Thursday, December 13, 2007

College 529 Savings Account Results

In preparation for our personal year end financial review, I looked at the college 529 savings account for our three year old daughter. We originally opened the account in December, 2005 and have made the maximum state tax deductible contribution for each year. To date, we have split the contributions and invested equal amounts in each fund. Here are the results as of 12/11/07:

YTD 12/11/07Overall Gain
(not annualized)
Vanguard Aggressive Growth Index Portfolio



Vanguard 500 Index



Vanguard Extended Market Index



Vanguard Developed Markets International Stock Index






The table shows that the International Stock Index has done the best this year and over the past two years. Notably, the Vanguard Extended Market Index, which invests in small to mid-cap stocks, has under performed the other funds, indicating that we are likely in the late stages of the bull market when large cap stocks tend to perform better than small cap stocks.

Based on this analysis, I will make an adjustment to the allocation of next year's contributions. Instead of putting 25% in each fund, we will put 50% in 500 Index fund and 50% in the International Stock Index fund. The reason I didn't choose the Aggressive Growth Index is that it appears to approximate a 85%/15% blend of the 500 Index and International Index funds.

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

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

Copyright © 2007 Achievement Catalyst, LLC


Unknown said...

I just did something similar with my 403b account. I noticed the international index fund I was contributing to was just blowing the lids off my other investments, but only represented about 15-20% of my mix. I bumped that up to about 40% and may ramp that down this time next year depending on the status of the US market.

AX said...

I also agree. Changed my allocation in both mine and my wife's 401k and have made several thousand dollars in a few months. Look at the stock mix of the emerging market or international funds offered. Think about how these companies compare with stagnant companies at home such as GE and the choice is pretty simple.