How To Compare Your Investment Options For College - Part 2

2006-08-21

Back to Part 1 of How To Compare Your Investment Options For College

When you invest in the educational future of your children, it is important for you to avoid doing the things that 80% of the population will do. You must think outside the box. The economic future of your children will depend on it. One of the best investments you can get for your child is called an EIUL, or Equity Index Universal Life. This is a life insurance policy that you can earn interest on, and it has a number of powerful advantages over CDs, savings accounts, or stocks and bonds. Most importantly, a large segment of the population has never heard of a EIUL.

The EIUL was first introduced in the 1980s when a bunch of insurance companies got together and decided to create more options for their customers. They decided to create an insurance policy that could earn the policy holder a guaranteed amount of interest. There are a number of powerful advantages to an EIUL. First, they are not taxable. The IRS cannot tax them, because they are not considered to be investments. This means that parents can put money into the EIUL and let it grow tax free for 18 years. Not only that, when the money is taken out to pay for the cost of your child's education, the IRS cannot tax it.

Another powerful advantage of the Equity Index Universal Life is that it will earn you an average of 10 percent interest each year. At the very least, it will earn you 1 percent interest, and this will occur even in the event that the stock market should crash. However, the EIUL isn't good for everyone. It is important for you to call insurance companies to find out if your child qualifies. For example, if you put $200 per month inside your EIUL, you would have well over $40,000 in 18 years, plus an average of 10 percent interest.

Not matter which investment option you choose, you will want to avoid student loans at all costs. Do not allow your child to get into a situation where they will have to go into debt to pay for their education. Invest money for them while they are young, and they will be thanking your for it when they are old enough to attend college, and they can graduate with their degree debt free.

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