I have been consistently (and heavily) contributing to my kids 529 plans since they were born. I have enjoyed a bull market and the tax-free growth in these funds have been fantastic. However, they are now entering the middle school years and I have lost my appetite for continuing to fund these accounts. In my opinion, when compared to a retirement plan, the relatively short time horizon for needing to withdraw from a 529 plan exposes the later contributed dollars to much risk for given theoretical return. 'Targeted enrollment by year' funds offered through 529 custodians reallocate into ever increasing proportions of various bond market funds as the beneficiary gets closer to enrollment. Recent data has demonstrated that bond markets correlate with equities more so than what has historically been taught. Given that the average market cycle of around 7 years and sequence of returns risk for withdrawals, it is not making sense to me to continue to expose new dollars to so much volatility and limited time for recovery, when a down market eventually hits.
Does anyone agree or disagree with my concern here? Does anyone use any alternative asset classes to store ongoing savings as their beneficiary(s) approach enrollment?
Does anyone agree or disagree with my concern here? Does anyone use any alternative asset classes to store ongoing savings as their beneficiary(s) approach enrollment?
Statistics: Posted by Airmanf117 — Thu Aug 15, 2024 7:18 am — Replies 6 — Views 314