| NY Saves program not for aggressive investors | |
| By Bob Fisher "Imagine the Returns!" the promotional literature for the NY SAVES program proclaimed in bold print. After a year's experience in the much ballyhooed college-savings program, many now know (it's only 6 to 10 percent) - about the same return you could have gotten from buying a US government savings bond and using it for college expenses at maturity. What went wrong? Actually, nothing. If you wade through the legalese in the descriptive brochure and read the appendix you can figure out that this is not the aggressive, but well-managed, investment many are looking for. The investment manager reports that most of the assets go into fixed-income investments, defying conventional wisdom that over the long term, they would make more money in the stock market. The investment manager, a respected pension-fund manager with an excellent track record, was not making a poor guess about what the market would to. It simply was following a requirement in the law. What should aggressive investors hoping to save enough for college expenses do? Your best bet may be the little-used Education IRA and the popular Roth IRA which can be used for educational expenses, at least until the NY SAVES program is amended to permit more discretion to the investment manager. The writer is chair of PEF's Statewide Pre-Retirement Planning Committee. Editor's Note: Any PEF member thinking about investing in this plan should speak to his or her accountant or financial planner or tax advisor. PEF does not provide financial or investment advice. |
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