<p>Here's an article analyzing the performances of 529s:</p>
<p>College</a> Savings Plans Outperform the Market - US News and World Report</p>
<p>thank you very much for this article......</p>
<p>Our experience is inline with the article. I only have access to the Sept 30 data, so they could have fallen off since then, but D in college lost very little, S in 10th grade lost a bit more, and D in 8th grade took the biggest hit in 529 funds. These accounts were opened by my in-laws and we only get a copy of the quarterly reports, we don't directly manage them.</p>
<p>Hopefully things have held up for all you this month. The market as a whole is down another 21% or so just this month.</p>
<p>Articles like this are pretty meaningless, perhaps even harmful, because they are misleading, especially the title. Consider what they do:
[quote]
Better yet, about two thirds of parents have invested in "age-based" portfolios, some of which have actually earned profits of about 3.5 percent during the past year, Morningstar found. Because the managers of these age-based portfolios automatically shift investments from riskier stocks to safer bonds as the child gets closer to college age, managers of funds designed for older kids were selling stocks earlier this year and locking those profits into safer alternatives like treasury bills.
[/quote]
. This same approach would guarantee returns that underperform the "market" in a bull market.</p>
<p>The biggest thing misleading about this is that it is not fair to compare the returns of a fund with a mix of assets (stocks, bonds, cash etc) to the overall stock market. It is a fniancial apples and oranges comparison. It would have been much more reasonable to compare 529s to balanced mutual funds, for example. </p>
<p>Worse, because 529 funds vary so much from state to state, and one can normally only get maximal tax benefit from the one sponsored by your state, looking at the funds overall is misleading, because no one can easily invest in them all. Individual funds vary widely.</p>
<p>Then again, the article was typical USNWR, little substantive information compared to the headline. They sell magazines for a living, don't they?</p>
<p>Howly cow. The College Illinois plan is up to $70000 plus for 9 semesters. We only put in $22,000 for four years of all University. I think I did good with a prepaid plan. I just hope they dont melt down in this investment crisis.</p>
<p>Before the crash we were saying we needed to "do something" with the excess we had in the bank that should have been in stocks...we thought. (It was actually not a clear-cut situation because last child is less than 2 years from college.)</p>
<p>Boy, did the bank accounts outperform the stock market!</p>
<p>Prepaid Tuition Programs have been golden the last ten years. As you invest, you just say more power to the schools as they jack up tuition. You receive the amount of the hike each year and that has worked out to an amount several percentage points above general inflation. The States guarantee the plans and no state legislature and Governor would ever fail to pay college tuition no matter how well the funds underlying investments perform.</p>
<p>Prepaid tuition plans give peace of mind and, in this era, make those who invest in them feel like financial geniuses.</p>
<p>I believe 12 states have the Prepaid plans.</p>
<p>TCPA and VM,</p>
<p>What do state prepaid tuition plans have to do with state college savings plans?</p>
<p>Two different things.</p>
<p>Independent</a> 529 Plan</p>
<p>I have had college savings plans for years, and they simply cannot match the rate of growth of college tuitions. Every year I fall further behind.</p>
<p>Prepaid plans are guaranteed to match the growth rates of college tuitions, but it is my understanding that most state plans are limited to in-state schools.</p>
<p>The Independent 529 Plan is also guaranteed to match the growth rates of college tuitions for any of the participating colleges, wherever they may be. For people in this forum, it might be of interest to note that the following colleges participate: Princeton, Stanford, MIT, Chicago, Duke, Hopkins. Also Amherst.</p>
<p>ditto to 4th floor... and for those of you who are not up to CC academic standards (like us) there are a ton of littler, less competitive schools as well....it was the BEST thing we ever did....</p>
<p>My family's college funds all took a hit, mine (I'm a junior in college) lost a small, but substantial chunk, my brother's more (he's a freshman in college), and my sister's lost still more (junior in HS). Hopefully they're doing better now--this info was from mid-October...I remember he was scared to check when the Dow dipped even more.</p>