We want our kids to have a better life than ours. But even
though rising college costs aren't expected to ease up, don't let
a dire situation paralyze prudent planning. The best solution is
to get started right away and let the power of compounding growth
work for you.
Later in this article I'll discuss five stocks to help you
build a solid foundation for your child's college savings, but
let's first address why waiting to get started is costing you
more than you think.
It all goes by so fast
According to the College Board, a four-year degree from a public,
in-state university costs $21,447 today. For parents of a
newborn, this requires setting aside roughly $460 every month for
18 years in an investment earning 8% annually. But by waiting
until your bundle of joy enters kindergarten to start saving,
you'll need to fork over nearly $640 per month.
Let's take a look at five companies you won't lose sleep over,
each characterized by incredible brand strength, simple business
models, blockbuster products, and stable histories.
Mickey Mouse's massive empire includes theme parks, television,
movies, and an amazing brand. Disney's return on assets and
return on investment absolutely dwarf the competition standing at
twice the industry average. Earnings growth is expected to double
over the next five years versus the prior five. Expected growth
will probably come, in part, from the continued success of its
subsidiary Marvel Studios'
clever film franchises
Cleaning up after your little ones is no small feat, and nearly
100-year-old Clorox eases the dirty work. The company reported 4%
top-line sales growth in the most recent quarter, attributed in
part to successfully passing higher input costs to consumers. And
in good times and bad, we still need to clean our homes. To tidy
things up further, the company pays an impressive 3.6% dividend
McDonald's has secured a top 10 spot on Interbrand's "Best Global
Brand" list every year since 2001. The company enjoys exceptional
margins and continues to increase sales growth despite a
challenging economic climate. Watch for McDonald's to benefit
from its recently renewed emphasis on brand imaging, premium
products, healthier menu options, and remodeled restaurants.
McDonald's is expected to grow earnings 9% annually over the next
five years. Its 3.2% dividend is a tasty treat for
Before your child was a twinkle in your eye, there's a good
chance Spot melted your heart. You're not the only one:
Pet industry sales
are expected to top $74 billion by 2015. PetSmart's net sales
increased 7.7% annually for the past four years, and same-store
sales were up 5.4% in 2011. Company earnings are expected to grow
at a 16% annual clip over the next five years; that news is like
a scratch behind shareholders' ears.
Whole Foods Market
Whole Foods co-founder and current co-CEO John Mackey identified
the organic food trend more than three decades ago, when his
company became America's first national Certified Organic grocer.
Now a $17 billion retailer with a presence in three countries,
Whole Foods operates 300 stores in the United States and plans to
open three times that number domestically. A huge helping of
international expansion opportunities packs this retailer's
Take a look at how these stocks fared in the past 18 years --
the blink-of-an-eye period of time your newborn could have grown
to a dorm dweller.
Total Return Over 18 Years
|Whole Foods Market
Source: The Motley Fool. Percentage change represents period
of time from Aug. 13, 1994, to Aug. 13, 2012, including dividend
Consider these five won't-lose-sleep-over-them companies for your
child's college savings, either as a portfolio of five stocks or
just one or two of them. Of course, these companies may not grow
at the same clip in the coming 18 years, but even if they perform
half as well as they did, that'd still give little Tommy a huge
head start at Wherever U.
If you'd like another stock idea that's as brilliant as your
kid, our analysts have done the homework for you. Read about the
one stock they've given high marks to and awarded
"The Motley Fool's Top Stock for 2012."
This report won't be available forever, so get your
free copy today
owns no shares in any of the companies mentioned in this
article. You can follow her on Twitter,
. The Motley Fool owns shares of Clorox, Whole Foods Market,
Walt Disney, and McDonald's.
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