Advertisement
Paying for College

As the College Bills Approach, Ratchet Down Risk in a 529 Savings Plan

When your son or daughter enters high school, or even before, start shifting some of the money from aggressive funds into more-conservative ones.

Question: We started saving in a 529 plan for my daughter soon after she was born, putting the money in aggressive stock funds. Now she's a freshman in high school. How should we adjust our investments with college a few years away? We're still adding to the account every month.

Alternatively, she says, you can invest 60% to 70% in a growth portfolio and 30% to 40% in an FDIC-insured savings account within the 529.

Advertisement - Article continues below

She recommends that you continue to invest new monthly contributions in growth funds, to benefit from dollar-cost averaging. With dollar-cost averaging, when the stock market drops, you can buy more shares for your money -- and then wait for those shares to rise over the years, she says.

If you don’t have to invest in your state's plan to get a tax break, Kiplinger's recommends the Utah Educational Savings Plan for hands-on investors, which offers low-cost Vanguard funds as well as an FDIC-insured bank account. For more information about our favorite 529 plans in several categories, see The Best 529 College-Savings Plans. For more information about each state’s plan, see our state-by-state guide to 529 plans and at SavingforCollege.com.

TAKE OUR QUIZ: How Much Do You Know About 529 College Savings Plans?

Advertisement

Most Popular

12 Tax Deadlines for July 15 (It's Not Just the Due Date for Your Tax Return)
tax deadline

12 Tax Deadlines for July 15 (It's Not Just the Due Date for Your Tax Return)

Between due dates for paying estimated taxes, IRA or HSA contributions, and other deadlines, there's more to do by July 15 than just filing your feder…
July 14, 2020
Know Why Your Credit Score Changes: 9 Money Moves to Consider
credit & debt

Know Why Your Credit Score Changes: 9 Money Moves to Consider

Your credit score is a key indicator of your financial well-being and of the risk you pose to lenders. How good is yours?
July 10, 2020
65 Best Dividend Stocks You Can Count On
stocks

65 Best Dividend Stocks You Can Count On

These 65 Dividend Aristocrats are an elite group of dividend stocks that have reliably increased their annual payouts every year for at least a quarte…
July 8, 2020

Recommended

7 Ways the Pandemic Will Change College Forever
college

7 Ways the Pandemic Will Change College Forever

Colleges and universities face steep budget cuts, enrollment challenges and new types of competition as a result of COVID-19. We cover the changes you…
June 19, 2020
How to Fund a Memorial Scholarship to Honor a Veteran
college

How to Fund a Memorial Scholarship to Honor a Veteran

With the help of a college or community foundation, you can establish a scholarship in the name of a loved one to help students in perpetuity.
May 24, 2020
How to Endow a Scholarship to Honor a Veteran
college

How to Endow a Scholarship to Honor a Veteran

You may be able to set up a scholarship fund through a college or community foundation, or support educational programs through a charity that special…
May 24, 2020
Gifts for Grads to Build Good Money Habits
college

Gifts for Grads to Build Good Money Habits

Today’s graduates aren’t destined to share the same fate as past generations, so it’s important for them to ramp up their money skills.
May 13, 2020