Where is the best place to start saving for a new baby?

We recently had our first child and would like to start saving for her. The idea of a 529 plan doesn't seem appealing because of its limitations and the rising cost of college tuition which a 529 won't cover, but we can be convinced otherwise. What is the best way to start saving for her?

Financial Planning, Lifestage Based Planning
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2 weeks ago
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Congrats! I am a father of two as well, so I know what a wonderful, joyous, and challenging time it can be. I have written on this topic in some detail, here is recent article that I think would help:


The 529 Plan is a great tool, but it is often overused. As my article mentions, maxing out your Roth IRA, if possible, is usually the best holistic strategy. For most people, retirement should come first. It is still early, but one advantage of using retirement accounts first is they are not used for most financial-aid calculations (FASFA – The Free Application for Student Financial Aid).

Also, before you dismiss 529 Plans, see if your state offers a tax deduction. It is hard to pass up the free money.

Other education-friendly, what I call dual-purpose accounts, are:

  • I-Bonds (has some inflation protection)
  • 529 Prepaid Tuition Plans (will match a specific schools inflation)
  • ESA Account (low contribution limits but more flexible investments)

Other investments used:

  • Muni Bonds
  • Taxable Accounts
  • Zero-Coupon Bonds
  • TIPs (has some inflation protection potential)
  • Life-Insurance
    • Has limited value for most, is oversold for education due to high sales commission

We also offer a very affordable online class on 529 Plans:


I also believe parents should start to think about college differently:


Good Luck!

Mark Struthers CFA, CFP®

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