Results 1 to 6 of 6

Thread: 529 College Savings Plan Investment Options?

  1. #1
    Featured Member
    Joined
    May 2011
    Location
    Miami
    Posts
    1,529
    Thanks
    2,260
    Thanked 2,276 Times in 730 Posts

    Thumbs up 529 College Savings Plan Investment Options?

    Account Owners can choose from eight different
    and Performance investment options -- one of six Fixed Allocation
    options (each a Portfolio), an Age-Based option, and
    a Preservation of Capital option (a Portfolio) -- or a
    combination of these options. The Fixed Allocation
    Options are:
    • Aggressive Growth Portfolio
    • Growth Portfolio
    • Moderate Portfolio
    • Balanced Portfolio
    • Conservative Portfolio
    • In College Portfolio
    Age-Based Option (See “Investment Options” on
    page 1 7 for details.)

    I'm reading further (page 17 lol).... but wanted to ask what you guys think is a good investment option to go with. I'll be starting with 300 dollars, contributing a minimum of 50 a month plus 100 or my child's birthday and every Christmas. So I alone would be contributing 800 dollars a year to this fund. Not to sound like a bitch but I do expect other family members to contribute as well and am hoping it will be closer to 1000 a year. My child will be two in March.

    Considering the current economic situation and how many years it might be until my child goes to college, what do you think is the best investment option?

    I'm really happy to be doing this finally by the way. Just had to throw that in there

  2. #2
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: 529 College Savings Plan Investment Options?

    For better or for worse, the list of available options for the 'packaged' 529 plan you describe are much like the available options for 'packaged' 401k retirement accounts. They all involve US dollar denominated investments, with limited or no options to invest in foreign countries / foreign currencies. They all involve 'paper assets', with limited or no options to invest in commodities. They all involve 'long' investments i.e. US bonds or US stock shares, with limited or no options to invest in 'short' or 'contrary' vehicles that will rise as the US dollar and/or US markets fall. I also assume that the 'conservative' option involves US money markets and/or short term US corporate paper.

    The only ( totally non-professional ) personal opinion that I can offer would be that the limited tax advantages of such a 'packaged' 529 plan, plus the legal restrictions which apply to the contributed money in any 529 plan, do not outweigh the potential risks of having all of the contributed money subject to the future fate of the US dollar and US stock, bond, and money markets. And if you're only talking about contributing $1000 a year or so, I would seriously think about forgoing the 529 in favor of simply purchasing a US TIPS Bond every year in the name of your child.
    Last edited by Melonie; 01-25-2012 at 03:49 AM.

  3. #3
    Member Sitri's Avatar
    Joined
    Jan 2012
    Posts
    54
    Thanks
    1
    Thanked 48 Times in 24 Posts

    Default Re: 529 College Savings Plan Investment Options?

    Or simply, Yes you receive a tax advantage, however most 529 plans charge a fee. When I was a financial planner and I did the math. The fees ate up most if not all of the potential tax savings. There were as I recall 3 states (Nebraska was one I believe) where the fees were not totally out of line.

    And given the initial small value of the account and length of time, ... what Melonie said^

  4. #4
    Featured Member Vamp's Avatar
    Joined
    Jul 2004
    Location
    Missouri
    Posts
    1,111
    Thanks
    271
    Thanked 757 Times in 289 Posts

    Default Re: 529 College Savings Plan Investment Options?

    The 529 has so many restrictions when they go to pull out the funds in my mind it doesnt make it worth it.

    I always suggested people use Roth IRAs. You get the tax advantages without alot of strings. After five years you can pull out the funds for college, home, unemployment and two other reasons i forget. You can choose mutal funds, CDs, stocks, gold, whatever you want. And if your child gets a scholorship the funds are still there for whatever they need, even retirement.
    Nature knows no indecencies; man invents them. ~ Mark Twain


  5. #5
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: 529 College Savings Plan Investment Options?

    ^^^ I've never heard of a Roth IRA being set up in the name of a child. I suppose it's possible.

    Or were you referring to the mother setting up a Roth IRA in her own name ? This would make it difficult to solicit 'contributions' from other family members, on the implied promise that 15 years from now the mother will make an early withdrawl for the sole and specific purpose of funding the child's education.

    Again, if you're talking about annual contributions on the level of $1000, IMHO none of the gov't sanctioned 'special purpose' accounts ... be it Roth IRA or 529 ... are worth the additional complexities and restrictive regulations. Buy the kid a US Treasury TIPS bond every year. No complexities, no restrictions. You get a tax advantage on earned interest just the same. And you also get some measure of protection from US dollar inflation / devaluation.

  6. #6
    Featured Member Vamp's Avatar
    Joined
    Jul 2004
    Location
    Missouri
    Posts
    1,111
    Thanks
    271
    Thanked 757 Times in 289 Posts

    Default Re: 529 College Savings Plan Investment Options?

    It is set up in the child's name with the mother as power of attorney. Any knowledgeable banker can set that up without a lawyer.

    There are subcategories of IRAs ie daily, monthly vs yearly. It has been awhile since I have dealt with it. But there are options there.
    Nature knows no indecencies; man invents them. ~ Mark Twain


Similar Threads

  1. anyone know anything about 529 plans?
    By Gynger in forum Dollar Den
    Replies: 8
    Last Post: 09-06-2014, 02:43 PM
  2. Replies: 144
    Last Post: 10-19-2011, 10:52 PM
  3. Replies: 19
    Last Post: 05-23-2004, 03:55 AM

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •