Thursday, February 08, 2007

Investing 529 Plan Contributions

I've been happy with the returns on the college savings in our 529 plan. So I am following the same investment strategy with the 2007 contribution I made in January. Here's how I've invested the 529 contributions since 2005:

25% Vanguard Aggressive Growth Index Portfolio
25% Vanguard 500 Index
25% Vanguard Extended Market Index
25% Vanguard Developed Markets International Stock Index

As of January 31, 2007, the one year return of these funds was 14.56%, 14.24%, 10.52% and 20.11% respectively. I continue to divide our college savings equally among these funds instead of putting the majority in the highest returning fund. I believe all of these are good funds and will have good returns over the long term. Therefore, I don't try to choose the best fund for the year and just put an equal portion in each fund.

For more on Crossing Generations , check back every Thursday for a new segment.

Photo Credit:, Michael Connors

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC


Man on a Mission said...

Those are some excellent returns. At that rate, you might actually be able to afford college! Then again, who knows with the growth rate of tuition these days.

Does Vanguard still require the high investment minimums on 529 plans? I just don't 3k to cough up for each fund.

sun said...

Super Saver: What's the benefit of having four funds in a 529 plan? I don't know the size of each fund, but does Vanguard charge $10 for each fund with less $5000 assets? I have one Vanguard lifecycle fund and one Fidelity lifecycle fund for my daughter's 529 plans and really didn't spend a lot of time doing research. One reason is that the plans I chose (Upromise and Fidelity 529) don't have a lot of selections. Which plan are you using?

Super Saver said...

Man On A Mission and Sun,

Thanks for your comments. I didn't realize that most fund companies have annual fees and minimum amounts for 529 plans. My financial advisor recommended the 529 fund I use and I did no additional research. For reference, my financial advisor knows that I prefer no maintenance fee, no annual fee investments.

I invest through College Advantage which is offered through the Ohio Tuition Trust Authority. Vanguard is one of fund families they carry. There is a $15 minimum investment and no annual maintenance fees for the account or the mutual funds. They charge a 0.25% expense fee, which I think may be partly waived right now. Of course, each mutual fund has an expense charge. Finally, if one lives in Ohio, one can deduct up to $2000 from an Ohio Tax Return.

Hope this information is helpful.

Janie Hickok Siess, Esq. said...

Thanks for including your post in the Carnival of Family Life which will be posted later today. We got a lot of great submissions, so come on over later today and read them!

Lisa said...

Great info in this post. I think it is important for parents to learn about 529 plans.

Here via the carnival of family life.