Your 529 Plan - Thoughts and Strategies

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JimmyD
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Your 529 Plan - Thoughts and Strategies

Post by JimmyD » Wed May 21, 2014 12:46 pm

Just out of pure curiosity, I would love to hear others' thoughts and strategies related to their use of 529 plans for their children's higher education. Specifically, I'd be interested in knowing the following:

1. How old are your children who you're saving for?
2. Which 529 Plan do you invest in?
3. What's the current balance?
4. How much do you contribute and how often? How did you come to this number?
5. What are the underlying investments?
6. Are you satisfied with the 529 Plan you invest in? Why or why not?
7. What percentage of higher education cost do you hope to cover for your children? How did you come to this number?

To kick things off, I'll begin:

1. How old are your children who you're saving for?
One month

2. Which 529 Plan do you invest in?
The state of Georgia 529 Plan

3. What's the current balance?
$99.38

4. How much do you contribute and how often?
Currently only contributing $100/month but will double and possibly triple that after my wife returns to work this summer. The budget's a little tight with my wife on maternity leave, so we're going to slowly increase the amount as we get more comfortable with it.

5. What are the underlying investments? Why did you choose them?
We invest in the "Aggressive Managed" allocation option that dynamically shifts into more conservative investments with age. We picked this option because I'm comfortable assuming a little more risk early on. We have other avenues available for funding if it came down to it.

6. Are you satisfied with the 529 Plan you invest in? Why or why not?
Yes, for the most part. The expense ratios are all less than .33% for each of the underlying funds, so I'm happy with that. That plan's website leaves much to be desired, but it updates the balance daily, so I suppose it could be worse. You sort of have to dig deep to find the plan's underlying investments and there's no real method for tracking rate of return (unless I calculate it manually), but other than that, it's not the worst.

7. What percentage of higher education cost do you hope to cover for your children? How did you come to this number?
We're thinking of shooting for 50% of undergrad, assuming he chooses to go the traditional college route. We want to help pay for some of his expenses, but we don't want to give him a handout. Having both had to pay a significant portion of our own college costs, my wife and I feel that it's important that our son have a little skin in the game as well in order to better develop an appreciation for the sacrifice required to obtain a quality education. While we plan to encourage him to apply for grants and scholarships, we're also not completely opposed to him taking manageable loans out in his name either.

freebeer
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Re: Your 529 Plan - Thoughts and Strategies

Post by freebeer » Wed May 21, 2014 12:59 pm

We have approx $320K for 2 children presently in 5th and 11th grade. We aren't making any more contributions.

For eldest 50% of that ($160K) is the baseline for the funding we'll provide... that should suffice at our best in-state public school and if he manages to win the lottery and get into a super elite private (an Ivy, Stanford, Cal Tech) where $40K/year doesn't cut it, we will consider helping further and have intimated so to him. But if he wants to go to an equivalent out of state public for the sunshine or distance, or a a not-super-elite private, we've told him he'll end up with some loans or serious summer working and/or if lucky a merit scholarship. So he's got some motivation (and potential - he's a National Merit Finalist and is going to a national championship in his regrettably non-scholarship-eligible sport) to help us keep costs down.

For our youngest I consider it a race between the cost of education rising and imminent disruption of traditional higher education with technology. Already his math learning is basically 100% online. $160K + appreciation may be way too little or more than enough. The uncertainty is one of the reasons we're still working... we're not going to short kid #2 if kid #1 goes to an Ivy...

letsgobobby
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Re: Your 529 Plan - Thoughts and Strategies

Post by letsgobobby » Wed May 21, 2014 1:07 pm

......
Last edited by letsgobobby on Mon May 23, 2016 5:04 pm, edited 2 times in total.

npatel12
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Re: Your 529 Plan - Thoughts and Strategies

Post by npatel12 » Wed May 21, 2014 1:18 pm

I have 2 kids. Ages 3 and 2 years old.

529 plan is the Maryland plan because it allows for good tax deductions in that state. We are moving in 1 year and I will probably move it to a Vanguard 529 plan at that time unless we move somewhere with a good tax break.

Current balance is 1000 dollars in each. I plan on contributing a lot more next year (max out).

I plan to contribute 10-12k/yr/child in the aggressive fund that we are a part of.

I don't like the fees given the low fees of the vanguard plan, but the state plan helps with tax efficiency of our higher incomes.

I hope to have 300k/child when they turn 18. My wife and I are both physicians and believe that a bachelors degree won't mean much when my kids graduate from college. I plan on encouraging them to go to a good state school and excel academically or go somewhere else where they get a full ride. I hope to use the savings money for post graduate training (med school, dental school, etc).

Great Post!

WarpSpeed
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Re: Your 529 Plan - Thoughts and Strategies

Post by WarpSpeed » Wed May 21, 2014 1:48 pm

1. How old are your children who you're saving for?

8 and 11

2. Which 529 Plan do you invest in?

New Hampshire - wanted to use Fidelity which is where my 401k, Roth, and taxable brokerage accounts are held.

Also have a Coverdell ESA at Scottrade that was started earlier than the 529.

3. What's the current balance?

About $5000 in the 529
About $23000 in the Coverdell ESA

4. How much do you contribute and how often? How did you come to this number?

$100/month to each account. This is what was originally comfortable for us after maxing out tax-advantaged retirement accounts. It will be increased (probably to about $250/child each month) going forward now that our house is paid off and our retirement accounts are fully-funded.

5. What are the underlying investments?

The 529 contains:

NH Spartan 500 Index - ER of .19% (80% of new money goes here)
NH International Index - ER of .29% (20% of new money goes here)

The ESA contains:

2 Shares of AAPL
CHTTX - ER over 1% (yikes!)
FSCSX - ER .79%
New Money is going into Money Market until I figure out what to do with the allocations.

(Yes, I know I need to fix the investments and allocations in this account -- just haven't gotten around to it yet. This account pre-dates my Boglehead awakening).

6. Are you satisfied with the 529 Plan you invest in? Why or why not?

Yes. I like the NH plan and the index funds available there. I may consider dropping contributions to the Coverdell ESA altogether...

7. What percentage of higher education cost do you hope to cover for your children? How did you come to this number?

We hope to be able to cover about 50% of the costs for undergrad. Like the OP, we feel it's important for the kids to have some skin in the game. We will encourage our kids to work full time in the summers and to work part time during the school year. The importance of grades and academic excellence will be emphasized, with the hope of obtaining some scholarships and grants. School loans will be strongly discouraged, but are not 100% out of the question. Funds available will be a determining factor in choice of schools.

In-state tuition will be less than $55,000/child in today's dollars. A decent private school will be closer to $130,000/child in today's dollars (accounting for inflation of tuition that outpaces overall inflation).


