The new forums will be named Coin Return (based on the most recent vote)! You can check on the status and timeline of the transition to the new forums here.
The Guiding Principles and New Rules document is now in effect.
College savings - 529? other options?
JHunz
Registered User regular
Registered User regular
So the wife and I are trying to figure out what sorts of options are available for saving for the future of our new family member.
We seem to have three options for Illinois 529 plans - two of them being stock-market fund type plans, and one being more of an amortized payment sort of thing.
The disadvantage on the amortized (College Illinois) plan is obvious: there's no payment flexibility. No prepayment penalty, but not really any option to start paying a lesser amount in and pay more later.
The problem with the stock market funds is that my wife tends to be very financially conservative - in that she doesn't really trust the stock market at all, and would take it badly if our college fund started losing money one year because some asshole bankers caused and collapsed another bubble. Also, there are some annual % fees on the accounts which would decrease the yield some.
Are there other things we should be looking at? Are there other tax-deductible ways to save for future education expenses, or are 529s it? Do we need to just get over it and put the money into the stock market?
We seem to have three options for Illinois 529 plans - two of them being stock-market fund type plans, and one being more of an amortized payment sort of thing.
The disadvantage on the amortized (College Illinois) plan is obvious: there's no payment flexibility. No prepayment penalty, but not really any option to start paying a lesser amount in and pay more later.
The problem with the stock market funds is that my wife tends to be very financially conservative - in that she doesn't really trust the stock market at all, and would take it badly if our college fund started losing money one year because some asshole bankers caused and collapsed another bubble. Also, there are some annual % fees on the accounts which would decrease the yield some.
Are there other things we should be looking at? Are there other tax-deductible ways to save for future education expenses, or are 529s it? Do we need to just get over it and put the money into the stock market?
Gamertag: JHunz. R.I.P. Mygamercard.net JHunz on
0
Posts
This is from a year ago, but Morningstar pulled together the best & worst 529 plans.
Best and Worst 529 Savings Plans
Stock or higher risk investment options in the initial phases and as you get closer to maturity, either retirement or high-school graduation, you move the money into safer investments, like bonds and money-market funds. As you're a year or two away from your child's graduation, most of the money in the 529 plan should probably be in a low-yield, safe investment.
Basically, look for something where the government will match or more than match what you put in before its invested. While 18 years in the stock market will probably do good things to your savings, the more you start with the better it will turn out.
The US doesn't have any 529 plans (or any gov't-sponsored plans outside of certain retirement plans for gov't employees) with matching funds that I know of. Usually your state government will give you a tax deduction or credit if you invest in one of their plans, but the only break from the Feds is that that any profits made on the 529 plan are not subject to capital gains and income taxes if used for educational purposes.