The reality is that a college education is rather expensive in the United States. Even public “state” universities often require around $20,000 for two semesters if the students are attending as state residents. If the students are residents in different states, they are classified as out-of-state and often pay twice as much in tuition. Private colleges and universities are often valued for higher education standards, but cost much more than public universities. Although community college is somewhat more affordable, most community colleges only offer technical certification programs or two-year Associate’s degrees, while many high-paying professional jobs require a minimum of a four-year Bachelor’s degree.

The value of a university education cannot be understated. But many parents are unsure of how to save money for their children’s educations while working their regular jobs. After all, 39% of Americans don’t even have enough money on hand for a $400 emergency, according to the Federal Reserve. This is why they are currently being encouraged to invest in the stock market and grow their money, creating an additional income through which they can fund their children’s schooling. It can be difficult to navigate investing, especially in the early days. So, how should you get started if college financial aid planning is your goal?

Should I Begin Investing On My Own?

If your goal is to invest wisely in order to someday fund your child’s university education, you shouldn’t begin on your own. Rather, you should start speaking to professional financial planners from the very beginning, discussing your goals and how realistic they might be. You might not be able to grow your wealth soon enough to fund your child’s entire education through investments, but you may be able to grow your wealth significantly in your allotted time frame nonetheless.

Wealth managers are there to assess what you’re beginning with and map how you can most efficiently grow your wealth. It’s important for you to understand that wealth managers are trained in identifying investment opportunities and building portfolios. If you are new to investing, this may sound like a foreign language to you; and it’s all too easy for well-intentioned people to lose money rather than gaining it. Responsible financial planners will not knowingly let you make reckless investment decisions. For example, they will be honest about whether or not you’re even ready to invest. Often, financial planners advise that people have a certain amount of money saved before they begin investing. Not only because a realistic minimal amount of money is needed to invest, but because it’s important that you have savings to fall back on if the stock market experiences unexpected setbacks.

Additionally, financial planners can offer certain tools that will enable you to plan your portfolio more realistically. Among these would be the opportunity to try portfolio stress testing.

What Does Portfolio Stress Testing Involve?

If you aren’t familiar with investing, you probably aren’t familiar with portfolio stress testing either. Essentially, a portfolio stress test allows you and your financial planners to create hypothetical scenarios and expose your portfolio to those scenarios. This will allow you to have a better idea of how your portfolio will respond to these scenarios, and essentially test its strength.

Usually, the types of scenarios that you would test through portfolio stress testing will include things like stock market crashes or inflation. Stress testing cannot predict the future precisely. There is no way to know exactly how your portfolio would precisely respond to real-life crises. But you can have a better idea of what would happen through these tests.

Many financial planners insist on conducting portfolio stress testing, and with good reason. Investing and financial planning can be quite intimidating. But if you’re led by a responsible financial planner, you will be more likely to make the right decisions for your future.

Indeed, it is important for you to remember that you are not only planning for your kids’ college funds but your own financial future. You can save for your own retirement through investments, and it’s important for you to think of every inevitability. Maybe your kids won’t even want to attend college, but giving them that option can mean the world.