What does an "Age-Weighted" 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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How Much Risk is in YOUR Age-Weighted 529?

While we could provide you with that answer- after reviewing your statements and about 100 pages of your 529 Plan's prospectus - it is beyond the scope of our normal, FREE analytical services.  Suffice it to say, we have 30 years of award-winning investment advisory experience and we think Age-Weighted 529 Plans are inappropriate for parents of high school juniors and seniors (and maybe freshmen and sophomores, too). 

Unless that parent is a knowledgeable and willing speculator in the stock and bond markets, in which case, we wish you luck.


At right, is something of a proxy for your level of principal risk - a Bond Value calculator.  If you knew the time to maturity of the bonds in your Age-Weighted 529 Portfolio and their current price, you could assess how much principal you'll lose when (no "if") interest rates rise.  But finding out the specific bonds in the portfolio - a portfolio that can change several times per year - is not easy either.  What if you just enter a few guesses as to how much interest rates could rise?  Perhaps that would help.  Here is another way to look at how risky bonds are.

For instance, if you entered your 529 Plan value - say $50,000, a maturity of 180 months (the longer a bond has to maturity, the more volatile its principal value), an interest rate of 3.75% (about the current 30-year mortgage rate) and a new "Current" rate of 6% (could mortgages go back to 6%?), you'll find that the 529 could decrease in value to $38,890.  If you used 10-years as your maturity, the decline would be less, to $41,556.

Maybe a BETTER idea is to get out of a 529 Plan whose principal is potentially 100% at risk as the time to withdraw funds for college nears.  What if instead of risking all of your child's 529 principal, there were a way to insure and protect it?  There is: Contact us to learn how to do it.

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