529 allocation for HS junior

[Anonymous]

DS' 529 has enough funds for 3 years at essentially all private schools. We still have two years of contributions left and our current allocation is all in stock. Given the potential uncertainty in the market, would it make sense to move all the funds to a target date fund and plan on making up the difference using cash flow and whatever minimal gains accrue? Or is it better to keep the allocation as is?

While I don't think the market is going to crash next year, 2027 might be a different story.

[Anonymous]

Yes, you should move because you have a specific need/time for that fund. Don’t treat it like an investment fund. 529 and retirement funds alike.

[Anonymous]

I don’t think anyone can advise what’s “better,” without a crystal ball… but you could for now invest all new contributions in money market/cash. Then consider whether to change your current allocation to a target date fund. I’d ask around on Bogleheads too.

[Anonymous]

Anonymous wrote:DS' 529 has enough funds for 3 years at essentially all private schools. We still have two years of contributions left and our current allocation is all in stock. Given the potential uncertainty in the market, would it make sense to move all the funds to a target date fund and plan on making up the difference using cash flow and whatever minimal gains accrue? Or is it better to keep the allocation as is?

While I don't think the market is going to crash next year, 2027 might be a different story.

I would pull 50%+ into bonds/cash alternatives. Because you don't have time to weather a massive drop, unless your kid chooses a State U.

But keep the rest in the market, as you won't need it for 3+ years.

[Anonymous]

If you add up the current balance of the 529 and add the amount you would contribute over the last two years (taking out any gains or interest) would that be enough for their entire college? If so, my opinion is to put all 529 and future contributions in the HYSA option and call it a day. You’ve accomplished what you set out to do and funded your kids college.

[Anonymous]

Op, even if you want to be aggressive at minimum covert at least 10-20% of the current amount to bonds or cash equivalents. Any further additional amounts from now should be added as bonds. Aim to have two years of bonds/cash equivalents when you start making payments to weather any downturns. Spend from the equities, but use the bonds if there is a market drop over 7% under the market peak. That allows the equities to recover in a two year time frame. (Average recovery is 18 months from a bear market.)

[Anonymous]

Just stop the 529 already. It's not a miracle account with fees, bad customer service, rules and possible penalties. You can do better in a hysa.

[Anonymous]

If you can’t pay for college otherwise, then yes. We are letting ours ride in the market because we can make up the difference if we need.

[Anonymous]

Anonymous wrote:Just stop the 529 already. It's not a miracle account with fees, bad customer service, rules and possible penalties. You can do better in a hysa.

You know they are all different right and can be serviced a variety of ways?

[Anonymous]

Anonymous wrote:Just stop the 529 already. It's not a miracle account with fees, bad customer service, rules and possible penalties. You can do better in a hysa.

[Anonymous]

Yes, we have a junior and moved 2 years of college 529 funds into a target account. We will stay two years ahead and move one more year's worth each year.

That feels like enough time and we can make it up through monthly cash flow if needed. We also have a younger kid that we could use those funds for, if we need them to sit for a while longer to make up value and may be more conservative with 529 funds then because we will want to use them.

[Anonymous]

If your kids graduate near the top do well in APs and SAT they will get some scholarship.

Alternatively college is not the only path to success your son or daughter may opt for a shorter technical formation.

Folks don't take pride I having $200k+ saved for college it's so ridiculous in this country we have come to accept as normal that's it's okay to spend 1/4 millions for a college education.

[Anonymous]

Anonymous wrote:If you can’t pay for college otherwise, then yes. We are letting ours ride in the market because we can make up the difference if we need.

I’m taking a similar approach for my HS Junior but also moved to 25% to bonds/cash equivalents earlier this summer.

[Anonymous]

Anonymous wrote:If you can’t pay for college otherwise, then yes. We are letting ours ride in the market because we can make up the difference if we need.

This is the first question. Do you need those funds in those first years or could you fund with other money. We could fund with other money. But at some point junior year we moved 25% of the fund to cash. At some point senior year we moved another 25% to cash. We could then pay two years plus from the 529. We also knew we could pay year 3 if we had to from pther funds so we left the rest 100% equities. Our time horizon for that money was then 3-4 years which we were comfortable with. At the start of Sophomore year of college we moved a years worth to cash to cover junior year. We let the rest ride as we could cover senior year if we had to.

[Anonymous]

Anonymous wrote:If your kids graduate near the top do well in APs and SAT they will get some scholarship.

Alternatively college is not the only path to success your son or daughter may opt for a shorter technical formation.

Folks don't take pride I having $200k+ saved for college it's so ridiculous in this country we have come to accept as normal that's it's okay to spend 1/4 millions for a college education.

I agree you look at where your child is likely to go. Our DD went to a T25. No scholarship money despite top grades and top ACT score.

Your quarter of a million is cheap. Top 25 with no aid will cost closer to 400k all in.