529 AA survey

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hbdad
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529 AA survey

Post by hbdad » Sat Jan 11, 2020 11:59 pm

I’m curious what everyone’s asset allocation is in their 529. I know everyone’s situation is different, but I thought it would be fun to survey the field.

Me: 7 and 5 yr olds both 100% equity (Vanguard Institutional Total Stock Market Index)

Basis
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Location: The Midwest

Re: 529 AA survey

Post by Basis » Sun Jan 12, 2020 12:04 am

16 yo - 100% short term bond fund
14 yo - 60% total stock market and 40% short term bond fund
You see what you know.

decapod10
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Re: 529 AA survey

Post by decapod10 » Sun Jan 12, 2020 12:18 am

I just use the "Age Based Moderate" glide path that is provided by the provider for 6 and 8 y/o. Looks like the 8 y/o is currently at 65% stocks, and the 6 y/o and 80% stocks.

ivk5
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Re: 529 AA survey

Post by ivk5 » Sun Jan 12, 2020 12:20 am

I include it in my overall AA and treat it as Roth-like for asset location purposes, ie 100% equities.

Hillview
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Re: 529 AA survey

Post by Hillview » Sun Jan 12, 2020 9:01 am

decapod10 wrote:
Sun Jan 12, 2020 12:18 am
I just use the "Age Based Moderate" glide path that is provided by the provider
Same here -- we are in Vanguard. Kids are 14 & 12.

mbres60
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Re: 529 AA survey

Post by mbres60 » Sun Jan 12, 2020 9:29 am

I'm looking to set up 529s for my grandkids. I see New York is highly rated and with Vanguard funds. It seems their age based portfolios are heavy with International. More than I would want. Unfortunately I don't want to set up my own portfolio and have to remember to change it every year. So right now I am in analysis with paralysis (or whatever the saying is ;)).

GuySmiley
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Re: 529 AA survey

Post by GuySmiley » Sun Jan 12, 2020 9:35 am

Age-based aggressive for mine. No other accounts use a target date option, but for whatever reason I decided it was appropriate here.

livesoft
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Re: 529 AA survey

Post by livesoft » Sun Jan 12, 2020 10:05 am

Just got the last check from 529 draining it.

The AA for the past couple of years was the Vanguard Income option at the Ohio 529, so 22.5% Vg Total Int'l Bond Index, 34.5% Vg Total Bond Market II Index, 18% Vg Sh-term Infl Prot index, 25% Vanguard Federal MM F.

The Vanguard Income option wasn't always this allocation. I recall it was 50% Total Bond, 25% Prime MM, and 25% ST infl prot several years ago.

So our 529 plan was never 100% cash or MM even while student was in college. Don't forget that a college freshman has a few years of college ahead of them, so doesn't need to be 100% in cash.
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Wiggums
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Re: 529 AA survey

Post by Wiggums » Sun Jan 12, 2020 10:12 am

livesoft wrote:
Sun Jan 12, 2020 10:05 am
Just got the last check from 529 draining it.

The AA for the past couple of years was the Vanguard Income option at the Ohio 529, so 22.5% Vg Total Int'l Bond Index, 34.5% Vg Total Bond Market II Index, 18% Vg Sh-term Infl Prot index, 25% Vanguard Federal MM F.

The Vanguard Income option wasn't always this allocation. I recall it was 50% Total Bond, 25% Prime MM, and 25% ST infl prot several years ago.

So our 529 plan was never 100% cash or MM even while student was in college. Don't forget that a college freshman has a few years of college ahead of them, so doesn't need to be 100% in cash.
+1

My son is in a 5 year program. I agree with Livesoft. 100% cash is too conservative for most situations.

livesoft
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Re: 529 AA survey

Post by livesoft » Sun Jan 12, 2020 10:14 am

And for everybody reading this, don't forget that the AOTC is a better deal than a 529 plan if a family can use it: Pay $4,000 and get back $2,500 instantly, so net cost is only $1,500! That's a steal!!!
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aristotle'sfootprint
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Re: 529 AA survey

Post by aristotle'sfootprint » Sun Jan 12, 2020 10:27 am

We use Fidelity's age-based portfolios, but put about 10% in the aggressive growth portfolio (which is 100% equity) to take just slightly more risk. So the equity is 57% for 10 year old and 67% for 7 year old.

