What to do to Prevent A(nother) 35% Decline in College Savings:
PROTECT ASSETS.In 2008, three of the largest 529 Plan's top-selling funds posted the following annual results: -30.06%, -36.80% and -39.07%. The stockbrokers who sold parents the 529s probably said what stockbrokers always say when the market suffers one of its inevitable major declines: "It's not a problem; we're in for the long term." But what if your child was a high school junior or senior in 2008? Let's take a quick look.
Suppose you had accumulated $50,000 in her 529 plan and were ready to use some of it in the Fall of 2009 to offset the cost of college. How much would the accumulated $50,000 be worth is 2009, were we to pick the middle-performing fund? $31,500. How did that "long term" thing work out?
What if there were far safer alternatives for Juniors and Seniors than holding 529 Plans that invest in 100%-Principal-At-Risk funds? What if there were ways to provide 100% Principal PROTECTION for kids about to leave for college? There are, contact us.
"Parents can go into our Age-Weighted plans," some might say. But what is that, really? For many 529s, the "age-based" portfolios are just a shift from 100% principal-at-risk stocks to 100%-principal-at-risk-bonds. In an era of record-low interest rates, bonds may be less safe than stocks!