In the UTMA, we purchased a 5.1% CD due on 9/15/2008. The UTMA account is designed to fund her weekly allowances until she is 18, at an amount equal to two times her age. Thus, I want to have a "guaranteed" return on the money. Of course, the risk is that 16 months from now, I won't be able to get 5% interest any longer.
Since the 529 plan is for college tuition, we won't need any funds for 16 years. Therefore, this account is invested in the stock market. We have invested 25% in each of the following funds:
as of 5/14/07
|Aggressive Growth Index Portfolio|
|Extended Market Index|
|Developed Markets International Stock Index|
The S&P 500 had a 6.55% YTD return as of 5/14/07.
To date, I am pleased with the investment performance of both accounts. Currently, a 2 year treasury bill is paying 4.73% versus 5.1% that I got for the CD. In the 529 plan, all the mutual funds are matching or beating the S&P 500 returns and averaging 7.9% YTD which is exceeding the 8% annualized return that we need.
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This is not financial advice. Please consult a professional advisor.
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