Looks like we better get busy with accelerating our savings!!! (But funding retirement came first...)

mrsscuba
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Re: Your 529 Plan - Thoughts and Strategies

Post by mrsscuba » Wed May 21, 2014 2:47 pm

1. How old are your children who you're saving for?
12 months

2. Which 529 Plan do you invest in?
Maryland 529 Plan

3. What's the current balance?
We have two plans because MD gives a $2500 deduction per account. We invested $2500 each in 2013 and haven't made a 2014 contribution yet. I think the total current value is ~$5500 (I don't regularly check the balance on those accounts)

4. How much do you contribute and how often? How did you come to this number?
My plan is to contribute the $2500 each for each year so that we can get the MD state deduction. I also want to make a separate contribution into another, separate 529 plan from a different state that uses Vanguard as its Plan Administrator (Maryland uses T. Rowe Price). I intend to roll over our MD state plan into that one. I was considering ~$5000 per year into the separate 529 plan, but we haven't started this saving yet. I used the calculator on savingforcollege.com.

5. What are the underlying investments?
We're currently invested in a target date fund. There aren't a lot of options in the MD plan.

6. Are you satisfied with the 529 Plan you invest in? Why or why not?
It's ok. I really like the tax deduction, but I am not pleased with the expense ratios. That's why I intend to rollover into another plan.

7. What percentage of higher education cost do you hope to cover for your children? How did you come to this number?
My in-laws told my husband that they would pay for his college if he paid for his children's college. They did so with no strings attached, and it was fine for my husband. Since then, they've paid for my nephew's college (he is now 22), and the no strings plan hasn't worked out so well. At 22, he is still years away from getting a degree. He's only been taking 1 or 2 classes a semester and hasn't picked a major. I came from a family that could barely afford college and my parents paid for mine until it became too expensive and I left school with $3000 in student loans that I had to pay off myself. I was expected to graduate in 4 years.
I plan to tell my son that we will pay for 100% of his education at an in state school, up to 4 years. If he extends past 4 years, he will have to pay for the additional semesters. If he wants to go to a private school or an out of state school, he will have to pay the difference in tuition.

bloom2708
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Re: Your 529 Plan - Thoughts and Strategies

Post by bloom2708 » Wed May 21, 2014 2:51 pm

3 girls, ages 14, 10, 6. 529 with Bank of ND.

My strategy has been to put $100/month in + $1,000 on each birthday + a lump sum in from bonuses.

My goals is to have ~$50k for each kid. That would pay for a good chunk of a ND state school (like NDSU or UND). I could accelerate, but our oldest seems the least likely to go to college at this point.

My quandary is what if a kid doesn't choose college? To mitigate this I have $ in 529 and $ in a taxable investment account (15% VTSAX, 85% VWITX for the oldest, +5% stocks for 10 yo, =10% stocks for 6 yo)

The expense ratio on every investment option is .85% for the 529. But I get tax advantages in/out of the 529.

Balances:

14 yo - $16k in 529, $24k in Taxable
10 yo - $15k in 529, $19k in Taxable
6 yo - $14k in 529, $14k in Taxable

The numbers aren't even due to better performance and different lump sum additions.

At this point I feel "behind", but ok about where we are at.
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richard37
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Re: Your 529 Plan - Thoughts and Strategies

Post by richard37 » Wed May 21, 2014 3:50 pm

1. 18 months
2. Don't use 529. Have custodial brokerage account
3. Around 30K
4. $500 per month (but also very lucky to receive 10K per year from relative)
5. 70% SWTSX (US total stock market) 30% SWISX (International index fund)
6. NA
7. Hoping to cover all costs.

jackholloway
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Re: Your 529 Plan - Thoughts and Strategies

Post by jackholloway » Wed May 21, 2014 7:56 pm

1. How old are your children who you're saving for?

10.

2. Which 529 Plan do you invest in?

Colorado 529, Vanguard Coverdell.

We are considering Nevada, Utah, NY for the next installment.

3. What's the current balance?

We have $20k in a Coverdell at Vanguard, $18k in 529 plans, plus $90k in munis that could be cashed in if we need to.

4. How much do you contribute and how often? How did you come to this number?

We do not contribute regularly. We have $140k in cash that we were considering whether it goes into a 529, or pays off our house.

Plan a: fund $0 in 529, pay off my 3.75% home loan, and take LTCG on 35k of earnings.
Plan b: fund a five year contribution of $140k

If we go with plan a, we will not contribute again for at least five years. If we go with plan b, we will probably contribute another 10-20k this year into the 529.

5. What are the underlying investments?

Current: S&P 500.
If we do a lump sum, Total Stock Market for at least half, and perhaps the CO stable value fund. It currently pays 2.64, or roughly what our Muni fund returns.

6. Are you satisfied with the 529 Plan you invest in? Why or why not?

Yes. The 529 and the Coverdell are cheap, do exactly what I want, and get me market returns.

7. What percentage of higher education cost do you hope to cover for your children? How did you come to this number?

We plan on covering it all. Both our parents did.

A top tier university runs $255k, while a top state university costs $128k for four years. We thus figure that $140k, plus the existing $37k in Coverdell and 529, will cover roughly $180k in present terms, leaving a gap of 75k that we would have to cover from cash flow or other savings.

If the market plummets in the next five years or so, we would still have the ability to cover state school expenses from our muni bonds while withdrawing the 529 funds without penalty, while if it makes returns somewhere near the rising cost of schools, our gap would be $75k over four years. Painful, but about what we save for retirement over a four year period.

Bracket
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Re: Your 529 Plan - Thoughts and Strategies

Post by Bracket » Wed May 21, 2014 7:58 pm

1. 3 years old
2. Virginia 529 InVest plan
3. $50k
4. Highly variable but average maybe $1000 per month. I prioritize retirement savings over college savings, so whenever I have money to put in the 529 I do so.
5. I basically copied my retirement asset allocation, adjusted it for a shorter time horizon, and adapted it to the funds that exist in the 529. I don't use one of the automatic adjusting portfolios but use 5 separate funds and rebalance manually. I'm at 80/20 stocks/bonds until my son is 8, then gradually reduce equity allocation until age 15 or so. 30% of equities in int'l, 10% REITs, 20% of bonds in TIPs. I'd probably skip TIPs if I had to start over.

They are all vanguard funds:
Total stock market index
Total int'l index
REIT index
Total bond market index
TIPs fund

6. For the most part yes. The ERs of the funds are slightly higher than the VG funds normally have outside of the 529, but still well within what I consider the acceptable range. The fund choices are great, vanguard index funds--far better than what's in my 401k, for example. I get a state tax deduction for each fund as well, which more or less offsets the higher ERs.

