s/o 529 allocations and rationale

[Anonymous]

I'm wondering if we have the right 529 allocations. We currently have one aggressive growth and one year based for each kid. Wondering if we should be more aggressive.

[Anonymous]

Get out of 529 for more aggressive options. There is nothing aggressive about any of their choices.

[Anonymous]

Plenty of aggressive options if you select the correct 529. American funds VA has many great options.

Avoid the Year based ones, as they will not be aggressive enough.

[Anonymous]

We pulled out of the year based ones after observing them earn next to no interest whatsoever. We waited too long, don't be us.

[Anonymous]

For one of my kids, we have a year based one but chose it 5 years after her HS graduation year. She is in 9th now and it is still doing well, but I'm assuming in a few years it will get very conservative. We only need it a year at a time so I'm OK with it.

[Anonymous]

age? If you have 10 years, yea, be more aggressive. We weren't, and I'm kicking myself.

[Anonymous]

Our kids are still young, so we have everything in an S&P500 fund.

[Anonymous]

NP.
Since the topic of 529 is going on here,
(1) does it happen that someone diligently puts money in 529 for 17 years and the money goes down by the time of the withdrawal?
(2) how much money should be in 529 for a 9 year old child? Thumb rule?

[Anonymous]

Anonymous wrote:NP.
Since the topic of 529 is going on here,
(1) does it happen that someone diligently puts money in 529 for 17 years and the money goes down by the time of the withdrawal?
Goes down, as in being less than what one paid in? Although possible, this is unlikely, unless there is a financial crisis.

If you are talking about going down from its all times high, then, yes, this is possible, and — depending on your allocation and the market conditions — a frequent outcome.

(2) how much money should be in 529 for a 9 year old child? Thumb rule?

There are many calculations out there. They pretty much all work the same. You need to know: (a) target amount (private/state + assumptions about future tuition), (b) future contributions, (c) assumptions about market performance. You can then play around with the numbers and get a sense of whether you are on track.

https://www.schwab.com/saving-for-college/college-savings-calculator

[Anonymous]

We have 529s for all of our grandchildren who are ten and under. We are almost entirely in equity index funds. When they hit HS age I will likely derisk to a certain extent.

[Anonymous]

Anonymous wrote:NP.
Since the topic of 529 is going on here,
(1) does it happen that someone diligently puts money in 529 for 17 years and the money goes down by the time of the withdrawal?
(2) how much money should be in 529 for a 9 year old child? Thumb rule?

(1) Could it happen? Yes, if you mismanage your investments. Does it happen? Most likely not. People aren’t reckless.

(2) Since your kid is going to need about $1M, you should have around $500K by the time they are 9. The rule tells us that your investment should double every 7 years.

[Anonymous]

Anonymous wrote:We have 529s for all of our grandchildren who are ten and under. We are almost entirely in equity index funds. When they hit HS age I will likely derisk to a certain extent.

NP here, with a child about to start high school, so we will need the funds starting in just over 4 years. What do others do with the funds once their kid hits high school? Right now we have our college fund (not a 529, just a brokerage account) in VTSAX (vanguard stock market index fund).

[Anonymous]

Anonymous wrote:

Anonymous wrote:NP.
Since the topic of 529 is going on here,
(1) does it happen that someone diligently puts money in 529 for 17 years and the money goes down by the time of the withdrawal?
(2) how much money should be in 529 for a 9 year old child? Thumb rule?

(1) Could it happen? Yes, if you mismanage your investments. Does it happen? Most likely not. People aren’t reckless.

(2) Since your kid is going to need about $1M, you should have around $500K by the time they are 9. The rule tells us that your investment should double every 7 years.

I hope you are joking

[Anonymous]

Anonymous wrote:Get out of 529 for more aggressive options. There is nothing aggressive about any of their choices.

Not sure you know what you are talking about.

[Anonymous]

Anonymous wrote:

Anonymous wrote:NP.
Since the topic of 529 is going on here,
(1) does it happen that someone diligently puts money in 529 for 17 years and the money goes down by the time of the withdrawal?
(2) how much money should be in 529 for a 9 year old child? Thumb rule?

(1) Could it happen? Yes, if you mismanage your investments. Does it happen? Most likely not. People aren’t reckless.

(2) Since your kid is going to need about $1M, you should have around $500K by the time they are 9. The rule tells us that your investment should double every 7 years.

I doubt you will need a million. That is also too much in a 529. Right now for fully pay top dollar private you are 90 all in. That is 360 needed. In nine years you could expect to need 500 if you wanted and target that. At 9 years old -- if you had 200 now you would be great. 150 and I would say ok.

But remember you do not need it all on day 1.


In terms of allocation, we did not go out of high growth until towards the end of the first year of college. We planned on paying for year 1 out of other savings. During year 1 we moved to 50% cash and short term low risk and half still high growth invested. During year 2 we moved more to cahs but still had 25% in an S&P 500 index fund. We have other assets we could use if we had to if the market went down. For DC 2 we went 25% cash at the end of junior year of high school; same amount to cash during year 1 of college and so forth.

If these were our only funds we would have been more cautious. But we will pay for grad school so we have time to grow back if there was a drop.