For couples and individuals who decide to become parents, their future children’s well-being is a top priority. This includes preparing for their college education and other milestones later in life. If you’ve been thinking about financial planning investments tailored to help them when they’re older, consider the following.

Ways Parents Can Invest in Their Child’s Future

1. Index Funds

You can open a brokerage account in your child’s name that contains a range of diversified index funds. A financial planning advisor can help you select ones based on your risk-tolerance level. The younger your little one is when the account is established, the more time it has to grow. While most brokerage accounts don’t have withdrawal and contribution limits, the goal is to not tap into it until your child needs it.

2. 529 Plan

This popular college savings plan is designed to pay for higher education costs. Parents are only allowed to contribute as much as what their child would need for college attendance. Qualified expenses include tuition, books, dorm fees, and meal plans.  Contributions are not subject to federal and state taxes, nor are withdrawals taxed. However, there is a penalty if the funds get used for non-college purposes.

3. Coverdell Education Savings Account (ESA)

This investment option is created to cover college costs as well as school expenses for kids in kindergarten to 12th grade. From private school tuition and books to SAT and ACT prep courses, the Coverdell ESA grows tax-free. However, there are annual limits on how much parents can contribute based on their income and marital status. Financial planning specialists say if other relatives want to contribute, they are also capped at certain limits each year per child.

If you’re a parent, these are just a few investments to consider when planning for your kid’s future. For 26 years, Hill & Associates CPA’s in Lincoln, NE, has helped families throughout the area by offering customized and professional financial planning. By listening to their client’s unique needs, the advisors help design short and long-term solutions tailored for college expenses, retirement, and much more. Schedule your consultation today by calling (402) 489-9300. You can also go online to view other services, including tax return preparation and insurance options.