Compounding may allow your savings to grow exponentially over time.
Starting early matters more than trying to predict the market.
You may be able to invest more aggressively when you have more time to recover from short-term volatility.
For parents thinking about the cost of college, there’s no better time than now to start planning. Tuition prices continue to climb, but the good news is that starting early can help lighten the future burden. One of the ideal ways to do that is by contributing to a CollegeBound 529 college savings plan. Here, we’ll break down how extending your time in the market may make a big difference.
Albert Einstein reportedly called compounding the “eighth wonder of the world,” and when it comes to college savings, it’s easy to see why. Compounding lets your interest and investment returns potentially earn interest and returns of their own. That snowball effect may be powerful, particularly if you begin saving when your child is young. More time in the market gives your contributions one of the best chances to grow.
Let’s say you open a CollegeBound 529 plan with an initial $1,000 investment when your child is born and contribute $100 monthly. If the account earns a 6% average annual return, it could grow to around $38,735 by the time your child turns 18. But if you wait until they’re 10 years old to start with the same contributions, the total could be closer to $16,388.1 That’s a big difference!
Another potential advantage of starting early is flexibility with how you invest. With a longer time horizon, you can consider taking more risk up front and shift to more conservative investments as your child nears college. A financial professional can help you weigh options like CollegeBound Year of Enrollment or Target Risk Portfolios that align with your goals.
You don’t need to contribute large sums to make progress. In fact, getting into the habit of consistently saving — no matter the amount — may pay off over time. With a $0 minimum to get started and possible federal and state tax benefits, 529 plans are accessible to a wide range of families.
Setting up automatic contributions can help make saving effortless. Tools like automatic investment plans (AIPs) or pre-authorized contributions (PACs) can help you stick to your goals while taking the stress out of budgeting. Use the automatic contributions tool to see how consistent investments could grow over time.
Starting a CollegeBound 529 plan early isn’t just a calculated move — it’s a gift for your child’s future. The earlier you start, the more time your contributions have to potentially grow and help reduce the need for student loans. Even small increases to your contributions over time may make a real impact.
On this 5/29 Day, take the first step — or the next step — toward your college savings goals. It’s never been easier to save.
Don’t let misconceptions about 529 plans haunt your clients. With expanded qualified uses these plans are more adaptable than ever.
The recently passed Big, Beautiful Bill brings sweeping changes to how American families can save for the future.
College tuition continues to increase steadily — earlier savings can help you leverage compound growth
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