Taking Stock: Children's College Savings

Dear Mr. Berko: I'm 30, make a good living as a plumber and have two children ages 4 and 6 who are in preschool while my wife works part-time at Walmart. We want to provide for their college and need to know how to invest $150 to $200 a month for their education. One financial adviser recommended investing monthly in 3 mutuals that look very good. Another, whose seminar we went to, recommends a complicated life insurance policy that will have a high guaranteed value when the children are ready for college. Another recommends small partnerships in apartments, oil, shopping centers, natural gas wells, etc. And another told us to invest in a diversified portfolio of good stocks that we would invest in every month. The mutual sounds the best but we don't know how to make a decision. Please tell us what you would do. CT in Gainesville, Fla. Dear CT: I'd prefer you save that money for retirement rather than a college degree for your kids. When you retire in 40 years (if you're able) I'm certain you'll need every penny you can beg, borrow and save, and even then, that won't be enough. The retirement future for most middle-aged Americans is bleak, and its a colossal mess out there. It's a daunting task to invest for a child's college costs. You have a 12-year time frame till the kids are college ready, which isn't enough time for the magic of compounding to work. Our market has morphed into a casino, whose embedded players have the scruples of a gang of sociopaths. Most investments purchased 10 years ago are worth less today, failures of over- aggressive stock market greed. This money is dear to you, and you can't afford to have fewer dollars 12 years from now than you have today. Saving $200 a month accumulates to $28,800 in a dozen years (without interest), which is what the cost could be for a single year of college. Bank your savings in an interest account and know that all of it will be there in 2024. This isn't what you want to hear, but I don't like the risks I see in the coming 12 years. Now, you need to look around you and ask why an employer a dozen years from now would hire a graduate with a degree in history, sociology, literature, political science, philosophy, art or music theory. Employers I talk with recognize a student's 4.0 grade average but also recognize the culture of grade inflation and from past experience doubt a student's ability to learn on the job. We're not in the 70s, 80s and 90s anymore. The economy and its need for new skill sets is changing. Many educators wear blinders or are too bumbling to recognize this change. Those who do prefer the easy, armchair sinecure of the 20th Century and won't change. Most of today's bachelor's degrees aren't worth a blue pig in a green huckleberry patch and too few master's degrees are worth more. Forget the Madison Avenue media hype about the importance of a college degree; rather, look at the facts. Over 54 percent of bachelor's degree holders under 25 are either jobless or under-employed as wait staff, cabbies or telephone solicitors. Universities care more about becoming bigger than getting better. This year, your University of Florida recently announced an increase in funding for its athletic department to $99 million and a decrease in funding for its computer science department. Your boys can make a better living as butchers, electricians, diesel or jet engine mechanics, welders and yes, plumbers. They can get a better education about life as apprentices in these fields rather than doing dope at frat parties or sitting through mindless classes given by 50 -year-old nerds who can't make a living in the real world. Tell your kids to join the Armed Services, learn a skill, learn about life, absorb maturity and perhaps learn what they would like to do. Then when their hitch is up, have Uncle Sam pay for their college education. CT, this may be some of the best advice you will ever get, and it only cost you 50-cents. ---------- Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775 or e-mail him at mjberko@yahoo.com. Visit Creators Syndicate website at www.creators.com. © 2012 Creators Syndicate Inc. Published: Mon, May 28, 2012