The Path to College

You check the mail and there it is: the letter your child has been waiting for. You watch as she opens it with nervous anticipation, second only to yours. Years of hard work — the studying, the extracurriculars, the campus tours — all come down to this moment…

Accepted!

You’ve been imagining the day your child gets into their dream college for a long time. Seeing them achieve this milestone will no doubt give you tremendous joy. But being able to provide them the financial support they’ll need will make the moment even more joyful. But with the cost of college rising much faster than inflation, how will you be ready? Simple: by starting early.

And Wealthfront wants to help.

Today we’re thrilled to announce college planning with Path. Sound familiar? It should. Earlier this year we launched Path — the most comprehensive automated financial planning and investing solution — to help you build towards retirement. And now we’re making Path even better by adding college planning to help you prepare for your child’s academic future.

Path walks you through every important aspect of college planning and delivers a complete, personalized assessment that helps you start preparing for that important moment in your child’s life. And because our team of PhDs has thought through the complex calculations on the back end, you can do it with just a few taps on your phone. We make it easy!

First, Path projects the future costs of college. You select any college you like, and we’ll determine the total costs with a detailed breakdown of what you’ll be accountable for — things like tuition, room and board, and books. State school? Ivy League? Path helps you weigh all the options. And don’t worry, you can change the school you’re building towards at any time and the data will automatically update for you.

 

 

Next, we calculate your expected financial aid. We use information we already know about you through Path, like your income, finances, and how many children you have. We also pull in outside data to specify the costs of a particular college and how they calculate financial aid. This provides a customized estimate per school that you won’t find anywhere else.

 

 

Now, a special touch: you get to add a photo of the apple of your eye! Consider this our way of letting you put one of the 500 pictures of your kids you have stored on your phone to good use.

The final step is the most important one: you get to grow those savings! Path helps you build a savings plan to help close the gap. You’ll choose how much you can save, and Path shows you how far that will go towards covering college expenses. And just like with retirement, you can see the impact when you’re able to save more.

 

 

Speaking of savings, let’s talk about the key to all of this: the 529. The 529 is an investment account specifically designed for college savings, and you’ll need to open one with Wealthfront to enable the college planning service within Path. For those with external 529 accounts, stay tuned: you’ll soon be able to link your existing 529s and unlock Path’s powerful new feature.

Just like a retirement account, a 529 has tax advantages that help your savings grow faster. As a result, your returns can be as much as 16% higher than in a traditional investment account. And what’s even better? Withdrawals from a 529 account are tax-free, so long as you use the money to pay for tuition, books and any other education-related expenses.

Wealthfront is the only advisor who can deliver the most cost-effective 529 and a personalized college planning service all in one. We know the the path to getting into college is hard enough, so we want to ensure the path to saving for it is easy.

So dream big for your kids. We’ve got your back.

Disclosure

When we say that your returns from a 529 can be as much as 16% higher than in a traditional investment account, this figure is based on a hypothetical calculation of a $50,000 initial contribution invested in a 529 account for 18 years versus the same amount invested in a similar taxable account, excluding any potential benefit from a state tax deduction. The projected performance is based on a 529 investment plan with a risk score of 6.0, producing average net-of-fee returns of 4.0% over an 18-year investment horizon. We assume a combined federal and state marginal tax rate of 24.7% for dividends and long-term capital gains, based on a married California couple earning $260,000 per year and filing jointly.

Remember, this is hypothetical performance is and not an indicator of any investor’s actual current or future experience actual results and is provided for illustrative purposes only. Hypothetical performance is developed with the benefit of hindsight and has inherent limitations. Specifically, hypothetical results do not reflect actual trading or the effect of material economic and market factors on the decision-making process. Wealthfront assumed we would have been able to purchase the securities recommended by the model and the markets were sufficiently liquid to permit all trading.   Hindsight provides an inherent benefit and may not account for market, liquidity, or other economic factors. Investors evaluating this information should carefully consider the processes, data, and assumptions used by Wealthfront in creating its simulations.

Nothing in this communication should be construed as tax advice, a solicitation or offer, or recommendation, to buy or sell any security. Financial advisory services are only provided to investors who become Wealthfront Inc. clients pursuant to a written agreement, which investors are urged to read carefully, that is available at www.wealthfront.com. All securities involve risk and may result in some loss. Wealthfront Inc.’s financial planning services are designed to aid our clients in preparing for their financial futures and allows them to personalize their assumptions for their portfolios. Wealthfront Inc.’s free financial planning guidance is not based on or meant to replace a comprehensive evaluation of a Client’s entire financial plan considering all the Client’s circumstances.  For more information please visit www.wealthfront.com or see our Full Disclosure.


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