There are many kinds of mutual funds; there are some that would be good for funding further education. If you are planning for your children’s academic futures, some long term investments would get good for that purpose. Initially, you might be required to invest $500 into a mutual fund account, and then after that you may be able make smaller deposits into your plan. For parents interested in funding further education for their children, it is important to be aware of the options, fees and restrictions of the specific funds you invest in.
Funding further education is often done by making long term investments in money market deposit accounts, money market funds, certificates of deposits, as well as government and corporate bonds. Money market deposit accounts are good to have for funding further education because they are very easily liquidated. These money market deposit accounts are most likely offered by your own bank. Your account may need to maintain a minimum balance. You are also allowed to write a limited amount of checks on the money in the account. The downside of a money market deposit account is that if you fail to keep the minimum balance, you may have to pay a penalty.
You can buy a money market fund from a broker or a mutual fund family. Because money market funds invest in securities that are easily liquidated, they are a good source for funding further education. With a money market fund you can write checks on them and you may also be able to use an ATM card with them. Money market funds generally generate more income than money market deposit accounts. The Net Asset Value (NAV) is usually fairly constant at $1 per share, which makes this a safe investment for funding further education. These are good for funding further education because they tend to remain stable without losing money. Conversely, other types of funds may have higher NAVs and create higher capital gains, but there is always more risk involved with funds with higher rates of return.
Government and corporate bonds are long term investments. Government bonds, like the I Bond can be bought at half its face value, and when the bond matures, you get the full value of the bond. Municipal bonds are bought similarly to stocks. The prices of “munis” rise and fall with the market. Bonds are essentially IOU’s for borrowed money. They are very stable and are good to use for funding further education.