529 Allocation

[Anonymous]

Our kids 529s have grown substantially and I’m now wondering whether to change to a more conservative allocation. They are currently almost 100% equity with a mix of US total market and international. Kids are twins in 7th grade. We have $615k between them. I feel like we’ve won the game and want to lock in and I’m thinking we can put it in a bond fund that will keep up with inflation and be enough to pay all or nearly all costs by the time they are in college. Thoughts?

[Anonymous]

7th grade is still young. i'd try to ride it longer. you have done well. congrats

[Anonymous]

Anonymous wrote:7th grade is still young. i'd try to ride it longer. you have done well. congrats

+1, I wouldn't change till atleast highschool 9th grade.

[Anonymous]

Anonymous wrote:

Anonymous wrote:7th grade is still young. i'd try to ride it longer. you have done well. congrats

+1, I wouldn't change till atleast highschool 9th grade.

I feel like I’m risking a big market downturn in the next couple years though. If that happens, will it recover in 4 years? Maybe. Why not just lock in?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:7th grade is still young. i'd try to ride it longer. you have done well. congrats

+1, I wouldn't change till atleast highschool 9th grade.

I feel like I’m risking a big market downturn in the next couple years though. If that happens, will it recover in 4 years? Maybe. Why not just lock in?

Only you can decide OP. If you are convinced market will significantly pull back and don’t want to risk that, lock it in. I personally dont believe market will crash. Correction? Sure. Crash? Don’t think so.

[Anonymous]

Don’t over contribute to 529.

[Anonymous]

Id lock in half on bonds since I do think we are in for a crash of some magnitude. Going 50/50 would help me psychologically feel like I win in either scenario. If there is a crash, I was smart enough to lock in some gains. If there isn't a crash, I was smart enough to not lose some of the gains between now and college.

[Anonymous]

Our 529 also has an option for basically a high yield savings account, currently getting about 3.8%. You could put some in that...

[Anonymous]

The same money outside of 529, would be 1.2 million at minimum plus all the knowledge how you got there.
It's very hard to understand why you would even worry about money if you were willing to put so much money into account that has a low return compared to what it could be.
What's done is done. The kids are still young. Leave it alone. Don't touch most of it even when they start college. Downturns last under 2 years.
This is way too much money in such a restricted account unless they want to be doctors.

[Anonymous]

Anonymous wrote:The same money outside of 529, would be 1.2 million at minimum plus all the knowledge how you got there.
It's very hard to understand why you would even worry about money if you were willing to put so much money into account that has a low return compared to what it could be.
What's done is done. The kids are still young. Leave it alone. Don't touch most of it even when they start college. Downturns last under 2 years.
This is way too much money in such a restricted account unless they want to be doctors.

You seem to be the same poster who keeps posting on all the 529 questions, and I just need to know…what is your deal? what state do you live in that your 529 options for index funds doesn’t return nearly the same as any regular index fund?

I live in DC. The fees are slightly higher than a Fidelity/Vanguard brokerage. But I get to deduct $8k in contributions each year from taxes AND anything the acct earns is tax free. I don’t know if you are in some impossibly low tax bracket that this doesn’t matter (hugely) or you are suggesting parents forgo tax savings yo bet it all on nvidia stock (which carries so much risk) or what? What is the thing that makes you think you were so right? Scholars at Brookings think 529 is so advantageous they want to take it away from high income earners who they think benefit too much. What do you know that those experts don’t?

[Anonymous]

Anonymous wrote:

Anonymous wrote:The same money outside of 529, would be 1.2 million at minimum plus all the knowledge how you got there.
It's very hard to understand why you would even worry about money if you were willing to put so much money into account that has a low return compared to what it could be.
What's done is done. The kids are still young. Leave it alone. Don't touch most of it even when they start college. Downturns last under 2 years.
This is way too much money in such a restricted account unless they want to be doctors.

You seem to be the same poster who keeps posting on all the 529 questions, and I just need to know…what is your deal? what state do you live in that your 529 options for index funds doesn’t return nearly the same as any regular index fund?

I live in DC. The fees are slightly higher than a Fidelity/Vanguard brokerage. But I get to deduct $8k in contributions each year from taxes AND anything the acct earns is tax free. I don’t know if you are in some impossibly low tax bracket that this doesn’t matter (hugely) or you are suggesting parents forgo tax savings yo bet it all on nvidia stock (which carries so much risk) or what? What is the thing that makes you think you were so right? Scholars at Brookings think 529 is so advantageous they want to take it away from high income earners who they think benefit too much. What do you know that those experts don’t?

Im not that poster, but i have MD 529 accounts with a target graduation date fund. Last I checked the fee was like 0.3%, which is higher than I would normally invest. But the 529 does beat a Roth for tax purposes with growth not taxed and taking the additional state deduction. Its a good deal.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:7th grade is still young. i'd try to ride it longer. you have done well. congrats

+1, I wouldn't change till atleast highschool 9th grade.

I feel like I’m risking a big market downturn in the next couple years though. If that happens, will it recover in 4 years? Maybe. Why not just lock in?

I see no reason not to lock in some % that makes you feel comfortable. 529s are a very goal driven investment. You want to save for college in X years, you want some tax free gains. You want a small state tax deductible.

If you were able to save so much by 7th grade, you likely don't have to worry about optimizing the account perfectly to the last dollar. Presumably instead of contributing more money to a 529 you will put that extra money in a brokerage account, so you can do all your riskier investing there.

[Anonymous]

Anonymous wrote:The same money outside of 529, would be 1.2 million at minimum plus all the knowledge how you got there.
It's very hard to understand why you would even worry about money if you were willing to put so much money into account that has a low return compared to what it could be.
What's done is done. The kids are still young. Leave it alone. Don't touch most of it even when they start college. Downturns last under 2 years.
This is way too much money in such a restricted account unless they want to be doctors.

[Anonymous]

Anonymous wrote:Don’t over contribute to 529.

Why?

[Anonymous]

Anonymous wrote:The same money outside of 529, would be 1.2 million at minimum plus all the knowledge how you got there.
It's very hard to understand why you would even worry about money if you were willing to put so much money into account that has a low return compared to what it could be.
What's done is done. The kids are still young. Leave it alone. Don't touch most of it even when they start college. Downturns last under 2 years.
This is way too much money in such a restricted account unless they want to be doctors.

What do you mean low returns? Very confused. For my kids 529 -- now in college -- average annual return was 9%