Leftover college savings fund is great basis for investing

Dear Bruce: My 24-year-old daughter has a 529 plan that is worth about $25,000. Scholarships paid for her undergraduate degree, and she has an assistantship for her master’s degree program. She’s needed very little of the money.

Her income is very low this year as a graduate student, and will be next year as well. Would it make sense for her to withdraw the money now when the tax impact would be less? If so, what should she do with it? It’s a great problem to have. — Gary

Dear Gary: You’re right! It’s a problem all kids should have. Accepting that her income will be very low for the next couple of years and as a consequence she will have little or no income tax, now is the time to withdraw it. No question about that. What she should do with it is another question.

It seems to me that this would be a good time to begin investing in the marketplace. Not all at one time, but once every couple of months over six months. This could be an even more important learning experience than her college education. She should take the time and sneak in at least one noncredit course dealing with investing, just to get an idea about the language and what is expected of her.

Dear Bruce: What do you think about investing $40,000 in the stock market at this present time? — Reader

Dear Reader: You ask an interesting, but impossible question to answer. Is the $40,000 all the money you have in terms of savings, or is it just a small percentage? Without knowing that, it would be impossible for me to comment.

Get back to me and let me know a little more information about how much money you have saved and where it is currently. I would be happy to comment.

Dear Bruce: I attended a “business” lecture. One of the young women said, “Business is a social construct built around the penis and that has to change.” I would like you to comment on that quote as a longtime businessman, and a very successful one. — Reader

Dear Reader: Without repeating that somewhat harsh description, I happen to agree that more and more focus on women employees and executives is absolutely coming, and with good reason. Members of the business community who skip over some very intelligent people leave themselves at a disadvantage. Part of the reason the young woman said it the way she did was for the shock value. As a practical proposition, no matter how you cut it, she is correct and should be paid attention to.

Dear Bruce: Where would an elderly person invest where the fees aren’t very high? — Helen

Dear Helen: Whether it’s an elderly person or a young person, the fees are going to be the same, but they’ll vary depending upon the choice of investments. If you’re going to put your money into a bank CD, for example, the fee isn’t very high, but the interest is next to nothing.

As soon as you start to get into investments like the stock market, there are certain fees and they can’t be skipped. In almost every case, I would rather pay the higher fee combined with a higher interest rate. When you start talking about money market funds, CDs, etc., for all intents and purposes, right now no interest is being paid.