7. No idea really, but hopefully all of it. Don't know what college will cost and don't know how much I will have in the 529. The plan is simply to save as much as possible. Any shortfall will be covered with cash or other investments, loans if necessary, etc. I borrowed and made use of a military scholarship to pay for my education, so I'm not necessarily against these options, But I suspect I will be able to pay for a large portion of my son's college using this 529. He will certainly be in much better shape than I was. There was no college savings account waiting for me when I turned 18. The goal is for him to choose a school based on what is best for what he wants to study, not based on financial considerations as was the case for me.

Good topic, nice to learn how others approach college savings.

livesoft
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Re: Your 529 Plan - Thoughts and Strategies

Post by livesoft » Wed May 21, 2014 8:20 pm

I wrote up a story about our use of 529 plans in this thread: http://www.bogleheads.org/forum/viewtop ... &p=1568298

1. How old are your children who you're saving for?
We are done saving. Our kids are 22 and 18.

2. Which 529 Plan do you invest in?
Utah at first, then Utah and Ohio, then only Ohio.

3. What's the current balance?
$0 for one and mid-5 figures for another.

4. How much do you contribute and how often? How did you come to this number?
Random amounts a few times over the lifetime of the 529 plans. Not regularly and sometimes not for a few years in a row.

5. What are the underlying investments?
All equities at first and now all fixed income.

6. Are you satisfied with the 529 Plan you invest in? Why or why not?
No, not satisfied. Why? Because of 2008 the equities lost more than 50% of their value.

7. What percentage of higher education cost do you hope to cover for your children? How did you come to this number?
100%. This is because we can afford it.
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RunningRad
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Re: Your 529 Plan - Thoughts and Strategies

Post by RunningRad » Wed May 21, 2014 8:58 pm

1. How old are your children who you're saving for?

12 and 15

2. Which 529 Plan do you invest in?

Missouri "MOST" plan

3. What's the current balance?

Each account has approximately $130,000

4. How much do you contribute and how often? How did you come to this number?

I have generally added $8000/year/account, to capture as much of the state income tax deduction as possible. I am now depositing $850/month/account.

5. What are the underlying investments?

Both accounts started with higher equity percentage and have been moving more toward fixed income as the kids approach college age.

15 year old's account:


Vanguard Explorer™ Portfolio 7% $9,680.27
Vanguard Windsor™ II Portfolio 8% $10,506.71
Vanguard Aggressive Growth Portfolio 14% $18,311.45
Vanguard Conservative Income Portfolio 36% $46,419.37
Vanguard Interest Accumulation Portfolio 35% $45,364.54

12 year old's account:

Vanguard Explorer™ Portfolio 11% $14,579.30
Vanguard Windsor™ II Portfolio 12% $15,924.02
Vanguard Total International Stock Index Portfolio 0% $60.23
Vanguard Aggressive Growth Portfolio 20% $26,113.35
Vanguard Conservative Income Portfolio 28% $36,929.30
Vanguard Interest Accumulation Portfolio 29% $35,978.39

6. Are you satisfied with the 529 Plan you invest in? Why or why not?

What's not to like? Easy systematic withdrawals, tax-free growth and state deduction on deposits, Vanguard funds.

7. What percentage of higher education cost do you hope to cover for your children? How did you come to this number?

100%, because that is consistent with our beliefs and priorities. Additional funds will come from current cash flow, as necessary. Both kids also have UTMA accounts to draw in the event our incomes deteriorate over time.
Few decisions in life motivated by greed ever have happy outcomes--Peter Bernstein, The 60/40 Solution

gips
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Re: Your 529 Plan - Thoughts and Strategies

Post by gips » Wed May 21, 2014 11:01 pm

1. How old are your children who you're saving for?
18, 16, 14
2. Which 529 Plan do you invest in?
ny
3. What's the current balance?
around $50k/kid
4. How much do you contribute and how often? How did you come to this number?
$800/month. Wanted to max out ny state deduction.
5. What are the underlying investments?
vanguard target funds
6. Are you satisfied with the 529 Plan you invest in? Why or why not?
yes, low fees, well-managed.
7. What percentage of higher education cost do you hope to cover for your children? How did you come to this number?
100%. We had originally thought about 80-20 but we're in a position now for 100%. From our perspective, it's one of the best gifts we can give our kids.

Bmac
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Re: Your 529 Plan - Thoughts and Strategies

Post by Bmac » Thu May 22, 2014 12:57 am

letsgobobby wrote:I think education planning is much more difficult than retirement planning. The time horizon is shorter and the inflation rate is higher. And many people can't afford to save adequately for their own retirement, much less save substantial sums for their children's education.

Our kids are 4 and 7. We have ~$120k in 10 years of prepaid in-state tuition in the Washington GET program, and another ~$180k in stocks in traditional 529 plans (mostly Utah, a little Nevada). We add a variable amount per year to the accounts, generally about $10k-$14k per child per year. As they get older and their educational needs and academic ability/prospects declare themselves, we may need to save more or we may be able to stop saving.

Letsgobobby, how are you valuing your Washington GET? Dollar amount you have contributed or the present value of purchased units x current unit redemption price? From prior posts my recollection is you got into the program in 2007-2009 or so when unit prices were much less than $100/unit, but 10 years of units at $120,000 works out to $120/unit. Just curious, as we have GET accounts for our 9 and 11 yo and I wonder how best to value our contributions.
Bmac

ratesguy
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Re: Your 529 Plan - Thoughts and Strategies

Post by ratesguy » Thu May 22, 2014 3:38 am

I have 3 kids: 2, 4 and 6. I have essentially out the gift tax exemption max into each (my 14k, not the full 28k allowed with spouse). With growth combined balance is 225k. Assets are 70/30 split with about 1/3 of stocks in foreign developed. Pretty standard stuff.

It's NY so Vanguard and great 0.17 expense ratios all-in for every choice.

This year I'm pretty well decided to open a Nevada plan (also Vanguard but with options but a bit higher fees) with maxed-out front-loaded gift tax exemption funding, perhaps 3x 5x 28k with the goal of transferring 10k per year back to NY for the tax deduction.

This would bring me to 665k for three kids give or take with no more contributions for five years. But I've maxed out my tax-exempt space, if asset returns just keep pace with education inflation, I still wouldn't have enough for triple private school. Plus it covers grad school, or my nephew, or grand kids. So not worried about having to much. Worst case it becomes a multiple-generational education trust. There are worse things for heirs to spend money on, IMO.

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Devil's Advocate
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Re: Your 529 Plan - Thoughts and Strategies

Post by Devil's Advocate » Thu May 22, 2014 4:07 am

I have one child. 18 month girl.

We max out our 401k's, HSA, and Roths.

Paying off mortgage early.

Do not use or plan on utilizing 529s.

I paid for my own schooling. IMO it gave me skin in the game so to speak. I feel that my retirement is much more important than the possible need for college money for child. If I am well off enough and if child needs help, we can and will. But if 529 is well funded and market or retirement funds suck in the future I don't want to eat dog food.

