WV 529 Plan DFA vs. Others

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Scorpion
Posts: 388
Joined: Mon Sep 14, 2009 6:56 am

WV 529 Plan DFA vs. Others

Post by Scorpion »

I have had my kids in the WV Smart 529 Select plan since late 2006. The reason for doing this was that WV offers DFA funds. Based on my reading at the time, I felt that even if I couldn’t be in DFA funds, it would be worth it to get my kids in them. My oldest is 12 years away from college, and I have had all my kids in the 100% All Equity option, which has an expense ratio of 0.78% and has an asset allocation of:
8% DFA Emerg Mkts Core
19% DFA Intl Core Equity
73% DFA US Core Equity 2

I think it may be time to think about moving them into an age based option. The ages 7-9 option gives the following:

3% DFA Emerg Mkts Core
16% DFA Intl Core Equity
61% DFA US Core Equity 2
10% Interm Term Gov’t
5% 5 year global fixed income
5% 2 year global fixed income

I could also do either this or the ages 4-6 option as static portfolios so that they wouldn’t change with age. The 4-6 has only 10% bonds instead of 20%.

So, two questions:

1. As I start to stray from 100% equity, is it worth to stay with the WV 529? Presumably the advantage of DFA funds dwindles the less equity I have. I estimate that I am paying about 0.5% more in fees per year (compared to say, Ohio’s Vanguard 529 options) for this privilege.

2. Whether I stay with WV or not, do you like the 7-9 year old asset allocation above? I think its plenty conservative – only question would be whether it should be more aggressive.

Thanks.
Random Walker
Posts: 5561
Joined: Fri Feb 23, 2007 7:21 pm

Post by Random Walker »

I think a big question is whether you will use any other money also for college. You might maximize the benefit of the WV 529 by staying in the all equity portfolio longer and taking care of bonds in another part of your portfolio where you maybe have cheaper bond funds or individual bonds. I think this is a big advantage of viewing all of one's assets from the top down.
For what it's worth, I use the WV 529 all equity for my 3 year old and 2 year old kids. I plan to shift towards bonds in the 529 much later, but will increase my overall bond exposure over the intervening years in other accounts.

Dave
mhalley
Posts: 10424
Joined: Tue Nov 20, 2007 5:02 am

Post by mhalley »

I have been in the original WV Smart 529 plan since my granddaugter was born 7 yrs ago. Have been thinking of moving it to the new one with the DFA funds. Anyone know how difficult that would be?
Mike
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