|Talk to me about 529 college savings plans.||Spinchick|
May 28, 2003 6:13 PM
|I am overwhelmed with all the info out there on the multitude of plans within various states. I checked collegesaving.com (I think) - they listed the top ten. Money magazine has their favorites. We live in NJ so we don't have any state tax breaks available - plus the NJ plan has higher than average costs involved.
Any input is appreciated.
|re: Talk to me about 529 college savings plans.||txcross|
May 28, 2003 7:24 PM
|I am currently using the Virginia plan. The main reason is that you can tailor your investment options to meet your own personal risk tolerance. From what I saw, most plans give you a few options, maybe 5 or 6. With the VA plan you have about 40 different funds to contribute to and you can disperse them in any percentages you choose. Much like my 401k. Twice a year I meet with my FA to review my current elections and see how they are performing.
The key things to look at will be flexibility and fees. Currently I am contributing $200/month and with somewhat conservative estimates this will me worth about $80,000 by the time my son turns 18. That's about 80 times the amount I had when I went off to college so I figure he should be OK...
Also make sure the plan does not charge a penalty for going to an out-of-state school. Texas has some plan that requires your child to attend a school in Texas to receive the full benefits.
|re: Talk to me about 529 college savings plans.||PaulCL|
May 29, 2003 3:41 AM
|Personally, I use the Ohio plan from Putnam investments for my children. I live in Kentucky which doesn't have a 529 plan yet.
No tax break for me, but the plan is a good one. High max contribution limits (if you win the lottery). Putnam allocates your assets for you based upon the child's age. For example: my 4 year old is in more stocks than his 10 year old sister. My plan was net up over the last two years. Fees are average and reporting is excellant. There is automatic deduction from your checking/savings account if you want.
Go talk to a financial advisor. Please realize that most plans have several fee options - so don't pay anything up front for any reason!
Good luck. Paul
|re: Talk to me about 529 college savings plans.||moneyman|
May 29, 2003 6:21 AM
|One - They are an excellent way of saving for college;
Two - Expenses matter, but not the most.
Three - Paying for advice is not such a bad idea. If you work with a fee-only financial planner, he/she will charge you for his/her advice, but it will be worth it. Why would you hesitate to pay a few hundred dollars for advice affecting the second largest investment you'll ever make? (It astounds me how people think financial advice should be free, and then complain when it is bad or tied to a sales presentation.) If you use a fee-only planner, there won't be a conflict of interest in that the planner will not be selling anything but his/her advice. Be sure that the person you go to has the CFP designation. To find one go to http://www.cfp.net/default.asp. The designation means a lot.
Four - Because New Jersey does not have any tax breaks, it doesn't matter which state plan you use.
Five - Investments: All 529 programs offer a number of set investment portfolios that are allocated among stocks, bonds, mutual funds, and money market instruments. A portfolio typically consists of 8-10 funds from the same fund family, but there are several providers that offer funds from several families of funds The investments and the allocation of each investment within a portfolio are set by the program. You may choose the portfolio or portfolios to invest in but may not choose which investments make up the portfolio.
Six - When comparing 529 plans, it is difficult to choose a plan based on past performance. While 529 savings accounts have been around for three years, the majority of the plans have only been up and running for the last year. Due to the newness of these plans, there is a limited investment track record for comparing portfolios and with current trends in the marketplace, most portfolios are in the negative.
Seven - When comparing 529 plans, it is difficult to choose a plan based on past performance. While 529 savings accounts have been around for three years, the majority of the plans have only been up and running for the last year. Due to the newness of these plans, there is a limited investment track record for comparing portfolios and with current trends in the marketplace, most portfolios are in the negative.
If you would like some more info, I would be glad to Email things to you. For the record, this is not a solicitation for your business, nor will there be one. matt n p 2 at earthlink dot net.
May 29, 2003 6:24 AM
|Six and seven are repeats. Six should deal with fees - 529 plans typically charge either an enrollment fee or an annual fee or both. The fees range from $5 to $85 with some programs adding another .25% to 1.29% in annual asset-based management fees. Annual total expense ratios range from .2% to 3.5%. Also, most investments carry a load on the actual investment share.
Sorry for any confusion.
May 29, 2003 12:05 PM
|I knew I was asking in the right place. You've given me good info and resources.|| |