Most, if not all, 529 Plan vendors consider Bonds to be "safer" than stocks and so they weight portfolios with more bonds - several go to 75% bonds - as the student gets older. But bond prices are at record highs! Is now the time to hold bonds? Maybe. Can parents afford a(nother) 30-40% decline in their 529 Plan values? Maybe not.
What if the 40% decline happened the summer before Freshman Year, when tuition is due?! Wall Street loves to use the term "long term" in its sales pitches. But for a High School Junior or Senior, there is no "long term!" Tuition is due, whether or not 529 Plans are doing well, by August of the Senior Year. There is a term for investors who have their portfolio's principal at-risk for a very short time horizon:
And we are not opposed to speculators; they are necessary for markets to function. We are, however, opposed to 529 Salespeople not telling parents that they are speculating with their child's education if they're invested in 529 Plans during the last few years of high school. Contact us for better ideas.
What does an "Age-Based" 529 Plan Do if Interest Rates Rise?
And is This What You Thought Might Happen Just Before College Payment is Due?
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