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When do you start becoming conservative with 529 accounts?
Posted on 5/5/24 at 8:14 am
Posted on 5/5/24 at 8:14 am
My oldest is in 6th grade. Currently have her in a mix of large/mid/small cap and total stock market. All Vanguard funds. I have coworkers who lost significant gains 2008-2009 when their kids entered college. I'm very weary of the current financial status and economic outlook of the country. Should I just continue and don't look at it until another 3-4 years, or start moving these funds into bonds/cash/value? 529 accounts are a little trickier with a shorter timeline in the market.
3
Posted on 5/5/24 at 8:41 am to Crescent Connection
I started with the age based strategy, where it automatically pulls back and becomes more conservative after certain age milestones, starting with their 9th birthday. I have a nice chunk so far, so I reduced that strategy and added a little more risk. My thinking is the conservative strategy will get me through 3 years of college, adding to a recovery timeline when I actually need the remaining funds.
You should pull back on at least a portion of the investment.
You should pull back on at least a portion of the investment.
Posted on 5/5/24 at 9:42 am to Crescent Connection
Depends how funded you expect to be.
Posted on 5/5/24 at 10:04 am to slackster
Principal in her account is $14k. Gains are about $9k.
Posted on 5/5/24 at 8:33 pm to Crescent Connection
I opened 529’s the week my twins were born. Turned 30K principal into 100K over 18 years. I was in a S&P 500 Index Fund until January of their high school senior year. Then put it in a money market. They are now college seniors and should have 30K or so leftover for grad school.
My advice on 529’s are always to invest heavily and don’t go conservative too early. Even if you have money left over it can stay in the account and be used for grandkids, etc. If I would have stayed in the index during their college days they’d have even more than they have left over.
My advice on 529’s are always to invest heavily and don’t go conservative too early. Even if you have money left over it can stay in the account and be used for grandkids, etc. If I would have stayed in the index during their college days they’d have even more than they have left over.
Posted on 5/6/24 at 8:49 am to Crescent Connection
Even in worse case scenario (if today is October 2007), the market fully recovered within 6 years. I think if the pending recession - you know, the one that should've happened in 2018, 2020-2022, etc. - doesn't happen soon, yes, I'd reduce risk fairly significantly. However, if it does happen soon, I would just keep plugging away.
The problem with the LA START age-based funds is they move your funds based on age, not on market cycle. So in the example someone else gave, they could take the entire drawdown of a recession and then because the kid turns 16, it automatically moves all to cash. Literally exactly what you're not supposed to do. If anything, a 50% drawdown you should move 100% to Total Market.
The problem with the LA START age-based funds is they move your funds based on age, not on market cycle. So in the example someone else gave, they could take the entire drawdown of a recession and then because the kid turns 16, it automatically moves all to cash. Literally exactly what you're not supposed to do. If anything, a 50% drawdown you should move 100% to Total Market.
This post was edited on 5/6/24 at 8:52 am
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