contributions will be accepted.
  • When creating your American Funds CollegeAmerica plan, it’s important to work with a financial adviser to select the funds that are appropriate to your needs.
  • Everyone has a different time horizon and tolerance for risk. CollegeAmerica offers investors 25 American Funds with a full range of investment objectives. You may either select a single fund, opt for one of our investment foundations or develop a customized portfolio of funds. You may want to keep it simple and invest in a single fund that you can buy and hold for many years. If the person you’re saving for won’t be starting college for a while, you might consider investing in one of the seven American Funds in the growth category. If you’re more conservative or have a shorter time frame, you may want an “all-weather” equity-income or balanced fund that invests in both stocks and bonds. You may wish to choose an investment foundation appropriate to your beneficiary’s objectives and time horizon and, as enrollment draws nearer, transition those assets into one of the more conservative foundation options. You may prefer to build a customized portfolio of funds that you can adjust as the beneficiary gets closer to enrolling in school.
  • Whichever CollegeAmerica fund options you select, you’re getting American Funds’ time-tested investment approach. The following five factors are at the heart of the American Funds philosophy: American Funds invests with a long-term, value-oriented approach based on extensive research. Instead of asking, “Where will this security be in three to six months ?” American Funds analysts prefer to ask, “Where will this company or issuer be in five to 10 years ?” American Funds doesn’t cut corners when it comes to global research. Our investment professionals travel the globe each year to meet with business executives, industry specialists, economists and government officials. They also speak with a company’s suppliers, buyers, bankers, consultants, customers and competitors. Created in 1958, American Funds’ multiple portfolio counselor system combines the best attributes of single-manager and committee systems: Each portfolio is divided into smaller, more manageable segments. Segments are assigned to individual portfolio counselors who make independent decisions. A group of investment analysts also manages a segment. All investment decisions are monitored to ensure consistency with fund objectives and overall guidelines. American Funds portfolio counselors have an average of 27 years of investment experience. They have a depth of experience in both good markets and bad. More than 60% were in the investment industry before the October 1987 crash, and one in five experienced the 1973–74 bear market. American Funds is committed to providing exceptional value for shareholders, with management fees that are among the lowest in the mutual fund industry, according to Lipper.
  • The following slides illustrate three model portfolios that you can use as guides to help you get started. Depending on when your beneficiary plans to enroll in college, one of these foundations may be appropriate.
  • If enrollment is a long way off, consider Conservative Equity Foundation.
  • If your time horizon is shorter or you are seeking increased stability, consider Income Foundation.
  • If enrollment is near, consider ABC Foundation. Of course, you may prefer different investment options which can be changed according to a timetable you develop with your adviser.
  • If you and your adviser choose a customized approach, CollegeAmerica offers 25 different American Funds. Here is a complete list of the equity funds available for your CollegeAmerica plan. They fall under the categories of growth, growth-and-income, equity-income and balanced funds.
  • Here is a complete list of the bond and money market funds available for your CollegeAmerica plan.
  • Higher education delivers priceless benefits. That’s why investing for higher education is a key financial goal for so many people. However, as the cost of college continues to climb, the goal has become more challenging. A 529 savings plan can help. With 529 plans, earnings can grow free from federal tax and withdrawals for qualified higher education expenses are free from federal tax. CollegeAmerica, the 529 college savings plan offered by American Funds, gives higher education investors an attractive combination of benefits and options. CollegeAmerica is designed for use with your adviser, who can help you develop an investment plan appropriate to your objectives and time horizon. CollegeAmerica is the only 529 savings plan that offers the experienced investment management of American Funds. CollegeAmerica’s expenses are competitive among 529 college savings plans. Finally, a college investment is serious money. Investors want an experienced investment manager. So, the most important question they can ask is, “Who will manage my assets?” For 80 years, American Funds has helped millions of shareholders reach their investment objectives.
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  • American Funds: The right choice for the long term.
