529 college Education - vanguard question

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jordan
Posts: 55
Joined: Tue Jul 18, 2017 7:06 pm

529 college Education - vanguard question

Post by jordan »

Hello ,
I have set up Individual college saving account 529 fund for my kid via vanguard. I have 10k balance into it and my little one is 3 year old.
I have below fund set up as initially as I didnt have 3k balance to start.
1)Vanguard Growth Index Portfolio -20%
2)Vanguard Mid-Cap Index Portfolio -20%
3)Vanguard Total International Stock Index Portfolio -20%
4)Vanguard Total Stock Market Portfolio -20%
5)Vanguard Value Index Portfolio. -20%

I would like to change funds and need some advise. Could you please guide me which plan can I select considering I dont need it for next 15 years.

Jordan
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mhc
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Re: 529 college Education - vanguard question

Post by mhc »

I have always just used a Total Stock Market (TSM) fund in the 529s for my children. I decided to keep it simple. I will keep it at 100% TSM even when the children are in college.

Vanguard offers pre-made portfolios that combine TSM, international, and bonds. You could use one of those. With 15 years to go, I would use one that is lighter on bonds. Some people recommend move the 529 more towards bonds as your child approaches college. This way you reduce the risk of losing money you need for college.

You will need to choose the asset allocation (AA) that you are comfortable with.
vas
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Re: 529 college Education - vanguard question

Post by vas »

I suggest you opt for one of Vanguard's Target Enrollment Portfolios. Select the one that matches your child's anticipated first year of college. The expense ratio is 0.14%. So for a very modest premium VG will gradually adjust the asset allocation is a sensible fashion. All you need to do is setup automatic contributions and you're good to go.

Target Enrolment 2037/37: https://investor.vanguard.com/529-plan/ ... rview/4652
Nebraska_Drought
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Re: 529 college Education - vanguard question

Post by Nebraska_Drought »

What state do you live in? Do you have an opportunity to utilize tax advantages through a state sponsored plan?

I have one kid in college and another a junior in HS. We started our 529's for each when they were born. In our state sponsored plan, they had age-based options and within that; aggressive, moderate, or conservative allocations. The allocations changed when they hit certain birthday thresholds and I did not have to worry about them (think cruise control). Sure, I may have been able to spend time trying to do better, but with the state tax advantages that I was able to utilize as well as the good mix of low-cost funds being used in the plan, it worked to use their systems/programs that were in place. Both kids have nice college nest eggs and it was simple on my end as I did automatic contributions and utilized the age-based aggressive set-up for both. If you are content on doing what you are doing, I'd find a good state sponsored plan and try to mimic what they do for their age-based allocations and go for it on your own. Good luck
rkhusky
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Re: 529 college Education - vanguard question

Post by rkhusky »

If you plan to fund your kid’s college no matter what happens in the market, you can be aggressive in the 529.

If the 529 is all they will get, be more cautious and use a target date fund.
dak
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Re: 529 college Education - vanguard question

Post by dak »

We found the age based portfolios in the California Scholarshare plan to work well - basically a target date retirement fund for college :D . Could probably have done better being more aggressive, but that is only known in hindsight. It has been quite a joy to send the kids to University without any stress about paying for it - unlike many of our peers that are staring at loans for their kids and themselves.
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cchrissyy
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Re: 529 college Education - vanguard question

Post by cchrissyy »

rkhusky wrote: Wed Jan 05, 2022 12:58 pm If you plan to fund your kid’s college no matter what happens in the market, you can be aggressive in the 529.

If the 529 is all they will get, be more cautious and use a target date fund.
good advice

OP, probably what you want is the target date.

another way you could be a little more or less conservative than vanguard's default is to pick a different date, such as, asking them to aim for the kid's last year of college instead of their first year.
comfortable being all stock until age 40, now working towards 60-20-20 us-intl-bond
Topic Author
jordan
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Re: 529 college Education - vanguard question

Post by jordan »

Nebraska_Drought wrote: Wed Jan 05, 2022 10:40 am What state do you live in? Do you have an opportunity to utilize tax advantages through a state sponsored plan?

I have one kid in college and another a junior in HS. We started our 529's for each when they were born. In our state sponsored plan, they had age-based options and within that; aggressive, moderate, or conservative allocations. The allocations changed when they hit certain birthday thresholds and I did not have to worry about them (think cruise control). Sure, I may have been able to spend time trying to do better, but with the state tax advantages that I was able to utilize as well as the good mix of low-cost funds being used in the plan, it worked to use their systems/programs that were in place. Both kids have nice college nest eggs and it was simple on my end as I did automatic contributions and utilized the age-based aggressive set-up for both. If you are content on doing what you are doing, I'd find a good state sponsored plan and try to mimic what they do for their age-based allocations and go for it on your own. Good luck
I am in maryland and state sponsor funds has some restriction as it can be used only in side state colleges so I invested with vanguard.
Topic Author
jordan
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Re: 529 college Education - vanguard question

