<p>Lots of good info.</p>
<p>“Vanguard, a major 529 provider, found that no matter how conservative or aggressive a fund they choose, families who are able to sock away $6,000 a year in an age-based portfolio starting when the child is a baby would have a 99% likelihood of banking enough to pay all four years of tuition, fees, room, and board for one student at an instate public college.”</p>
<p>$6,000 a year for 18 years??.. Boy, I would hope be enough to pay for instate public…</p>
<p>
$108,000 + earnings</p>
<p>@4kids - Are you saying you don’t think that would be enough for a instate public?
Currently GT is $23,384 for tuition/room/board/books for instate…</p>
<p>
</p>
<p>$6,000 x 18 would not pay for 4 years tuition and R&B at our state flagship (UIUC) at current rates. Earnings would have to outpace cost increases and then some for it to be enough. UIUC’s in-state tuition alone in certain majors (such as business and engineering) exceeds $20,000 a year (current COA is $34,514), and I think there might be a couple states that are even more.</p>
<p>Wow I guess I’m lucky my DS goes to Georgia Tech because we did not put away $6,000 a year since he was born…</p>
<p>Thank God for Florida Pre Paid. :)</p>
<p>^ I thought about prepaid when we lived in Illinois. But never got around to it. Glad it the Florida one worked for you.:)</p>
<p>Vanguard runs a number of the state 529s, and they typically offer low fees. My state of PA has further lowered fees if parents reduce the amount of statements that are mailed. Fees can really eat up gains.</p>
<p>The market went up 30% in the last year, and it can’t keep going up at that fast rate. It might make sense to choose a very conservative fund now, and wait to put the money into a mostly stock fund as soon as the next stock market correction occurs.</p>
<p>
</p>
<p>Many of the “conservative” 529 funds are heavy on bonds, and I’m not so sure that’s where someone with a conservative mindset wants to be right now.</p>
<p>Good point - bonds go down as inflation increases. I’ve temporarily moved temporarily some investments from stocks to money market, to secure the recent gains. The intent is to put money back into the market right after the next 5 to 10% drop.</p>
<p>Virginia 529 VEST funds rebalance as your child gets closer to college. You might miss a market home run like the 2013 30% stock returns, but you generally won’t have market losses when the kids get to the 16-17 age range.</p>
<p>
</p>
<p>I hear you. Just today, I moved an entire 529 account balance from a “moderate” age based allocation (17 year old age band) to a guaranteed interest option, primarily because I’m worried about how bond funds will fare as the Fed begins to taper. The age based fund is 50% in bonds, so there was heavy exposure. Last year when the equity markets were up 30%, the 20% of the age based fund that was in equities bailed out the poor performing bond funds to give the age based fund an overall gain for the year, but I don’t see the equity markets having a 2014 like the 2013 that they had. The last thing I want in the months before my kid heads to college is for her 529 fund to have a down year.</p>
<p>Whew! I just rebalanced my 529 plans. No idea they were so high with bonds! And I work for a financial advisor and we tell people to move out of bonds all the time.</p>
<p>
</p>
<p>You can’t time the market. Almost every study I have ever seen shows that when people try to time the market, getting in or getting out, they get it wrong most of the time. IMHO, better to buy and hold. If the market drops, ride it down and then ride it back up again. Don’t panic.</p>
<p>Yes, I rode out the 2008 crash with my retirement and college accounts, without making any major changes, and came out fine. Fortunately, I didn’t have to sell much in those down years. Too many people panicked and sold low at that time, and now they are getting ready to buy into the stock market when it is high.</p>
<p>Now is a good time to lock in the past year’s gains by moving college funds out of stocks that have greatly increased in value. This is particularly important if you will need to use the money in the next couple years for college.</p>
<p>Hi. I’m the author of that story. Our estimates for the annual savings amounts were based on national college cost averages, and thus may not apply to the most expensive states, such as Illinois, California and Pennsylvania. Also, for those of you considering moving your funds to “conservative” allocations, please read the section of the story explaining about the hidden risks in 529 bond portfolios. The longer the “duration” of the bond portfolio, the more sensitive the portfolio is to changes in interest rates. The most common bond index portfolio has a duration of more than 6 years, which generally means a 1 percent rise in interest rates can send the value of the fund down about 6 percent. (You can check the “duration” of your 529’s bond fund on Morningstar.com.) The story suggests safer “conservative” choices such as guaranteed principal funds which pay anywhere from 1 to 3 percent and which are insured against fluctuations in interest rates. Thanks everybody, and good luck! Kim Clark</p>
<p>Thanks, esteemed author. </p>
<p>I looked yesterday and did see that the “conservative” 529 options that I had been recently using were mostly 75% bonds. Most short-term bonds are not risky, but long-term bonds are.</p>
<p>I just moved the college funds I needed for the next year to a money market account inside a 529. My state doesn’t offer a “guaranteed principal” option, but other states do. Here’s some info:</p>
<p><a href=“http://thefinancebuff.com/colorado-stable-value-plus-529-plan-3-04-percent-return-guaranteed-through-december-31-2013.html[/url]”>http://thefinancebuff.com/colorado-stable-value-plus-529-plan-3-04-percent-return-guaranteed-through-december-31-2013.html</a></p>
<p>Does anyone have any thoughts about investing in insurance companies like MetLife? I really like the guaranteed return (especially since my kid is a junior), but I worry a little about insurance companies after the AIG fiasco. Wouldn’t the rating agencies be rating them downward if there were concerns?</p>
<p>KimxClark, thank you for posting. I, too, after reading the article, moved some money around to reduce our weight in bonds. Our D is a freshman at an expensive private, and a drop in the value would not be good. I want to thank you for showing me the light.</p>