For anyone currently contributing to a 529 plan with 4 or more years time horizon, what investment option(s) are you selecting? Personally, I am in 100% aggressive growth stocks, just wondering what everyone/anyone else is doing.
I contributed to 529 funds for several years, but they have been fully funded for a while (one child in college now, another entering in 2020).
How many years do you have before your child enters college? Given the bull market run, I would be wary of putting money into aggressive growth in any case, but particularly if you are looking to pull out money within 10 years.
Expecting to spend it all over the next 3-10 years for 3 kids. Are you in short term reserves now?
I have one that is sophomore in college. His funds all basically in a money market fund. We locked in profits a few years back. Other child is freshman in HS. Her funds in are still in growth, but I plan on shifting some to safer funds in the next year. We will ramp her investments down so that they are all in safer funds over the next two years. We may accelerate that based on changes in market sentiment though.
If your time horizon is more than 10-15 years out, I think you can be safe with an aggressive posture (so long as you have the nerve to stay fully invested if there is a 50+% drop).
If your horizon is 3 years, well, just remember that your investments could drop by 50+% over that time frame.
We are using age based porfolios. The one for my child in college is 80% money markets or bonds. The one for my child in HS is 73%.
It depends on your options if the market drops.
We have a freshman in college and a freshman in high school. We have separate 529s for them.
The college student’s 529 is a bit over 20% in money market and the rest is in broad stock index funds (Fidelity). The 20% in money markets would pay for a semester if the market falls. We have had the funds in stocks since about 2010, when I noticed that the age-graded investments were already nearly half bond funds while still ~7 years out from college. We can be aggressive in the 529 because we have non-retirement cash savings we would be willing to spend for college if the market takes a serious downturn.
The high school freshman’s 529 is all in broad stock market index funds. 4 years out doesn’t make me too nervous.
While past performance is not a guarantee of future gains and current politics make me nervous of course, the market has been good to us over the long term and the recent short term.
If you mean that the 529 is in specific individual stocks, that would make me nervous. We do have an account like that, but it isn’t aimed at college savings.
I have 3 accounts for each of 3 children. The investment options are combinations of Vanguard mutual funds. Not currently hold any fixed income
I have all of my children in 529 plans, many age ranges, oldest a senior. When they get to middle school, you are switching out of aggressive portfolios?
Early on we were more involved in the selection and chose more aggressive funds, closer to college, we moved to age allocation as others have mentioned.
Almost. We fully funded our kids 529 plans to cover college and professional school if needed. However, one is done with school (and we used a little of hers to help her brother finish his MBA). I’m now going to begin funding again as the 529s have a generation skipping ability – one can change the beneficiary to the grandkids generation. The grandkids don’t yet exist (neither kid is married though both are in serious relationships that may or may not lead to marriage). But, I like having no tax on appreciation/interest/dividends for 20+ years.
If so, I would normally be in pretty aggressive growth funds. I probably will do so but will phase my contributions (e.g., not make the 5 year contribution all at once). We are already in the 8th year of the upward business cycle and we’ve had many years of declining interest rates. I think that Trump’s tax corporate tax cuts will lead to a lot of companies buying back stock to raise the price (and the executives stock options). But, after that, I’m concerned that the combination of the inevitable turn in the business cycle and the increase in interest rates will not be good for stocks. So I’ll need to think harder about asset allocation.
Thanks @shawbridge, I wasn’t considering the generation skipping characteristic. Having a perpetual tax free investment account for your descendants to use as needed (for educational expenses) is pretty cool. I’m in.
Utah 529 Plan. D15 and S11 both in “Age Based Aggressive Global” fund since they were born. As the kids hit high school, the fund drops equities gradually each year from 60% (9th grade) to 10% (age 19+) with the other 90% in fixed income and cash.
@socaldad2002 We’ve used the Utah 529 plan as well for our two kids (from birth). Has performed well for us. Son is sophomore in college, daughter still in high school.