If I had a much larger income and had house paid off and needed more tax advantaged space then I would consider 529s.

DA

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Bounca
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Re: Your 529 Plan - Thoughts and Strategies

Post by Bounca » Thu May 22, 2014 7:27 am

Good thread
:sharebeer

1. How old are your children who you're saving for?
9 and 12. Both

2. Which 529 Plan do you invest in?
NY first then switched to Illinois direct, index age based.

3. What's the current balance?
12K each

4. How much do you contribute and how often? How did you come to this number?
Regularly invested about 5 years ago for a 2 year stretch. Then stopped. Started up again this year. $500 each month for both

5. What are the underlying investments?
Age based, index funds

6. Are you satisfied with the 529 Plan you invest in? Why or why not?
Yes. both NY and IL have some of the lowest fees for index/age-based direct sold plans. I live in Pennsylvania, which rocks because I can shop around any state and still take the tax deduciton of %3.07. If math is correct for this years contributions, I will get a check cut for me for $368 next year.

7. What percentage of higher education cost do you hope to cover for your children? How did you come to this number?
50% ???, but i don't see that happening at my current pace. My stance is to help them out with some of it, but they will chip in too some how, some way.

Grt2bOutdoors
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Re: Your 529 Plan - Thoughts and Strategies

Post by Grt2bOutdoors » Thu May 22, 2014 7:43 am

1. 4
2. 529 and UTMA - Utah, Ohio and Vanguard UTMA
3. High 5 figures
4. 14K annually
5. Age Based Moderate in Utah, 5% fixed CD Ohio courtesy I believe of Tramper Al on the board, 100% VTSAX - Vanguard
6. Very satisfied, low cost UTAH plan - Vanguard Index funds, highly diversified, decent performance. Okay with Ohio but may rollover after CD matures, current rates are bleh and their Vanguard options can be found cheaper in other plans like NYS. As far as performance, even with the high returns seen in the market, it hasn't particularly translated to the same in the 529 plan probably due to me dollar cost averaging as I get money vs. lump summng it and international has exactly been a stellar performer, just yet.
7. 100% hopefully, I say that because jobs are somewhat stable so if lose jobs, contributions will halt and ALOT can change over the next 18 years.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

markcoop
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Re: Your 529 Plan - Thoughts and Strategies

Post by markcoop » Thu May 22, 2014 8:14 am

1. How old are your children who you're saving for?
17, 15, 11

2. Which 529 Plan do you invest in?
NY

3. What's the current balance?
$330,000

4. How much do you contribute and how often? How did you come to this number?
I've been maxing out the NY deduction ($10k/yr) and maxing out Coverdell ($2k/yr per child). I just stopped contributing this year.

5. What are the underlying investments?
TSM
SV
REITs
TISM
EM
TIPS
Tot'l Bond
Short Term Inv Gr

6. Are you satisfied with the 529 Plan you invest in? Why or why not?
Satisfied. All Vanguard. Similar allocation as my non-college money. Currently 35% stock (2/3 domestic, 1/3 int'l), 65% bond.

7. What percentage of higher education cost do you hope to cover for your children? How did you come to this number?
I don't have separate accounts for each kid. I hope to spend about 1/3 per child of what I saved (there's always a little flexibility). I expect the kids to pay a small percentage of the bill. For my oldest, who decided to go to an out of state public college ($44K/yr), the expectation is that she will pay no more than what she can get in Stafford loans. If we max those out, it will be $27K total for the 4 years. I max end up making her do cover a little less than that.

I find this whole process frustrating. You have no idea how much your children's education will cost (merit scholarships, tuition differences, tax credits, etc) and we save for this hugely unknown target with penalties if you miss. Although this is also somewhat true for retirement savings, I feel with retirement it's longevity/health that's the unknown, where in college savings it's the infrastructure that we set up that is the unknown.
Mark

letsgobobby
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Re: Your 529 Plan - Thoughts and Strategies

Post by letsgobobby » Thu May 22, 2014 8:17 am

Bmac wrote:
letsgobobby wrote:I think education planning is much more difficult than retirement planning. The time horizon is shorter and the inflation rate is higher. And many people can't afford to save adequately for their own retirement, much less save substantial sums for their children's education.

Our kids are 4 and 7. We have ~$120k in 10 years of prepaid in-state tuition in the Washington GET program, and another ~$180k in stocks in traditional 529 plans (mostly Utah, a little Nevada). We add a variable amount per year to the accounts, generally about $10k-$14k per child per year. As they get older and their educational needs and academic ability/prospects declare themselves, we may need to save more or we may be able to stop saving.

Letsgobobby, how are you valuing your Washington GET? Dollar amount you have contributed or the present value of purchased units x current unit redemption price? From prior posts my recollection is you got into the program in 2007-2009 or so when unit prices were much less than $100/unit, but 10 years of units at $120,000 works out to $120/unit. Just curious, as we have GET accounts for our 9 and 11 yo and I wonder how best to value our contributions.
Bmac
One year of tuition at UW currently costs just under $12k so I'm valuing at current redemption value. Your memory is good: we bought at $70 and $76 and current price is $172 or so. But there is no open marketplace to sell the units to others so the best estimate of their current value is ~$120 and not ~$170.

Bmac
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Re: Your 529 Plan - Thoughts and Strategies

Post by Bmac » Thu May 22, 2014 8:44 am

letsgobobby wrote:
Bmac wrote:
letsgobobby wrote:I think education planning is much more difficult than retirement planning. The time horizon is shorter and the inflation rate is higher. And many people can't afford to save adequately for their own retirement, much less save substantial sums for their children's education.

Our kids are 4 and 7. We have ~$120k in 10 years of prepaid in-state tuition in the Washington GET program, and another ~$180k in stocks in traditional 529 plans (mostly Utah, a little Nevada). We add a variable amount per year to the accounts, generally about $10k-$14k per child per year. As they get older and their educational needs and academic ability/prospects declare themselves, we may need to save more or we may be able to stop saving.

Letsgobobby, how are you valuing your Washington GET? Dollar amount you have contributed or the present value of purchased units x current unit redemption price? From prior posts my recollection is you got into the program in 2007-2009 or so when unit prices were much less than $100/unit, but 10 years of units at $120,000 works out to $120/unit. Just curious, as we have GET accounts for our 9 and 11 yo and I wonder how best to value our contributions.
Bmac
One year of tuition at UW currently costs just under $12k so I'm valuing at current redemption value. Your memory is good: we bought at $70 and $76 and current price is $172 or so. But there is no open marketplace to sell the units to others so the best estimate of their current value is ~$120 and not ~$170.
Makes sense. My children are a little bit older than yours and I got in a little bit later with a combination of lump sum and custom monthly units that will end up with a total of about 450units/child at an average price/unit of about $96. Not quite as spectacular a return has you managed to lock in, but still looking pretty good based on the rate of tuition increase the last several years. Wish I had got in a few years sooner, but I wasn't quite convinced that the GET would allow as much flexibility as a 529, so when each of my girls were born, I opened Utah 529s (which currently have a total combined value of about $240k). Having both a 529 and the GET seems a bit like having the tax diversification of a Roth and traditional IRA. I've been quite happy with both plans to this point, although until we start actually using the money/units for education it seems difficult to make a complete assessment.

