Tuesday of this week, Fidelity Investments said that it is going to celebrate National College Savings Month by providing something different, something new to all of their clients that are looking for conservative college savings options. Actually, they made no mention of National College Savings Month, but I give them credit for coming up with a new college savings idea that coincides with this month! 😉
As someone that talks with families on a regular basis, I have heard time and time again about how poorly their 529 college savings plans have been performing in the past couple of years. Since most of these funds are invested in stocks and bonds, they are subject to the same volatility that is experienced by the rest of us that have dabbled in the stock market over the years. Some days and months are good and others… not so much.
Since families have been experiencing more of the “not so much”, they are trying to find options that provide guaranteed returns and some sort of protection from the financial ups and downs of the investment market. Fidelity Investments has heard the call of these families and is happy to oblige.
They are rolling out a 529 savings plan that is an interest bearing bank deposit savings account with FDIC protection. You basically get the best of both worlds. You get the tax advantages of having a 529 college savings plan AND you get the safety net of having your funds be FDIC insured.
The interest rate of return is indexed to the federal funds rate (which is hovering around zero) but one can only hope that is has no where to go but up… if they are investing in Fidelity’s new 529 option.
If you would like to learn more about the college savings options provided by Fidelity, you can check out their website here for more information.
Today marks the last day of National College Savings Month, but I certainly hope you know that you don’t have to wait for September of each year to start a college savings fund. If you are busy today and have to open a college savings account tomorrow, trust me… no one will harass you because it is October and not September! 😉
