Five Years to Save Money for College

I have five years to save money for my son's college education. Any advice?

--NMayfil6315
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Bruce Hammond

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Five years is an in-between time period to be saving. If you had 10 years, I would recommend putting most of your money in stock mutual funds. With only five to go, you need to guard against a market downturn.

What to do depends partly on your comfort level with risk. The supersafe way is to get a certificate of deposit, Treasury bill, or U.S. Savings Bond. Another possibility is a zero-coupon Treasury bond, which you buy at a fraction of its value and then get the whole payoff when it matures. A corporate bond fund would be slightly riskier. You could also consider a blue-chip stock mutual fund -- the riskiest of these ideas but also the one with the highest probable return. If you do go for bonds or C.D.s, you may want to consider "laddering," that is, buying at least several with maturity dates spaced a year apart while your son is in college. That way, you will maximize your interest and have a steady stream of cash. Good luck.

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