Almost a year ago, I opened 529s for my two sons, and started them off with a sizeable lump sum. I have not contributed any money since. Thanks to a nice holiday bonus, I was planning to add another large lump sum but when I checked the accounts, the total balance was lower than the opening balance (about 4% lower).
Do I add funds now, to benefit from any upswing? Or hold off?
Thanks in advance.
honeydew / 7235 posts
@Myicitygirl: Ugh really? We have one for my older son and are just about to open another for my 9 week old, and this makes me nervous, but like other investments you need to think long term, and there are tax savings to a 529 vs money in the bank.
I think you can reallocate your investments annually, but if it's only been a year you may want to wait. And did they perform really badly or did you lose due to fees and other plan associated costs?? The fees can be sneaky.
Also, you will get some savings when you file your taxes and deduct whatever your state allows for 529s.
Ok, I was also re-convincing myself on why to do a 529.
wonderful pea / 17279 posts
Still invest. Just like your own 401k any investment vehicle will have ups and downs. By the time you need to use the money for college the entire account will have grown.
wonderful pomelo / 30692 posts
Yep, what @Mrs. Lemon-Lime: said. We've just been continually putting money into our kids 529s, just like our 401ks. Last year was a rough one for the stock market, but things always go up and down, so you have to look long term.
nectarine / 2973 posts
Still contribute. You're going to see ups and downs throughout time. Overall you will have more growth than loss but to see that you have to let the money grow. Investing is a long term process. Don't get discouraged over a negative year!
wonderful kiwi / 23653 posts
Contribute as normal! I'd look it at like any account... The market is volatile but since the funds will sit around for ~18 years it will survive the storms!
grapefruit / 4418 posts
Contribute as you would a 401k. They go up and Down with time and are long term investments. You really only need to worry if you're getting close to needing to cash out.
grapefruit / 4355 posts
Definitely still contribute. All investments are going to have ups and downs and you shouldn't worry about the fluctuations. If anything, now is a better time than normal to contribute if the accounts are down. Better to buy low than buy high!
grapefruit / 4988 posts
This was a tough year for investments. I ignore the balances on our 529 just like I ignore it for my 401k and IRAs. I would just contribute as normal.
apricot / 294 posts
@hellobeeboston: I chose the NY Direct Plan for the low expense fees (I think 0.16%). So the bulk of the 4% drop most likely has to do with the market.
I wish we had a state tax deduction for 529 contributions, but alas, we live in CA.
Thanks everyone, for the advice and encouragement. I will add to the accounts now. I guess I should keep an eye on the account performance on a regular basis, and not once a year.
There are so few options for college savings with tax free growth. There is so much talk about the college debt problem, but no one does anything to help parents save for their kids' education.
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