Morningstar Advisor - Summer 2008 - (Page 7)

Letter from the Editor College Challenge My dad was 42 years old when he and I stuffed the car with the essentials needed to fill a freshman’s dorm room and embarked on the 750-mile trip east on Interstate 70 from Aurora, Colo., to Columbia, Mo. As we clicked off mile after mile—leaving behind home and nearing the beginnings of a new stage of my life—I had a lot on my mind. But one thing I didn’t have to worry about when he dropped me off at the University of Missouri was tuition bills. My parents, through investing, had saved enough to pay for my college education, as well as my sister’s. And unlike many of my friends, I was able to graduate debt-free— a tremendous gift as I headed into a string of low-paying journalism jobs. Boy, that was another era. I’m 43, and the only places of learning I’ll be dropping my kids off at for the foreseeable future are elementary schools. Like a lot of people I know who are members of my generation, my wife and I just recently got around to starting a family. I’ve got three children: ages 5, 3, and 1. I’ll be taking the oldest to college when I’m 57; the youngest will graduate when I’m 65. I’ve got eight years of college to fund at the doorstep of my retirement age. I think my parents had better timing. Will I be able to give my kids a debt-free college education? It’ll be a real challenge, especially if tuition prices keep outpacing inflation and the cost of living continues to skyrocket. (A prolonged bear market won’t help, either.) We’re saving, and luckily, prosperous grandparents are chipping in mightily by investing in 529 savings plans. (Little did they know that they’d help fund two generations of higher-learning pursuits.) I’m sure you have clients in similar situations. Saving for college rightfully takes a back seat to retirement planning, but it’s an important Also in this issue, we introduce a new data table in By the Numbers (page 84). We list the 50 most popular equity exchange-traded funds. In addition to key performance information, we feature Morningstar’s new ETF valuation data. You’ll be able to see quickly how the market is valuing an ETF and its underlying holdings. One of the big stories in the mutual fund industry during the last quarter was the reopening of Sequoia Fund SEQUX. It had been closed since 1982. Senior mutual fund analyst Michael Breen, who profiled fund shop Manning & Napier in the Fall 2007 issue, returns to tell us whether investors should seize this opportunity to get into one of the best performing mutual funds in history or whether the fund is past its prime (page 58). In Morningstar Conversation (page 50), Kunal Kapoor has a smart, rollicking discussion about investing with T. Rowe Price global manager Robert Gensler. As always, please e-mail your feedback to magazine_editor@morningstar.com. challenge nonetheless. There are myriad ways to save for college, many of them complicated. Tax laws change, and structures of options evolve. It’s hard to keep up. This issue’s Spotlight section (page 30) should provide some clarity to the issue of college savings. We look at the current state of college planning and the pluses and minuses of a handful of college planning vehicles. We then list the best and worst 529 plans, as judged by our analysts. Finally, estate-planning attorney Susan T. Bart has a few planning tips up her sleeve to help your clients get the most out of the tax benefits offered by collegesavings plans. Also, be sure to read On Topic (page 10) to see what strategies other advisors are using in their college planning. Jerry Kerns MorningstarAdvisor.com 7 http://MorningstarAdvisor.com

Table of Contents Feed for the Digital Edition of Morningstar Advisor - Summer 2008

Morningstar Advisor - Summer 2008 Contents Letter from the Editor Contributors Inbox College Planning: Solutions and Concerns ETFs: The Next Chapter Engineering Financial Advice Investment Briefs Flexible vs. Style-Pure Managers: The Evidence Forging a New Commodity Index Work Your Way Through College Planning Sizing Up the Options Best and Worst 529 College-Savings Plans A 529 Travel Guide 10 Tax-Smart Tips for College-Savings Planning Global Dialogue How Sequoia Cranks Out Good Returns Year After Year The Many Layers of David Winters Living on the Edge Stocks to Buy Once a Decade With Munis Feeling the Pain, Some Opportunities Arise Health Care Provides Shelter from Economic Storm Help Your Clients Get More Out of Their Bond Portfolios Mutual Fund Analyst Picks 50 Most Popular Equity ETFs Undervalued Stocks Most Popular Variable Annuities New at Morningstar New on MorningstarAdvisor.com Closer to Fine

Morningstar Advisor - Summer 2008

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