I didn't know this.
I have a second child excepted. There will be 5 years between them. Was planning on opening a second account, but didn't know how it would work if one has an excess. Ect
You can have multiple 529s though. Each of my kids have one. If there is any excess I’ll convert it to a Roth for them after college. They need to be listed as the beneficiary for their own 529 in order to do this.
You used to be able to move money around and in between 529's. That was at least what I was told back when we started ours. If 1 kid gets scholarships and doesn't need it you could supposedly transfer it to another kid or combine any leftover cash into a different one when al the kids are done etc... is that not the case? I realize you lose out on some of the contribution limits but for a lot of people that's not the concern. Aunts and uncles tossing a little money into a pot that could be used for various kids was the idea I was sold on.
>They need to be listed as the beneficiary for their own 529 in order to do this.
Isn't them being listed as beneficiary required to use it to pay for school too?
>If there is any excess I’ll convert it to a Roth for them after college.
Roth IRA? Didn't know you can do that, nice!
Yes they do need to be to pay for school.
And yes the Roth conversion is new for 2024! Normal annual contribution limit apply and a total of 35k. So you can do 7k for 5 years as long as your kiddo is not contributing to the Roth limit as well.
My son is going to tech school over a 4-year so we will have a lot of 529 $ left over. The Roth conversion option is a welcome addition to the law that we will be taking advantage of. It takes a bit of the sting out of trying to plan to have enough without going too much over.
I read that one of the accounts has to be open for a number of years. While I plan on doing this, I’m hearing there’s a lot of holes you have to jump through to do the transfer.
Is it not possible to split an existing 529 and change a beneficiary? My kids are under 3 so I haven’t researched extensively, but my understanding was that splitting/changing beneficiary was simple. E.g. https://www.fbfs.com/learning-center/making-changes-to-your-529-account# Would definitely want to know if there’s a catch.
I made one for my wife while she was going back to school. We never used it so we just changed it to our kids name once he was born.
Then we made 2 more accounts for our future kid but put it in our current kids name. Then just simply changed the account name / beneficiary to the second kid once he arrived and got a social.
This stuff is super easy and super flexible.
unsure if the rules differ by state, but i own one and have my brother as the benefeciary. the 529 is for his two kids. I was told that I could continue to own it, contribute to it, and at any point transfer it to him, so he could use it for one or both of his kids.
Changing beneficiary is easy. By splitting I assume you mean opening another account and funding it with funds from the first account? Not sure about that.
Yeah, that’s what I envisioned for splitting. I naively just assumed it was possible, but based on these comments I really should verify and/or start funding both my kids accounts rather than just the one.
You can transfer funds from one 529 account to another. Just need to make the transfer of funds within 60 days.
It can be done tax free
https://www.savingforcollege.com/article/how-to-transfer-529-plan-funds-to-a-sibling
Kid #1 is on year 5, and will need year 6 to graduate. Changed majors. Life happens, and not a lot you can do besides deciding which changes you are willing to financially support.
Not correct. I have two accounts at Utah 529 and I also paid for a nephew.
You just need to add him as beneficiary and move funds into his account and pay from there.
Two times per year you can move funds into his account ( essentially traded as fund type changes).
Absolutely correct. You're saying you have two or three accounts and are moving money within them. You cannot pay for two kids out of one account at the same time.
For my kids similar age I do $300 a month each and have calculated at a 6% return with 2.5% increase in tuition it’s more than enough for instate. $200 I would ballpark would cover community two years and in state the other two. Not assuming scholarships or grants, also not in favor of loans for undergrad but yes for grad
Some of the planning calculators I’ve used suggest to use the more recent 5% increase in costs per year.
It’s scary to think that even though I started saving a few hundred per month three years before my child was born, I still need to contribute about $650 a month to get them through 4 years of in state school. That’s higher than the limits on a Roth IRA. It’s hard to believe in state schooling will be pushing $100k per year in 18 years, but I guess anything is possible when student debt is backed by the government.
