College vs. retirement: no contest

Many investors see investing for college versus investing for retirement as some kind of either-or dilemma. It's not. (Lisa Shidler at InvestmentNews):

Americans are split on whether to save for their children's college education or for their own retirement, according to a new study.

The study completed by Country Insurance & Financial Services in Bloomington, Ill shows that 43% believe saving for college is more important while another 43% say retirement takes precedence.

The study also showed that 40% of respondents do not think they have enough knowledge to make the right financial decisions about saving for college. And, 25% of them estimate the costs of college and think it will cost less than $50,000 to send children to college.

As my co-blogger Karen Valdez once explained it to me: "Plenty of people will lend you money to go to college, but nobody will lend you money for retirement."

It makes a great deal of sense: a loan for college uses the future earning power as collateral. In retirement, there is no future earning power — it's sad but true.

Here's the rule of thumb: Always, always, always invest to the max for retirement first. What's left can go to investments for college.