I am periodical “anonymous” forum reader, but first time posting, as well while I have IBKR account and been playing with some stocks some time ago, I am not an experienced investor at all (just theoretical reading). Therefore, I would like to verify my “strategy” if anyone would have any advice or confirmation, from overall perspective (risks, value, taxes, etc..):
I have some fund reserved for my kid’s tuition fees, which I will have to pay over the next four years (fingers crossed.. ). I have a choice to pay it annually (currently planned fund will cover almost 2 years), but instead I am thinking paying monthly (there is a very small “penalty” compare to annual) and invest that “fund” into ETF’s and then cash-out monthly to pay tuition fee. I also plan to periodically top-up that “fund” by adding same or different ETF’s. My idea is to diversify ETF’s into some geographical, some bonds, some industry and perhaps some broader coverage/world.
So taking that into perspective - does it sounds stupid for you and I shall consider something else (i.e. just keep CHFs..)? Any other risks shall I consider, except that I understand it is “a very short term investment” with “a long term investment strategy” and in the worst case scenario, I can loose money and would still need to pay those fees… Any types of ETF’s you would advice then?
Many thanks in advance and my apologies if that post and the whole idea sounds extremely stupid from experienced investor perspective…
You pretty mich summarized the key issue. Unless you can easily find money somewhere else to not be forced to sell in downturns, you should just keep it in cash or equivalent.
Id assume there will be new income in the next years which could pay for part of the tuition. So you could consider investing now the part that will not be needed.
Red flag here: what kind of “fund” charges you for “investing”? I think you should stick to basic products and have a direct relationship with a bank/discount broker.
The stock market drops 50% and stays that way for the next two years. The result? You’ll have to pay school tuition from another source, if you have one, or you’ll end up paying double (assuming you’ve invested enough and have sufficient funds available which you can sell).
If that’s a reasonable risk, go for it. If not, then not.
Thank you all, who replied - really appreciated! As I have mentioned before, I fully understand the risks, however, provided I would take that risk - what is the split of ETF’s types you would suggest (bonds/equity)? Accumulating or distributing (I presume this, due to taxes/risk)? anything else to consider?
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). I have a choice to pay it annually (currently planned fund will cover almost 2 years), but instead I am thinking paying monthly (there is a very small “penalty” compare to annual) and invest that “fund” into ETF’s and then cash-out monthly to pay tuition fee. I also plan to periodically top-up that “fund” by adding same or different ETF’s. My idea is to diversify ETF’s into some geographical, some bonds, some industry and perhaps some broader coverage/world.