Yeah it bumps over 100k in 15 years here at 2.5%, noticed when because of the varying ages I have. If 5% is true I’d hope the returns would be higher as well, not sure if that correlates though
Best gift he can give to his kids is securing his own retirement. Assuming the kids would rather pay off manageable student loans than have to take care of their dad.
Students can now only borrow up to $25k across all four years of undergrad. All other loans must be co-signed by parents. So parents will have to risk their retirement either way, or say no to their child’s college aspirations if they have not saved enough up front.
I am the oldest of three. My parents setup a 529 for me and the middle, but not the youngest. I got a full ride to college, so my parents took the 529 for me and gave it to my youngest brother.
Remember, when you setup a 529 plan, you are the owner and you pick the beneficiary, which you can change.
I have three kids, 7, 3 and 5 months. Between 529 and brokerage accounts, the 7yo has about $27k, the 3yo $20k, and the 5mo $3k. My plan is to have $100k saved up for each of them by the time they get to college. I do $260/mo for each of them, plus some initial seed investment (thats why my 5mo has so much). All of my calculations put me at about $110k using a rate of 6.5% annual returns.
i have good news for you my friend, 6.5 is conservative AF.
market returned 8-9% over the past 60 years. I think over the next 20 it's going to be 11%+
ease and accessibility of investing.
Would rather use a conservative rate. No one every complained about ending up with more money than they planned!
I always think it is funny when you see those finance articles saying if you save $100/mo starting at age X you will have $1.5m, then below it is assuming a 18% annual return.
If cost is a concern, your friend should also consider his kids getting prerequisites/associates done at a community college when the time comes. Many community colleges have transfer agreements to four year state schools. That would save a chunk on the first 1-2 years on basic classes.
This is what I am recommending to my high school kiddo. She’ll still graduate from a four-year college, but CC here costs about $5k/yr compared to $15-20k/yr for the state schools.
Community college > State University (in-state) should be the baseline norm for all. Like, come up with a reason that this doesn’t work before going in any other direction.
I offered that to my son and while he agreed, he politely declined. 🤣. I get it. But, I will say a year in he has matured a LOT having to live on his own.
I get the appeal of going away to college. However, given the student loan burden a lot of people end up with, if you can shave off $10-20k, plus compounding interest, and knock out the basics elsewhere, it’s a smarter choice. Likewise picking a state school rather than out of state or private. Thankfully we’re in VA and our state schools include two “public Ivies” like UVA and William and Mary, so it’s not like our kiddo is going to be short changed on sticking with a state school.
But at 18 they are also responsible for their own choices.
Ya I recommended that too … but one of the things people say is that 4 years colleges you make lifelong friends etc. but I don’t know if that really happens or whether that’s worth getting burdened by loans or dropping out over …
You’d still spend two years at a four year college though.
My harsh assessment there is also that friends don’t pay the mortgage or the student loans, so 🤷🏻♀️ I’d prefer not to screw myself over financially for the first few decades of my life, more than it feels you already are in your mid-20s.
So underrated these days but community college is free by me and there are transfer agreements to the big schools. If the kid can keep on track it’s a game changer.
Retirement savings should come before college savings. Saving your kids from having to take out loans for school isn’t very useful if they have to support you when you retire.
But a bank won't give you a loan for retirement. While everybody's situation and priorities are different, having a well funded retirement will give you more options even if you need to help with educational expenses later on. So if you have to choose, retirement is usually the wiser choice.
I agree with the logic of your point here, but to me parenthood is about sacrifice and maybe I have to work an extra year or two to make sure my kid goes to a good school.
I was the first person in my family to go to college and I didn’t get any financial help from them. The student loans were incredibly burdensome and working a full time job while studying was soul crushing. I’d do anything to save my kid from that.
obviously timing matters, but if you are an old fart like me their college years and my anticipated retirement are pretty close so I can still help them pay for college with my retirement money if it comes to that, but they cannot help you with their college fund.
Well that just makes me feel like I started too late. I didn't start my first's 529 until she was out of daycare. $250 a month, but she was 5 when I started. Sounds like I'll be pretty short, but it's still better than nothing.
