Thursday, October 15, 2009

College 529 Savings Account - Recovered Significantly in 2009

In preparation for our year end financial review, I looked at the college 529 savings accounts for our family. We originally opened the accounts in December, 2005 and have made the maximum state tax deductible contribution for each year. Through 2008, we invested the contributions with in the Aggressive Growth, 500 Index, Extended Market, and International funds with Vanguard. In 2009, we changed our contribution mixed and added to the Aggressive Growth, Extended Market and Morgan Growth (new for 2009) funds.

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:

Total Return
on 11/5/08
Total Return
on 10/14/09
Vanguard Aggressive Growth Index Portfolio



Vanguard 500 Index



Vanguard Extended Market Index



Vanguard Developed Markets International Stock Index



Vanguard Morgan Growth




- 28.74


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.

Copyright © 2009 Achievement Catalyst, LLC

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