Don't panic.QA My husband and I both have a 401(k) and we were thinking about borrowing from one of these accounts to prepay pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. for our son's
education, who is 14. Do you think that would be a good investment
considering the rising cost of education?
--P. Smith and F. Smith Chester, VA Barring an emergency, borrowing from your 401(k), for any reason, should be your last resort. It's one of the most common mistakes that people make when managing their 401(k). While the relatively low interest rate may make the loans seem attractive, it only serves to reduce the balance that would have been available at retirement. But to the matter at hand: I imagine you're looking at your 14-year-old son and thinking that time's running out. Even though you're starting late, you're asking the right questions. Another common mistake parents make is to panic and try to shift funds around or seek to make a killing in high-risk high-risk adjective Referring to an ↑ risk of suffering from a particular condition Infectious disease Referring to an ↑ risk for exposure to blood-borne pathogens, which occurs with blood bank technicians, dental professionals, dialysis unit investments with the hope of a quick payoff. Because you'll need to tap into whatever savings you accumulate Accumulate Broker/analyst recommendation that could mean slightly different things depending on the broker/analyst. In general, it means to increase the number of shares of a particular security over the near term, but not to liquidate other parts of the portfolio to buy a security in three or four years, you should be conservative. That means you'll want to look for high-yield money-market funds money-market fund, type of mutual fund that invests in high-yielding, short-term money-market instruments, such as U.S. government securities, commercial paper, and certificates of deposit. , plus treasury notes, CDs. and bonds. And remember, though tuition For tuition fees in the United Kingdom, see . Tuition means instruction, teaching or a fee charged for educational instruction especially at a formal institution of learning or by a private tutor usually in the form of one-to-one tuition. is going up, there are a wide range of financial aid programs, grants, and work-study opportunities that you can tap into. So continue to ask the right questions about savings and financial aid, and you'll be able to develop a plan that can move you forward, not set you back. --Trevor Delaney Mail your money management questions to Money Matters, BLACK ENTERPRISE 130 Fifth Ave., New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , NY 10011 or send an e-mail to delaneyt@blackenterprise.com. |
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