Investments to avoid

Some investments aren’t well suited to a college investment account, either because they expose you to too much risk or because they provide too modest a return. Of course, that doesn’t mean they may not be appropriate choices for meeting other goals.

Be wary of choosing:

1.	Investments that don’t pay enough interest to beat the rate of inflation, except in the last few years before the child enrolls. These include money market mutual funds, money market bank accounts, regular savings accounts, short-term bond funds, and certificates of deposit.
2.	Zero coupon bonds that aren’t timed to mature during the years when you’re paying college bills, since they are particularly volatile in the secondary market.
3.	Any investment that you can’t sell easily, such as real estate, unit investment trusts, and limited partnerships.
4.	Derivatives, such as futures contracts, whose value is linked to the value of an underlying commodity or unregulated investments, such as hedge funds.
5.	Any investment that would cost you surrender fees and potential penalties if you liquidated it during a certain period or before you reached a certain age.

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