My pal says his idea will be bigger than Google. Should I invest?
Your great-grandfather made a loan to his neighbor. When the young man offered to repay the loan in cash or stock in his new firm, your grandfather took the money. The company turned out to be IBM. If you don't want to make the same mistake, Eric Tyson says you can certainly consider funding someone else's business if you're investing in a small, privately held company and the amount you're putting in is less than 20 percent of your total financial assets; if you read and understand and totally believe in the company's business plan (it should explain the concept, the business objective, exactly how it will be implemented and at what cost, the background of principals, and how this product or service will better meet customer needs); and if you review a study of model companies in the same field. Finally, if you can afford to lose everything you invest, then, sure, go ahead.
How will I be able to afford my child's college tuition?
Don't save for your children's college fund, says Suze Orman, until you've met every one of your own financial goals—you're free of credit card debt, own a home, and are on track for retirement—because (1) you don't want to be a burden to your kids when you're old, and (2) you can withdraw money from an IRA without penalty to pay for tuition. Under the current financial aid system, investing in a 529 plan or education savings account can reduce your eligibility. These accounts may, however, have certain tax advantages. Find out more at SavingforCollege.com.
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