Personal Investments • Please help me allocate 529 funds

I have two main concerns about sticking with the age based track:
1. 40% international has been such a drag for so long. I chose the age based fund for simplicity but in retrospect, I should have mirrored my 401K which is almost all S&P 500.

With a diversified portfolio, you will always have regrets over part of the portfolio. Chasing past performance in unlikely to help. As soon as you do, foreign will outperform and you will be kicking yourself for having switched.

2. If the market drops, wouldn’t I be better off having separate equity and bond funds vs an all-in-one fund? That way, I could pull from BND and let VTSAX recover (assuming we don’t have a repeat of 2022!)

I think many here will argue that you are just kidding yourself with such an approach, but for me mentally, it would help me. You change your AA, but you don’t sell at the bottom.

I am considering just transferring all my funds from the age-based track to an individual portfolio of 60/40 (domestic stock/bond), which would eliminate international stock and give me two “buckets” to pull from. My DD is going to be a HS junior this year so part of me thinks 60/40 is too aggressive and part of me thinks the risk is worth it because she’ll only complete undergrad in 6 years so the runway is not quite as short as it seems.

Or do I just leave this alone??

Even before today’s relatively high returns on cash, I would have recommended derisking the 529. Now it is an even easier decision. If the market goes up, you will have regrets. If it goes down, you will be happy. No one knows what Mr. Market will do.

That said, if you are planning on funding much of college expense from your income / portfolio, then you might want to view the 529 as part of the overall AA, in which case you would be more aggressive.

Thanks! We do need the 529, especially in years 1 and 2. Even though we can cash flow some, we can’t risk this money entirely. It’s a pot we’re counting on to ease us into the college spending era.

I think I’m having a bit of a knee jerk reaction to the notice letter I got about the age-based fund change, coupled with my frustration that I derisked some other 529 money set aside for private HS tuition at the “wrong” time based on market performance. It was the right time (I needed the money in less than a year). But boy have I kicked myself the last few months watching the market soar. I think that’s why I’m tempted to keep the risk level higher, to avoid further regret around derisking, but my rational side knows this money shouldn’t be gambled with. 50/50 is reasonable. And international equity could well rebound, as you said, and I’d kick myself for giving up now.

So maybe I just leave this alone and see where the 50/50 age based track gets me in two years?

Statistics: Posted by meadowrue — Wed Jul 31, 2024 10:13 am — Replies 2 — Views 61

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