When planning your college investment strategy, one of the important decisions you will make is choosing the most appropriate type of investment for your situation.
As you develop your plan to invest for college expenses, here are some questions to ask yourself and information to help you with the decision-making process.

Will I use the investments exclusively for college expenses?
Some of the popular investment options to pay for college expenses include: 

  • 529 Plan 
  • Coverdell Education Savings Account (CESA, formerly the Education IRA)

Before making any investment, you should consult with a trusted financial advisor who can help you understand and verify the many benefits.

Do I need an investment account that offers multipurpose uses?
You have a couple of options if you want to invest in an account for multipurpose uses.

If you open an account under the Uniform Gifts/Transfers to Minors Act (UGMA/UTMA), the money in the account must be used for your child's benefit, whether for education or other expenses. The account will be registered in your child's name with you or another adult acting as custodian. Your child is the legal owner of the UGMA/UTMA investments and gains control of the account at a set age defined by your state (usually 18 or 21).

If you want the investments to be available for miscellaneous expenses and you want to maintain control of the account, you may want to consider opening a regular, taxable account in your name. This option allows you the most freedom with your investments; however, you lose the tax benefits that the other account options offer.

Should I use my traditional or Roth IRA for college expenses?
It's possible to use your traditional or Roth IRA investments for college expenses; however, this may not be the best option for you. Remember that investing for your retirement should be your primary goal when you open a traditional or Roth IRA.

For more information about these and other college investment options, visit americancentury.com.