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College Savings - buy/sell comics or tax free savings plan??
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158 posts in this topic

My daughter has 5 years until college and received $10,000 in an inheritance that is all going into her college savings before she spends it all on stuff. Here is the question - would you invest it in a tax free college savings plan or use the money to buy and sell books over the next 5 years? I'm not talking about buying a AF 15 and sitting on it for 5 years but the typical flipping situation (buying a collection or gradable books as many times as possible) over the next 5 years.

 

If she invest the 10k she will hopefully have 15k or so if her investments do really well over the next 5 years but that 10k could be big money if spent wisely on books over the same time frame.

 

Both options have some inherent risks but which would you pick? I'd like to sit her down and go over the pros/cons on these options and have her make an educated decision and your insight would be appreciated. I'd obviously help her with the comic flipping but I'd make sure she was involved in the process.

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Whatever you choose to do, make sure to sign up for UPromise, and register your credit cards, etc. with the account. Have any grandparents sign up to with your child as beneficiary.

 

https://www.upromise.com/

 

It's passive savings, a percentage of items you buy, gifts, flowers, meals, hundreds of sites and retailers and thousands of restaurants, grocery stores and pharmacies, etc. are part of it.

 

It's money you're already spending but you get a % rebate back into an account (can be linked to a 529) for your kids.

 

I signed up my 15 year old at birth and we have over $5,000 gained without any costs to us.

 

 

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Full disclosure...I work in finance (I know, shocking, right? lol).

 

The tax free college savings plan is the smarter choice. You literally just let the money sit there and grow.

 

Nothing is without risk but the savings plan is less risk and less work.

 

If she wants to (or enjoys) flipping comics, let her do it for fun. Set aside $500 and let her try to make money. But the pressure of trying to make a profit to ensure your college education is a lot to put on a kids shoulders.

 

***Best of luck

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If she has 5 years until college, I assume she is 13. I don’t she SHE has an interest in buying and selling comics, I think dad does, since he has tried his hand setting up at shows and often starts threads asking for selling advice.

 

If it were me, I'd ask myself "What would Bob Storms do?"

 

 

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If she has 5 years until college, I assume she is 13. I don’t she SHE has an interest in buying and selling comics, I think dad does, since he has tried his hand setting up at shows and often starts threads asking for selling advice.

 

If it were me, I'd ask myself "What would Bob Storms do?"

 

 

Definitely not intending to imply my daughter even likes comics and I'm sure she would rather put the money toward her first car in a couple years. But she also doesn't want a huge college dept when she graduates.

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If she has 5 years until college, I assume she is 13. I don’t she SHE has an interest in buying and selling comics, I think dad does, since he has tried his hand setting up at shows and often starts threads asking for selling advice.

 

If it were me, I'd ask myself "What would Bob Storms do?"

 

 

Not sure if I read it right but I'm definitely not hurting for cash right now so it's not a case of me wanting to use her money to back my comic side business.

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My daughter has 5 years until college and received $10,000 in an inheritance that is all going into her college savings before she spends it all on stuff. Here is the question - would you invest it in a tax free college savings plan or use the money to buy and sell books over the next 5 years? I'm not talking about buying a AF 15 and sitting on it for 5 years but the typical flipping situation (buying a collection or gradable books as many times as possible) over the next 5 years.

 

If she invest the 10k she will hopefully have 15k or so if her investments do really well over the next 5 years but that 10k could be big money if spent wisely on books over the same time frame.

 

Both options have some inherent risks but which would you pick? I'd like to sit her down and go over the pros/cons on these options and have her make an educated decision and your insight would be appreciated. I'd obviously help her with the comic flipping but I'd make sure she was involved in the process.

 

A couple of thoughts:

 

1) You would need the $10,000 investment to grow at nearly 8.5% per year to reach your goal of $15,000 in five years. I'm not sure what investments you were thinking of, but it's not likely you'll be able to manage a return that high. Most financial investments are pretty pricey these days, so returns that high over the next five years seem unlikely to me.

 

2) The flipping approach has a better chance because, in effect, you (and your daughter) would be earning some of the return through the time and effort you would put into locating, prepping, and selling the books.

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So you are constantly asking for help from the boards on how to sell better, how to buy this box of books, how to make more money, how the cons don't get you enough money and now there is thought of spending/gambling your daughters inheritance money on the above. Gabe is that you?

