Blues Man
Diamond Member
- Aug 28, 2016
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So much is being said about student loans and the debt people are accumulating for a 4 year degree I have started to think about alternatives for that money.
So now what if instead of paying tuition and hoping that you get some sort of return on that investment people actually invested that money in a Roth IRA that would provide tax free income after the age of 60?
If a parent contributed $6000 to a Roth IRA starting when their child is 16 and continued making those annual contributions until they are equal to what would be paid at the average state college what would the result be?
If we assume an ROR of 8% ( a conservative number) and a time frame of 5 years for a total of 30K when the child turns 21 he'll have 45288 in his portfolio
If we then assume a very modest monthly contribution of 100 for the next 44 years until the age of 65 at the same 8% at age 65 he will have 1.8 million in his portfolio.
Now after paying back loans and interest on those loans the question is will that 4 year degree result in the same return on the original 30K investment?
I know some of you will say there's no way a parent can afford that but if we assume a parent is saving money for college from the birth of the child say 100 a month at the same 8% for 16 years there will be 38000 saved for his Roth investments of 6000 a year
It seems to me that the Roth beats a college degree
So now what if instead of paying tuition and hoping that you get some sort of return on that investment people actually invested that money in a Roth IRA that would provide tax free income after the age of 60?
If a parent contributed $6000 to a Roth IRA starting when their child is 16 and continued making those annual contributions until they are equal to what would be paid at the average state college what would the result be?
If we assume an ROR of 8% ( a conservative number) and a time frame of 5 years for a total of 30K when the child turns 21 he'll have 45288 in his portfolio
If we then assume a very modest monthly contribution of 100 for the next 44 years until the age of 65 at the same 8% at age 65 he will have 1.8 million in his portfolio.
Now after paying back loans and interest on those loans the question is will that 4 year degree result in the same return on the original 30K investment?
I know some of you will say there's no way a parent can afford that but if we assume a parent is saving money for college from the birth of the child say 100 a month at the same 8% for 16 years there will be 38000 saved for his Roth investments of 6000 a year
It seems to me that the Roth beats a college degree
