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Vanguard 529 investment options – looking for recommendations

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  • Avatar tintin 
    Participant
    Status: Spouse
    Posts: 22
    Joined: 01/07/2019

    We live in Texas and we are rolling over around 140K to a new The Vanguard 529 Plan 

    Our kids are 8 years and 10 years away from college.

    Any suggestions for investment options with The Vanguard 529 Plan?

     

    https://investor.vanguard.com/529-plan/vanguard-529-plan

     

    Vanguard offers age based options and individual portfolio options

     

    https://investor.vanguard.com/529-plan/age-based-options

    https://investor.vanguard.com/529-plan/list#/529-plan/asset-class/month-end-returns

     

     

    #179875 Reply
    Avatar Peds 
    Participant
    Status: Physician
    Posts: 3791
    Joined: 01/08/2016

    Why not just the age based TDF?

    #179878 Reply
    Avatar tintin 
    Participant
    Status: Spouse
    Posts: 22
    Joined: 01/07/2019

    @peds, good idea. It may be the simplest option. BTW, can 529 funds be used for medical school (if kids decide to go down this route), graduate school etc. or can you only pay for 4 year college after high school?

    #179880 Reply
    Avatar G 
    Participant
    Status: Physician, Small Business Owner
    Posts: 1546
    Joined: 01/08/2016

    Age based, though do take note that they get ultra conservative pretty fast. I have mine in aggressive and will probably leave there til 3rd year of college pending plans for my kid, likely changing back to 100% equities.

    529 can be used for pre-college, college, or post-college education expenses.

    #179887 Reply
    Liked by JBME
    Avatar toothshucker 
    Participant
    Status: Dentist
    Posts: 2
    Joined: 12/20/2018

    You can pay for any schooling. I think you can even pay for private K-12 school with the changes made to 529s this year.

    I just put all my kids 529 investments into the “aggressive” age based option. Set it and forget it type stuff for me. Mine are a lot younger than yours, so you very well may find something else more appropriate for your situation.

    #179886 Reply
    Liked by tintin
    Avatar G 
    Participant
    Status: Physician, Small Business Owner
    Posts: 1546
    Joined: 01/08/2016

    Got this today from VG re their 529:

    Change to Maximum Contribution Limit
    Effective July 1, 2019, the maximum contribution limit is increasing to $500,000 from $370,000

    Thank goodness, because at this rate, in 20 years $370k is going to cover about 4 semesters max.

    Unless we have socialized education, at which point the top marginal tax bracket will be around 100%; perhaps we’ll all be able to take some community college classes and use the 529 to pay for food and shelter.

    #218142 Reply
    Liked by ENT Doc, JBME
    Avatar JBME 
    Participant
    Status: Spouse
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    Joined: 03/26/2018
    Splash Refinancing Bonus

    Is VG changing their max because they want to, or did some Nevada law change the limit (for those that don’t know, the VG-based 529 is located in the state of Nevada)?

    #218152 Reply
    Avatar nephron 
    Participant
    Status: Physician
    Posts: 67
    Joined: 05/09/2019

    I have my vanguard 529 accounts in a mixture of aggressive age based growth, 500 index, growth index, value index, and small cap indices.    I don’t know when I am going to move them out of stocks, but probably when they are in high school?    If you have an over a 5 year horizon, I think that the likelihood that your portfolio will decrease in stocks is low (historically).

    #218154 Reply
    ENT Doc ENT Doc 
    Participant
    Status: Physician
    Posts: 3165
    Joined: 01/14/2017

    States determine individually what 5 years of qualified educational costs means, which is the target contribution max for each state. Vanguard just does what it’s told by the state.

    #218162 Reply
    Avatar G 
    Participant
    Status: Physician, Small Business Owner
    Posts: 1546
    Joined: 01/08/2016

    Is VG changing their max because they want to, or did some Nevada law change the limit (for those that don’t know, the VG-based 529 is located in the state of Nevada)?

    Click to expand…

    State Treasurer/Board.  These are the last minutes I could find, addresses the issue starting page 10.

    #218175 Reply
    Liked by DCdoc, JBME
    Avatar ajm184 
    Participant
    Status: Other Professional
    Posts: 553
    Joined: 07/14/2017

    The question I have are:  a. Does your state offer a 529 plan, b. Is said plan decent, c. do you get some type of tax break for investing in your state’s 529?

    When I enrolled in Nevada’s 529’s none of these questions were affirmative in the state I lived in at the time (Illinois).  IMO one of the biggest reason I choose Nevada was the options to create your own asset allocation.  If you are going to do a TDF or age-based portfolios, most states have a good low cost option.

    If you are going to contribute a single lump sum or accelerate contributions, then a TDF or age-based maybe the way to go.  If you are making say monthly or bi-weekly contributions, and if you are DIY’r I would create your own portfolio/asset allocation over the timeframe/cash flow you expect to contribute.

    This is the approach I am taking/took (YMMV)-

    0 – 5 YO- All equities (Total stock/Total International stock/Growth/Value)

    6 – 10 YO- add small allocation to bonds (total stock/total international stock/growth/value/bond)

    11 – 18 YO- a larger allocation to bonds and overall portfolio simplification (total stock/total international stock/bond/international bond)

    The 500K limit is one of the highest now I believe as NY is like 420K and was one of the higher ones I had seen.  Most are in the 360 – 380K range.  Average 529 balance in US is just over 16K, not exactly an amount to get someone through an undergrad program.

    #218194 Reply
    Avatar DCdoc 
    Participant
    Status: Physician
    Posts: 442
    Joined: 06/14/2016

    Tax advantages are predicated on large growth with no taxes on growth. State deduction ranges from nonexistent to minimal. Any states high? Not mine. We admittedly have 15 years left before college but are 100^ equities hoping to maximize growth and tax benefit. If this doesn’t happen we can try to Cash flow, but with 3 kids that won’t be easy. Only really makes sense if you get a state deduction, go heavy equity, and the market cooperates.

    #218203 Reply
    Liked by ENT Doc
    Avatar bonebrokemefix 
    Participant
    Status: Physician
    Posts: 54
    Joined: 04/10/2017

    Now that I have MY education paid off I have started to look into saving for my children’s. Silly question, but for multiple kiddos does a 529 get opened with each child as the beneficiary, so that different age-based allocations can be made?

    #218664 Reply
    ENT Doc ENT Doc 
    Participant
    Status: Physician
    Posts: 3165
    Joined: 01/14/2017

    Now that I have MY education paid off I have started to look into saving for my children’s. Silly question, but for multiple kiddos does a 529 get opened with each child as the beneficiary, so that different age-based allocations can be made?

    Click to expand…

    I would open a separate 529 per child.  There are no costs to doing so other than keeping track of more than 1 account.  By doing so you can try to achieve parity, either through hitting certain thresholds by a specific time period or cash flowing the difference (if achieving parity is important – is for us).  The downsides of one account/beneficiary are:

    -with multiple kids you’ll reach the contribution maximum much faster and might not be able to attain your long-term savings goals in 1 account

    -if you need to open a separate account later and transfer funds you’ll be “out of the market” during that funds transfer, which statistically is not a good decision

    #218669 Reply

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