Rebalancing 529 when you self manage.

[Anonymous]

If you self manage your 529, how do you handle the limitation on 2x/year rebalancing as you near college? I would be especially appreciate to hear advice on your approach given recent market volatility.

For those who prefer TDF and will inevitably chime in here, I completely appreciate why. However, I found those funds far too conservative, especially in the last few years before college. I prefer self managing the accounts and have made far more doing so.

[Anonymous]

I just put in more money to rebalance

[Anonymous]

We had our kiddo in the “Aggressive” portfolio from day 1. We left it alone. Fast forward to last year, now their Junior year in college, we realized their college would be fully funded. At that point we rebalanced ALL into the money market option to essentially lock in our funds.

[Anonymous]

Anonymous wrote:We had our kiddo in the “Aggressive” portfolio from day 1. We left it alone. Fast forward to last year, now their Junior year in college, we realized their college would be fully funded. At that point we rebalanced ALL into the money market option to essentially lock in our funds.

We moved 50% to MM/Cash funds by start of junior year, and by time they entered college we had 75% in Cash/MM. Once you have enough it is essential to lock it in, so you dont' have to weather a downturn. We had more than enough so we left 25% in stock funds, so that it can grow for grad school.

[Anonymous]

Umm, you shouldn't be rebalancing more than 2x per year.

If you're worried about recent market volatility, then you're almost certainly invested in the wrong fund.

[Anonymous]

I only have TDF in my 529. Do you guys have the option to purchase individual stocks???

[Anonymous]

Made a mistake of opening a 529. I can get much better return on my own in a Roth and investment account. The lousy $20k that is in there, is divided by small caps and growth.
Can't wait to get rid of the account the next two years.

[Anonymous]

Anonymous wrote:Made a mistake of opening a 529. I can get much better return on my own in a Roth and investment account. The lousy $20k that is in there, is divided by small caps and growth.
Can't wait to get rid of the account the next two years.

Can you get enough better returns to make up for the tax advantages? You don’t have to pay any tax at all on future withdrawals for qualified expenses. Personally, I feel like my 529 accounts — mostly invested in S&P 500 index funds — are doing pretty well, and certainly not better than I could do on my own if I take taxes into account.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Made a mistake of opening a 529. I can get much better return on my own in a Roth and investment account. The lousy $20k that is in there, is divided by small caps and growth.
Can't wait to get rid of the account the next two years.

Can you get enough better returns to make up for the tax advantages? You don’t have to pay any tax at all on future withdrawals for qualified expenses. Personally, I feel like my 529 accounts — mostly invested in S&P 500 index funds — are doing pretty well, and certainly not better than I could do on my own if I take taxes into account.

Of course they can get better returns. This is likely our DCUM resident troll investor who:

Always beats the market
Always times the market perfectly
Hates 401Ks
Makes a cool half million in six months

Etc

[Anonymous]

Anonymous wrote:Umm, you shouldn't be rebalancing more than 2x per year.

If you're worried about recent market volatility, then you're almost certainly invested in the wrong fund.

My accounts offer an annual, biannual and quarterly rebalancing option.

And I disagree. Rebalancing on the wrong day given recent market gyrations can have a huge long term impact.

[Anonymous]

Anonymous wrote:I just put in more money to rebalance

How does this work? Are you contributing all the way through HS?

[Anonymous]

Anonymous wrote:I only have TDF in my 529. Do you guys have the option to purchase individual stocks???

No, there are index funds you can invest in (S&P, total market, etc.). But obviously you want to move that to cash well ahead of the time you need it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I just put in more money to rebalance

How does this work? Are you contributing all the way through HS?

Yes i rebalance twice a year and keep adding through high school for grad school or whatever

[Anonymous]

Anonymous wrote:

Anonymous wrote:We had our kiddo in the “Aggressive” portfolio from day 1. We left it alone. Fast forward to last year, now their Junior year in college, we realized their college would be fully funded. At that point we rebalanced ALL into the money market option to essentially lock in our funds.

We moved 50% to MM/Cash funds by start of junior year, and by time they entered college we had 75% in Cash/MM. Once you have enough it is essential to lock it in, so you dont' have to weather a downturn. We had more than enough so we left 25% in stock funds, so that it can grow for grad school.

But in terms of timing, do you just choose a date like January 1 and leave it alone regardless of how the market is moving?

I ask this because I need to rebalance, which I do biannually. I forgot do it in January and then the marketed freaked out. With all the craziness I am think I just do it now but I am wondering if I should rebalance both my January 1 and June 1 number now, or just the January portion now.

How did you know by junior year what the cost would be? We also potentially overfunded if DD goes in state. Or did you overfund regardless of the scenario?

[Anonymous]

DD is finishing her junior year. I had half in money market until a few months ago. Now 100% is in money market.