Project $160K
My daughter was born this year, and I would like to begin
investing for her college. I will
make some assumptions about the cost of college in 2034 as noted below. First, the cost is 160k for a 4-year degree – based
on Landsman’s article “What College Tuition Will Look Like in 18 Years” found
on CNBC: “In 18 years, the average sticker price for a private university
could be as much as $130,428 a year. The situation isn’t
much better if you go the public route. Sending your child to a state
university could set you back at least $41,228 a year.”
Second, the SP500 will have an average return on investment
of 10% - this is based on a conservative estimate of the historical average
return of 12%. I defer to the expert, Dave
Ramsey, on this assumption. Dave states,
“[t]he current average annual return
from 1926, the year of the S&P’s inception, through 2011 is 11.69%.”
Third,
I will have 18 years to invest, and allow my investment to grow to 160k. Alright, the project has been laid out and
now it’s time to implement. I will
provide various snap shots along the way on this project to see if it is on
track to hit $160k by 2034. Also, I have created the following mile stones to provide feedback on the fund's progress.
Mile Stones:
2017 - $3,600
|
2026 - $57,300
|
2018 - $7,500
|
2027 - $66,700
|
2019 - $12,000
|
2028 - $77,000
|
2020 – $16,700
|
2029 - $88,200
|
2021 - $22,000
|
2030 - $100,700
|
2022 - $27,000
|
2031 - $114,380
|
2023 - $34,000
|
2032 - $129,400
|
2024 - $41,100
|
2033 - $146,000
|
2025 - $49,000
|
2034 - $160,000
|
Sources:
1. Stephanie
Landsman, “What College Tuition Will Look Like in 18 Years”, 2012, <<http://www.cnbc.com/id/47565202>>
