Thursday, January 24, 2008

College 529 Savings - 2006 and 2007 Gains Gone

For our three-year old's college education, we are invested in four Vanguard funds through a college 529 plan. While we won't need the money for another 14 years, it has been particularly painful to watch the decline during the January, 2008 stock market correction. The accounts has lost virtually all of its 2006 and 2007 gains, as of 1/18/2008. Two years of gains have been wiped out in two and a half weeks:-(

I am not too concerned yet. At this point, I will continue to hold the funds and wait for a recovery. Hopefully, we won't have to wait 14 years:-) In addition, this correction validates a future strategy of transferring funds to "stable" investments, such as CDs, in the one or two years prior to attending college. I'd hate to have a drop in the stock market reduce the account value just before I needed the money.

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

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

Copyright © 2008 Achievement Catalyst, LLC


Father Sez said...

This can be really painful.

If you are following the Dollar averaging method, you should be able to recover and more.

Just believe that the stock market will not dissapear.

All the best. You are saving for a very good cause.

Super Saver said...

Father Sez,

Thanks for your encouraging comment. I fully agree that it is important to stay invested and continue contributing. Ten years from now, January, 2008 will likely be a small dip on the chart :-)

S. B. said...

Did you already put a large lump-sum in the 529, or do you plan on contributing relatively equal amounts until the kids are in college?

In the latter case, having the market drop NOW is actually quite beneficial to you, although I realize that's not the case for your retirement assets, which you starting to draw on now...

Super Saver said...


We have been making a single yearly contribution to the 529 account, and had already made the 2008 contribution. Our plan is to continue to make yearly contributions until our daughter is in college. Since our daughter is only three, we're not overly worried about this market decline...yet.