Author Topic: Best returns/expense ratios for 529  (Read 1608 times)

Vic99

  • Stubble
  • **
  • Posts: 124
  • Age: 48
  • Location: MA
Best returns/expense ratios for 529
« on: July 29, 2016, 07:54:48 AM »
I have two boys, 6 and 4 years old. 

1) Anyone done a recent analysis as to which 529s seem to have the best historical returns or a really good expense ratio?

2) Can I have a 529 in one state for one son and a 529 in another state for the other?  My thinking is that if one out performs the other, I can make a withdrawl/transfer to the other with the surplus, right?

I'm in MA, I do not see that there is a MA resident incentive, but if I can have one son invested in MA and the other in a better state, perhaps I can still take advantage of the MA in state resident incentive if one becomes available in the future.

Thanks.

naners

  • Stubble
  • **
  • Posts: 172
  • Age: 37
Re: Best returns/expense ratios for 529
« Reply #1 on: July 29, 2016, 02:33:04 PM »
Chasing returns is generally a bad idea because past performance doesn't predict future performance. Furthermore most actively managed funds don't beat their index over the long term. If you need more info on this idea check out jlcollins' blog or Bogleheads. Therefore, don't bother looking at returns when choosing a 529. Instead, focus on expense ratios, which will usually mean choosing index funds. Also, look into the tax situation in your state for 529s. States that offer a tax break usually only do so for your own state's 529.

Vic99

  • Stubble
  • **
  • Posts: 124
  • Age: 48
  • Location: MA
Re: Best returns/expense ratios for 529
« Reply #2 on: July 29, 2016, 02:50:38 PM »
Currently MA does not offer a tax break, but there's a bill in working its way through the legislature which may change that.

CanuckExpat

  • Magnum Stache
  • ******
  • Posts: 2909
  • Age: 36
  • Location: Travelling
    • Freedom35
Re: Best returns/expense ratios for 529
« Reply #3 on: August 01, 2016, 06:49:36 PM »
Good reading, and his personal experience, here: My 529 Plan Asset Allocation, Part 3: Final Decisions

BUT, without a state tax deduction, make sure it makes sense for you to contribute to a 529 at all.
You are maximizing all tax deductible accounts first right?

If you still want to contribute, and want to go simple:
Choose Utah or Nevada, buy some combination of passive funds with a moderately aggressive stock/bond allocation. Leave it at that.