And Why NO High School Junior or Senior Should Still Own One:
This is the actual performance, from 2007 through 2011, of one of the most popular 529 Plans' most popular funds. We assumed parents invested $31,846 into this 529 fund at the start of 2007 and then ran the numbers based upon actual annual results and fee/commissions deductions.
We chose $31,846 as the starting point because that is the average cost of 5 Kiplinger's Best Value Public colleges and 5 Kiplinger's Best Value Private Colleges. So this chart asks, "How did parents do if they invested into this popular fund an amount equal to the average cost of college in 2007?" The answer is not pretty (what if the parent's child were a HS graduate in 2008, with tuition due in August of that year? See 2008's annual return).
Instead of keeping pace with college inflation, they fell further behind because their college savings fund lost value. Is This Any Way to Save for College?!
Please note that the "Average" 5-year return for this fund - a number that 529 sales firms like to quote - is +1.50% but the parents' college savings balance DECLINED by 10.46%. How can this be? Contact us for a free discussion of The Flaw of Averages as they relate to the way money really works.
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