Editor's note: Ask TheStreet is designed to answer questions about the market, terms, strategies and investment methods. Please email us to ask a question, but keep in mind that we cannot offer specific investment- or stock-related advice.
What do you think of buying a particular stock as a long-term strategy to pay for my daughter's college education? -- S. (via
To the question of whether any single stock is a good long-term investment strategy to finance college, the answer is an unequivocal "No."
When you're looking at a long-term, big-budget goal like college, asset allocation rules apply (see "
Allocate Your Assets Like a Pro
If you want to avoid the headache and risk of allocating an education-focused
yourself, taking the hands-off route with a
target-date mutual fund
(offered by most
) is a good way to go.
Here's what you need to know if you're ready to set up a college savings plan for your little Einstein.
Paying for College: It's All About Goals
According to Stuart Ritter, a certified financial planner at
T. Rowe Price
(TROW - Get Report)
, there are three decisions you need to make when planning for any financial goal: how much to save, what kind of account to use and what investment strategy to follow.
A Tear-Free Guide to College Savings
Figuring out what your goals are (and thus how much you need to save) is a very important step in the process. "How much you're going to save has a bigger impact than anything else," says Ritter. "You may nail everything else right, but if you're only putting away $25 a month for your child's college education, you're probably not going to have what you need to fund it all."
College is becoming a fairly lofty financial goal for many. The College Board projects that four years at a U.S. in-state public college or university will average more than $90,000 a decade from now.