"I can't understand this. We've tried to do everything right from the day she was born."
So lamented a friend, right after telling me that the college fund of her daughter, a senior in high school, had dropped by nearly 50 percent in 2008. My friend and her husband were facing a tough choice: They could either tell their daughter to look at cheaper schools or they could try to finance tuition at a more costly college by dipping into their retirement savings or asking their daughter to take out loans.
Ultimately, their daughter opted to go to a public university that cost thousands less than some of the private schools she was originally eyeing. That's not a calamity—in fact, she was happy with her decision and the school she chose is highly rated. However, this family's predicament is a common one. Not only have many families not been able to save for college at all, but even some of those who have been saving assiduously have had to confront a shortfall in their college funds at precisely the wrong time.
In the previous two chapters, I discussed how to select the right "shell" for your college investments. But once you have done so, it's crucial to choose the right investments to go inside that vehicle. You want your assets to grow, of course; given the soaring costs of college, it's hard to imagine saving enough without a little help from the market. But it's equally important to adjust your college portfolio ...