The College Savings “Survival Guide”

The hidden threats to your child’s college savings account; how to avoid them and how to come out on top…

A 20-year-old trend could soon cost you your child’s college savings account.

How so?

To understand, let me share some very interesting information.

But before I do, let me be very clear – I am not an economist.  I don’t make it a point to pass myself off as one.  But one thing I do (and my team does) is follow trends and facts.

That’s why it’s absolutely in your best interest to take the following information very seriously.   These are not my opinions.  This information is real. And how it plays out over the coming years is going to have an enormous impact on every single college savings plan that exists today.

Is America turning into Japan?

“Trends are our friends,” is a saying we use a lot around our offices.

Trends can tell us a lot.  And one of the trends we are paying close attention to right now is the parallel between the United States and Japan.

Let’s take a closer at some basic facts between our economy and theirs. *

  • Between 1971 and 1985, the Japanese stock market went up about 500 percent.   In the United States, the bull market began 10 years later, in 1981.  From 1981 until 1995, U.S. stocks also went up about 500 percent.
  • In 1985, the Japanese market really took off… tripling in the next 5 years.  In 1995, the U.S. market did the same thing, tripling in the next 5 years.
  • In 1990, the Japanese market peaked, and began to decline.  Eighteen months later, it was down some 30 percent. By 2000, the U.S. stock market peaked, and began to decline.  Eighteen months later, it was down about 30 percent.

Sounds strange – right?  The similarities don’t end there.

  • In 1992, then Prime Minister Miyazawa wanted to help the banking system with public funds (read: bailout), but public sentiment was strongly against it.  U.S. officials, 16 years later, found themselves facing a credit crunch of epic proportions – and responded with the largest injection of liquidity the U.S. markets have ever seen.

And the parallels don’t end there.  There are more than 15 different key events, and statistics that link these 2 world powers together.

The biggest thing we take from this Japan/US parallel trend is that the US is about 10-15 years behind where Japan is now – economically speaking.

So if the U.S. has been following the path of Japan, just 10 years behind – where is Japan now?

Here is a chart of a performance of their stock market over the last 25+ years:

And here is a chart of the performance of the Japanese real estate market over the last 25+ years:

These charts clearly show the Japanese stock and real estate markets are off more than 80% from their highs. That is insane!  (and depressing, if you’re a Japanese stock or home owner.)

So, how are the Japanese people dealing with having not one, but two depressed major asset markets?

This is where the story gets interesting.  You see, the Japanese people as a whole are in many ways in excellent economic condition; they work fewer hours than us, they pay less in taxes, they are in better health and live longer. They take more overseas vacations and they buy more luxury goods (like Rolexes) than any other country on the planet.

So how were the Japanese people able to remain in a strong financial position despite the catastrophic losses in the stock and real estate markets?

They did 2 major things:

  1. They became incredible savers; among the highest in the world at 13% of their earnings.
  2. They adjusted where they saved and invested their money.  They stopped speculating on stocks and over-leveraged real estate.  Instead they switched to financial products and solutions that contained strong guarantees and certainty. Safe money products have become all the rage in Japan.

And the Japanese people have prospered because of it.

If the Japan and US trend continues, it very well could be the case that families who adopt and prepare for a long, slow, downward slide of stocks and real estate, will do well in the long run.

And those who fail to adapt quickly to this new American reality could have their college savings and retirement plans wiped out.

That’s why the rest of the report is dedicated to doing two things for you:

  1. Giving you the 4 key benefits every great college savings plan has.
  2. A detailed breakdown of the 9 most popular college savings plans on the marketplace today… as well as the pros and cons of using each one.

To your successful college pursuit,

Scott Weingold
Publisher, CollegeMadeSimple.com

Follow this link to read Part 2 of the College Savings Survival Guide. In it, I’ll share the 4 major benefits every great college savings plan has… along with the Pros and Cons of every college savings account.

Related Articles:

The College Savings Crisis

The College Savings Crisis, Part 2

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Editor's Note: Scott Weingold has been ranked the #1 “College Financial Aid Expert Worth Knowing About” in the entire country by CollegeStats.org.  He has co-authored the book, “The Real Secret To Paying For College. The Insider’s Guide To Sending Your Child To College – Without Spending Your Life’s Savings.” Scott also publishes a popular free online newsletter, “College Funding Made Simple" which reveals insider’s tips, methods, and strategies for beating the high cost of college.

Scott is the co-founder and a principal of the widely renown College Planning Network, LLC – the nation’s largest and most reputable college admissions and financial aid planning firm. CPN is a proud member of the Better Business Bureau, the National Association of College Funding Advisors, the National Association for College Admission Counseling, the National Association of Student Financial Aid Administrators and the Student Affairs Administrators in Higher Education.

Scott, along with his college funding advisory team, helps thousands of families throughout the country with their college planning needs and offers a series of free educational webinars and workshops on “How To Pay For College Without Going Broke In The Process!” He's been featured or mentioned in The Philadelphia Inquirer, Yahoo News, TheStreet.com, Voice America with Ron Adams, Crains Cleveland Business, and on Cleveland Connection with James McIntyre.  Scott has published numerous articles and is a professional speaker who has addressed thousands of audiences online and offline throughout the United States.  His actionable insights and candid, open approach have earned him & his team numerous media interviews, citations, and speaking opportunities, and his free online video workshop is one of the Internet’s most widely viewed pieces in the college funding space.