  • Transcript of "Collegeamerica"

    1. 1. Interests in CollegeAmerica are sold through unaffiliated intermediaries. © 2011 American Funds Distributors, Inc. AI-99974 CollegeAmerica is sponsored by Virginia College Savings Plan. Figures are past results and are not predictive of results in future periods. Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
    2. 2. She wants to be a doctor AI-90016 <ul><li>CollegeAmerica ® </li></ul><ul><li>A 529 college savings plan </li></ul><ul><li>Flexibility </li></ul><ul><li>Oversight </li></ul><ul><li>Tax advantages </li></ul><ul><li>American Funds </li></ul>© American Funds Distributors, Inc. V1
    3. 3. Agenda <ul><li>An academic decision </li></ul><ul><li>An educated choice </li></ul><ul><li>Building your plan </li></ul>© American Funds Distributors, Inc. AI-90004 V1
    4. 4. An academic decision AI-90005 © American Funds Distributors, Inc. V1
    5. 5. 529 college savings plans <ul><li>Flexibility </li></ul><ul><li>Tax advantages </li></ul><ul><li>Oversight </li></ul>© American Funds Distributors, Inc. AI-90012 An attractive combination of benefits V1
    6. 6. This hypothetical example assumes an 8% average annual rate of return (compounded monthly) for both investments. The example also assumes an investor pays 25% in taxes. (The typical mutual fund investor falls into the 25% tax bracket.) Your tax rate may vary. The current minimum tax rates on capital gains and dividends could make the taxable investment return higher, thus reducing the difference between the two ending values in the chart. If you withdraw money from a 529 college savings plan for purposes other than higher education, your earnings will be subject to federal income tax and possibly a 10% federal tax penalty. The results shown here are not intended to represent an investment in a specific fund and, of course, a program of regular investing does not ensure a profit or protect against loss. Your investment experience will differ. Why tax-free investing? The tax-free advantage © American Funds Distributors, Inc. AI-90013 11 10 9 8 7 6 5 4 3 2 1 Year 12 13 14 15 16 17 18 $50,000 40,000 30,000 20,000 10,000 0 $48,329 $38,929 Tax-free college savings plan Taxable account V1
    7. 7. An educated choice AI-90002 © American Funds Distributors, Inc. V1
    8. 8. Why CollegeAmerica? <ul><li>Designed for use with advisers </li></ul><ul><li>Competitive operating expenses </li></ul><ul><li>Diverse investment options </li></ul><ul><li>Experienced investment management </li></ul><ul><li>Low start-up amounts </li></ul>© American Funds Distributors, Inc. AI-90014 V1
    9. 9. Account value at age 18 if your beneficiary is currently a … How your monthly investment can grow Never too early … or late © American Funds Distributors, Inc. AI-34647 This hypothetical example assumes an 8% average annual rate of return, compounded monthly. The results shown are not intended to represent an investment in a specific fund. Your investment experience will differ. Regular investing does not ensure a profit or protect against loss. Investors should consider their willingness to keep investing when share prices are declining. $100 $ 48,329 $ 24,211 $ 9,264 200 96,657 48,422 18,528 300 144,986 72,634 27,792 400 193,315 96,845 37,056 500 241,643 121,056 46,319 Monthly investment Newborn 6-year-old 12-year-old V1
    10. 10. AI-90009 Building your plan © American Funds Distributors, Inc. V1
    11. 11. <ul><li>Invest in a single fund </li></ul><ul><li>Select an investment foundation </li></ul><ul><li>Build a customized portfolio of funds </li></ul>With 25 investment choices, investors can: © American Funds Distributors, Inc AI-90499 Building your plan V1
    12. 12. The American Funds difference <ul><li>Long-term, value-oriented approach </li></ul><ul><li>Extensive global research effort </li></ul><ul><li>Multiple portfolio counselor system </li></ul><ul><li>Experienced investment professionals </li></ul><ul><li>Commitment to low management fees </li></ul>© American Funds Distributors, Inc. AI-90018 V1
    13. 13. Three foundation choices © American Funds Distributors, Inc. AI-34644 Building your plan ABC Foundation SM Conservative Equity Foundation SM Income Foundation SM The Bond Fund of America SM American High-Income Trust SM Capital World Bond Fund ® American Mutual Fund ® American Balanced Fund ® Capital World Growth and Income Fund SM The Income Fund of America ® The Bond Fund of America SM Capital Income Builder ® V1
    14. 14. Enrollment is a long way off This sample asset allocation is for illustrative purposes only. © American Funds Distributors, Inc. AI-70112 Conservative Equity Foundation Through investments in three equity-oriented funds, Conservative Equity Foundation can give prudent investors an opportunity for growth while also seeking reduced volatility. American Mutual Fund American Balanced Fund Capital World Growth and Income Fund V1
