Should I change 529 glide path?

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Joined: Fri Dec 13, 2019 3:29 pm

Should I change 529 glide path?

Post by hbdad »

Hi all,

Currently, I am invested 100% in VITPX (Vanguard Inst. Total Stock Market Index Fund) through Utah's 529. I started the account in August 2012 when my child was born. I currently contribute $300 a month. The current balance in the account is 38k. My child is now in 2nd grade. I know there are different schools of thought as regards to glide paths. Tuition at a top state school (CA, UCI) is roughly 16k a year. Tuition at a lower tier Cal State Long Beach is roughly 7k. These numbers don't include room and board, which I would probably only pay 1 or two years worth of. My child will be responsible for room and board beyond that, along with books. I'm fine saving 75-80% of the cost and cash flowing any remainder. The issue is factoring in private tuition because I don't know where my child will go or be accepted. Should I change my glide path and/or change my contribution amount? I was thinking about changing glide path to 70/30 at the end of this year or early next. I do not plan to keep any unused money in the account for grandkids. I also view my 529 in isolation from my other accounts, not a total buckets thing.
Posts: 142
Joined: Sat Dec 31, 2016 2:04 pm

Re: Should I change 529 glide path?

Post by AllMostThere »

You are out to a great start with college savings, congratulations. You did not mention your retirement savings status, so my response assumes you are fully funding your retirement. You have had a nice run up since 2012 with the 100% equity allocation, so nothing wrong with a little tweaking. I would go with one of the age-based portfolio's (Aggressive, Moderate, Conservative) which would still leave you with a nice equity allocation. The 529 plan would then make the appropriate allocation adjustment every 2-3 years driving towards low equity stake as your child approaches 18th year. If you still want a little more equity stake, then take of portion of the total amount (Ex: 25%) and leave it at 100% equity. When your child reaches HS, then move this smaller amount to 70/30 until College starts then reassess. The intent of this small amount with higher equity allocation is to let it grow and use in year 3 or 4. I would not stop the 529 contributions as the unknown factors are tuition annual increases and housing cost (which could be 1:1 of tuition). Overall, great job and stay the course :beer
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