When College Tuition is Due

If you are a parent of a child going to college someday, there might come a point where you get the first tuition bill and feel like your hair is on fire.  With four step children and three biological children, we went through this experience multiple times.  The best college savings plans and straight “A” students with scholarships do help, but they still don’t always cover everything (as we found out).  Planning for this day(s) ahead of time is important, but it also important to react to it in real time.  That means bringing all financial tools to bear, including possibly your stock portfolios.

There When You Need it…

Guy, my co-author and partner in investing research, tells me frequently that there are times when the money is there in your portfolio, and “Sometimes the right thing to do is use it!”  Part of me wants to remind him that he is also the one who told me: “Patience, patience, patience!”  But now after more experience I get it.

In this case (child #1 to college) a major transportation company stock I held had recently split, paid multiple dividends, and recovered value after the split.  Ten shares quickly became more like two dozen, and I decided to sell it and more than double my initial investment.  The sale covered the remaining college bill.  I felt a tiny bit sad to see that stock go, but as Guy says…

But Then What?

You may be thinking okay that takes care of child #1, but…  What next?  After some deliberation, I decided that this company was still a “buy” based on additional careful research and analysis.  It didn’t have to be the end of the story.  I set up a small monthly automatic buy for the stock that was within my budget, and over the months I edged up to a dozens shares and more dividends.  Not every stock is this dependable (and that’s part of what Guy and I help with), but the risk was still tolerable.  A year later when child #2 went off to college I sold the same stock again for even more than I had netted the first time!

In Conclusion

My conclusion from this story is that your portfolio is dynamic, just like the market itself.  You should see it as a living thing that breathes in and out, has good days and bad days, but also has many potential moves you can make with it at any time.  Yes, Guy’s recommendation about patience is key; the market rewards investors most consistently when they are patient.  But none-the-less, there are times when it is appropriate to pull the trigger and deal with life (in this case kids going to college).  With a little good timing and thoughtfulness, you might be able to do the same thing I did, which is use your portfolio for a life situation, but not wreck it, and instead use it smartly to perform even better in the long run.  This is the major message Guy and I share with people: Anyone can do this!  You can, too.