You and your parents sit down to have a converstion about paying for college. Your parents tell you that bases on their savings to this point they can give tou $40.000 toward your college tutition. They tell you that they can either keep it in its current place where it gets 3% interest or if you can convince them that you could do better with it, they will give it all to you now to invents yourself.

Based on recent studies the average yearly tutition for 4 year colleges is about $25,875. You found a part time job where you make $10.00 an hour. by working 12 hours per week aftr school and full time durning school vacation(average of 12 weeks per year)for the remainder of high school and throughout college, you know that you bring your tutition cost down by $7000.00 per year. Additionally your parents information how much money will you need to make in interest over the life of your investments in order to graduate from college debt free.

Less assume that you can pay your entire college bill as a lump sum upon gradutatuin, so your investment period will be 5 years. Since you are a fincially savvy individual you know that to maximaze your investment protfolio you want to divide your money between low-risk low-return and high-risk, high return inventsment . Over the course of a 5 year investment , 5.5% money market account will yeild 30%, 7% muncicpal bonds will yeild 40% and 8.5% mutual funds will yeild 50%. since you have a longer investment period you diecide to be more cautions with your investments and put four times the amount of money in money market accounys as you put in mutual funds.

How much money do you need to inbest in each type of account in order to graduate from collge debt free.