NJ Best 529 value down

Hi, I wanted to get some feedback about 529’s. I have one for my D25 with about $33,000 in it. The website says I’ve contributed $37,000 but since stocks are down so much right now the balance reflects that. I can’t really find any information online about if the performance should improve or what. My D is likely to start college in a couple years and I was depending on this money to offset the costs. I automatically contribute out of every paycheck and have thrown in extra here and there. Should I stop contributing for now or keep buying the stock at the lower value? I appreciate any input.

And you won’t, because no one can accurately forecast future performance (and investment managers are disallowed from making promises about future returns).

At some point after the stock markets bottom out, it will eventually start climbing up again but unfortunately no one can say when that will happen or at what pace the markets will recover.

I am not an investment advisor and I have no basis to provide investment advice as I don’t know your whole financial picture, so please take this only as general advice. If you’re able to continue contributing to the 529, you may want to do so as you’ll get a tax benefit when you withdraw for qualified educational expenses. This will especially help if you’re in a higher tax bracket.
You may also want to check how your portfolio is allocated. NJ Best provides multiple options such as “conservative”, “moderately conservative”, “aggressive”, etc.
With a 2-3 year horizon, you would want it to be conservative (or close to it) to preserve assets.

Hope that helps.

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So we are in a similar boat, our 529 has lost value and there is no way to know when it will start to re accumulate again. We have started to invest in more guaranteed options, I bonds, high yield savings accounts, CDs. The tax benefit of the 529 is small vs the more guaranteed gains on these other accounts.

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Thanks for taking the time for your thoughtful response. I just looked and it’s in the moderate age based account. The conservative age based account looks like it’s down just as much. The main reason I think I should continue to contribute is the new NJ state income tax write off. We’re under the $200k threshold and tend to owe state taxes every year. Plus I see there’s some benefit if my D goes to an instate school. I’ll call the fund manager and see if it’s worth switching over to conservative with fees/losses. Thanks again!

Thank you for responding. I wish the 529 was at least breaking even. My basic savings account still gets a tiny bit of earned interest. NJ does now allow us to write off up to $10,000/yr contributions to the NJ best 529 for household incomes under $200k. I’m not a professional financial person at all and trying to figure out complicated financial markets is just out of my scope. I hope it works out well with your other investments!

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Agreed. Especially when you have a short time horizon before you start withdrawing.

I-bonds have a great yield right now but keep in mind that if you hold them for less than 5 years you’ll give up 3 months of interest.

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yes, but if you buy before the end of the month you get almost 10% for 6 months and then almost 7% for the next 6. If OP can hold on for the 5 years it is a great benefit and I beleive it is also tax free growth.

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If “a couple of years” means you might not have to start withdrawing in 2+ years, then historically that leaves time for things to have bottomed out by then.

If that holds true this time around as well, then making automatic contributions of a fix amount, means that you’re currently investing at low prices, which buys you more shares. And, making extra contributions further amplifies the effect.

So even a modest recovery by then can generate good growth.

(While everyone likes the vibe of a booming market, it’s actually the hardest time to invest successfully.)

The biggest problem is for folks who are forced to withdraw in less than 2 years. If they don’t have other funds available to them to hold off selling 529 investments, they might have to realize some losses.

Of course, all is relative:
My 529 account is >20 years old. I will probably be selling one of the funds at 10% less than what it was at its peak, but then again, it just means my profits in that fund are “down” to +38% from +48%.

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We’re invested in the NY state 529 account and we live in CA (now). There’s no tax benefit for us since we don’t live in NY anymore and CA doesn’t offer a benefit.

I have a freshman in college and a freshman in high school. We are paying our college freshman’s tuition in cash savings, and will keep doing that if we can, until the account recovers. We don’t add money to that account. We are continuing to contribute to the 529 for my son, hoping that it will bounce back and then some in 4 years time. If not, we will cross that bridge when we get there.

Down markets suck :slight_smile:

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Down markets are a buying opportunity. :slight_smile:

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