If you're thinking about having a family, you might want to think about moving to Maine. Thanks to the founder of Dexter Shoes, there's some money in it for you.
Dexter Shoes is more than 50 years old, offering penny loafers, tassel loafers, and bowling shoes --the latter something of a rarity these days. Its founder, Harold Alfond, sold his company to none other than Warren Buffett of Berkshire Hathaway
Alfond died recently, and made big news with an unusual bequest. His foundation will offer $500 to every child born in Maine, as a down payment on a college education -- something Mr. Alfond never got himself.
I know that $500 used to be a lot of money. When my dad went to college, $500 covered all of his annual tuition. But today it's easy to scoff at $500, thinking it will barely cover a semester's worth of books. That's sort of true, with many textbooks costing more than $75 these days.
But that's not the right way to look at the situation. Remember, these are babies, with about 18 years before college starts. If that $500 is invested in funds that grow at an annual average of 10%, it will total nearly $2,800 in 18 years. And as some press releases have pointed out, if parents add just $50 per month to the account, it will end up growing to some $25,000 in 18 years. If they add more ... well, you can see. The gift is a powerful jump-start for any youngster.
We Fools can aspire to even more. If we start off babies born in our families with $1,000 each, that will grow to more than $5,000 by college. If we add money along the way, we can grow tens of thousands of dollars. We can also hope to earn more than 10% per year, perhaps via some top-notch mutual funds.
For example, one fund -- which happens to be a recommendation of our Champion Funds newsletter -- has sported a five-year average annual return of almost 18%, with an expense ratio around 1%. Some of the stocks it has used to achieve that success include EchoStar
So hurry and move to Maine if you're expecting a child -- or just put some money aside for Junior on your own, starting now.
Longtime Fool contributor Selena Maranjian owns shares of Berkshire Hathaway. Berkshire Hathaway B shares is both a Motley Fool Inside Value and Stock Advisor recommendation. Sears and USG are Motley Fool Inside Value recommendations. The Motley Fool owns shares of Berkshire Hathaway. Try our investing services free for 30 days. The Motley Fool is Fools writing for Fools.