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goodenyou
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Re: 529 AA survey

Post by goodenyou » Sun Jan 12, 2020 10:29 am

Two in college and one Junior in HS. 3 separate 529 accounts at Utah 529. Both college students’ accounts are 100% FDIC and (were) fully funded for 4+ years each (all-in). The HS junior account is 30% FDIC, 30% TSM and 40% TBM. 100% of expenses are covered for 4 years at this time. Had been age-based allocation up to high school. Started at age 5.

Any excess in 529 will be for additional education (graduate school) for younger 2 children. Oldest in graduate school now. Anything left after that will be for grandchildren. This money has been set aside and not part of our portfolio. College education is a sunk cost as far as we are concerned.

We don’t fill out a FAFSA. We pay 100% of all costs.
"Ignorance more frequently begets confidence than does knowledge" | Do you know how to make a rain dance work? Dance until it rains.

aristotle'sfootprint
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Re: 529 AA survey

Post by aristotle'sfootprint » Sun Jan 12, 2020 12:17 pm

ivk5 wrote:
Sun Jan 12, 2020 12:20 am
I include it in my overall AA and treat it as Roth-like for asset location purposes, ie 100% equities.
Interesting. Could you say more about how the 529 fits into your portfolio? Will you de-risk that portion as college approaches or will you continue with 100% equities? If the latter, will you pay college bills from other sources if there's a market downturn when college begins? Etc. I've always treated 529s as a separate part of our portfolio with their own AA and time horizon, but have wondered whether that's a bit of mental accounting that's unnecessary. I'd love to hear more about this approach.

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DrPayItBack
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Re: 529 AA survey

Post by DrPayItBack » Sun Jan 12, 2020 12:19 pm

3yo and 0yo, both 100% US stock index

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goodenyou
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Re: 529 AA survey

Post by goodenyou » Sun Jan 12, 2020 12:42 pm

Wiggums wrote:
Sun Jan 12, 2020 10:12 am
livesoft wrote:
Sun Jan 12, 2020 10:05 am
Just got the last check from 529 draining it.

The AA for the past couple of years was the Vanguard Income option at the Ohio 529, so 22.5% Vg Total Int'l Bond Index, 34.5% Vg Total Bond Market II Index, 18% Vg Sh-term Infl Prot index, 25% Vanguard Federal MM F.

The Vanguard Income option wasn't always this allocation. I recall it was 50% Total Bond, 25% Prime MM, and 25% ST infl prot several years ago.

So our 529 plan was never 100% cash or MM even while student was in college. Don't forget that a college freshman has a few years of college ahead of them, so doesn't need to be 100% in cash.
+1

My son is in a 5 year program. I agree with Livesoft. 100% cash is too conservative for most situations.
Unless you get a really bad sequence of return when you child starts college. I wonder what the longevity of a 529 Plan (with a variety of AAs) would have been given a 20-25% withdrawal rate starting in 2009. It would be an interesting exercise. 100% cash is a good option if you have 100% of expenses met prior to year 1.
"Ignorance more frequently begets confidence than does knowledge" | Do you know how to make a rain dance work? Dance until it rains.

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DameTime
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Re: 529 AA survey

Post by DameTime » Sun Jan 12, 2020 1:00 pm

2yo. 100% Vanguard Institutional TSM. This thread has given me some good insight towards what to do in about 10-12 years when college becomes less abstract and much closer to reality.

