The year is ending and I just thought I'd post about college savings and how small savings adds up. Maybe to inspire someone, maybe because it's the simplest accounts we have. My DK1 turns 14 in January. I think we started her Education Savings Account or Coverdell in May 2010. But Coverdell IRA or ESA are capped at $2000 a year contribution limits. But you can invest in anything. What have we invested in? VOO. Yep that's it. BORING. Nothing special. DK2 was born in July 2012 and I think I did her as well maybe a few months later. So I've been tracking it for awhile. I have to go back to see how it was but 10 years ago...Realize we've never contributed more than $2k/year.
1/1/2014 DK1 $11,239 DK2 $6369
1/1/2015 $12,251 $6831
1/1/2016 $14695 $9105
1/1/2017 $16,588 $10,277
1/1/2018 $22,205 $14,612
1/1/2019 $24,801 $17,605
1/1/2020 $36,702 $27,169
1/1/2021 $39,668 $29,251
1/1/2022 $51,869 $38,691
1/1/2023 $43,940 $33,366
12/1/2023 $54,540 $41,945
total contri $26,000 $22,000
So small amounts invested once a year for many, many years leaves to a doubling in 12 years. It's supposed to double every 7 years but i'll take it.
As for apple stock? DK1 sometime in 2010, again I think summer 2010, we were visiting in SF and DH's uncle. He decided after meeting DK1 he would gift her 2 shares of apple stock and asked us to never sell it. At the time it was $300 a share so he gave her around $600. We didn't reinvest the dividends though we should have. I think we let the cash ride. What's the $600 gift worth now from July 2010? $11,891. She has 60 shares from all the splits, but since I started reinvesting dividends actually 61.425 shares. DH's uncle didn't give DK2 but I did matching shares for her in a taxable account. Those two shares of apple are the only reason why we had taxable accounts for the kids since we didn't plan on having enough money past the $2k/year ESA.
Well now the kids have around $45k each in a taxable account and they have nice and hefty college funds with the ESA being a big chunk of it. Turns out small investing can make a big difference in someone's life. We weren't born into any sort of money or inheritance. But wow, just a tiny amount can make a huge difference.
Imagine if either of our parents had gifted us even $500 or $1000 per year per kid for college or anything else. I'm hoping to do that for our kids. Maybe be in the situation where we could gift the maximum per year to them. Investing in their taxable accounts might make a bigger difference by the time they are 30.
December 24th, 2023 at 01:15 pm 1703423709
If you had put in the $26,000/$22,000 all at the beginning, it might have doubled in 7 years. Compounding is amazing.
December 25th, 2023 at 01:45 am 1703468727
December 25th, 2023 at 12:40 pm 1703508056
December 26th, 2023 at 03:05 am 1703559935