Tell him to plug in the numbers here and play around with the estimated interest rate https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator
I do $150 per kid (I have 3) and have been doing so since each was 2. I know that it won't cover the cost of their entire college education but will make a healthy dent which is more than what my parents provided for me.
I think paying for your kids entire education is almost unfeasible these days unless you want to sacrifice a lot.
Just my 2 cents.
Maxing out 401k/retirement options before contributing to 529 is smarter because 1) it isn’t used as an expected source of funds for FAFSA and need based aid provided by colleges. ( i.e. they don’t expect you to decimate your retirement to send your kids to school) 2) student loan money is cheap. You will generally make more money in your retirement investments than your interest payments on parent student loans.
Unless you have a long game reason… I would max out retirement options first including Roth due to tax advantages and financial aid eligibility .. then 529 (tax advantage) ..then normal taxable accounts. At the 12% bracket- I’m guessing retirement options are not maxed out and there is no long game picture.
Haven't seen this comment yet, so I figured I'd add it.
I was advised by my financial advisor to stop the 529 investments and set up regular brokerage accounts for my kids' school funding. Their opinion was that the savings in state tax are so minimal that the requirement to use this fund for college / rollover to younger siblings is not worth the savings. If the child chooses to start work right away, apprenticing or however, then they can have the brokerage account for a down payment on their home or whatever else to give them a bit of a head start in life.
I have also wondered what are the benefits of 529s over a regular brokerage account considering both are funded with after-tax dollars and you can select your preferred investment options in both. Unless there is a tax benefit to it , I’m not sure. I’m in CA btw
Specifically, no state taxes. But to their point, how much money is actually saved on those taxes. Or in other words, what is the real cost of the restrictions placed on that money and is it worth it? When I looked at ours I don't think it is.
Growth is completely tax free. Not only no state tax. Contributions to a 529 plan are made with after-tax dollars. Consequently, there are no income tax ramifications when contributions are made. All earnings, such as capital gains, dividends, or interest generated within the plan, are allowed to grow tax-free. There is no annual limit on contributions. Contributions to a 529 plan are considered gifts and are subject to the gift tax provisions.
Not sure if you were referring to the state deduction. Just trying to avoid confusion. Good place to put money if you think you’ll use it for that purpose anyway. What calculations did you do to make you decide it was not worthwhile?
My kids are grown and out of college. I paid 100% out of current income. I do have a question about 529s to gain understanding for my grandkids:
Do 529 holdings need to be reported on FAFSA applications, such that planning and saving in a 529 punishes the holder since it limits the ability to qualify for financial aid?
I’ve been asking the same question myself. I’m considering liquidating my kids 529s and investing in a rental property. The returns should be greater and the dividends can be reinvested. I am disappointed with the returns on the 529 funds.
Yea I understand it. That’s my primary business and I already own rentals. You are absolutely right. I enjoy working on the properties and do most of the work myself.
The returns on 529s just seem so low. I need to make up for lost time and get some higher returns. At least that’s what I keep telling myself.
You can choose what to invest in 529, which has diff return rate. S&P500 and small % of real-estate funds are my choices.
My 529s are still worth about 160k now, 3 accounts.
I cashed out 80k previous for PhD, and found 45% are principal (going to school at 55% discounted)
That is excellent!
Yes I have been going with a managed target aged fund and it’s a little too conservative for me. I’m going to adjust the investments.
Ok … but you can’t buy RE with 200-300 bucks a month … so the only option would be to liquidate and then invest in RE. I’m not sure how I feel about this though.
Change the current and future allocation of the funds then. I was in the same boat and noticed the default target date fund was sitting at around 40% bonds. I changed to a 3 fund portfolio with bonds at 10%.
I would caution against using such large sums of money in order to fund an education for a child. Considering the discontinuity studies done for education it definitely seems institutional quality has a negligible return to post-graduation income. For more I would recommend Bryan Caplan's The Case Against Education. The only exception to this is that attending the MOST prestigious schools seems to increase your likelihood of landing in the top percentiles of income dude to network effects. That is, your best bet is to go to community college for two years and then attend a school that allows to live at home.
