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©2013 Legg Mason Investor Services, LLC, a Legg Mason Inc. Subsidiary. Member FINRA, SIPC
How to save for college
Five steps to successful saving
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Important information
An investor should consider the Program’s investment objectives, risks, charges and expenses before investing. The Program Disclosure Statement at scholars-choice.com, which contains more information, should be read carefully before investing. If an investor and/or an investor’s beneficiary are not Colorado taxpayers, they should consider before investing whether their home states offer 529 plans that provide state tax and other benefits only available to state taxpayers investing in such plans.
HOW TO SAVE FOR COLLEGE: FIVE STEPS TO SUCCESSFUL SAVING
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How much will it really cost?
What is the estimated cost in 18 years for a 4-year degree at a private university including tuition, fees, room and board?
Based on average student expenses adjusted for a hypothetical 5.0% rate of education inflation over 18 years.Source: ©2012 The College Board, collegeboard.com.
A. $140,000
B. $240,000
C. $340,000
D. $440,000
HOW TO SAVE FOR COLLEGE: FIVE STEPS TO SUCCESSFUL SAVING
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Investment in education pays off
Based on sum of mean annual 2007 earnings from ages 25 to 64.Source: U.S. Census Bureau, Current Population Survey, Education Attainment in the U.S.: 2007.Calculations on this slide were provided by Ernst & Young, LLP.
$2.4
mil
lio
n
$2.8
mil
lio
n
$1.3
mil
lio
n
In their lifetime, the average college graduate earns over
$1 million more than the average high school graduate.
High School Degree
College Degree
Graduate Degree
HOW TO SAVE FOR COLLEGE: FIVE STEPS TO SUCCESSFUL SAVING
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Barriers to successful college saving
Procrastination
HOW TO SAVE FOR COLLEGE: FIVE STEPS TO SUCCESSFUL SAVING
Competing priorities
Too many savings options
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1. Determine the cost of college
5. Establish a savings schedule and get started
2. Identify your savings profile
3. Set your savings goal
4. Choose a savings vehicle
A practical five-step strategy
HOW TO SAVE FOR COLLEGE: FIVE STEPS TO SUCCESSFUL SAVING
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College costs now and later
Based on the average annual cost of attendance, adjusted for a hypothetical 5.0% rate of education inflation. Source: ©2012 The College Board, collegeboard.com.
Determine the cost of college
$437,982
$222,466
In 18 Years(2030-2034)
$191,090
$97,061
Now(2012-2016)
STEP 1 STEP 2 STEP 3 STEP 4 STEP 5
Public
Private
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Identify your savings profile
Before you determine how much you will save for college, you’ll want to figure out what kind of saver you are based on:
STEP 1 STEP 2 STEP 3 STEP 4 STEP 5
Your values
Your financial goals
Your financial means
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It will be a more meaningful accomplishment
College is the perfect time to grow up financially
It’s a family value
This is the realistic solution
PROFILE A: “Paying for college builds character”
Identify your savings profile
STEP 1 STEP 2 STEP 3 STEP 4 STEP 5
Source: College Board, www.collegeboard.com.
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College is just one of many financial goals
We’ll explore scholarships and other funding to augment our family’s contribution
I have more than one child
PROFILE B: “As best I can”
Identify your savings profile
STEP 1 STEP 2 STEP 3 STEP 4 STEP 5
Source: College Board, www.collegeboard.com.
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College is a priority for our family — I can and want to provide this for my child
I want my child to experience all that college has to offer
We’re willing to make sacrifices for this
I want to leave a legacy for my grandchildren
PROFILE C: “I’ll fund it all”
Identify your savings profile
STEP 1 STEP 2 STEP 3 STEP 4 STEP 5
Source: College Board, www.collegeboard.com.
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Understanding your profile helps you develop a college savings plan that’s right for you and your child.
Set your savings goal STEP 1 STEP 2 STEP 3 STEP 4 STEP 5
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Choose a savings vehicle
Coverdell education savings account
UTMA/UGMA (Uniform Transfer/Gift to Minors Act)
Trusts
Savings bonds
Traditional taxable accounts
ROTH IRAs
529 college savings plans
Please see the Scholars Choice Education Savings Product Guide for additional information.
STEP 1 STEP 2 STEP 3 STEP 4 STEP 5
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Note: all of the above are subject to limitations and conditions. Please consider these before investing in a 529 plan.