Triple digit golfer
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Re: 529 AA survey

Post by Triple digit golfer » Sun Jan 12, 2020 1:19 pm

DameTime wrote:
Sun Jan 12, 2020 1:00 pm
2yo. 100% Vanguard Institutional TSM. This thread has given me some good insight towards what to do in about 10-12 years when college becomes less abstract and much closer to reality.
I love your username. Lillard is one of my favorite players in the league.

We use an "age based moderate" allocation for our 2 year old, invested in Vanguard index funds. Currently it's 90/10, with a third of equities in international.

ivk5
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Re: 529 AA survey

Post by ivk5 » Sun Jan 12, 2020 3:29 pm

aristotle'sfootprint wrote:
Sun Jan 12, 2020 12:17 pm
ivk5 wrote:
Sun Jan 12, 2020 12:20 am
I include it in my overall AA and treat it as Roth-like for asset location purposes, ie 100% equities.
Interesting. Could you say more about how the 529 fits into your portfolio? Will you de-risk that portion as college approaches or will you continue with 100% equities? If the latter, will you pay college bills from other sources if there's a market downturn when college begins? Etc. I've always treated 529s as a separate part of our portfolio with their own AA and time horizon, but have wondered whether that's a bit of mental accounting that's unnecessary. I'd love to hear more about this approach.
I max other tax-advantages accts and invest in taxable. In my situation I believe it’s suboptimal time view the 529 as a college savings acct. Instead it’s a (Roth-like) tax-advantaged account, albeit subject to liquidity gates that need to be managed. That’s the only connection the acct has to a particular kid’s education expenses: I’ll use qualified expenses to access the funds without penalty. But my plan to pay for college (or other qualified expenses) is a separate matter, and yes, I’ll draw from other assets/income as needed.

So yes, I’ll stay 100% equities in the 529s right up until funds are withdrawn.

Edited to add:
It’s less valuable space than Roth because of the liquidity gates, of course. And the benefit may have more limited duration, unless funding qualified expenses for beneficiaries beyond your own children is a goal, in which case the 529 becomes even more Roth-like.

I’m not saying this approach is necessarily for everyone. It’s more of a no-brainer for high income families where there’s little question of whether they’ll be able to pay for college and less concern for “fairness” in allocating finite resources between siblings etc.
Last edited by ivk5 on Sun Jan 12, 2020 3:38 pm, edited 4 times in total.

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DameTime
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Re: 529 AA survey

Post by DameTime » Sun Jan 12, 2020 3:32 pm

Triple digit golfer wrote:
Sun Jan 12, 2020 1:19 pm
I love your username. Lillard is one of my favorite players in the league.

We use an "age based moderate" allocation for our 2 year old, invested in Vanguard index funds. Currently it's 90/10, with a third of equities in international.
Thanks! Always happy to see him getting some love despite being in a smaller market. Hate to waste a year of his prime but injuries have done a number on us this season.

How do you plan to change your AA (if at all) over the years?

Triple digit golfer
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Re: 529 AA survey

Post by Triple digit golfer » Sun Jan 12, 2020 3:50 pm

DameTime wrote:
Sun Jan 12, 2020 3:32 pm
Triple digit golfer wrote:
Sun Jan 12, 2020 1:19 pm
I love your username. Lillard is one of my favorite players in the league.

We use an "age based moderate" allocation for our 2 year old, invested in Vanguard index funds. Currently it's 90/10, with a third of equities in international.
Thanks! Always happy to see him getting some love despite being in a smaller market. Hate to waste a year of his prime but injuries have done a number on us this season.

How do you plan to change your AA (if at all) over the years?
The age based plan automatically gets more conservative. Keeps me from having to determine how and when to switch. It's the Illinois BrightStart plan.

marcopolo
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Re: 529 AA survey

Post by marcopolo » Sun Jan 12, 2020 3:58 pm

We used Fidelity age-based portfolio while accumulating and paying for college. They have plans at 3 years steps, we used one meant for slightly younger kids than we had, this effectively keeps a slightly more aggressive glide path.