Post by jordan »

thank you . i was little worried with whats going on in the market with feds interest rates hike so thought to reshuffle it.
Will look more closely and work accordingly.
professor_americus
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Re: 529 college Education - vanguard question

Post by professor_americus »

OP, Just be aware that you can rebalance / reallocate / exchange investment options in 529 accounts only twice per calendar year. Consider this constraint in your planning.
vas
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Re: 529 college Education - vanguard question

Post by vas »

jordan wrote: Thu Jan 06, 2022 11:10 am I am in maryland and state sponsor funds has some restriction as it can be used only in side state colleges so I invested with vanguard.
What State plan are you using? Nevada? State plans vary and some are generally well regarded as they have good investment options and may be used for colleges in any State. Nevada and Utah come to mind but I'm sure there are current rankings and comparisons available. Some States allow you to deduct 529 contributions regardless of the State plan you're enrolled. Not sure of the MD specific rules.
Nebraska_Drought
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Re: 529 college Education - vanguard question

Post by Nebraska_Drought »

jordan wrote: Thu Jan 06, 2022 11:10 am
Nebraska_Drought wrote: Wed Jan 05, 2022 10:40 am What state do you live in? Do you have an opportunity to utilize tax advantages through a state sponsored plan?

I have one kid in college and another a junior in HS. We started our 529's for each when they were born. In our state sponsored plan, they had age-based options and within that; aggressive, moderate, or conservative allocations. The allocations changed when they hit certain birthday thresholds and I did not have to worry about them (think cruise control). Sure, I may have been able to spend time trying to do better, but with the state tax advantages that I was able to utilize as well as the good mix of low-cost funds being used in the plan, it worked to use their systems/programs that were in place. Both kids have nice college nest eggs and it was simple on my end as I did automatic contributions and utilized the age-based aggressive set-up for both. If you are content on doing what you are doing, I'd find a good state sponsored plan and try to mimic what they do for their age-based allocations and go for it on your own. Good luck
I am in maryland and state sponsor funds has some restriction as it can be used only in side state colleges so I invested with vanguard.
You do know that you can utilize the 529 plans of other states, correct? There are some good state sponsored plans out there that even if you don't live in those states and take advantage of the tax benefits, you can utilize them. It could make your life easier.
Admiral
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Re: 529 college Education - vanguard question

Post by Admiral »

Vanguard Target Enrollment. Self-adjusting asset allocation. I believe Vanguard uses Nevada's 529 plan. Just dump the money in and ignore it.
HappyPappy
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Re: 529 college Education - vanguard question

Post by HappyPappy »

professor_americus wrote: Thu Jan 06, 2022 11:19 am OP, Just be aware that you can rebalance / reallocate / exchange investment options in 529 accounts only twice per calendar year. Consider this constraint in your planning.

I wish I’d thought about this a little more before we’d started our savings. We have some of the college savings for our two kids in my Roth IRA (I’ll be 60 when they start college :shock: ), so the overall asset allocation needs to include that Roth, which I figured made the target portfolios less useful to me. I just figured I’d do my own rebalancing every year across the 529 and the Roth, mimicking one of the target funds. But now that I’ve been thinking more about rebalancing as the kids have been growing, I’m feeling like the regular 529 plan doesn’t give me much flexibility at all. I can only make a couple transfers each year, which isn’t much considering I have three separate funds within the 529. In fact, in the next year or so, I might look into switching over to a target fund, if the expense ratio isn’t too much.
dan7800
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Re: 529 college Education - vanguard question

Post by dan7800 »

I didn't even know you could set up a 529 through Vanguard. I live in NY state, and I've been using their nysaves.org site. I am in the "aggressive growth" Vanguard 60/40 US/ex-us fund. Seems ok to me. My daughter I am saving for is 4 months old.
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markjk
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Re: 529 college Education - vanguard question

Post by markjk »

vas wrote: Wed Jan 05, 2022 10:30 am I suggest you opt for one of Vanguard's Target Enrollment Portfolios. Select the one that matches your child's anticipated first year of college. The expense ratio is 0.14%. So for a very modest premium VG will gradually adjust the asset allocation is a sensible fashion. All you need to do is setup automatic contributions and you're good to go.

Target Enrolment 2037/37: https://investor.vanguard.com/529-plan/ ... rview/4652
+1

I view the 529 as a much more conservative investment than personal savings or retirement due to the relatively short timeframe (to both save and use the money) and limited options for using the money (earnings can only be used for education without tax and penalty). I'm not looking to maximize in this case but grow reasonably and protect earnings. There are certainly different philosophies but that is how I look at it. The target date portfolios with a glide path to conservative investments fit this approach for me.
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