College Savings That Will Make The Grade in a Failing Economy

If you're like me, you check your retirement savings, your stocks, grit your teeth and say "I'm in it for the long haul", and try to forget about it until the next time you check your stocks. After all, I have about 25 years until retirement (although I hope it's actually less), so there is time for the stock to bounce back, which it will...eventually.

But what about those college savings for Junior? Perhaps he's like my kid...13 years old and ready to attend college in five years or less. All of a sudden those stocks don't look so inviting, and every "economic meltdown" story in the news is driving the stock price lower, and eating up your gains. If you're looking at sending a child to college in five years or less, and you want to lock in your savings before losing the rest of the tuition and book money, there are a few sensible, although very conservative, moves you can make with the kid's college cash.

1. Get rid of the stocks. If you're really concerned about having some college cash left in five years or left, preserve the money you have now. Things are just to volatile on Wall Street right now to risk cash you'll need in the short term.

2. Stash your cash. Those high-yield savings accounts at online banks are suddenly looking like a better deal. Sure, they only pay 3-4 percent interest per year, but that's better than LOSING money.

3. Adjust your 529. If you have a 529 state-sponsored college savings account, shuffle your investments around to more conservative options, like bonds...or the fixed asset option which pays a set (but lower) amount of interest each year.

4. There are always U.S. Savings Bonds. These are an old-school savings option. The interest rate on Series EE and I bonds are low, and you need to hang on to them for at least five years to make it worth it, but again...you're not going to lose your cash.

5. Buy a CD. Certificates of Deposit at the local bank or credit union are another safe option. There are varying lengths of time you have to hold the CD, usually ranging from 6 months to 3 years. The higher the dollar amount of the CD and the longer you hold it, the higher the interest. Again, your cash won't go anywhere, and it's insured in case your bank tanks (provided your bank is FDIC-insured).

I had been buying shares of Wal-Mart and Devon Energy for my son's college fund. I'm not selling them (I don't have many shares), but I'm not buying more, either. For now, the kid's cash is going into an Emigrant Direct savings account at 3 percent interest per year.