College Savings Plans exist to encourage parents, Teenvestors, and others to prepare for the college expenses they may face in the future. There are usually two types of plans – College Investment Plans and Prepaid College Plans. This section discusses College Investment Plans only.

In many College Investment Plans, you have a choice as to how your money is invested but there are no guarantees about the amount of money your investments will make or about the tuition payments to a public institution in your state. However, College Investment Plans are great for Teenvestors because they can invest as little or as much as they want in order to save for college. The features of these plans are as follows:

Age-Based Plans. Each state has its own investment options but what a lot of the plans have in common is that these options can change, as the person for whom the plan was stabled gets closer to college age. Such plans whose composition can change with age are called age-based plans.

Your Funds are Moved Around. In some state college investment plans, your investments are automatically moved from aggressive (risky) portfolios to more conservative portfolios, depending on the age of the person for whom the plan was established. In these plans, as the child approaches college age, the money in the plan is moved into more conservative investments.

You Can Revise Your Investments. Some plans allow you to revise your investment options. These plans allow you to move from aggressive (more risky) investments to more conservative investments as the college candidate approaches college age. An example is one where a Teenvestor opens a College Investment at age 14, which means he has only about 3 years before he needs the money for school. Given this short time horizon, he can move the money into conservative College Investment Plans that invest only in low-risk investment such as Certificates of Deposits or Money Markets.