Author Topic: 529 Account Allocations  (Read 587 times)

catccc

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529 Account Allocations
« on: September 12, 2018, 07:31:38 AM »
I've always had a hard time with seeing my investment allocations across all accounts as a single approach... Instead I have retirement accounts at 90/10 (stocks/bonds), my taxable accounts that I may take $ out of for a house at 80/20, and here is where I'm getting into my question...  529 accounts are in moderate age based portfolios.  Right now, this means that DD1, almost 10 y/o, is in a 50/50, and DD2, 7.5 y/o, is in a 62.5/37.5.  I started these accounts 5 years ago in 2013, when they were ages 5 and 2.5, putting just a couple grand more in DD1s account.

DD1's account is:
$36,410 principal
$  9,970 earnings
$46,380 total

DD2's account is:
$34,410 principal
$11,120 earnings
$45,530 total

I guess DD1 missed out on 2.5 years of a heavier stock allocation, which is a bummer.  Anyone have any thoughts on whether I should adjust my approach, or just keep things as is?  I guess I'm questioning it because I just selected the moderate age based option without much thought when I opened the accounts, and it just seems really conservative, but perhaps for a shorter horizon to drawdown and relatively short drawdown period, this is the right choice.  Also, I feel bad that DD1 is missing out on gains... I guess the $2K head start I gave her is being eclipsed by DD2's more aggressive allocation.  Or maybe I'm overthinking it all?
« Last Edit: September 13, 2018, 09:15:43 AM by catccc »

seattlecyclone

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Re: 529 Account Allocations
« Reply #1 on: September 12, 2018, 10:48:37 AM »
I went for Vanguard's aggressive age-based approach, which still seems rather heavy on fixed-income compared to my retirement stash, but that's probably a good thing for money I want to spend down to nothing in two decades.

harvestbook

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Re: 529 Account Allocations
« Reply #2 on: September 12, 2018, 05:02:32 PM »
I believe accounts should have different AAs because they might be for different uses and time horizons. Our 529 is still 60/40 even though we just entered freshman year, because we are planning on grad school spending and possibly medical school. I might drop it to 50/50 next year but I am prepared for the risk while planning on a 6+ year time frame. If my choice proves to be a bad one, I'm prepared to cash-flow and use the 529 in later years or for grandkids.

My personal accounts are 90/10 because I don't expect to tap any of them for at least 10 years or more, so that has no bearing on the 529.

If you feel like moderate is safe enough for you, I'd stick with it. There might be a time where you will be happy about avoided losses rather regretful over "lost" gains.

Laserjet3051

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Re: 529 Account Allocations
« Reply #3 on: September 13, 2018, 10:01:45 PM »
The spread on the gains between those 2 accounts is exactly what I'd expect from the described AAs over the past five years.

I like harvestbook's reply "There might be a time where you will be happy about avoided losses rather regretful over "lost" gains."

We each have our own need, ability, and willingness to take risk. My almost 10 year old daughter's 529 is at 100% equity with a US/Intl split of 70/30. 16 year old daughters 529 has the risk waaaay dialed down.

What are your specific goals with these accounts? What will you do if you can't reach your goal?
« Last Edit: September 13, 2018, 10:03:20 PM by Laserjet3051 »

catccc

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Re: 529 Account Allocations
« Reply #4 on: September 14, 2018, 01:09:55 PM »
Thanks everyone for your input.  I suppose I'll just leave the investment options alone.  Glad to hear I'm not totally crazy to see my AAs in silos. 

Sigh... I remember when I thought Bernie would be president and my 529 savings would be useless because he'd make colleges tuition free.