Taxable Income = $60,000
Tax rate = 29%
Savings as a percent of taxable income 10%
Choices for saving:
1) Open a stock brokerage account and buy $6,000 worth of the ETF (exchange traded fund) with the symbol SPY
2) Open a New York's 529 College Savings Program Direct Plan and invest $6,000 per year.
You expect to have college tuition bills at either Queens College or NYU in 18 years. Tuitions are expected to rise at a rate of 4.9% per year. Your salary is expected to rise at 3% per year.
What is the better savings vehicle and why?
Will you be able to finance four years of college if you stay with your plan?
Please use Excel to make your analysis.