Smart Reasons to Save, Use and Invest Money

Why The Age-Based 529 College Approach Has Failed For Me

I hate to say this but my college “Age-Based” 529 plan selection has failed to live up to my expectations.

It seemed like such a brilliant idea 13 years ago.  It was an Age-based plan that in theory would re-balance the asset investment types for me based on the age of my kids.  To me it seemed like a slamdunk!  Unfortunately, the stock market decided to do the exact opposite from the strategy that my state’s college 529 plan was following…. What a huge disappointment!

So, instead of it being a great investment vehicle, at most it’s been a glorified savings account.  At least I get to deduct the amount I contribute to it from my state income tax!

Future Concerns:

Now as my kids are growing older, the age-based plan starts to re-balance the money in the plan from equities to bonds.  Unfortunately, this is also a bad time to do such a re-balance since the US Treasury rates are rising!  As the treasury rates rise, the bond funds should suffer.  Obviously this just adds insult to injury!

In fact, the only thing that has worked for me is that I’ve been able to dollar cost average my contributions along the bump stock market road.  This at least give my account a bit of a return, but still less than have of what my “all equities” 401k plan has been able to accomplish.

So in conclusion, if you are considering a similar college investment route with your kids and their college 529 planning… I recommend thinking long and hard about other options that just the Age-Based option!  If I had to do it over, I wish I would have choose a mix like half in the age-based plan, and half in an “all equities” plan.

It’s not too late for me though, I still might change the strategy since my oldest is only 13 years old.

Learn from my mistakes,



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