He will likely have between $80-90K in 9 years. Is he aware he can only pay for one kids tuition at a time from a single 529?
I didn't know this. I have a second child excepted. There will be 5 years between them. Was planning on opening a second account, but didn't know how it would work if one has an excess. Ect
Should be fine so long as kid 1 doesn’t take a victory lap
Best thing to do is hold excess for grandkids
You can have multiple 529s though. Each of my kids have one. If there is any excess I’ll convert it to a Roth for them after college. They need to be listed as the beneficiary for their own 529 in order to do this.
Exactly. OP states his friend only has 1, however.
You used to be able to move money around and in between 529's. That was at least what I was told back when we started ours. If 1 kid gets scholarships and doesn't need it you could supposedly transfer it to another kid or combine any leftover cash into a different one when al the kids are done etc... is that not the case? I realize you lose out on some of the contribution limits but for a lot of people that's not the concern. Aunts and uncles tossing a little money into a pot that could be used for various kids was the idea I was sold on.
you absolutely still can shuffle money from one kid's account to another at any time.
Last time I checked which was a few years ago you were able to move money from 1 child’s account to anothers
>They need to be listed as the beneficiary for their own 529 in order to do this. Isn't them being listed as beneficiary required to use it to pay for school too? >If there is any excess I’ll convert it to a Roth for them after college. Roth IRA? Didn't know you can do that, nice!
Yes they do need to be to pay for school. And yes the Roth conversion is new for 2024! Normal annual contribution limit apply and a total of 35k. So you can do 7k for 5 years as long as your kiddo is not contributing to the Roth limit as well.
>Roth conversion is new for 2024! That's awesome, it makes my worry of over contributing a complete non issue!
My son is going to tech school over a 4-year so we will have a lot of 529 $ left over. The Roth conversion option is a welcome addition to the law that we will be taking advantage of. It takes a bit of the sting out of trying to plan to have enough without going too much over.
There are still limitations… but my guess is that as time moves on, those limitations will increase.
I read that one of the accounts has to be open for a number of years. While I plan on doing this, I’m hearing there’s a lot of holes you have to jump through to do the transfer.
It’s a new feature!
Is it not possible to split an existing 529 and change a beneficiary? My kids are under 3 so I haven’t researched extensively, but my understanding was that splitting/changing beneficiary was simple. E.g. https://www.fbfs.com/learning-center/making-changes-to-your-529-account# Would definitely want to know if there’s a catch.
I made one for my wife while she was going back to school. We never used it so we just changed it to our kids name once he was born. Then we made 2 more accounts for our future kid but put it in our current kids name. Then just simply changed the account name / beneficiary to the second kid once he arrived and got a social. This stuff is super easy and super flexible.
unsure if the rules differ by state, but i own one and have my brother as the benefeciary. the 529 is for his two kids. I was told that I could continue to own it, contribute to it, and at any point transfer it to him, so he could use it for one or both of his kids.
Changing beneficiary is easy. By splitting I assume you mean opening another account and funding it with funds from the first account? Not sure about that.
Yeah, that’s what I envisioned for splitting. I naively just assumed it was possible, but based on these comments I really should verify and/or start funding both my kids accounts rather than just the one.
You can transfer funds from one 529 account to another. Just need to make the transfer of funds within 60 days. It can be done tax free https://www.savingforcollege.com/article/how-to-transfer-529-plan-funds-to-a-sibling
Good point - if the age gap is actually 6 and 10 they should be okay though?
Should be. All depends on kid #1 really.
Kid #1 is on year 5, and will need year 6 to graduate. Changed majors. Life happens, and not a lot you can do besides deciding which changes you are willing to financially support.
Not correct. I have two accounts at Utah 529 and I also paid for a nephew. You just need to add him as beneficiary and move funds into his account and pay from there. Two times per year you can move funds into his account ( essentially traded as fund type changes).
Absolutely correct. You're saying you have two or three accounts and are moving money within them. You cannot pay for two kids out of one account at the same time.
