529 plans?

[Clay]

I'm thinking about getting a 529 plan for my kids college. I've got some cash saved up and I'm debating on a 529 or something else (mutual fund, etc).

IF I go with a 529, what is the best way to go? I've spoke to my broker about it, and of course I can have them do it, OR I can just do an Indiana 529 myself.

Thoughts or experiences that might help me out a bit?

thanks,
Clay

 

[Fishersjohn48]

Basic input as its late and on an iPhone but a guaranteed 20% return on your first $5000.00 is pretty hard to pass up. I've done them for both sons as self directed plans basically putting the $5000 in to get the the $1000 tax break.

 

[Clay]

yeah, that is part of the drive for the 529 as well.

that, and the fact that a savings account isn't cutting it in the interest dept.

 

[jd4320t]

There was a thread a few weeks ago and the consensus seemed to be not to do the 529 plan.

 

[mom45]

My son graduated in 2010. I had money in Savings Bonds and an adviser convinced me to put $5,000 into a 529 plan a year before he was to graduate. In order to get those kinds of returns, it has to be a fairly aggressive plan. Our account lost $1,000 in less than a year. If I had left it in Savings Bonds, he would have earned money. Not a lot, but better than a savings account. I believe his bonds were at about 5 or 6 percent at the time.

I wish I had not opened the account and would never recommend one to anyone else considering one.

 

[hoosierdoc]

Why are you always losing money?

funds that are needed in a year should probably not be invested. There's no time for recovery if market dips. What would the money be worth today compared to 6% growth in a bond?

 

[CountryBoy19]

In order to get those kinds of returns, it has to be a fairly aggressive plan.

You don't invest according to the "returns you need to make", you invest according to the risk level you're willing to accept. More risk, comes with more reward (long-term average) but can have huge short-term consequences. Anybody putting money into an aggressive fund with an expected withdraw timeline in a year or so is just begging to be hit hard...

 

[hornadylnl]

What to do if your child graduated in 2009? Put off college until the market recovers?

 

[Vamptepes]

Hey I graduated in 09. Ive been working since 05 though and live on my own.

 

[Clay]

well, I have 10 years for my son, and 13 / 14 years for my girls, so I've got some time.

Plus, the money doesn't need to double in that time frame, but a few percentage points is way better than what I can get for where it sits today, and then there is the tax benefit.

 

[mom45]

Why are you always losing money?

funds that are needed in a year should probably not be invested. There's no time for recovery if market dips. What would the money be worth today compared to 6% growth in a bond?

You don't invest according to the "returns you need to make", you invest according to the risk level you're willing to accept. More risk, comes with more reward (long-term average) but can have huge short-term consequences. Anybody putting money into an aggressive fund with an expected withdraw timeline in a year or so is just begging to be hit hard...

I trusted a financial adviser who apparently was more interested in what SHE could make off of us rather than what returns we would be getting on our investments. Out of all the accounts she did for us, the John Hancock annuities are the only ones our current adviser considers to have been smart given our ages/time left to retirement, etc. Those accounts are currently less than we invested 6 years ago, but are getting closer to being valued at those amounts. However, they have guarantees and will provide income for life similar to a pension would. Small monthly payments, but it will help supplement our other income when we reach that point.

The adviser knew how long it was going to be until my son graduated and ASSURED me that this was the way to go. I was foolish or naive enough to trust her advice.

 

[churchmouse]

I trusted a financial adviser who apparently was more interested in what SHE could make off of us rather than what returns we would be getting on our investments. Out of all the accounts she did for us, the John Hancock annuities are the only ones our current adviser considers to have been smart given our ages/time left to retirement, etc. Those accounts are currently less than we invested 6 years ago, but are getting closer to being valued at those amounts. However, they have guarantees and will provide income for life similar to a pension would. Small monthly payments, but it will help supplement our other income when we reach that point.

The adviser knew how long it was going to be until my son graduated and ASSURED me that this was the way to go. I was foolish or naive enough to trust her advice.

Anyone that is on commission based pay and is giving you advice.....get a 2nd opinion. Investments/mortgages.....anything.

 

[mom45]

Anyone that is on commission based pay and is giving you advice.....get a 2nd opinion. Investments/mortgages.....anything.

From now on, I am investing in guns and ammo!

 

[hoosierdoc]

I trusted a financial adviser who apparently was more interested in what SHE could make off of us rather than what returns we would be getting on our investments.

The adviser knew how long it was going to be until my son graduated and ASSURED me that this was the way to go. I was foolish or naive enough to trust her advice.

Let me guess... she charged 5% for the privilege of moving your money?

 

[Clay]

which brings up another question, do those of you who have 529 plans do it yourself, or use some kind of broker?

 

[spencer rifle]

We invested directly in our 529s set up for each of our 4 children. No brokers or middlemen. We looked for any that use Vanguard, since their fees are so low and that's the only thing you really have control over. It was Iowa early on, so much of our money went there. We've been doing Indiana more recently since they now have a Vanguard option. The main problem is that we can't transfer funds from Iowa to Indiana and still get our tax break. So we have other funds we've saved in a non-529 that we use for our Indiana 529 to get the credit. So far we have managed to get two through college (one at private out-of-state) with no debt and some money left over. One is in college now and one still to go.

 

[Clay]

yeah I noticed that Indiana has Vanguard as an option. I like that since I've had good luck using them with my 401K.

I also like that they have a similar option for the 529 as I do with my 401K, which is a plan based on age. As the child gets closer to going to college, the risk (stocks) of the plan goes down, and more secure (bonds) investments go up.

 

[ws6guy]

We started one this year for both kids. Haven't put much money in yet but we are doing it directly and using the age option right now since I would have chosen the most aggressive funds anyway for starting out. This thread has reminded me that we need to make a large deposit by the end of the year for the tax benefit.

 

[medcoxo]

Sorry, late to thread, but use the 529 plan that is state sponsored. Just like the one they show on TV. IF you already have savings bonds. keep them there. I used 529 money for college first, THEN use savings bonds. Most importantly, tell your kids to keep at least a B or B+ average in high school and you get even better because colleges will offer additional benefits and discounts for incoming freshmen. AND keeping that average in college still gets more money.
I know this because my kid did NOT have the B average in high school, then could not keep the grades in college.

 

[warthog]

I will check those out and see. Since I don't have kids they are nothing I have even looked at so I have no opinion of them as yet. I will let you now soon though.

(bet you are hanging on my words and waiting with anticipation for me to return with my verdict too.)