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Plan Well, Retire Well

Saving and investing your money

Your Goal Helps Define Your Investment Options


Our family has just finished a whirlwind of college visits. With two sons graduating from high school in just 4 weeks (!), we have been thinking and talking about college choices. Of course, one of the big questions about college is how will we pay for it?

Actually, I think (I hope!) that we're relatively prepared to pay for these amazing college costs. One of our financial goals has been to save enough money to be able to pay for most of our sons' undergraduate college expenses. Over the past several years we have saved for future college expenses using a variety of tax-advantaged tools such as Coverdell Savings Accounts and 529 Plans. (For more information about these savings tools visit the University of Illinois Extension website, Tax Breaks for Higher Education.)

However, as the stock market went down recently and as I reviewed this last quarter's financial statements from our different accounts, I was VERY glad that I had remembered the basic rule: short-term goals require using different investment options than do long-term goals.

While saving for college started out as a long-term goal (over five years), it has recently changed for my family into a short-term goal. When you have a short-term financial goal you need to invest your money in investment options that not volatile and that are liquid -- so that when you need the money it is there and you can access it. I'm pleased that we have a stash of money in a money market fund (whose principle has not been effected by the stock market's downturn) to use to pay college tuition and housing deposits this week.

We will use the money we have in other investment options (such as 529 plans) eventually, but I'm happy to wait awhile until the market has a chance to correct itself and go back up.

So, do your investment options match your financial goals timeframe? The Plan Well, Retire Well website has an interactive lesson on this topic -- you can write your financial goals and match investment options choices on this secure, free website. Now is a good time to review your investments and see how they match your goals. Login to the Plan Well, Retire Well website and then go to the section "Choose Investments." From here click on the link "Invest Your Money." I think you'll find that it is time well-spent.

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