allocation of 529 for kid starting college in 8 years?
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Anonymous
| I feel like the return I'm getting in the 2030 target fund have been kind of crappy due to stocks and corporation bond funds sucking at the same time. Considering moving 25-30% of it into the 529's CD option or something. Is this dumb? My TSP has been doing better (2045 target date) than this 529, probably thanks to the G Fund (Treasries). I think we're about to fall into a recession and am concerned that we won't recover losses before DS starts college. |
Anonymous
|
Your kid heads to college in 8 years or finishes college in 8 years? I wouldn't move anything if school beginning is 8 years away. A target date fund does the rebalancing for you.
And your 2045 TD fund is *more* aggressive than a 2030 TD fund, it's not doing better because it has more bonds. |
Anonymous
| I keep it all in the 500 Index. The target date fund costs are completely out of line with what they provide. |
Anonymous
|
I'm 8 years away too and keeping things in all equities for now. It'll go back up and I'd hate to lock in losses when things are at a low. To put things in perspective it took less than 8 years to get back even after the Great Recession.
https://www.macrotrends.net/1319/dow-jones-100-year-historical-chart |
Anonymous
| I’d leave in S&P 500 equities. You could defer future contributions to iBonds (outside your 529) for a guaranteed return. |
Anonymous
| Even if a recession happens, 8 years is plenty of time to recover. You’re committing the mistake of selling after the losses have happened and then buying what is hot now. You need to pick an allocation and stick with it, not change it to whatever happens to be doing well at the moment. |
Anonymous
| Thanks all. This confirms I really need to leave this stuff to the rget date fund experts. I did a bit of digging, and apparently the G Fund does better than corporate bonds when interest rates are rising, but the reverse is true when rates are falling. So the worse performance of the corporate bonds in the 529 compared to the G Fund makes sense and isn't reason to panic. |
Anonymous
| Moving out of the funds you are in to CDs means locking in losses, which is a bad idea. |