Thinking of Front Loading 529

[Bucksandreds]

I’ve got some cash I’m thinking of dropping into the kiddos 529s. Would you do it now, do half now and wait a month or 2 depending on the market for the other half, or wait out a further slide. I’ve been reading that the market as of now is valued about historically correct, after this recent drop. I do know that things often over correct and drop below their historical value, for a time.

[fell-like-rain]

'Historically correct' values are meaningless. As anyone smart would tell you, past performance doesn't predict future performance. I could easily go out and find you thirty pundits who think we're in the beginning of a crash, and thirty more who think there'll be a rebound. None of them has any more basis for saying so than the others.

Statistically, the best choice is to just invest the money whenever you have it. Realistically, it probably won't make much of a difference if you invest half now and half in a month. But there's no way of knowing if waiting will help you or hurt you.

[Irregular Joe]

No one knows what the market will do in such a short time period. Seriously.  There's no 'markets often do this after a drop.' There's no 'correct' value either. Markets go down until they go up, then eventually they go down again.

It's just a gamble, except you have the house advantage. Put it all on red now, or spread it out over a few bets. 

[Tuskalusa]

For the first couple years after our son was born, we put about $10k/year in his 529. Relatives have contributed at little over the years, as well.  The funds are invested conservatively. We have about 2 years of college in there now (he’s 12). I’m a fan of getting a 529 started, if you have a bit of cash. It wasn’t on my list of urgent things at the time. However, now I’m glad we have something there. Even if we don’t add,it’s a good start that provides options.

[Bucksandreds]

For the first couple years after our son was born, we put about $10k/year in his 529. Relatives have contributed at little over the years, as well.  The funds are invested conservatively. We have about 2 years of college in there now (he’s 12). I’m a fan of getting a 529 started, if you have a bit of cash. It wasn’t on my list of urgent things at the time. However, now I’m glad we have something there. Even if we don’t add,it’s a good start that provides options.

I do $250 per month per child which if invested from birth through age 22 with typical market returns would pay just about expected 4 years Ohio state tuition. I Just see an opportunity right now with emergency savings that I could replenish over the next 6 months. Just trying to figure out when we’re close to the bottom.

[Much Fishing to Do]

Consider whether a 2018 contribution versus a 2019 make a difference state tax deduction-wise for you, I think that the only reason to not just drop it in now (e.g. would it go over some dedcution amount limit that you could fix by splitting across 2018-2019

[bryan995]

We put $28K in the day our daughter was born. 100% VSTAX. Hoping to have enough to cover full tuition 18 years from now.  Relatives contribute 500-1000 / year.

[Bucksandreds]

Consider whether a 2018 contribution versus a 2019 make a difference state tax deduction-wise for you, I think that the only reason to not just drop it in now (e.g. would it go over some dedcution amount limit that you could fix by splitting across 2018-2019

Makes no difference tax wise. Ohio gives up to $4000 tax credit which would require for me to contribute like $80,000. I just don’t want to lose 10% in the first month.

[Mustache ride]

Consider whether a 2018 contribution versus a 2019 make a difference state tax deduction-wise for you, I think that the only reason to not just drop it in now (e.g. would it go over some dedcution amount limit that you could fix by splitting across 2018-2019

Makes no difference tax wise. Ohio gives up to $4000 tax credit which would require for me to contribute like $80,000. I just don’t want to lose 10% in the first month.

What you’re doing/asking is market timing. Nobody knows how to do this on a consistent basis, and if they did, they surely wouldn’t be on this forum. The optimal decision is to lump sum everything. If you’re not comfortable with that then just DCA it.

[Bucksandreds]

^ you’d have been a fool in 2008 if sitting on cash to not try to market time after the crash.  I guess I’m just wondering if people think there’s a ways to go on this drop or if it’s near bottom.

[Bucksandreds]

I threw a couple of large lump sums into my kids 529s in November 2008 and February 2008. Those investments make up about 1/2 our total contributions. DS has lived at home his first 3 years and will end up with 10~30k in his account for grad school. DD should have enough to fully fund 4 years tuition room and board at a state school in 4 years.

YMMV but I would lump sum now or DCA over the next month or two.

Thanks. This is the experienced opinion that I was seeking over the lemming tow the MMM ‘company line.’ I’m going to do $2,000 to $3,000 for each kid this week and then see where everything’s at in a month or 2.

[twe]

Makes no difference tax wise. Ohio gives up to $4000 tax credit which would require for me to contribute like $80,000. I just don’t want to lose 10% in the first month.

@Bucksandreds , Ohio gives a $4000 tax deduction, not credit-big difference there.

[richschmidt]

I just dropped $4k into my boys' 529 plans today, to hit $5k for total 2018 contribution. Here in Indiana, that means a $1,000 state tax credit (not deduction), which is the annual max. 20% back as state tax credit, up to a $1k credit. It's a crazy good deal.