Reply to s/o 529 allocations and rationale

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[quote=Anonymous][quote=Anonymous][quote=Anonymous]NP. 
Since the topic of 529 is going on here, 
(1) does it happen that someone diligently puts money in 529 for 17 years and the money goes down by the time of the withdrawal? 
(2) how much money should be in 529 for a 9 year old child? Thumb rule? [/quote]

(1) Could it happen? Yes, if you mismanage your investments. Does it happen? Most likely not. People aren’t reckless.

(2) Since your kid is going to need about $1M, you should have around $500K by the time they are 9. The rule tells us that your investment should double every 7 years. [/quote]

I doubt you will need a million.  That is also too much in a 529.  Right now for fully pay top dollar private you are 90 all in.  That is 360 needed.  In nine years you could expect to need 500 if you wanted and target that.  At 9 years old -- if you had 200 now you would be great.  150 and I would say ok.

But remember you do not need it all on day 1.

In terms of allocation, we did not go out of high growth until towards the end of the first year of college.  We planned on paying for year 1 out of other savings.  During year 1 we moved to 50% cash and short term low risk and half still high growth invested.  During year 2 we moved more to cahs but still had 25% in an S&P 500 index fund.  We have other assets we could use if we had to if the market went down.  For DC 2 we went 25% cash at the end of junior year of high school; same amount to cash during year 1 of college and so forth.

If these were our only funds we would have been more cautious.  But we will pay for grad school so we have time to grow back if there was a drop.  [/quote]

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