posted on May 27, 2016 14:56
It's a financial predicament many families face - saving for your children's future, your own future, and having enough money for day-to-day expenses. Financial advisor Daryl Dagit shares ways to help you save in a recent interview with WMBD news. Download the PDF
Advice from Daryl Dagit on 529 College Savings Plans
Interviewer: Welcome back, everyone. It's time to start saving for college, and joining us this morning is Daryl Dagit from Savant Capital Management to talk about the 529 college savings plan. Daryl, good morning. Thanks for being here.
Daryl Dagit: Good morning. Thank you for having me.
Interviewer: So you said an alarming statistic to me that basically 70% of Americans don't know about this trick for college savings.
Daryl Dagit: That's correct.
Interviewer: I think it's like a trick, at least. It's the 529 college savings plan with Bright Start. Explain what that is.
Daryl Dagit: The 529 is just the IRS regulation number. It's a federal program that allows you to save tax-free, so you put money in, and it grows tax-free as long as the money is used for college expenses.
Interviewer: Absolutely. And you can start by just putting as little as what, $25 away?
Daryl Dagit: Well to open an account, it's as little as $25 just to initially open the account, and they don't take that. That's your money. And then you can actually put in electronically as little as $15 a month, or you can write your own check if you want to put in less than that.
Interviewer: And they can automatically deduct it too.
Daryl Dagit: Right.
Interviewer: So you don't even have to really do any effort.
Daryl Dagit: Very simple. No.
Interviewer: What are some of the benefits of doing something like this early, maybe when your child is born?
Daryl Dagit: Yeah, well you've probably been hearing all the alarming statistics about how much college debt graduates are coming out of college with, and this is a way to start out with just a little bit of money at an early age. As you know, compound interest is one of the great miracles out there in finance. When you start out when they're first born, putting away, you'll have enough to pay for all their college, depending on how much you put away, or at least a year or two so that the debt isn't that bad when they get ready to go to school.
Interviewer: You gave $15 a month as an example just now. Do you think putting something, which seems like a small amount away like that would really add up over time enough to pay for college?
Daryl Dagit: Yes. We've run the numbers, and even on a small amount like that, considering even a 7% or 8% return over time, is enough to pay for at least two years of junior college, so at least give them a good start on that. And one of the really good benefits for you is the fact that you also get a tax break on your Illinois state taxes as well.
Interviewer: So there's a benefit to doing that. It's a national thing.
Daryl Dagit: Right.
Interviewer: But in Illinois, there is that one advantage there too.
Daryl Dagit: Exactly.
Interviewer: Anything else you want to mention about the 529 savings plan that people might not know about?
Daryl Dagit: Yeah. Go to the web, and just put in brightstartsavings.com, and all the information is right there at your fingertips. It's a state program. They use Vanguard funds, which are some of the best funds in the country, and very low cost. All in, you're about 0.16%. You can do it on your own, and you go to the website, there's a big orange button right in the middle that says, "to start, push here."
Interviewer: All right, very easy. Daryl Dagit. Thank you so much for stopping by with that information. We'll find out more on Good Day Central Illinois over on WYZZ, and we'll be right back.