Regarding the Washington GET, it looks like you and I managed to get in at a good time. I would not recommend it for anyone with children already in elementary school and would even have some reservations for those with infants. The current unit price just seems too high even with the rate of tuition inflation. Although the ongoing rising cost of higher education never ceases to amaze.

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Mister Whale
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Re: Your 529 Plan - Thoughts and Strategies

Post by Mister Whale » Thu May 22, 2014 10:08 am

1. How old are your children who you're saving for? One child, age 5.

2. Which 529 Plan do you invest in? VA 529, not the "pre-paid tuition" version but the regular savings program ("inVEST").

3. What's the current balance? 90k

4. How much do you contribute and how often? How did you come to this number? 1-2 times a month for each account, to total about $4000/account/year. I have six "accounts" (really, just 6 different funds). VA allows $4k state tax deduction per child per account (with carry-forward allowed). This amount gets us close to the annual gift tax exclusion as well; as my income increases and my debt drops I intend to fund the 529 out to the annual max (currently 28k), which will mean adding another account or two.

5. What are the underlying investments?
Six accounts are: REIT, Eastern Shore (age-based evolving), "Moderate" (60/40 fund), Bond Index, TIPS, Stock Index. All are basically Vanguard funds except for the evolving fund. The age-based fund and the REIT fund together compromise the bulk of the holdings for now, although the monthly contribution to each fund is currently identical. I know that the AA must seem unusual but I'm satisfied with it; the REIT and equity involvement are for long-term holding (see #7 below) and bond placement for funds to be used during a bear market if necessary. (My AA for my combined taxable/retirement accounts is conservative and simple, I'm a 3-fund-portfolio guy.)

6. Are you satisfied with the 529 Plan you invest in? Why or why not?
Yes, fees are low and there are a reasonable amount of choices. However, I do wish that we could move funds from one account to another online.

7. What percentage of higher education cost do you hope to cover for your children? How did you come to this number?
~90%, I'm expecting some contribution from my son, and I think that it will be a valuable experience for him to contribute (we're already saving some allowance for it). I'm also expecting to use the 529 as an estate planning vehicle, and possibly for my sister's kids -- and so I'm overstuffing it.
" ... advice is most useful and at its best, not when it is telling you what to do, but when it is illuminating aspects of the situation you hadn't thought about." --nisiprius

letsgobobby
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Re: Your 529 Plan - Thoughts and Strategies

Post by letsgobobby » Thu May 22, 2014 11:57 am

Bmac wrote: Makes sense. My children are a little bit older than yours and I got in a little bit later with a combination of lump sum and custom monthly units that will end up with a total of about 450units/child at an average price/unit of about $96. Not quite as spectacular a return has you managed to lock in, but still looking pretty good based on the rate of tuition increase the last several years. Wish I had got in a few years sooner, but I wasn't quite convinced that the GET would allow as much flexibility as a 529, so when each of my girls were born, I opened Utah 529s (which currently have a total combined value of about $240k). Having both a 529 and the GET seems a bit like having the tax diversification of a Roth and traditional IRA. I've been quite happy with both plans to this point, although until we start actually using the money/units for education it seems difficult to make a complete assessment.

Regarding the Washington GET, it looks like you and I managed to get in at a good time. I would not recommend it for anyone with children already in elementary school and would even have some reservations for those with infants. The current unit price just seems too high even with the rate of tuition inflation. Although the ongoing rising cost of higher education never ceases to amaze.
I think you've done just fine - I always remind myself with GET, the benefit is not in the return, it's in the (nearly) zero risk nature of the investment. In fact despite a $70 -> $120 return since 2007, and $76 -> $120 since 2009, it's not clear even my return has been so spectacular on an absolute basis. 2007 looks great - but since 2009, the S&P500 is up 200%+, so a $76 investment in March 2009 (which is when I bought my son's units) would now be worth approximately $225, nearly double what GET has returned. But again, none of that is really the point - I wanted a liability matching program for a highly variable future expense and across the country GET offered one of the few truly risk free ways to accomplish that. So I'm getting exactly what I paid for, and whatever return I get is nice but not the point.

In addition it is the zero risk nature of this part of our college portfolio that allows me to take 100% equity risk in the rest of the portfolio. I have a floor, not a half bad one at that - 5 years of in state tuition at an excellent public university. With the rest of our investment, I can shoot for the moon (I may dial down the risk in the future but GET makes it possible for me to choose not to do so).

So for all these reasons, while I agree with you that future returns on GET will not be as high, in my opinion it is still a very attractive program for those who want to use liability matching to fund college, or who simply have a very low personal tolerance/ability/desire to take risk. If the parent of a newborn invests $68,000 today, in 18 or 22 or 30 years their child *will* have their full 4 years of tuition paid for at UW - regardless of the return of the investment. That knowledge, the security of having college paid for, may be well worth accepting more modest rates of return than you and I received.

It sounds like you and I have similar college funding strategies and goals. What is your AA at UESP?

YttriumNitrate
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Re: Your 529 Plan - Thoughts and Strategies

Post by YttriumNitrate » Thu May 22, 2014 12:11 pm

1. How old are your children who you're saving for?
Roughly negative 2 and negative 5...they are still at the "twinkle in the eye" stage.

2. Which 529 Plan do you invest in?
Indiana.

3. What's the current balance?
Around $10,000

4. How much do you contribute and how often? How did you come to this number?
$5,000 a year to max out Indiana's 20% tax credit.

5. What are the underlying investments?
80% total US stock market (might be a Vanguard fund) and 20% international.

6. Are you satisfied with the 529 Plan you invest in? Why or why not?
Yes, but slightly lower expense ratios would be nice.

7. What percentage of higher education cost do you hope to cover for your children? How did you come to this number?
It's a bit too early to tell for this one.

istoner
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Re: Your 529 Plan - Thoughts and Strategies

Post by istoner » Thu May 22, 2014 12:34 pm

letsgobobby wrote: wanted a liability matching program for a highly variable future expense and across the country GET offered one of the few truly risk free ways to accomplish that. So I'm getting exactly what I paid for, and whatever return I get is nice but not the point.

In addition it is the zero risk nature of this part of our college portfolio that allows me to take 100% equity risk in the rest of the portfolio. I have a floor, not a half bad one at that - 5 years of in state tuition at an excellent public university. With the rest of our investment, I can shoot for the moon (I may dial down the risk in the future but GET makes it possible for me to choose not to do so).

