The market meltdown means most 529 state college savings plans are awash in red ink. Joe Hurly of http://Savingforcollege.com, which ranks these plans, offers this advice, based on your child’s age.
AGE 10 AND UNDER: Hang tight. Stocks are still your best chance to see money grow at a rate that even begins to approach yearly tuition hikes. But look to see if your plan has an age-based option that automatically moves you into more conservative investments (bonds, cash) as your child approaches college age.
AGE 11 TO 16: Consider putting new contributions in conservative investments and leaving your current portfolio as is. That way, you can hedge your bets with new money and remain well positioned for a stock market rebound. (Note: In 2009 only, the IRS is allowing 529-plan investors to make changes twice a year instead of once.)
AGE 17 AND UP: It’s time to switch all or most of your portfolio to conservative investments. If you used an age-based option, you should be Ok, but check to be sure. A few 529s keep as much as two-thirds of an older teen’s portfolio in equities, which may make you nervous.
*Remember to ask Mike or Doug about your options for 529 plans. 1-888-225-9564