Once older son finished school (and work is paying for grad school), we put the rest into a "moderate growth" option that is 70/30 asset allocation. Will do the same for younger son.

Once grand kids start showing up, we would plan to switch back to age-based glide path based on their ages (with same, more aggressive offset).

Good luck to you.
Once in a while you get shown the light, in the strangest of places if you look at it right.

aristotle'sfootprint
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Re: 529 AA survey

Post by aristotle'sfootprint » Sun Jan 12, 2020 4:47 pm

ivk5 wrote:
Sun Jan 12, 2020 3:29 pm
aristotle'sfootprint wrote:
Sun Jan 12, 2020 12:17 pm
ivk5 wrote:
Sun Jan 12, 2020 12:20 am
I include it in my overall AA and treat it as Roth-like for asset location purposes, ie 100% equities.
Interesting. Could you say more about how the 529 fits into your portfolio? Will you de-risk that portion as college approaches or will you continue with 100% equities? If the latter, will you pay college bills from other sources if there's a market downturn when college begins? Etc. I've always treated 529s as a separate part of our portfolio with their own AA and time horizon, but have wondered whether that's a bit of mental accounting that's unnecessary. I'd love to hear more about this approach.
I max other tax-advantages accts and invest in taxable. In my situation I believe it’s suboptimal time view the 529 as a college savings acct. Instead it’s a (Roth-like) tax-advantaged account, albeit subject to liquidity gates that need to be managed. That’s the only connection the acct has to a particular kid’s education expenses: I’ll use qualified expenses to access the funds without penalty. But my plan to pay for college (or other qualified expenses) is a separate matter, and yes, I’ll draw from other assets/income as needed.

So yes, I’ll stay 100% equities in the 529s right up until funds are withdrawn.

Edited to add:
It’s less valuable space than Roth because of the liquidity gates, of course. And the benefit may have more limited duration, unless funding qualified expenses for beneficiaries beyond your own children is a goal, in which case the 529 becomes even more Roth-like.

I’m not saying this approach is necessarily for everyone. It’s more of a no-brainer for high income families where there’s little question of whether they’ll be able to pay for college and less concern for “fairness” in allocating finite resources between siblings etc.
I see. For high income families with other tax-advantaged accounts maxed out, this makes a lot of sense. Thanks for your reply.

FI4LIFE
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Re: 529 AA survey

Post by FI4LIFE » Sun Jan 12, 2020 5:19 pm

9, 5, and 2 year olds. 100% equities.

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mhc
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Re: 529 AA survey

Post by mhc » Mon Jan 13, 2020 9:56 am

1 high school, 2 middle school
all 100% TSM. It will probably stay 100% TSM until it is all used up.

Broken Man 1999
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Re: 529 AA survey

Post by Broken Man 1999 » Mon Jan 13, 2020 11:51 am

I'll play!

11 year-old granddaughter: Vanguard Aggressive Age-Based Option: Vanguard 60% Stock/40% Bond Portfolio
10 year-old granddaughter: Vanguard Aggressive Age-Based Option: Vanguard 70% Stock/30% Bond Portfolio
08 year-old grandson: Vanguard Aggressive Age-Based Option: Vanguard 80% Stock/20% Bond Portfolio
06 year-old grandson: Vanguard Aggressive Age-Based Option: Vanguard 90% Stock/10% Bond Portfolio

My intent for the use of these funds is for educational expenses other than tuition.

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven than I shall not go. " -Mark Twain

BV3273
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Re: 529 AA survey

Post by BV3273 » Mon Jan 13, 2020 12:20 pm

2 and 4 year olds. Both 100% equities.

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rickparks
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Re: 529 AA survey

Post by rickparks » Mon Jan 13, 2020 1:56 pm

I have an 8 year old and 4 year old using the Ohio 529 plan. 100% equities with 80% TSM and 20% TISM. I side with the White Cost Investor and view 529 contributions as sunk costs and will remain 100% equities until the bitter end.

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