Legg Mason, Inc., its affiliates, and its employees are not in the business of providing tax or legal advice to taxpayers. These materials and any tax-related statements are not intended or written to be used, and cannot be used or relied upon, by any such taxpayer for the purpose of avoiding tax penalties or complying with any applicable tax laws or regulations. Tax-related statements, if any, may have been written in connection with the “promotion or marketing” of the transaction(s) or matter(s) addressed by these materials, to the extent allowed by applicable law. Any such taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.
Choose a savings vehicle
Why 529 plans?
Tax advantages
Professional money management
Control
Estate planning considerations
Flexibility
STEP 1 STEP 2 STEP 3 STEP 4 STEP 5
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Choose a savings vehicle
Scholars Choice® 529 College Savings Program
Experienced portfolio managers
Asset allocation specialists*
Smart portfolio construction
Careful manager selection
Vigilant portfolio monitoring
*Asset allocation does not assure a profit or protect against market loss.
STEP 1 STEP 2 STEP 3 STEP 4 STEP 5
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Establish a savings schedule and get started
Contribute:
Monthly
Annually
A lump-sum
STEP 1 STEP 2 STEP 3 STEP 4 STEP 5
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The cost of waiting adds up!*
*Assumes a hypothetical investment growth of 5%.Calculations on this slide were provided by Ernst & Young, LLP. Your investment will vary and may perform better or worse than these examples, which are for illustrative purposes only and does not represent any specific investment.
Assuming your child will attend a private university in 18 years at a cost of $437,982:
If you start saving now, your monthly contribution will be $1,254
If you start saving in 5 years, your monthly contribution will be $1,999
If you start saving in 10 years, your monthly contribution will be $3,720
If you start saving in 15 years, your monthly contribution will be $11,302
Establish a savings schedule and get started
9.0 times more!
3.0 times more!
1.6 times more!
Per month$1,254 $1,999 $3,720 $11,302
Now
STEP 1 STEP 2 STEP 3 STEP 4 STEP 5
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Now is the time to start saving!
College is a smart investment.
Five-step strategy to start saving
1. Determine the cost of college
2. Identify your savings profile
3. Set your savings goal
4. Choose a savings vehicle
5. Establish a savings schedule and get started
Remember, it’s never too early or too late. The time to start saving is now!
HOW TO SAVE FOR COLLEGE: FIVE STEPS TO SUCCESSFUL SAVING
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scholars-choice.com©2013 Legg Mason Investor Services, LLC, a Legg Mason Inc subsidiary. Member FINRA, SIPC SCHX011873 2/13 FN1412271
An investor should consider the Program’s investment objectives, risks, charges and expenses before investing. The Program Disclosure Statement at scholars-choice.com, which contains more information, should be read carefully before investing. If an investor and/or an investor’s beneficiary are not Colorado taxpayers, they should consider before investing whether their home states offer 529plans that provide state tax and other benefits only available to state taxpayers investing in such plans.
Investments in the Scholars Choice College Savings Program are not insured by the FDIC or any other government agency and are not deposits or other obligations of any depository institution. Investments are not guaranteed by the State of Colorado, CollegeInvest, QS Legg Mason Global Asset Allocation, LLC, Legg Mason Investor Services, LLC, or Legg Mason, Inc. or its affiliates and are subject to investment risks, including loss of principal amount invested. Legg Mason, Inc., its affiliates, and its employees are not in the business of providing tax or legal advice to taxpayers. These materials and any tax-related statements are not intended or written to be used, and cannot be used or relied upon, by any such taxpayer for the purpose of avoiding tax penalties or complying with any applicable tax laws or regulations. Tax-related statements, if any, may have been written in connection with the “promotion or marketing” of the transaction(s) or matter(s) addressed by these materials, to the extent allowed by applicable law. Any such taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor. Scholars Choice is a registered service mark of CollegeInvest. CollegeInvest and the CollegeInvest logo are registered trademarks. Administered and issued by CollegeInvest, State of Colorado. QS Legg Mason Global Asset Allocation, LLC is the Investment Manager and Legg Mason Investor Services, LLC is the primary distributor of interests in the Program; together they serve as Manager of the Program. QS Legg Mason Global Asset Allocation and Legg Mason Investor Services, LLC are Legg Mason, Inc. affiliates. QS Legg Mason Global Asset Allocation (QS LMGAA) is part of the combined QS Investors investment platform, which is comprised of QS Investors, LLC, QS Batterymarch Financial Management, Inc. and QS LMGAA.
Important information
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