Author Topic: Should a single person invest in a 529?  (Read 260 times)

2dogs0kids

  • 5 O'Clock Shadow
  • *
  • Posts: 12
Should a single person invest in a 529?
« on: October 12, 2017, 12:31:27 PM »
I'm 35yo, single and sort-of Mustachian (saving 50% of my post-tax income -- but I still have frivolities like cable TV).

I've maxed out my employer 403b, my HSA and my backdoor Roth.

I'm trying to figure out the best place to invest the extra money that I am saving (part of that 50% of my income that needs to be saved somehow after I have maxed the other options out).

I'm hopeful that I might someday have kids, but recognize that I might not since I'm 35yo and single.  I could potentially be interested in grad school someday, but not now (I already have a graduate degree and don't see the need for more, unless I have a career change).

I'm considering investing in a 529 in case I have a kid or want to go to grad school someday -- but maybe it would be better to just put more money in Betterment or some other taxable vehicle?

Of note: I also still have some student loans - about 50K at 2.8% interest.  Based on what I have read/know, I have been letting that ride.  I don't own a home, so it is nice to think that I have some money in non-retirement accounts that is extractable should I decide I need a down payment on a home in the future (although no current plans to buy - very happy in my rental situation).

Interested in the wisdom of this group. Thanks in advance.

nobody123

  • Pencil Stache
  • ****
  • Posts: 506
Re: Should a single person invest in a 529?
« Reply #1 on: October 12, 2017, 12:56:12 PM »
I don't think it makes sense to invest in a 529 for yourself given the facts you've given.  You'd limit your investment choices to whatever is in your state's plan (assuming you're going to use it to get the state income tax deduction, if applicable), and if you don't have a known probable education expense in your future, why bother.  Just keep it in a taxable account, then you'd pay long term capital gains instead of regular income tax on the growth, plus the penalty for non-qualified expense withdrawal.

2dogs0kids

  • 5 O'Clock Shadow
  • *
  • Posts: 12
Re: Should a single person invest in a 529?
« Reply #2 on: October 12, 2017, 12:58:31 PM »
Thanks!  It seems like you can get some out of state ones with good Vanguard options (Utah popped up), but I see your point about not having known/probably education expenses...

Any tips on where to go to find the best taxable accounts to invest in?

I find figuring out where to put 403b / IRA money to be more straightforward, and then I have more trouble deciding about taxable accounts...  Maybe I'm making things harder than they need to be and I should just keep on investing in the same things?

seattlecyclone

  • Magnum Stache
  • ******
  • Posts: 3982
  • Age: 33
  • Location: Seattle, WA
Re: Should a single person invest in a 529?
« Reply #3 on: October 12, 2017, 01:12:00 PM »
Vanguard is great for a taxable account. If you already have your IRA with Fidelity or Schwab or another place that offers no-transaction-fee, low-cost index fund options, might as well go with that for your taxable account to keep your money in fewer places.
I made a blog! https://seattlecyclone.com/

The Roth IRA was named after William Roth, who represented Delaware in the US senate from 1971-2001. "Roth" is a name, not an acronym. There's no need to capitalize the final three letters.

2dogs0kids

  • 5 O'Clock Shadow
  • *
  • Posts: 12
Re: Should a single person invest in a 529?
« Reply #4 on: October 12, 2017, 01:32:04 PM »
Thanks...  I have some money in Fidelity through Schwab for my Roth, I could use them...

Do you guys both agree that it's wiser to invest than to pay off the 2.8% student loans?