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You are in Ohio? Not my business, but the Ohio 529 College Advantage is one of the best in the country, a savings plan that just keeps on giving, and allows a 2k deduction per year per beneficiary and can be carried forward to other taxable years, and family and friends can contribute and receive the same benefit.

 

I would vist Ohio.gov and review the 529 program. Additionally, part of the inheritance received can be applied to a Roth IRA for additional savings (it isn't that difficult a financial maneuver), and under the Ohio plan, matching funds from other sources (grants/scholarships/etc.) does nor dilute the benefit. Additionally, when used for in State tuition, it is not treated in the same manner as other States when other grants/scholarships are received. This is a no brainer. The thing you may have to do (assuming the 10K is not in a 529 now and is just sitting in a savings/checking account) is run some actuary tables on the timing/amount of contributing....put it all in now... or a portion over the next 4-5 years, taking into account the IRA contribution. Don't forget to factor in the advantages of the first 2 years at a CC. It may also be of benefit to set up a loan program between the beneficiary (your child) and you.

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So you are constantly asking for help from the boards on how to sell better, how to buy this box of books, how to make more money, how the cons don't get you enough money and now there is thought of spending/gambling your daughters inheritance money on the above. Gabe is that you?

 

Has Gabe ever asked for anyone's help or opinion? Gabe has all the answers.

 

With or without this 10K my daughter will not be hurting. Just wondering if people think investing in a college savings account is better then "investing" in comics in the short time frame.

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You are in Ohio? Not my business, but the Ohio 529 College Advantage is one of the best in the country, a savings plan that just keeps on giving, and allows a 2k deduction per year per beneficiary and can be carried forward to other taxable years, and family and friends can contribute and receive the same benefit.

 

I would vist Ohio.gov and review the 529 program. Additionally, part of the inheritance received can be applied to a Roth IRA for additional savings (it isn't that difficult a financial maneuver), and under the Ohio plan, matching funds from other sources (grants/scholarships/etc.) does nor dilute the benefit. Additionally, when used for in State tuition, it is not treated in the same manner as other States when other grants/scholarships are received. This is a no brainer. The thing you may have to do (assuming the 10K is not in a 529 now and is just sitting in a savings/checking account) is run some actuary tables on the timing/amount of contributing....put it all in now... or a portion over the next 4-5 years, taking into account the IRA contribution. Don't forget to factor in the advantages of the first 2 years at a CC. It may also be of benefit to set up a loan program between the beneficiary (your child) and you.

 

Wow - thanks a lot for the comprehensive info.

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So you are constantly asking for help from the boards on how to sell better, how to buy this box of books, how to make more money, how the cons don't get you enough money and now there is thought of spending/gambling your daughters inheritance money on the above. Gabe is that you?

 

Has Gabe ever asked for anyone's help or opinion? Gabe has all the answers.

 

With or without this 10K my daughter will not be hurting. Just wondering if people think investing in a college savings account is better then "investing" in comics in the short time frame.

 

Oh he asks but just doesn't listen.

 

You've been "doing" comics for several years now. If you don't know if you (and your daughter) can make it work how is someone else telling you they can make it work any help to you? I don't see why you need someone else's opinion. Can you beat the market by investing your time, energy, knowledge, business sense and more? I can't answer that for you so why does my, or anyone else's opinion matter?

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So you are constantly asking for help from the boards on how to sell better, how to buy this box of books, how to make more money, how the cons don't get you enough money and now there is thought of spending/gambling your daughters inheritance money on the above. Gabe is that you?

 

Has Gabe ever asked for anyone's help or opinion? Gabe has all the answers.

 

With or without this 10K my daughter will not be hurting. Just wondering if people think investing in a college savings account is better then "investing" in comics in the short time frame.

 

Oh he asks but just doesn't listen.

 

You've been "doing" comics for several years now. If you don't know if you (and your daughter) can make it work how is someone else telling you they can make it work any help to you? I don't see why you need someone else's opinion. Can you beat the market by investing your time, energy, knowledge, business sense and more? I can't answer that for you so why does my, or anyone else's opinion matter?

 

Hearing other people's opinions on various topics is mostly why I frequent the message boards. This seemed like a relevant question that may get some interesting responses - so I asked it. They all can't be winners to everyone. I can see a negative response if I posted up these kind of opinion post every week but that is not the case.

