Best college fund living inTexas

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
Investnewbie01
Posts: 62
Joined: Tue Jun 06, 2017 12:33 pm

Best college fund living inTexas

Post by Investnewbie01 » Sat Apr 13, 2019 10:54 pm

Hello,
I spoke to a person living in Texas who had started a CD for her 7 year old son. I told her best to put it into a Vanguard S&P 500 Index fund. However exploring further it seems complicated Texas appears a red state and advice was invest in New York or California as lower expenses. Can anybody suggest where the best 529 plan for her ?
Many thxs
.

Grt2bOutdoors
Posts: 20319
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Best college fund living inTexas

Post by Grt2bOutdoors » Sat Apr 13, 2019 11:27 pm

Investnewbie01 wrote:
Sat Apr 13, 2019 10:54 pm
Hello,
I spoke to a person living in Texas who had started a CD for her 7 year old son. I told her best to put it into a Vanguard S&P 500 Index fund. However exploring further it seems complicated Texas appears a red state and advice was invest in New York or California as lower expenses. Can anybody suggest where the best 529 plan for her ?
Many thxs
.
What bearing does a political moniker have to do with investing in a low-cost 529 Plan?
Can you be more specific while avoiding political commentary that will more than likely get this topic locked? Also, while the person is using a CD, did you ask the person why such a vehicle was chosen? The best vehicle to use is the one where the owner has the willingness, ability and need to take risk. Did you take that into consideration before making that suggestion? Did you explain your rationale as to why your suggestion could be one of a few different choices in selecting a college savings vehicle?
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Hydromod
Posts: 8
Joined: Tue Mar 26, 2019 10:21 pm

Re: Best college fund living inTexas

Post by Hydromod » Sun Apr 14, 2019 1:10 am

We invested in the Texas promise fund without doing a whole lot of research. This works as a guaranteed funding for tuition credits, which are indexed to the most expensive tuition for any public university program in the state. We made the assumption that buying four years was appropriate.

Be aware that this amount is fine for private schools but is too much for public, because the fund only covers tuition credits and cannot be used for room and board. We overbought for UTSA, which was an option. Once we became aware, we swapped the second child's fund to California, which has greater flexibility and low costs. Unfortunately we were unable to transfer the entire appreciated amount directly. We could have withdrawn the full amount, but would have had to pay taxes on the gains.

That's our limited insight into why California might be favored. Or perhaps a mix, with a lowball amount of tuition paid for in Texas and additional for contingencies such as room and board paid through California or New York plans.

anil686
Posts: 877
Joined: Thu May 08, 2014 12:33 pm

Re: Best college fund living inTexas

Post by anil686 » Sun Apr 14, 2019 2:39 am

I live in Texas and use the VG Nevada plan for our 529. I also looked into the Texas promise plan but felt the flexibility was better with the 529 option. I, too, am confused about the red state stuff...

jyoung
Posts: 43
Joined: Mon Jan 21, 2019 1:26 pm
Location: Houston, TX

Re: Best college fund living inTexas

Post by jyoung » Sun Apr 14, 2019 3:33 am

Live in Texas and transferred everything to NV Vanguard Plan this year for the sake of simplicity with everything being at one place/login.

Dazed&Confused
Posts: 42
Joined: Sat Dec 13, 2014 8:22 pm

Re: Best college fund living inTexas

Post by Dazed&Confused » Sun Apr 14, 2019 8:54 am

Purchased the Texas Tomorrow Fund for all four kids before they closed program for new applicants. This took care of tuition, and then opened 529 accounts for each for room and board. At the time I found several articles online for the best 529s and Utah's plan was one of the top rated and used low cost Vanguard funds. Have been very pleased with the Utah plan for my Texas kids.
Well, I thought I was retired. But it seems that now I'm working as a travel agent instead!

texasdiver
Posts: 2930
Joined: Thu Jun 25, 2009 12:50 am
Location: Vancouver WA

Re: Best college fund living inTexas

Post by texasdiver » Sun Apr 14, 2019 11:49 am

Since Texas has no income tax there are no tax issues tilting you towards a Texas-specific plan and you can pretty much choose any plan you want from anywhere.

I Lived in Texas for a decade and invested in the Vanguard 529 plan for all my daughters, which is actually the Nevada plan but administered directly by Vanguard so it shows up on the regular Vanguard web site with the rest of your Vanguard accounts. I've been happy with Vanguard. The fees have come down somewhat over time. I'm using it right now to pay for my daughter's tuition in Arkansas. The state your plan is from and the state you live in and the state your child goes to college are all irrelevant to the management of your funds if you don't have a state income tax.

The other plan that is competitive or a tiny bit cheaper is the Utah plan. It is a stand-alone plan not connected with another finanical institution so another web site, passwords, and such to deal with. But I think they are also in Vanguard funds.

I haven't run the numbers in a few years. But when I last did it looked like the Utah plan had the absolute rock bottom fees and the Nevada plan through Vanguard was very close or comparable in fees but with somewhat better and more convenient and sophisticated web interface

Topic Author
Investnewbie01
Posts: 62
Joined: Tue Jun 06, 2017 12:33 pm

Re: Best college fund living inTexas

Post by Investnewbie01 » Sun Apr 14, 2019 12:21 pm

Many thanks for all your replies.
The term ‘Red State” has nothing to do with politics, it was a term used by an article by Forbes which classified all the States by how much their plans cost. Their quote is “If you live in a red state flee and look elsewhere due to the high costs!” They classed Texas as one!
Sorry should have made it clearer

TexasRon
Posts: 37
Joined: Thu Mar 14, 2019 6:25 pm

Re: Best college fund living inTexas

Post by TexasRon » Sun Apr 14, 2019 1:03 pm

I live in Texas and now have Vanguard Nevada 529s for all my kids. Chose the age based, aggressive, option for each of them. Set up automatic monthly payments into each of them and now totally hands free. I do love how they appear in my Vanguard dashboard so I can see everything in one place.

Topic Author
Investnewbie01
Posts: 62
Joined: Tue Jun 06, 2017 12:33 pm

Re: Best college fund living inTexas

Post by Investnewbie01 » Sun Apr 14, 2019 2:23 pm

Many thanks, didn’t realize this was so complicated but will pass on this valuable advice to my friend.

Post Reply