6 Factors in Investing in an Educational IRA

The educational IRA is an investment account that will help you save money for educational expenses. Here are a few factors to consider when investing in an educational IRA.

1. Tax-Free Gains

With this type of account, you can contribute after-tax money and use it to invest. You can invest in a variety of different securities such as stocks, bonds and mutual funds. You will get to keep the gains that you make from these investments without paying any taxes on them. This can assist you in building up a substantial amount of money for education costs.

2. Multiple Education Levels Covered

Unlike other education savings accounts, the educational IRA can be used for any qualified educational expense. This means that you can use it for things like private school tuition starting at kindergarten if you want. The other education savings accounts allow you to pay only for college expenses with their funds. Therefore, this presents you with a lot of flexibility in how you spend money. This makes it an ideal solution for parents who want to start saving for private school costs when a child is born.

3. Investment Flexibility

The educational IRA is also known for its investment flexibility. With this type of education savings account, you can put your money into many different types of investments. With other education savings accounts, you tend to have a much more limited set of investments available. However, with this type of account, you have much more freedom when it comes to choosing investments.

4. Switching Beneficiaries

With the educational IRA, you can easily switch the beneficiary for the account. You are able to change the beneficiary without paying any penalty or losing any of your investment. Therefore, if for some reason the first child decides not to use the money on education expenses, you could convert the account to another child. With this feature, the money that you save will not go to waste.

5. Broad Expense Rules

The rules about what you can use the money on are very broad. Instead of being able to use the money just on tuition, you can use it for a variety of different education expenses. You can also use it for books, supplies, fees, equipment, tutoring, room and board and any necessary travel expenses. This helps to provide a lot of flexibility for future students.

6. Convenience

This type of education savings account is also very easy and convenient to set up. You should be able to work with nearly any financial institution that you want. You can get these through your local bank, through an online broker or even from your insurance provider in some cases. They have simple payment options that make it easy to save money on a regular basis. Since these accounts are readily available, you will also be able to find a provider that offers the investment that you want.

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