So for all these reasons, while I agree with you that future returns on GET will not be as high, in my opinion it is still a very attractive program for those who want to use liability matching to fund college, or who simply have a very low personal tolerance/ability/desire to take risk. If the parent of a newborn invests $68,000 today, in 18 or 22 or 30 years their child *will* have their full 4 years of tuition paid for at UW - regardless of the return of the investment. That knowledge, the security of having college paid for, may be well worth accepting more modest rates of return than you and I received.

It sounds like you and I have similar college funding strategies and goals. What is your AA at UESP?
Thanks for the very thoughtful and helpful post. I am a Washington resident with young kids, and while I use a Utah 529, this certainly gave me something to think about.

azb
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Re: Your 529 Plan - Thoughts and Strategies

Post by azb » Thu May 22, 2014 12:50 pm

Here goes:


1. How old are your children who you're saving for? One child, 9 years old.
2. Which 529 Plan do you invest in? We have been moving around so have funds in Utah, Arizona and Virginia. Have thought about consolidating but have seen no compelling reason to to so.
3. What's the current balance? Total balance is about $155,000, which is about the amount needed for 4 years at a Virginia state school (an outstanding set of options)
4. How much do you contribute and how often? How did you come to this number? Given that we can now pay for 4 years at a state school, I stopped contributing (we were very aggressive in the past, however). We plan to keep the balance at 4 years at a Virginia state school until we have more certainty about our son's aspirations. (and it will help that we will have paid off our mortgage in 6 years so we can be aggressive once the dusts settles).
5. What are the underlying investments? All index funds, of course. Arizona uses Fidelity index. Utah and Virginia use Vanguard. We aim for a 60/40 equity/bond split with about 30% of the equity portion in international.
6. Are you satisfied with the 529 Plan you invest in? Why or why not? Yes. All three have low fees and good performance. We will consolidate at some point.
7. What percentage of higher education cost do you hope to cover for your children? How did you come to this number? Close to 100%. Student loans areholding kids back, and we have the income and savings ethic to both fully fund our retirement and pay for our son's college

buckstar
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Re: Your 529 Plan - Thoughts and Strategies

Post by buckstar » Thu May 22, 2014 1:25 pm

1. How old are your children who you're saving for?
8 and 10

2. Which 529 Plan do you invest in?
Iowa - at the time it had some of the lowest fees, and I'm too lazy to move for a couple of basis points.
3. What's the current balance?
~$60k per child
4. How much do you contribute and how often?
$1,250 per month per child
5. What are the underlying investments?
Essentially a 70/30 stock/bond mix, but this will change as we get closer to college.
6. Are you satisfied with the 529 Plan you invest in? Why or why not?
Yes - low enough fees, good investment options
7. What percentage of higher education cost do you hope to cover for your children?
We would like to cover 100% of the cost of undergrad education, and some of grad school if they are so inclined.

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Go Blue 99
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Re: Your 529 Plan - Thoughts and Strategies

Post by Go Blue 99 » Thu May 22, 2014 1:43 pm

1. How old are your children who you're saving for?
10 weeks, and we'd like to have another eventually.

2. Which 529 Plan do you invest in?
We plan on $2k per year into Georgia, to get the state tax deduction. Remainder into Utah.

3. What's the current balance?
$6k, which is all from gifts.

4. How much do you contribute and how often? How did you come to this number?
About $400/month per child would fully pay for an in-state public school. I suspect that grandparents will chip in here and there also.

5. What are the underlying investments?
For GA, we do an aggressive target date option. For UT, we do the slice and dice customized option.

6. Are you satisfied with the 529 Plan you invest in? Why or why not?
I only do GA for the tax deduction. The investment options are limited and their website is very dated.
I love the Utah plan which allows you to create your own asset allocation by year, and offers Vanguard and DFA funds. A Boglehead's dream!

7. What percentage of higher education cost do you hope to cover for your children? How did you come to this number?
We'd like to fully pay for an in-state public school, to pay it forward. My parents paid for my out-of-state undergrad, and my wife's parents paid for her private undergrad and out-of-state business school.

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abuss368
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Re: Your 529 Plan - Thoughts and Strategies

Post by abuss368 » Thu May 22, 2014 2:16 pm

I keep the college investing very simple with a Vanguard all in one age based 529 offering. The fund allocates more to fixed income as the child nears college age.

This has worked very well and we plan to stay the course.
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WorkToLive
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Re: Your 529 Plan - Thoughts and Strategies

Post by WorkToLive » Thu May 22, 2014 2:22 pm

1. How old are your children who you're saving for?

We have one daughter, currently age 8 and finishing up second grade.

2. Which 529 Plan do you invest in?

Currently invest in MD College Savings Plan, but have a former plan in Virginia that is still open.

3. What's the current balance?

Total balance of combined 529s is approximately $150,000

4. How much do you contribute and how often? How did you come to this number?

We contribute $5000/year to the Maryland plan because that is the limit of the state tax deduction.

5. What are the underlying investments?

Maryland - T. Rowe Price Total Market Equity Index
Virginian - Vanguard LifeStrategy Moderate Portfolio

6. Are you satisfied with the 529 Plan you invest in? Why or why not?

Yes, we are satisfied. Sometimes I wish we still lived in Virginia since their plan is better and their state colleges are better, too.

7. What percentage of higher education cost do you hope to cover for your children? How did you come to this number?

We plan to cover 100% of undergrad up to a college that costs about $45k today annually. We arrived at this number by looking at current tuition of schools and picking a mid-point between a very high-end college ($65k) and a state college ($25k).

whadyaknow
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Re: Your 529 Plan - Thoughts and Strategies

Post by whadyaknow » Thu May 22, 2014 2:50 pm

1. 1 month
2. Vanguard 529 plan (Nevada)
3. $4,000
4. $1000 per month for the next few years. Will reassess contributions every five years or so.
5. Age based - aggressive allocation at the moment.
6. Fairly new to this. So not sure.
7. 100% of in-state public schools (CA). If she gets into an Ivy, I'd fund as much as possible. If she goes to out-of-state public schools for shits and giggles, I only plan to pay tuition.
80/20 Stock/Bond

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tdirgins
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Re: Your 529 Plan - Thoughts and Strategies

Post by tdirgins » Thu May 22, 2014 3:11 pm

1. How old are your children who you're saving for? 15/12
2. Which 529 Plan do you invest in? NY
3. What's the current balance? 132k/146k
4. How much do you contribute and how often? How did you come to this number? 1000 per month per kid. Used the John Hancock college planning calculator which allows you to enter multiple kids and spits out inflow and outflow reports. It's great.
5. What are the underlying investments? Vanguard Growth Index,Vanguard Total Bond Market Index. I adjust the %'s of these manually as each child ages.
6. Are you satisfied with the 529 Plan you invest in? Why or why not? yes. costs low, returns have been solid. Plus I get a 10k state tax deduction.
7. What percentage of higher education cost do you hope to cover for your children? How did you come to this number? 100%. I paid student loans for 10 years and I would like to help them avoid that. They will have to pay for their own incidentals: fun money, travel, etc..

