<p>No one knows what is going to happen. However, if you have money you will need in the next year or two, take it out of the stock market. You also need to avoid long-term bonds, which are falling in value. Short-term bonds are OK. Many of the options labeled as “conservative” in a 529 are actually 75% bonds, many of which are over 5 years in length and could fall in value. </p>
<p>For lack of a better choice, I just pulled some college money out of mutual funds and put it into a money market account inside my 529. The mutual funds had gained substantially in value and I didn’t want to lose those gains. </p>
<p>If you have brand new money to invest, I’d park it somewhere and wait for the next temporary fall in the stock market. Everything is cyclical - wait for the next temporary downturn and invest at that time. There is no way the market can keep going up at 30% for a year. Don’t be a sucker and buy at the peak of the market.</p>
<p>I also just moved some retirement money from higher risk stocks into an electric utility with a very stable stock price and 5% annual dividend. That utility operates in some markets that are not highly competitive.</p>
<p>If you are too heavily invested in a particular company, sell some stock and diversify.</p>
<p>Maybe… depends on the tax bracket. Many tax payers will pay no tax on qualified dividends and long term capital gains in 2014. Also, as has been previously pointed out, taxable gains can be offset by capital losses (if there are any).</p>
<p>If you are worrying about income, as dadx suggests, there are less risky alternatives. The least risky is probably GNMA mutual funds, which yield about 2.3% (for some reason the ETF equivalent yields a lot less. Guggenheim has a series of target year high yield bond ETFs yielding from a little less than 4 to about 5, depending on the maturity. You could build a ladder with no interest rate risk but you still have default risk. BKLN, the floating rate bond ETF, has a similar risk profile and yields about 4.4. But even a straight even a straight up high yield bond fund is less risky than a portfolio of dividend stocks.</p>
<p>I haven’t been worried about taxes because we are not in a high tax bracket and we are not talking about a huge amount of money. DS is getting about 2/3 of COA paid by FA and not all of the remaining annual cost will be covered by these funds. Then again, DH and I are not the most sophisticated investors.</p>
<p>But I have been concerned about market fluctuations and will likely move older investments into someplace safe.</p>