seeking 529 fund advice

[Jules13]

Good afternoon,

I've had a 529 with Vanguard for a while now.  There's a little over $38k (not a lot but it all helps) in my oldest son's account. I no longer contribute to it because he's a senior and I just started putting extra money in a HYSA instead (since 529s don't cover everything). 

At the beginning of the school year, I moved the money into some more conservative funds so it wouldn't go down anymore in value (as it had been), but now my HYSA is doing better, interest-wise, so I need to re-allocate the funds to earn more.

My Dad also has a 529 set up and I now plan to use that money first, so I'm guessing I have a couple of years before I will need to access my 529 funds. (I say guessing because my son hasn't decided on a University yet) 

If this was your situation, what investments at Vanguard would you choose? 

(I also hate the Vanguard platform and am open to/thinking about about switching the 529 accounts to Fidelity)

Thank you in advance for any advice. 

[Ron Scott]

How long have you had it and what is it invested in?

[Jules13]

I've had it around 12-15 years.  I can't recall.  It was originally with USAA, but I moved it (I actually have two 529 accounts) to Vanguard maybe 5-6 years ago. It's currently invested in Vanguard Growth Index Portfolio (22%), VG Conservative Growth Portfolio (63%), and VG High Yield Bond Portfolio (15%).  I don't remember why I chose these "portfolios".  I know I chose mostly conservative to minimize risk, but I think I went too conservative.  Would love some advice.  I'm a good saver and money manager, and have mostly index funds for the long term, but not as adept/knowledgeable at choosing investments for the short term.   Thanks. 

[MaybeBabyMustache]

Some clarifying questions:
-Does your son plan to attend university/college next year?
-Do you have a sense of how much he will need, even if it's a range?

My teens (DS18 & DS17) will be starting college in 2024 & 2025, and I've left their 529s in the most conservative asset allocation, but have considered instead swapping to CDs. Like you, I have non 529 accounts, and those are in CDs as well. The stock market doesn't make sense for us given time horizon.

[Jules13]

Yes, he will start Fall 2024.  He will likely spend between $14k-18k per year max (though we haven't received all decisions or aid information as of yet), so whatever he doesn't spend will stay in his account for grad school or rolled over to his Roth.

It's just annoying that the conservative 529 funds I am currently invested in are earning less than my HYSA.  I'd love to move that money into something conservative, but that is still earning 4-5%, within the 529.  I'm just not sure what that would be at Vanguard. 

[Much Fishing to Do]

I have one student finishing college with some leftover funds and one just starting and for both of them I basically have 50/25/25 of interest accumulation/total stock/total bond at Vanguard 529 to keep it conservative but with some potential growth. 

I have been very annoyed that as money market yields took off and have stayed over 5% at Vanguard their 529 "interest accumulation" option, the only cash option I think, is only yielding 2.5%

The very conservative options that I'm assuming you saw losses in were definitely nailed by them being so very bond heavy and the rising interest rates last year, but hopefully that's plateaued by now.

If I could get 5% in cash at vanguard, I probably would just have it all in that for any kid in school, so I guess I'm mostly saying I feel your aggravation and the slight stock and bond percentages is my attempt to counter but not sure its a good one....

[Scandium]

I have one student finishing college with some leftover funds and one just starting and for both of them I basically have 50/25/25 of interest accumulation/total stock/total bond at Vanguard 529 to keep it conservative but with some potential growth. 

I have been very annoyed that as money market yields took off and have stayed over 5% at Vanguard their 529 "interest accumulation" option, the only cash option I think, is only yielding 2.5%

The very conservative options that I'm assuming you saw losses in were definitely nailed by them being so very bond heavy and the rising interest rates last year, but hopefully that's plateaued by now.

If I could get 5% in cash at vanguard, I probably would just have it all in that for any kid in school, so I guess I'm mostly saying I feel your aggravation and the slight stock and bond percentages is my attempt to counter but not sure its a good one....

I don't have a vanguard 529, so not sure how they work. But VBIRX has a current 30-day SEC yield of 4.69%, and VBILX has 4.66%. Though both are down YTD. Can you not get VMFXX, the MM fund? That yields 5.28%

https://investor.vanguard.com/investment-products/mutual-funds/profile/vbirx
https://investor.vanguard.com/investment-products/mutual-funds/profile/vbilx#price

[Much Fishing to Do]

I have one student finishing college with some leftover funds and one just starting and for both of them I basically have 50/25/25 of interest accumulation/total stock/total bond at Vanguard 529 to keep it conservative but with some potential growth. 

I have been very annoyed that as money market yields took off and have stayed over 5% at Vanguard their 529 "interest accumulation" option, the only cash option I think, is only yielding 2.5%

The very conservative options that I'm assuming you saw losses in were definitely nailed by them being so very bond heavy and the rising interest rates last year, but hopefully that's plateaued by now.

If I could get 5% in cash at vanguard, I probably would just have it all in that for any kid in school, so I guess I'm mostly saying I feel your aggravation and the slight stock and bond percentages is my attempt to counter but not sure its a good one....

I don't have a vanguard 529, so not sure how they work. But VBIRX has a current 30-day SEC yield of 4.69%, and VBILX has 4.66%. Though both are down YTD. Can you not get VMFXX, the MM fund? That yields 5.28%

https://investor.vanguard.com/investment-products/mutual-funds/profile/vbirx
https://investor.vanguard.com/investment-products/mutual-funds/profile/vbilx#price

No, I have many of those in my VG investments but they are not avail in the 529.  AS far as I can tell the only MM/cash type option in the 529 is that interest accumulation one at 2.5%