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We want our kids to have a better life than ours. But even though rising college costs aren't expected to ease up, don't let a dire situation paralyze prudent planning. The best solution is to get started right away and let the power of compounding growth work for you.

Later in this article I'll discuss five stocks to help you build a solid foundation for your child's college savings, but let's first address why waiting to get started is costing you more than you think.

It all goes by so fast
According to the College Board, a four-year degree from a public, in-state university costs $21,447 today. For parents of a newborn, this requires setting aside roughly $460 every month for 18 years in an investment earning 8% annually. But by waiting until your bundle of joy enters kindergarten to start saving, you'll need to fork over nearly $640 per month.

Let's take a look at five companies you won't lose sleep over, each characterized by incredible brand strength, simple business models, blockbuster products, and stable histories.

Walt Disney (NYSE: DIS  )
Mickey Mouse's massive empire includes theme parks, television, movies, and an amazing brand. Disney's return on assets and return on investment absolutely dwarf the competition standing at twice the industry average. Earnings growth is expected to double over the next five years versus the prior five. Expected growth will probably come, in part, from the continued success of its subsidiary Marvel Studios' clever film franchises.

Clorox (NYSE: CLX  )
Cleaning up after your little ones is no small feat, and nearly 100-year-old Clorox eases the dirty work. The company reported 4% top-line sales growth in the most recent quarter, attributed in part to successfully passing higher input costs to consumers. And in good times and bad, we still need to clean our homes. To tidy things up further, the company pays an impressive 3.6% dividend yield.

McDonald's (NYSE: MCD  )
McDonald's has secured a top 10 spot on Interbrand's "Best Global Brand" list every year since 2001. The company enjoys exceptional margins and continues to increase sales growth despite a challenging economic climate. Watch for McDonald's to benefit from its recently renewed emphasis on brand imaging, premium products, healthier menu options, and remodeled restaurants. McDonald's is expected to grow earnings 9% annually over the next five years. Its 3.2% dividend is a tasty treat for shareholders.

PetSmart (Nasdaq: PETM  )
Before your child was a twinkle in your eye, there's a good chance Spot melted your heart. You're not the only one: Pet industry sales are expected to top $74 billion by 2015. PetSmart's net sales increased 7.7% annually for the past four years, and same-store sales were up 5.4% in 2011. Company earnings are expected to grow at a 16% annual clip over the next five years; that news is like a scratch behind shareholders' ears.

Whole Foods Market (Nasdaq: WFM  )
Whole Foods co-founder and current co-CEO John Mackey identified the organic food trend more than three decades ago, when his company became America's first national Certified Organic grocer. Now a $17 billion retailer with a presence in three countries, Whole Foods operates 300 stores in the United States and plans to open three times that number domestically. A huge helping of international expansion opportunities packs this retailer's plate.

Take a look at how these stocks fared in the past 18 years -- the blink-of-an-eye period of time your newborn could have grown to a dorm dweller.


Total Return Over 18 Years

Disney 307%
Clorox 792%
McDonald's 813%
PetSmart 572%
Whole Foods Market 2,663%

Source: The Motley Fool. Percentage change represents period of time from Aug. 13, 1994, to Aug. 13, 2012, including dividend reinvestment.

Building blocks
Consider these five won't-lose-sleep-over-them companies for your child's college savings, either as a portfolio of five stocks or just one or two of them. Of course, these companies may not grow at the same clip in the coming 18 years, but even if they perform half as well as they did, that'd still give little Tommy a huge head start at Wherever U.

If you'd like another stock idea that's as brilliant as your kid, our analysts have done the homework for you. Read about the one stock they've given high marks to and awarded "The Motley Fool's Top Stock for 2012."  This report won't be available forever, so get your free copy today.

Fool contributor Nicole Seghetti owns no shares in any of the companies mentioned in this article. You can follow her on Twitter, @NicoleSeghetti. The Motley Fool owns shares of Clorox, Whole Foods Market, Walt Disney, and McDonald's. Motley Fool newsletter services have recommended buying shares of McDonald's, PetSmart, Whole Foods Market, and Walt Disney. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.

Read/Post Comments (3) | Recommend This Article (10)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 15, 2012, at 6:59 PM, NickD wrote:

    i have 40k dollars i want to invest and i can add 2k a month to it what companies should i be investing in im only 19 so i just wanna build a portfolio for about 20-40 years idk w/e it takes until i can live off dividends thats been my goal for awhile i mean like JNJ GIS PG for dividends and what about companies like YUM Brands for growth potential idk they seem to be best bets these r my picks i would invest in but i really dont know this is jsut a 19 year old kid talking WM JNJ GIS PG MCD PEP MMM CL WMT HSY YUM AAPL NKE COKE DDD and what about buying low selling high i mean most these companes drop and thye always seem to go back up im talking u have 1m and u see nke drop 3% wtf its gonna go back up u jsut made 30k

  • Report this Comment On August 17, 2012, at 10:50 PM, momotrader12 wrote:

    To iseeksafestocks: My advice would be to sign up for Motley Fool's Stock Advisor. Take about $20k and spread it evenly over the 10 Core stocks they recommend. Take the other $20 and buy another 10 stocks from their Buy Now list or recent monthly picks from the past few months of stocks that have not yet taken off. That will give you 20 stocks with $2k each.

    Then each month take the $2k and buy the recommended stocks of the month (2) with $1000 each (sometimes it may even be a stock you already own). Do this for 40 years and you will be a very wealthy man.

  • Report this Comment On August 17, 2012, at 10:58 PM, rcbar wrote:

    My advice is to check out Dividends4Life portfolio here on the caps page.

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Related Tickers

10/21/2016 4:01 PM
CLX $120.05 Up +0.34 +0.28%
The Clorox Company CAPS Rating: ****
DIS $93.03 Up +1.00 +1.09%
Walt Disney CAPS Rating: *****
MCD $113.93 Up +3.36 +3.04%
McDonald's CAPS Rating: ***
PETM.DL $0.00 Down +0.00 +0.00%
PetSmart CAPS Rating: *****
WFM $28.08 Down -0.21 -0.74%
Whole Foods Market CAPS Rating: ****