A little over a year ago, when my oldest was a senior in high school and applying for colleges, I realized that I really needed to know how much money would actually be available in his 529. We don't have other funds to draw from if the 529 is down; its purpose is paying for college. I was already in a target date fund, but our target date funds have a fixed income mix that still experiences significant volatility (mostly total bond, some corporate, some international, a little TIPS). And we lost a ton in 2022, of course.
So, over the course of a six month period, I moved all of it into the capital preservation option earning 3%. Did I lose out on gains since then? Absolutely. Do I have any regrets? Absolutely not. I'm in the process now of more slowly doing the same with my daughter's 529 (high school junior). The sixth grader's 529 is still in the target date fund, but I'm already thinking about how to handle that over the next 5-6 years so I don't end up in the same spot (over-invested in fixed income options that don't align with my risk tolerance).
My risk tolerance is pretty high with our retirement accounts - we're at least 10 years out and will likely have options with regard to how long we work, part time work, etc. I realized in the college application process that my risk tolerance was MUCH lower there. And that's okay, now I know. For some people, the 529s are just one piece of their overall investments, so their risk tolerance is different. I like the point made earlier about savings vs investment - that resonates with me.
So, over the course of a six month period, I moved all of it into the capital preservation option earning 3%. Did I lose out on gains since then? Absolutely. Do I have any regrets? Absolutely not. I'm in the process now of more slowly doing the same with my daughter's 529 (high school junior). The sixth grader's 529 is still in the target date fund, but I'm already thinking about how to handle that over the next 5-6 years so I don't end up in the same spot (over-invested in fixed income options that don't align with my risk tolerance).
My risk tolerance is pretty high with our retirement accounts - we're at least 10 years out and will likely have options with regard to how long we work, part time work, etc. I realized in the college application process that my risk tolerance was MUCH lower there. And that's okay, now I know. For some people, the 529s are just one piece of their overall investments, so their risk tolerance is different. I like the point made earlier about savings vs investment - that resonates with me.
Statistics: Posted by smwisc — Sat Dec 07, 2024 7:25 am — Replies 81 — Views 5075