Back to School 2

One of the biggest motivators to put money in a 529 account for kids or grandkids is the tax advantages. You don't benefit much when putting the money in, but when the money is taken out, it is tax free at that time. No taxing the growth of the money while it was invested!

This comes with some limitations. Maybe your college student does not live on campus. There could be some restrictions on whether 529 money can be used for living expenses.

Let's say your pride and joy wants to start a business instead of going to college. No 529 money can be used for that.

Just opening a regular investment account, while not tax-advantaged, has no limitations on how the money can be used.

Many sites recommend a combination of 529 accounts and regular investment accounts or IRAs with money in index funds.

Sources

https://www.oregoncollegesavings.com/

https://www.washingtonpost.com/business/2019/12/12/even-if-your-child-is-just-few-years-away-college-its-not-too-late-fund-plan/

https://www.edmit.me/blog/where-can-you-use-a-529-plan