What if the Next Decade is as Bad as "The Lost Decade?"
A $90,000 Swing?! Whaaat?! From a negative $23,930 in an unprotected, S&P 500-like 529 Plan to a positive $67,729 in a principal-protected 529 Plan Alternative? Definitely one of those "too good to be true" things, right? Well, yes. And no.
The "catch" is that neither chart, the S&P 500 Index at the top nor the 529 Plan Alternative below it, shows a deduction for investment costs. And buying the S&P 500 Index is cheaper than buying the 529 Plan Alternative. Then again, the 529 Plan Alternative may very well be cheaper than buying a 5.75% front-end load 529 Plan. The other "catch" is that not all investors are qualified for the 529 Plan Alternative. Then again, not all investors are qualified for 529 Plans either (we're talking to you parents of Juniors and Seniors).
Let's get real here, too, about investment costs. If we have another "Lost Decade," are investment costs really going to turn an alternative that GAINS 67% into something that LOSES 24%? No, of course not.
How do you know whether or not you're qualified for the 529 Plan Alternative? How do you get details? How do you save many thousands of dollars on the cost of financing education for your children?