What do do with investment when needed for college?

[dhbike01]

I'm looking for advice on where a college age child should keep an investment just before they begin college and during the college years.

A year ago I was nervous about leaving my daughter's entire college investment in a more volatile fund with college looming 1 1/2 years away.  So, I moved the entire $37K from VEXAX (Vanguard Extended Market Index) to VASIX (Vanguard LifeStrategy Income Fund).  This resulted in owing about $2K Federal and State tax,  and after making a conservative $1.5 K during the year, this leaves just over $36K in VASIX.  Considering that this money will now be used in the next 4 1/2 years for college expenses, what advice is there for where the money should be invested during this time?

I also have 2 younger kids (2 and 4 years younger) with a college savings.  I left their entire investment in VEXAX and of course they have surpassed my oldest daughter in total savings.  Now I feel like a fool and hope someone can help.

[AccidentalMiser]

Now I feel like a fool and hope someone can help.

Whoa, hold on there.  You've paid for a bunch of college here, so please don't get down on yourself for not having a market crystal ball.  At 36k, you've contributed about 36k more to your child's education than a lot of people do.

I think I'd be inclined to leave it right where it is.  The VASIX looks like a great way to maintain principal over four years.

Congratulations on all you've achieved!

[TreeTired]

In a year when the S&P index goes up 30% you feel like a fool for not being 100% (or more) in the index.    In 2007 my 2nd son graduated from HS and started college.  His older brother was already in college.   Both boys had decent sized 529 accounts with NJBEST  (we lived in New Jersey at the time).    NJBEST was managed by the state at the time, and automatically moved funds into "age appropriate" investments.  For kids approaching college and in college,  my understanding was that the entire account was invested in US Treasuries.  These were my only accounts that showed a profit in 2008.  Because I used the proceeds to pay for college I paid no taxes on the gains.  I was very glad and grateful that these funds were invested in US Treasuries and my sons' college savings were intact and available while the stock market plunged.

Your experience may vary.

[soccerluvof4]

I agree just leave it where its at and pat yourself on the back for what you have accomplished for your kids. Anything else you lucky to get 1% on. There are some higher savings accounts but you need usually to follow up with a bunch of transactions each month. Seems to me your in a good place