    15. 15. Shorter horizon or increased stability This sample asset allocation is for illustrative purposes only. © American Funds Distributors, Inc. AI-90017 Income Foundation With an emphasis on income and the potential for growth, Income Foundation can help meet the investing objectives of those for whom college is still a few years away. The Income Fund of America The Bond Fund of America Capital Income Builder V1
    16. 16. Enrollment is near This sample asset allocation is for illustrative purposes only. © American Funds Distributors, Inc. AI-90006 ABC Foundation The combination of three complementary bond funds can make ABC Foundation a solid choice for those nearing enrollment, when income and capital preservation become more important. The Bond Fund of America Capital World Bond Fund American High-Income Trust V1
    17. 17. © American Funds Distributors, Inc. AI-34645 Growth funds AMCAP Fund ® EuroPacific Growth Fund ® The Growth Fund of America ® The New Economy Fund ® New Perspective Fund ® New World Fund ® SMALLCAP World Fund ® Equity-income funds Capital Income Builder ® The Income Fund of America ® Growth-and-income funds American Mutual Fund ® Capital World Growth and Income Fund SM Fundamental Investors SM International Growth and Income Fund SM The Investment Company of America ® Washington Mutual Investors Fund SM Balanced funds American Balanced Fund ® American Funds Global Balanced Fund SM Equity funds American Funds in CollegeAmerica V1
    18. 18. American Funds in CollegeAmerica © American Funds Distributors, Inc. AI-34646 Bond funds American Funds Mortgage Fund SM American High-Income Trust SM The Bond Fund of America SM Capital World Bond Fund ® Intermediate Bond Fund of America ® Short-Term Bond Fund of America SM U.S. Government Securities Fund SM Money market fund American Funds Money Market Fund ® Fixed-income and money market funds V1
    19. 19. Planning for college <ul><li>An academic decision </li></ul><ul><ul><li>529 college savings plans </li></ul></ul><ul><li>An educated choice </li></ul><ul><ul><li>CollegeAmerica </li></ul></ul><ul><li>Building your plan </li></ul><ul><ul><li>Trust American Funds </li></ul></ul>© American Funds Distributors, Inc. AI-90024 V1
    20. 20. Investors should carefully consider the investment objectives, risks, charges and expenses of the American Funds and CollegeAmerica. This and other important information is contained in each fund’s prospectus and summary prospectus and the CollegeAmerica Program Description , which can be obtained from a financial professional and should be read carefully before investing. © American Funds Distributors, Inc. AI-99978
    21. 21. Depending on your state of residence, there may be an in-state plan that provides tax and other benefits not available through CollegeAmerica. You should discuss the tax implications of 529 plans with your legal and/or tax advisers, as features may vary significantly from state to state. You should read the appropriate 529 plan program description before investing. It includes details about the plan’s risks, charges and tax treatment.  Most 529 plans will accept both in-state and out-of-state applicants. While federal tax treatment of 529 plans is identical regardless of the state plan, state tax treatment varies. State tax treatment may also vary for in-state and out-of-state residents. Each state’s 529 plan must be evaluated based upon its own merits relative to your needs, including the tax effects on the contributor and the beneficiary. AI-90189 © American Funds Distributors, Inc.
    22. 22. © American Funds Distributors, Inc. The return of principal in bond funds, as well as in funds with significant bond holdings, is not guaranteed. Fund shares are subject to the same interest rate, inflation and credit risks that are associated with the underlying bonds owned by the fund(s). Bond prices and a bond fund’s share price will generally move in the opposite direction of interest rates. Lower rated bonds are subject to greater fluctuations in value and risk of loss of income and principal than higher rated bonds. Regular investing neither ensures a profit nor protects against loss in a declining market. Diversifying investments does not insure against market loss. Investing outside the United States involves additional risks, such as currency fluctuations, periods of illiquidity and price volatility, as more fully described in the prospectus. These risks may be heightened in connection with investments in developing countries. Small-company stocks entail additional risks, and they can fluctuate in price more than larger company stocks. AI-44440
    23. 23. © American Funds Distributors, Inc. Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value. Although money market funds seek to preserve the value of your investment at $1.00 a share, it is possible to lose money by investing in a money market fund. AI-44440
    24. 24. © 2011 American Funds Distributors, Inc. AI-99997
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