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Learning, Sharing, and Teaching => Investor Alley => Topic started by: skyler on September 23, 2013, 05:00:28 PM

Title: 529 plan- too agresive?
Post by: skyler on September 23, 2013, 05:00:28 PM
It has been 5 years since I looked at the 529 plan we started for our DD...

At the time we opened it, we chose an age managed allocation fund with an ER of 0.36%.

We are considering moving all funds into the 100% equities option for her plan.
This plan has a ER of 0.28% and invests in TIAA Creff Equity index...
Our DD has 10 more years before she will need the money.

We have a separate account for our son, his plan is age based also, currently 65% stock and 35% bonds. The plan gets more conservative (auto re-balancing) as he approaches college age.
The ER is  0.38%. We plan on leaving it the way it is. He will need college $$ in 12 years. We plan on contributing more to each account by the end of 2013 (get a state income tax deduction for up to 2k per kid).

What do you think about our plan? Is it a gamble to go 100% stock with only 10 years left?

Title: Re: 529 plan- too agresive?
Post by: secondcor521 on September 23, 2013, 07:30:00 PM
Yes, it is certainly a gamble.  Might pay off, might not.

Why gamble with your daughter's college but not your son's?

With something "term-certain" like college where you know you want $X at year Y, I would recommend either saving more, or telling your kids that they'll get less, or some other plan rather than increasing the risk level on the investments, especially if that risk level made either me or my kids' mom uncomfortable or exposed me to significant downside risk that I wasn't willing to cover some other way.

If you're both on board and you're absolutely willing to take out a HELOC or withdraw from retirement or get a second job delivering pizzas to fund your kids' college if for some reason their account drops 30% or 50% when they are a high school senior, then maybe.
Title: Re: 529 plan- too agresive?
Post by: skyler on September 23, 2013, 07:42:24 PM
Our reasoning is that we will hold separate accounts for each kid, but we will be treating them as a part of one "package". Each kid will get an equal X amount when it comes time for college...

We will invest aggressively in one and moderately in the other.
Aggressive for a few years in the first account and gradually shift  towards a more moderate mix down the road...

Just want to take it up a notch for a few years and reassess/redistribute...

Title: Re: 529 plan- too agresive?
Post by: Cyrano on October 04, 2013, 04:37:10 AM
If you're going to spend the money in 10 years or less, going equity heavy on an investment is gambling. On these timeframes, waiting out a downturn is less of an option.
Title: Re: 529 plan- too agresive?
Post by: skyler on October 06, 2013, 10:21:48 AM
Thanx for the input Cyrano. Worth thinking about...