Sunday, January 23, 2011

529 plan basics and updates

A recent WSJ article highlighted limitations of 529 college-savings plans and recent changes offered by some plan providers.  As with all their financial planning, investors should make sure their strategies aer suitable for their own individual situations..

A couple of basic 529 tips:
  • Invest more conservatively as the college years approach.  In 2008 the average 529 lost 28%, reflecting the stock market's plunge that year (compared to -37% for the S&P 500).  A strong argument can be made to shift 529 assets to cash completely in the two to four years before college.
  • Shop carefully for low fees and competitive performance.  Average 529 fees and performance tend to be less attractive than their retail mutual fund counterparts.

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