Some plans offer federally insured bank savings options, Ms. Biar said.
Jeff Brooks, who works for a family publishing business in Seattle, said he was shocked to find that his children’s accounts through Utah’s my529 plan had lost about $19,000 combined in the first half of the year. One child is in college, and the second is a high school senior. He paid all upcoming college expenses as soon as he could, he said, and moved remaining balances to a stable value fund within the 529.
“I wanted to stop the bleeding,” he said.
The plan, which has a top rating from Morningstar, had been “solid” until now, Mr. Brooks said. But he cautioned that age-based portfolios should not be viewed as a “set it and forget it” option.
Brad Ledwith, a certified financial planner in Morgan Hill, Calif., suggested that families with students in college might consider moving an amount equal to several tuition payments into a low-risk option within the 529 plan, such as a money-market fund or even a certificate of deposit.
Mr. Ledwith, a father of four, including twins who are juniors in high school, said he had accrued $1 million in a 529 plan as of Jan. 1, but the balance had fallen about 23 percent by July. (He chose a more aggressive investment option with greater stock exposure, rather than an aged-based portfolio.)
“It was an eye opener,” he said, adding that he has a high tolerance for risk.
He said he was confident that the market would rebound. Even so, he has moved $100,000 into a more conservative option within the 529 plan.
Despite the current market gyrations, Mr. Ledwith said, people whose children are just starting high school should stay invested in a growth portfolio: “A lot can happen in five years,” he said. And people with very young children, he said, should consider contributing even more to their 529, since they will be investing when prices are generally lower.
Article source: https://www.nytimes.com/2022/08/26/your-money/markets-college-savings.html
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