But what if you were planning on using your child's 529 Plan to pay for college this year and/or next? What if your Holding Period were only a year or two? The chart above-right paints a different story, one that Wall St. fails to disclose. The variance if the holding period were one year is +60% to -40%. Can you afford to potentially throw away 40% of your college savings, in one year? Is the opportunity to potentially get 60% (and when was the last time anyone earned 60% on their mutual fund portfolio?) worth the risk? The yellow line, by the way, is Wall Street's "Age-Based Portfolio" solution: bonds ( where your historical annual risk is 18% of your principal).
TO SUMMARIZE, if you are the parent of a recent high school graduate, a Senior or a Junior, you should NOT have all of the money you're counting on to pay for college in 529 Plans.
The Risk-Reward ratio is simply not there. Sure, you could get lucky and have your portfolio increase 20%+ in the one or two years that remain until college. But is "luck" a college financial planning solution?