Still put $2K per month into the market or 529s?

[Anonymous]

We have an HHI of $400K and three kids. We don't save for college but do max out 401Ks.

We work with financial advisors and funnel $2K to them per month to invest (we don't know what we're doing).

With the market is how it is (we have about $75K in index funds in total, down about $3K right now) should we keep funneling $2K into the market or are we better to pause market investments and max out 529s?

[Anonymous]

529 are usually invested in the market as well so it's not like you'll be avoiding it.

[Anonymous]

With a $400k income why aren't you doing both? A 529 IS stock markets, often index funds just like your 401k, it just has tax benefits upon withdrawal. Why isn't your financial advisor telling you these things?

[Anonymous]

Isn't this a good time to be funneling money in, when the market is low? We do dollar cost average with regularly monthly contributions.

But that being said, we maximize the 529s first and invest the rest.

[Anonymous]

Whatever you do, don't stop putting money in. This is the best time to keep buying.

[Anonymous]

Is this a new income level for you? Otherwise no 529s and $75k in index funds is very low. How you intend to pay for college? At that income you’ll get no financial aid.

We have two kids at a slightly lower income and funnel $2.5k to 529s, max two 401k/403b vehicles, and invest another $2k in our brokerage per month.

[Anonymous]

Anonymous wrote:529 are usually invested in the market as well so it's not like you'll be avoiding it.

+1 This board consistently illustrates the most insane misunderstandings about 529s.

[Anonymous]

Anonymous wrote:

Anonymous wrote:529 are usually invested in the market as well so it's not like you'll be avoiding it.

+1 This board consistently illustrates the most insane misunderstandings about 529s.

I know. It's just an account. You could have stocks, bonds, cash in it. Same with your 401k. Or IRA. Or brokerage account.

It also amazes me that someone who has a skill that allows them to make $460k per year thinks that when the market is down is the time to stop investing.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:529 are usually invested in the market as well so it's not like you'll be avoiding it.

+1 This board consistently illustrates the most insane misunderstandings about 529s.

I know. It's just an account. You could have stocks, bonds, cash in it. Same with your 401k. Or IRA. Or brokerage account.

It also amazes me that someone who has a skill that allows them to make $460k per year thinks that when the market is down is the time to stop investing.

And yet DCUM also pushes investors to be DIY and not use financial professionals. Doesn't really make much sense, does it?

[Anonymous]

Anonymous wrote:Isn't this a good time to be funneling money in, when the market is low? We do dollar cost average with regularly monthly contributions.

But that being said, we maximize the 529s first and invest the rest.

We dollar-cost average as well just due to cashflow demands, but several studies have show you actually get a better return if you would put the same amount of money in all at once in the beginning of the DCA period. I'll try and find the studies to share here, if you are interested.

[Anonymous]

How do you plan to pay for college? I don't get why you aren't saving for college, especially with 3 kids.

[Anonymous]

Op here to add more color...we have 400k in cash and are first time home buyers. Just bought a few weeks ago. Our HHI went from 250 to 400 in the last two years so we maximized nest egg to save for big down payment, house furnishings, new van (baby three is new) and 100k in emergency savings.

Kids are newborn, 4 and 6.

I think now that we have our house, we feel more secure about maximizing 529s or market. We had student loans we paid off and no other debt so getting to debt free before house and getting enough to cut the house we wanted and still have enough to furnish and have 100k in savings is why we played it conservatively with the market.

Thanks for everyone's advice so far! Have meeting with advisers tomorrow and will bring this up.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Isn't this a good time to be funneling money in, when the market is low? We do dollar cost average with regularly monthly contributions.

But that being said, we maximize the 529s first and invest the rest.

We dollar-cost average as well just due to cashflow demands, but several studies have show you actually get a better return if you would put the same amount of money in all at once in the beginning of the DCA period. I'll try and find the studies to share here, if you are interested.

DP and I know the studies you mean, but that's more relevant for someone getting an inheritance or sitting on a significant lump sum of cash and trying to decide how to get it into the market. For most investors who put money in every payday, they're both dollar cost averaging across the year (in the sense of not trying to time the market), and putting it in at the beginning of the "DCA period" for that money (in the sense of investing all of it as soon as it's available instead of something like every three days until the next available pot of money shows up to be invested with the next paycheck).

[Anonymous]

Anonymous wrote:Op here to add more color...we have 400k in cash and are first time home buyers. Just bought a few weeks ago. Our HHI went from 250 to 400 in the last two years so we maximized nest egg to save for big down payment, house furnishings, new van (baby three is new) and 100k in emergency savings.

Kids are newborn, 4 and 6.

I think now that we have our house, we feel more secure about maximizing 529s or market. We had student loans we paid off and no other debt so getting to debt free before house and getting enough to cut the house we wanted and still have enough to furnish and have 100k in savings is why we played it conservatively with the market.

Thanks for everyone's advice so far! Have meeting with advisers tomorrow and will bring this up.

And again: 529s are market. You're going to be investing in the market either way. 529s are not pre-paid tuition plans.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Isn't this a good time to be funneling money in, when the market is low? We do dollar cost average with regularly monthly contributions.

But that being said, we maximize the 529s first and invest the rest.

We dollar-cost average as well just due to cashflow demands, but several studies have show you actually get a better return if you would put the same amount of money in all at once in the beginning of the DCA period. I'll try and find the studies to share here, if you are interested.

DP and I know the studies you mean, but that's more relevant for someone getting an inheritance or sitting on a significant lump sum of cash and trying to decide how to get it into the market. For most investors who put money in every payday, they're both dollar cost averaging across the year (in the sense of not trying to time the market), and putting it in at the beginning of the "DCA period" for that money (in the sense of investing all of it as soon as it's available instead of something like every three days until the next available pot of money shows up to be invested with the next paycheck).

Well this all ended up being moot because OP is sitting on a significant lump sum of cash. OP, put it in the market and then forget about it. $100k to each 529, the rest to a brokerage.