Fungibility of Money...Fixed Income in 529

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orthodoc
Posts: 27
Joined: Wed Nov 05, 2008 10:36 pm

Fungibility of Money...Fixed Income in 529

Post by orthodoc » Thu Jan 18, 2018 5:47 pm

I have been contemplating my path forward on 529 investing. I have been considering using the Colorado Stable Value fund to park my current 529 assets. I have 3 children that are 6-10 yrs away from college. I have $450k in them currently invested 80/20. I believe they are adequately funded and with annual contributions of $16k (max state tax deduction) and a "guaranteed" minimum of 2% currently 2.29% growth, I will have more than enough to fund my expected contributions.

While researching this, I ran across this discussion viewtopic.php?t=129325 discussing the opposite approach.

I feel like my approach may be overly conservative. So, I have considered incorporating the 529 into my overall AA and parking FI in the 529 while increasing my equities in other accounts. Is this just mental accounting? I think the difference here is that I remove the risk from 529 that has a known timeline and moved it to a longer term goal. Does this sound reasonable? This would represent about 1/2 of my bond allocation and with the current bond environment 2-2.29% return is as good as I can expect in my bond funds. I still have bonds in my 401k so I can rebalance as needed. If we see a large correction in the market I can always move the 529s back into equities as needed. Am I missing something?

I have read livesoft's posts regarding fungibility of money regarding emergency funds held in retirement accounts and the use of 529s along with outside funds to be eligible for tax credits. I am pretty sure I will be out of the income range with the first two kids but may catch the credit if I can ER when the last one hits college! I hope to get the BH community opinions before making the move.

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