WarpSpeed
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Re: Your 529 Plan - Thoughts and Strategies

Post by WarpSpeed » Thu May 22, 2014 4:12 pm

I'm a little jealous of those of you who have decent in-state 529 plans that provide state tax benefits. My state plan (ND) provides state income tax benefits, but the investment options have high fees (.85%) that over the life of the account would wipe out all the tax benefits (and more). :annoyed

RunningRad
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Re: Your 529 Plan - Thoughts and Strategies

Post by RunningRad » Thu May 22, 2014 5:01 pm

WarpSpeed wrote:I'm a little jealous of those of you who have decent in-state 529 plans that provide state tax benefits. My state plan (ND) provides state income tax benefits, but the investment options have high fees (.85%) that over the life of the account would wipe out all the tax benefits (and more). :annoyed
Unfortunately, the state deduction can be partially countered by the loss of the Federal deduction of state taxes. :annoyed
Few decisions in life motivated by greed ever have happy outcomes--Peter Bernstein, The 60/40 Solution

Bmac
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Re: Your 529 Plan - Thoughts and Strategies

Post by Bmac » Thu May 22, 2014 5:35 pm

Letsgobobby said,
"It sounds like you and I have similar college funding strategies and goals. What is your AA at UESP?"

I use one of the age-based plans. I believe "moderate growth," off the top of my head. When I enrolled there were no custom options, and frankly, I've been perfectly happy to not have to rebalance or adjust the AA. It makes me see the allure of using a Target Date fund for one's retirement portfolio, although I continue to manage that with several equity and fixed income index funds. Too much capital gains in our taxable accounts to change course now. :D

b4nash
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Re: Your 529 Plan - Thoughts and Strategies

Post by b4nash » Thu May 22, 2014 6:01 pm

1. How old are your children who you're saving for?
Unborn

2. Which 529 Plan do you invest in?
MICHIGAN EDUCATION SAVINGS PROGRAM

3. What's the current balance?
$13,500

4. How much do you contribute and how often? How did you come to this number?
$5,000/year to maximize state tax deduction

5. What are the underlying investments?
TIAA-CREF Equity Index Fund 36%
TIAA-CREF International Equity Index Fund 15%
TIAA-CREF Emerging Markets Equity Index Fund 3%
TIAA-CREF Real Estate Securities Fund 6%
TIAA-CREF Bond Index Fund 30%
TIAA-CREF Inflation-Linked Bond Fund 10%

6. Are you satisfied with the 529 Plan you invest in? Why or why not?
Yes, Total Annual Asset-Based Fees = 0.28%, lets me invest in a tax-advantaged way after 401k, IRA, HSA, I bonds

7. What percentage of higher education cost do you hope to cover for your children? How did you come to this number?
Undecided

yolli71
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Re: Your 529 Plan - Thoughts and Strategies

Post by yolli71 » Fri May 23, 2014 6:33 am

1. How old are your children who you're saving for?
- Two and four

2. Which 529 Plan do you invest in?
- VA Prepaid (we are VA residents)

3. What's the current balance?
- $52,400 & $56,600 (we did the lump sum one time payment for each; this covers 4 year in-state tuition for each)

4. How much do you contribute and how often? How did you come to this number?
- see above

5. What are the underlying investments?
- N/A

6. Are you satisfied with the 529 Plan you invest in? Why or why not?
- Yes, we're happy not having to worry about the market in the future and knowing their tuition is paid for. Not everyone agrees with the prepaid, but like paying off a mortgage, it gives us peace of mind. We get a 4k (for each child) annual deduction on state taxes.

7. What percentage of higher education cost do you hope to cover for your children? How did you come to this number?
- Fortunately for us, my parents are contributing to a traditional 529 through the state of VA. I do not know the investments or the current balance since it's under their name but I know that they've contributed around 30k to each child. As this grows over the years, hopefully it will fully cover room and board and possibly have some left over to go towards grad school (if our kids elect to do that).

Medion
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Re: Your 529 Plan - Thoughts and Strategies

Post by Medion » Mon May 26, 2014 1:55 am

1. How old are your children who you're saving for?

Ages 4 and 2.

2. Which 529 Plan do you invest in?

Currently in Vanguard's (Nevada) age-based aggressive growth. Previously was in a similar USAA Nevada plan. Switched due to lower expense ratio and no annual fee.

3. What's the current balance?

Roughly $8.1k in the 4yo and $3.9k in the 2yo portfolio.

4. How much do you contribute and how often? How did you come to this number?

$500 the month that they were born and $100 per month thereafter. I decided that I wanted to have a large initial deposit (large by my means) and a constant deposit thereafter. This means that I would deposit exactly $22k into each account by their 18th birthday. With compounding, I hope to cover 2 years of college without dipping into my own pocket, but we'll see.

5. What are the underlying investments?

Seems to be 100% equities based on Vanguard index funds.

6. Are you satisfied with the 529 Plan you invest in? Why or why not?

I am. It meets my needs for anticipated growth, low fees, and a reliable company behind it.

7. What percentage of higher education cost do you hope to cover for your children? How did you come to this number?

I hope to cover 100% of tuition for 2 years. I came to this number because I wanted to give my kids the head start that I never had. Given my income bracket and background, investing enough to cover 6 or even 4 years is not likely. But, if I hit it big, I'll certainly increase my contributions.

Big Snack
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Re: Your 529 Plan - Thoughts and Strategies

Post by Big Snack » Mon May 26, 2014 10:41 am

1. How old are your children who you're saving for?
Just turned 3 this month.

2. Which 529 Plan do you invest in?
The state of PA 529 Investment Plan

3. What's the current balance?
$15,500.

4. How much do you contribute and how often?
No set amount. When I get a little extra in my savings account, I make a contribution.

5. What are the underlying investments? Why did you choose them?
I use the Aggressive Age Based allocation option. I am comfortable with more risk, especially at an early age.

6. Are you satisfied with the 529 Plan you invest in? Why or why not?
Yes. They use Vanguard funds and there are savings on state taxes.

7. What percentage of higher education cost do you hope to cover for your children? How did you come to this number?
Too many variables to know a percentage at this early stage. I will just continue to try and contribute as much as possible after maxing out my 401k, Roth and HSA.

staythecourse
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Re: Your 529 Plan - Thoughts and Strategies

Post by staythecourse » Mon May 26, 2014 12:07 pm

Good thread and will hopefully help many of us.

