Ross Naylor's Ezine - Issue 6 - 3 ways to fund college costs
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3 ways to fund Words from the wise
college/university costs "Giving politicians the ability to
borrow is like giving a teenager a
With my own daughter
bottle of whisky and the keys to a
just starting kindergarten
and fees for the first
term having just been - Doug Casey, Chairman of
paid, now seems like a Casey Research.
pretty good ti me to be
taking a look at [Admission - I altered the quote
education costs. In slightly. I changed the spelling of
whisky in the quote, from the
particular, I want to focus on university/college costs.
American way to the proper way.
I know that it is quite a jump from kindergarten to
university. However, without the aid of a time machine,
there isn't much that I can do about planning for
kindergarten costs while with 16 years until university,
there is a lot that I can do about that.
The first thing, is to consider the various ways in which
these costs can be funded (let's assume that I would
prefer that she didn't spend the first 10 years after her VIX = Volatility
graduation repaying loans). Having had a think, the main
What is the VIX Index?
ways that I can see are as follows:
The VIX Index (VIX:IND) is an
1. Pay the costs from my income. If I don't do anything index measuring the market's
about it now, this is the most likely option. However, expectation of stock market
given that by then I will be in my early 50's and should be (S&P 500 ) volatility over the
focusing on my own retirement, this would hardly be next 30 days. It is also known as
ideal. the "fear index".
Why does it matter?
2. I can look at investing money over the next 16 years
so that I can use the proceeds to cover the costs. This It matters because it gives an
can be done in two ways. Either by contributing a regular indication of expected range of
monthly amount into a savings plan or I can invest a lump price movements up or down
sum/ series of ad hoc payments. over the coming month. Although
in recent years, peaks in the VIX
The benefit of this is that the compound growth on my have coincided with low points
investment does a lot of the heavy lifting for me. (buying opportunities) in the
3. Scholarships, grants, etc. To be honest I am pretty
What is it telling us right now?
sceptical about this. A lot of universities had their
endowments trashed in the credit crisis while at the same VIX values greater than 30 are
time committing large sums of money to grand new generally associated with a large
extensions. As a result their ability to support has been amount of volatility as a result of
reduced. investor fear or uncertainty, while
values below 20 generally
Government support? Hmm, I don't think I'll count on correspond to less stressful,
even complacent, times in the
that. Most governments have far bigger funding problems
to worry about.
Todays value is around 24. I.e. it
At the same time, I am happy to take any money that is is significantly higher than it was
going (it's the Scotsman in me) so I intend to look into pre credit crisis. However it is
this further and will post my findings in a future issue. much lower than during the
height of the crisis in September-
October 2008, when it peaked at
In reality, I will probably end up using a mix of all 3. The 80.
one thing that will influence to what extent I rely on 1 & 3,
is how smart I am now. Disclaimer
The views expressed here are
my own. They are not
necessarily shared by AES
International. They are subject to
Food for thought change at any time based on
market and other conditions.
This is not an offer or solicitation
Mark Mobius on why emerging markets may have learned from for the purchase or sale of any
security and should not be
construed as such. References
to specific securities are for
10 predictions for the next 10 years
illustrative or informational
purposes only and are not
Three reasons why people think property is a great investment: intended to be, and should not
leverage, price illusion & optimism bias. be interpreted as,
recommendations to purchase or
What 4 bullish billionaires are buying. sell such securities.
Was it really a lost decade? - Highlights the power of
diversification. Investing 100% in stocks would have lost
money, investing equally across the asset classes would have
returned 6.85%pa. Not great, but not bad considering we went
through 2 bear markets.
Gold (not so serious)
And finally, the hemlock fund.
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