The first column shows how the bear market of 2008 significantly reduced our college savings accounts. Not only were all the gains from 2006 and 2007 eliminated, the losses also reduced the principal from the contributions. However, the recovery since March 9, 2009 has enabled the accounts to almost reach break even. Here are the results as of 10/14/09:
|Vanguard Aggressive Growth Index Portfolio|
|Vanguard 500 Index|
|Vanguard Extended Market Index|
|Vanguard Developed Markets International Stock Index|
|Vanguard Morgan Growth|
This analysis has shown me the high volatility of equity investments in our 529 plans. When it gets closer to needing the funds, I will definitely want to avoid this level of fluctuation. Thus, I will definitely move a significant portion to interest bearing accounts within 2-4 years of needing the money for college.
We will continue to make the maximum state tax deductible contribution for 2010.
For more on Crossing Generations, check back every Thursday for a new segment.
This is not financial, saving or investment advice. Please consult a professional advisor.
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