529 Plans and Foreign Securities
Investing in a 529 plan can be a great way to save money for your child¶s college expenses.About 32% of parents¶ savings for children¶s college expenses put money into 529 plans during2009, up from 30% for 2008. Every state except Wyoming offers at least one plan; many statesoffer more than one plan. Investors are not required to invest in their home state¶s plan.However, by sticking to a plan offered by one¶s state of residency, the investor may be entitled toan upfront state tax deduction. For example, you can live in California, invest in a 529 plan for Vermont, and end up using it for New York.The most common investments for 529 plans are those tailored to a child¶s expected date of matriculation or the family¶s appetite for risk. Under IRS rules, 59 plan investors could onlymake one change per year; in December of 2008, the IRS stated plan holders could now maketwo changes per year. You can set up an annuity to invest in your 529 plan. A good way to besure that the interest rate for your payments remains the same is to have anannuity certificate.An annuity certificate ensures that your interest rate will be the same no matter how long theinvestment lasts.
Another lucrative investment can be found in foreign securities. Foreign securities are anysecurity in foreign currency in stocks, bonds, debentures, shares and other forms. Annuityeducationcan inform you and show you how to invest in a foreign security successfully. It¶simportant to understand how it works and how to invest directly on a foreign exchange. Anannuity education can help with this sometimes complicated information. For example, you maywant to know first why it¶s even a good idea to own a foreign security.Investing directly on a foreign exchange is not the only way to gain exposure to internationalshares. Take American depositary receipts (ADRs), which are certificates corresponding to acertain number of shares of a foreign company. ADRs trade on U.S. exchanges providinginvestors with timely dividend payments and widespread information, but sticking to ADRslimits your universe to the large, multinational firms that tend to issue the securities (about 3,200foreign firms currently list in the U.S.). ADRs are priced in U.S. dollars, so they mute the effectsof exchange-rate fluctuations²one of the arguments for investing in international stocks.The U.S. share of exchange-based global market capitalization has been falling, from 52% at theend of 2001 to 35.2% as of September 2007. As of January 2009, roughly 40,000 stocks tradedin foreign exchanges²compared with about 6,000 on the NYSE and NASDAQ.At one time, sticking to the domestic market ensured the world's greatest quality of management,accounting standards, and transparency. But much of the world has caught up: Today more than1,500 of the world's largest 2,000 companies are domiciled outside America's borders, includingindustry leaders such as Nestlé, Toyota, HSBC, Royal Dutch Shell, and Samsung.While foreign markets have some unique investing risks²some regions are more volatile andcan have the potential for faster gains or losses²they have also been home to some of the largestreturns over specific periods of time.