Suze Orman addressed a concerned mother, Rachel, seeking advice on how best to utilize her $100,000 inheritance for her family, specifically regarding college savings for her three children. Rachel’s children are 14, 11, and 8 years old, and she wants to ensure their future education without jeopardizing their current financial stability.
Orman strongly advised *against* using the money to pay down the mortgage, arguing that mortgage interest rates are tax-deductible and lower than potential investment returns. Instead, she advocated for prioritizing investments to maximize growth over time.
Her primary recommendation was to invest the entire $100,000 in a 529 college savings plan, allocating the funds proportionally to each child’s age and college enrollment timeline. Specifically, she suggested putting more into the younger children’s accounts due to the longer investment horizon. Orman also emphasized the importance of continuing to contribute to the 529 plans regularly, regardless of the initial $100,000 investment, to further boost their savings. Finally, she pointed out that 529 plans are often tax-advantaged, offering tax-free growth and withdrawals for qualified education expenses.
find the original article here: https://finance.yahoo.com/news/mom-asks-suze-orman-did-223026792.html