Strategies for Savings Success

While college education is expensive, there are strategies you can use to help prepare for these impending costs.

Start Early

When saving for college, starting early can make a significant impact on savings. The chart below shows two new parents who want to save for college – Liz (the teal line) and John (the yellow line.) While Liz starts investing today, John procrastinates for 5 years. In this example, John ends up with 40% less money than Liz when his child is ready to start college. Starting early can make a difference.

Put Time on Your Side
Assumes an Annual Rate of Return of 7%

Liz
John

This is a hypothetical illustration to represent the effects of compounding assuming an annual rate of return of 7%. It does not reflect an actual investment, investment expenses, or any taxes payable upon withdrawal. Returns are not guaranteed and may be less than or greater than the amounts illustrated.


Invest Regularly

Making regular investments, even if they are small, can greatly increase how much money you have saved when it’s time for college. The chart below shows the difference between investing once when a child is born and investing $100 monthly over 18 years. In this example, investing regularly results in over $42,000 more in the same time period.

NJBEST’s Automatic Investment Program (AIP) makes it easy to invest regularly.

Click here to learn more about enrolling.

Small and Consistent Investments Can Make a Difference

  • Contributions
  • Earnings

This is a hypothetical illustration to represent the effects of compounding assuming an annual rate of return of 7%. It does not reflect an actual investment, investment expenses, or any taxes payable upon withdrawal. A periodic investment does not assure a profit or protect against a loss in declining markets. Returns are not guaranteed and may be less than or greater than the amounts illustrated. A periodic investment plan such as dollar-cost averaging does not ensure a profit or protect against a loss in declining markets. Such a plan involves continuous investment in securities regardless of fluctuating price levels; investors should carefully consider their financial ability to continue their purchases through periods of fluctuating price levels.


Ask Friends and Family

Friends and family want to help. NJBEST makes it simple. Spryng. our exclusive crowdfunding tool, makes it easy for friends and family to contribute to your savings goals.

Learn more about Spryng


Educate Yourself

Take time to review which options are available and which ones offer the most advantages for your situation.

Comparing College Investing Vehicles


529 College Savings PlanCoverdell Education Savings
Account1
UGMA/UTMATaxable InvestmentsSavings Accounts
Federal Income Tax-Free Savings
Federal Income Tax-Free Qualified Withdrawals 2 3
Possible State Tax-Free Benefits
High or No Contribution Limit 4
No Income Restriction 5
Plan Owner Retains Control of Account
Ability to Change Beneficiary

Next Steps

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