Advice from Nashville's leading Financial Aid Advisor Dave Ramsey
Author of Financial Peace and The Total Money Makeover
How do I start an endowment fund?
I’d like to start a scholarship fund at our church to help families afford a Christian education for their kids. We have a large number of wealthy people at this church, in addition to several families with small children who cannot afford a Christian college education. I’d like to bring these groups together.
You’re talking about an endowment fund here, a set-up where you deposit a large amount of money into an investment and let the interest generated from the investment enable your cause.
I would suggest first getting with a good mutual fund broker, like one of our Endorsed Local Providers. The broker can help you get the investment portion of this plan set up, and recommend a good attorney to help you establish the endowment fund and educate you on the legal aspects of this kind of fund.
I always recommend leaving money in a mutual fund for at least five years, Chip. Since the beneficiaries of this fund are still small children, that gives you plenty of time to educate yourself, set up the fund and let it grow for several years. Mutual funds have a great track record, with more than 96 percent of them generating returns of 12 to 14 percent over the last 25 years.
By the time these kids are ready, you should have a nice chunk of money sitting there to help them make their college dreams come true.
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