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You are in Ohio? Not my business, but the Ohio 529 College Advantage is one of the best in the country, a savings plan that just keeps on giving, and allows a 2k deduction per year per beneficiary and can be carried forward to other taxable years, and family and friends can contribute and receive the same benefit.

 

I would vist Ohio.gov and review the 529 program. Additionally, part of the inheritance received can be applied to a Roth IRA for additional savings (it isn't that difficult a financial maneuver), and under the Ohio plan, matching funds from other sources (grants/scholarships/etc.) does nor dilute the benefit. Additionally, when used for in State tuition, it is not treated in the same manner as other States when other grants/scholarships are received. This is a no brainer. The thing you may have to do (assuming the 10K is not in a 529 now and is just sitting in a savings/checking account) is run some actuary tables on the timing/amount of contributing....put it all in now... or a portion over the next 4-5 years, taking into account the IRA contribution. Don't forget to factor in the advantages of the first 2 years at a CC. It may also be of benefit to set up a loan program between the beneficiary (your child) and you.

 

Wow - thanks a lot for the comprehensive info.

this answer says a lot of good stuff.

 

I would put the money in the savings. Flipping comics might net her optimistically another $10K, but for the time and effort, she'd probably be better off spending the time working hard towards some type of scholarship or just enjoying being a kid, or having some other productive hobby like sports, music, reading, maybe a part time job or internship when she's older.

 

Getting your daughter interested and good at math/science AND good at writing will make her eligible for all manner of scholarships. Girls are still heavily underrepresented in the sciences at the college level (especially assuming you live in the Midwest), and even fewer are truly outstanding scholarship applicants. Of course this assumes she has (or will have) interest in those fields

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I would vist Ohio.gov and review the 529 program. Additionally, part of the inheritance received can be applied to a Roth IRA for additional savings (it isn't that difficult a financial maneuver), and under the Ohio plan, matching funds from other sources (grants/scholarships/etc.) does nor dilute the benefit. Additionally, when used for in State tuition, it is not treated in the same manner as other States when other grants/scholarships are received. This is a no brainer. The thing you may have to do (assuming the 10K is not in a 529 now and is just sitting in a savings/checking account) is run some actuary tables on the timing/amount of contributing....put it all in now... or a portion over the next 4-5 years, taking into account the IRA contribution. Don't forget to factor in the advantages of the first 2 years at a CC. It may also be of benefit to set up a loan program between the beneficiary (your child) and you.

Note, Roth IRA needs to be in mom or dad's name unless the daughter has earned income greater than or equal to the Roth IRA contribution.

 

Just remember, while you avoid paying 10% early distribution penalty, you still need to pay ordinary income tax on the earnings portion of the Roth IRA withdrawal used to pay for higher education unless you're 59.5 and you've had a Roth IRA for at least 5 years.

Edited by aerischan
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Actually, I'd say buy an AF15 and sit on it for 5 years, it's growth has been crazy the past few years. If not that, then a pre-tax college savings plan for sure :) GL!

 

 

Jerome

 

If you are going with the comics route I definitely agree with this or getting similar key early Silver Age books. Buying collections with gradeable books sounds like it could be feast or famine. Plus it's more work and a ton of grading fees.

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You should also consider an UGMA or UTMA as an alternative to a 529 account. There are pros and cons depending on your situation. http://ctainvest.org/home/saving-and-spending/saving-for-college/Are-There-Better-Options-Than-a-529-Plan.aspx

 

Personally, I would view any "investment" in comics as high risk, and many would call it gambling. Therefore I would only put a small percentage of your daughter's college money into such a vehicle. Also, 5 years is a relatively short time frame for college savings, so you probably want to limit your exposure to high risk assets.

 

And, most importantly, you should be talking to a financial adviser. I'm sure you can get free consultation with many banks and brokers.

 

 

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Yeah, you got some great responses so far. Lot of good info in there.

 

My two cents to add, which I think you already know.

 

The big difference in the 'deal comics' route is two-fold: at the end of the time she will have greater experience after having helped run a small business and her mind will be developed a certain way. And there's a lot of work implied in dealing comics, and she'll have done a lot of that work. Supposedly, doing work helps one grow. And even if she hates you tiny bit more over the short term, over the long haul, if she develops a certain way, she'll appreciate the useful experience and lessons you forced her into learning. (Of course, the mercenary sensibilities so useful to being a successful dealer could have the reverse effect, and help make her into a hippie.)

 

 

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