529 Plans and Saving for College
Submitted by chibucks on April 10, 2008 - 1:05pm.
Hi all,
Appreciate this website and all the hard work everyone has put into it. We're currently looking to open up a savings plan for our baby for her education.
A 529 plan has been recommended and only makes sense, but aren't there a lot of options? For example, for Illinois, they have:
1) College Illinois: where you can lock in this year's tuition for the kid if they go to an Illinois Public University... with some caveats if they go to a private school and such... (www.collegeillinois.com).
2) And then there's bright start savings plan (www.brighstartsavings.com).
So, for those in the know... what did you choose and why? What factors did you look for when choosing what you did?
Thanks for the help in advance.
Tages:
529s
We live in CA, but opted for the Utah plan for our son. As far as I could tell, there's no real benefit to California residents for opting into CA's plan, e.g., there's no state income tax deduction. We shose Utah because we liked the investment options, the fees are really low, and you don't have to go through a broker. I've heard good things about VA's plan, too.
529 Accounts
I started a 529 through Fidelity one month ago. It is their nationwide 529 which originated in New Hampshire. Just to let you know. We put $1,025 dollars down to start. In the one month, it has gained $21.50. That's about a 2% return.
Saving for College
I'm not a financial planner by trade, but I'm very happy with the choices we've made so far. We went with one plan in Colorado (home state) that's connected with UPromise (www.upromise.com), and one through Fidelity that's fed by a 2% cashback Mastercard (no annual fee). As far as investing goes, there's a piece of wisdom out there (warren buffett, maybe) that basically says 'be bold when others are fearful'. Another way of looking at is that times like this are when the best bargains are to be had. As long as you're not trying to time the bottom and your investment time horizon is long, you'll do well. I also recommend www.motleyfool.com for financial advice in regular language. By the way, I have no financial interest in any of the websites mentioned... I'm just a dad who's very happy with what they've done for me.
Nate (2 boys, 4 girls)
interesting, I didn't know that
I can't say I did a TON of research, we ended up with brightstart (and an out-of-state one) simply because our planner recommended it. but now that you mentioned college illinois, that sounds like an excellent idea as college tuition inflation is going up almost as crazily as health care. I'm going to have to look into this more, and maybe add the other one!
plus, both illinois plans have the additional (though limited) advantage of a state tax write-off. (though lots of folks believe the out-of-state ones perform better and over the long-run overtake that write-off benefit)
The question I'm thinking through right now is: based on where the economy is right now, should I pull back on investments or accelerate them? I don't that supposedly long-term it won't matter, but I'm guessing this recession is gonna beat down stock prices for at least 12 months.
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