1.
jimday1982 wrote:1. How old are your children who you're saving for?2. Which 529 Plan do you invest in?3. What's the current balance?4. How much do you contribute and how often? How did you come to this number?5. What are the underlying investments?6. Are you satisfied with the 529 Plan you invest in? Why or why not?7. What percentage of higher education cost do you hope to cover for your children? How did you come to this number?
1. one 22 month old, but want another soon.
2. Utah plan (but live in Illinois)
3. 60-70k
4. Just keep throwing money in. I just max out the gift allowance for wife and I per year ?28k/ 12 month to determine monthly contributions. This, of course, is only AFTER maxing out all other tax deferred retirement plans (HSA, IRA x2, 401k x2).
5. 50%TSM/30% TISM/ 20% TBM (don't plan on changing anything until 10 yrs. to the youngest college grad. date, i.e. when she turns 21). Then will drop to 50/50. Figure any extra money will go to next kid and any left over money then will go to grad. school and any left over after that will just be transferred to the eventual grandkids (sort of an estate lowing educational trust).
6. yes. It is easy to contribute each money and has low fees (what more do you want?)
7. As mentioned above as much as I can afford to cover. My wife and I are physicians so we come from families where grad. school is a norm and an expectation.

Good luck.


6.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

WhiteMaxima
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Re: Your 529 Plan - Thoughts and Strategies

Post by WhiteMaxima » Mon May 23, 2016 4:23 pm

1. How old are your children who you're saving for?

16, 6

2. Which 529 Plan do you invest in?

Michigan (TIAA), UTAH (Vanguard), OHIO (Vanguard), Fidelity (Credit Reward)

3. What's the current balance?

$120k

4. How much do you contribute and how often? How did you come to this number?

Not any more. $120k is good for in-state tuition for 4 years for two kids (plus scholarship)

5. What are the underlying investments?

70% US Equity, 30% Forgien Equity

6. Are you satisfied with the 529 Plan you invest in? Why or why not?

It's 50/50. Can't match tuition inflation. Fee 0.25% from Vanguard Index is too high, State took too much fee for sending me statement

7. What percentage of higher education cost do you hope to cover for your children? How did you come to this number?

I will cover 50%. rest will pay by state (hopefully)

lernd
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Re: Your 529 Plan - Thoughts and Strategies

Post by lernd » Tue May 24, 2016 8:22 am

1. How old are your children who you're saving for?
18 months.

2. Which 529 Plan do you invest in?
Vanguard - Nevada. Our in-state plan is through Fidelity (I think) and their options were more expensive. Additionally, our state gives us zero tax benefits for contributions so there really is no difference - went with the cheapest and where our other assets are.

3. What's the current balance?
Approximately 22,000

4. How much do you contribute and how often? How did you come to this number?
Goal is to contribute 15k/year. Try to do 1k/month on a regular fashion, when have some "extra" money, add to it.

5. What are the underlying investments?
90% stocks - 75-25 US-International. 10% bonds

6. Are you satisfied with the 529 Plan you invest in? Why or why not?
I'm satisfied with the plan, I am VERY DISAPPOINTED in my own state for not having better tax benefits (which are none). Other than tax free growth there is no benefit or incentive for saving for your child's education.

7. What percentage of higher education cost do you hope to cover for your children? How did you come to this number?
Maybe I differ from a number of responders to this post, but my wife and I fully intend to cover 100% of our child's UNDERGRADUATE education. We will work for as long as necessary to ensure that. I understand the point about having "skin in the game" but I hope that we will raise our child (or children) to understand the value of what the family as a whole has worked for - the privilege of going to college. Even if he isn't paying directly for college, I hope he has learned by the time he is 18 how hard his parents have worked to give him that opportunity. Both my wife and I come from middle class backgrounds. I went through public high school and was fortunate enough to be accepted to a top 20 private university. My parents were able, through disciplined savings, to get me through college without any debt. Though I didn't take out any student loans for college, I understood the value of that education and I understood that when I graduated, nothing was guaranteed to me. I worked every summer and during the school year - my parents covered tuition/board/fees but anything "extra" I was on the hook for. I didn't do spring breaks in Cancun and Christmas Breaks skiing. My wife was in the same boat. I think graduating from college debt free allowed me to pursue professional school afterwards where I ended up borrowing $180K (good investment based on professional degree). My parents didn't have the resources to pay for graduate school as well though they helped me as much as possible (I lived at home etc.) I'm not sure I would have pursued further education if I came out of undergrad with as much debt as I accumulated in grad school - it would have been too daunting and I'm debt-averse in general. There are plenty of students who borrow money through the nose with no understanding of the value of money. They have skin in the game without even knowing it and the unfortunately start life (after college) with a rude awakening. I want to help my child learn the value of work, education and money, but also start off with a clean slate.

KlangFool
Posts: 9925
Joined: Sat Oct 11, 2008 12:35 pm

Re: Your 529 Plan - Thoughts and Strategies

Post by KlangFool » Tue May 24, 2016 8:30 am

OP,

No 529. I invest and save with Trad. 401K, Roth IRA, and taxable account. I have a kid went to college last year and another going this year. I stop my retirement savings since I saved enough for retirement. I finance their college education through cash flow.

For people that contributed to 529 but did not max up their Trad. 401K, they are paying too much tax.

KlangFool

masteraleph
Posts: 581
Joined: Wed Nov 04, 2009 9:45 am

Re: Your 529 Plan - Thoughts and Strategies

Post by masteraleph » Tue May 24, 2016 8:41 am

[quote="JimmyD"]
1. How old are your children who you're saving for?

10 months old

2. Which 529 Plan do you invest in?

NY 529 Direct (worth noting that we live in NYC, so there's a nice deduction associated with it)

3. What's the current balance?

About $20,000

4. How much do you contribute and how often? How did you come to this number?

About $10,000 per year. We'll see if we can contribute more over time, but the state deduction goes up to $10,000 of contributions, so it seemed like a reasonable place to start.

5. What are the underlying investments?

About 75% "Aggressive Growth Plan" (70% Vanguard TSM, 30% Vanguard Total International) and 25% Vanguard TBM. Total ERs are .16

6. Are you satisfied with the 529 Plan you invest in? Why or why not?

Seems pretty good. Certainly better rates than I can get in my 401k.

7. What percentage of higher education cost do you hope to cover for your children? How did you come to this number?

We'd like to cover all of it, at least for undergrad but hopefully for grad school as well. That should be reasonably feasible with our own contributions and my parents (who have been kicking some in), if the kids either go to a state school, receive a significant merit scholarship at a private university, or go to one of the schools that really cover need based on grants (places like Stanford, etc. that really keep parental contribution reasonable). Probably much harder at schools like BU, Emory, NYU, etc., where they charge the high prices but don't have the aid available.

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