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Calculating The Cost
How much you will need to invest to send your kids to the college of their choice? There are all kinds
of formulas you can use, but one of the easiest methods is to use this College Investing Calculator. It
allows you to quickly input different variables for your monthly investment, estimated rate of return on
investments, tax brackets or inflation rate so you can see how each factor will affect your goals.
If you know the cost today for a specific college you can use that as your starting point; otherwise
our chart below features average college costs at both public and private colleges.
College Investing Calculator
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Average College Costs
The chart below shows the average cost of attending either a public or private college.
Using these numbers, or your own information for a specific school, you can project
future educational expenses 5, 10 even 18 years away. Then you'll have a goal to shoot for!
Average College Costs 2006 - 2007
One Academic Year
| |
College or University |
| 4-Year Public |
4-Year Private |
| Tuition & Fees |
$5,836 |
$22,218 |
| Room & Board |
$6,960 |
$8,149 |
| Books & Supplies |
$942 |
$935 |
| Other Expenses |
$1,739 |
$1,277 |
| Transportation |
$880 |
$722 |
| Total Costs One Year |
$16,357 |
$33,301 |
Source: The College Board Trends in College
Pricing,
2006
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Time
Is Powerful Tool in Investing
If your time frame for investments is short, you will see from the table below
that a lump-sum investment can provide for more assets when they are needed,
although the power of compounding over the long run can increase your available
assets.
The following table
indicates the potential benefits of investing over the long term, via either a
systematic program or a lump-sum investment to ensure your goals are met.
Lump Sum Vs. Monthly Investments
| Monthly Investments |
Years to
Invest |
$50 |
$200 |
$500 |
| 3 |
$2,027 |
$8,107 |
$20,268 |
| 6 |
4,601 |
18,405 |
46,013 |
| 9 |
7,871 |
31,486 |
78,715 |
| 12 |
12,025 |
48,102 |
120,254 |
| 15 |
17,302 |
69,208 |
173,019 |
| 18 |
24,004 |
96,017 |
240,043 |
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| Lump-Sum Investment |
Years to
Invest |
$10,000 |
$25,000 |
$50,000 |
| 3 |
$12,597 |
$31,493 |
$62,986 |
| 6 |
15,869 |
39,672 |
79,344 |
| 9 |
19,990 |
49,975 |
99,950 |
| 12 |
25,182 |
62,954 |
125,908 |
| 15 |
31,722 |
79,304 |
156,608 |
| 18 |
39,960 |
99,900 |
199,801 |
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These figures assume an 8% yield compounded annually. The
table above is for illustrative purposes only and does not depict the
future performance of any fund. Regular investing, of course, does not
guarantee a profit or protect against loss in a declining market.
Investors should consider their ability to continue purchasing shares
during periods of low price levels.
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