Maria wants to start savings for college, but she has little tolerance for the risk. Which approach to saving for college is considered the lowest risk?
-529 plans
-Coverdell education savings accounts
-U.S. savings bonds
-equities
U.S. savings bonds are considered the lowest-risk approach to saving for college.
The approach considered to have the lowest risk for saving for college is U.S. savings bonds. These bonds are backed by the U.S. government and are considered to be a safe and secure investment option.
When it comes to saving for college with little tolerance for risk, the option considered to have the lowest risk is U.S. savings bonds.
U.S. savings bonds are generally regarded as a low-risk investment option. These bonds are backed by the U.S. government, which means they are considered very safe. They provide a fixed rate of return over a specified period, typically maturing in 20 years. The interest earned on U.S. savings bonds is generally exempt from state and local income taxes, and it may also be exempt from federal income tax if used for qualified educational expenses.
To invest in U.S. savings bonds, Maria can visit the official website of the U.S. Department of the Treasury, specifically the TreasuryDirect portal (www.treasurydirect.gov). Through this platform, she can set up an account, choose the type of U.S. savings bond she wants to purchase, and calculate how much she wants to invest. The bonds can be purchased in electronic form or as physical paper bonds.
It's important to note that while U.S. savings bonds are considered low-risk, they may have lower returns compared to other investment options. Therefore, Maria should carefully weigh the potential return against her risk tolerance and financial goals before making a decision.