529 investment
I have a couple of 529 accounts set up (in CO and MI, 2 states where I used to be taxed in, but no longer) for my 6 year old. The MI one is enrolled in some 2032/2033 college enrollment option, and has like a 72:28 stock to bond ratio currently (https://www.misaves.com/research/enrollment-year.php). I'm tempted to change this to 100% stock (the MI option for 100% stock is some TIAA-CREF Equity Index Fund -- not really familiar with TIAA) The CO one is owned by Vanguard under some "Direct Portfolio" 529 option. The fund has a similar stock:bond ratio with the allocation being Vanguard® Institutional Total Stock Market Index Fund 45% Vanguard® Total International Stock Index Fund 30% Vanguard® Total Bond Market II Index Fund 17.50% Vanguard® Total International Bond Index Fund 7.50% I'm considering switching these to one of the 100% stock allocations because my son is still far away from going to college and because I don't just see the 529 as a college investment option, but also as a (state) tax advantaged personal investment option where I can grow my net worth. What do you guys think of going with 100% stocks, and what do you guys do with your 529s?
I have 100% on stocks and will be aggressive until 3 years away from need.
Does your 529 have multiple options for stocks?
My kid is 5 years old. I have it set up for 100% stocks.
Do you have multiple choices for stocks?
I am in Texas. I have invested into New York 529. It has multiple vanguard etfs options.
Growth is tax free but you can only use it for education expenses, doesn’t have to be your own child ( nieces , nephews). Very limited options if you want to spend that money on education outside of USA . You can’t choose individual stocks but there are are funds like vanguard so I went to New York despite of living in WA. you might like a fund with portfolio of stocks that agrees with you in some another state so you get it there.
Noob here - does having a 529 investment for a specific state like MA, CA, etc guarantee college admission to the state univ?
No. Admission has no connection to 529 investments.
How can one do 529 plan if kids arent US citizen or have GC?
Dont need to withdraw from a taxable account. Infact tution fees are more for non-citizens and non-gc holders
Bkrf72 Can you explain if we can still contribute if non citizen and explain what you meant by dont need to withdraw?
Use an IRA. you can withdraw for college without penalty. https://www.investopedia.com/529-plan-vs-roth-ira-for-college-4771260
I max out my IRA before the 529
529 should always be all stock. Bonds are for those close to EOL not your 6 year old. You care about long term growth not short term volatility. Maybe when they hit 16 mix some bonds in but really doesn’t make sense if you do a Monte Carlo simulation
EOL = end of life?
Yes end of life. When your drawing down retirement accounts you really want it to be steady and you don’t really benefit from compounding. Your kids very young so be allocated in stocks.
Roth IRA accounts are better than 529. You have more flexibility with investments and usage
I used 100% stocks until my kids reached the age of 14. At that point I started transitioning to a mix with safer instruments. I was comfortable with the risk and it has paid off.
Does your 529 have multiple options for stocks?
I have several different fund choices. I generally distribute between us (large cap and total index) and international index funds