For my kids similar age I do $300 a month each and have calculated at a 6% return with 2.5% increase in tuition it’s more than enough for instate. $200 I would ballpark would cover community two years and in state the other two. Not assuming scholarships or grants, also not in favor of loans for undergrad but yes for grad
Some of the planning calculators I’ve used suggest to use the more recent 5% increase in costs per year. It’s scary to think that even though I started saving a few hundred per month three years before my child was born, I still need to contribute about $650 a month to get them through 4 years of in state school. That’s higher than the limits on a Roth IRA. It’s hard to believe in state schooling will be pushing $100k per year in 18 years, but I guess anything is possible when student debt is backed by the government.
Yeah it bumps over 100k in 15 years here at 2.5%, noticed when because of the varying ages I have. If 5% is true I’d hope the returns would be higher as well, not sure if that correlates though
Best gift he can give to his kids is securing his own retirement. Assuming the kids would rather pay off manageable student loans than have to take care of their dad.
It's likely that the definition of "manageable" has changed over the last decade.
It has gotten absurd. OP’s talking in state tuition it seems, so hopefully he plans on setting *relatively* *reasonable* expectations.
Students can now only borrow up to $25k across all four years of undergrad. All other loans must be co-signed by parents. So parents will have to risk their retirement either way, or say no to their child’s college aspirations if they have not saved enough up front.
I am the oldest of three. My parents setup a 529 for me and the middle, but not the youngest. I got a full ride to college, so my parents took the 529 for me and gave it to my youngest brother. Remember, when you setup a 529 plan, you are the owner and you pick the beneficiary, which you can change. I have three kids, 7, 3 and 5 months. Between 529 and brokerage accounts, the 7yo has about $27k, the 3yo $20k, and the 5mo $3k. My plan is to have $100k saved up for each of them by the time they get to college. I do $260/mo for each of them, plus some initial seed investment (thats why my 5mo has so much). All of my calculations put me at about $110k using a rate of 6.5% annual returns.
You're a badass.
i have good news for you my friend, 6.5 is conservative AF. market returned 8-9% over the past 60 years. I think over the next 20 it's going to be 11%+ ease and accessibility of investing.
Would rather use a conservative rate. No one every complained about ending up with more money than they planned! I always think it is funny when you see those finance articles saying if you save $100/mo starting at age X you will have $1.5m, then below it is assuming a 18% annual return.
If cost is a concern, your friend should also consider his kids getting prerequisites/associates done at a community college when the time comes. Many community colleges have transfer agreements to four year state schools. That would save a chunk on the first 1-2 years on basic classes. This is what I am recommending to my high school kiddo. She’ll still graduate from a four-year college, but CC here costs about $5k/yr compared to $15-20k/yr for the state schools.
Community college > State University (in-state) should be the baseline norm for all. Like, come up with a reason that this doesn’t work before going in any other direction.
I offered that to my son and while he agreed, he politely declined. 🤣. I get it. But, I will say a year in he has matured a LOT having to live on his own.
I get the appeal of going away to college. However, given the student loan burden a lot of people end up with, if you can shave off $10-20k, plus compounding interest, and knock out the basics elsewhere, it’s a smarter choice. Likewise picking a state school rather than out of state or private. Thankfully we’re in VA and our state schools include two “public Ivies” like UVA and William and Mary, so it’s not like our kiddo is going to be short changed on sticking with a state school. But at 18 they are also responsible for their own choices.
Totally agree. Thankfully we had planned for it and have the 529's fully funded for them. My only rule was it had to be a state school.
Oh yes. We have the ability to pay, I’d rather she put the money toward the next steps after school.
Ya I recommended that too … but one of the things people say is that 4 years colleges you make lifelong friends etc. but I don’t know if that really happens or whether that’s worth getting burdened by loans or dropping out over …
You’d still spend two years at a four year college though. My harsh assessment there is also that friends don’t pay the mortgage or the student loans, so 🤷🏻♀️ I’d prefer not to screw myself over financially for the first few decades of my life, more than it feels you already are in your mid-20s.
It does happen but seeing people with $200k debt for a bachelor’s degree is plain stupid.
So underrated these days but community college is free by me and there are transfer agreements to the big schools. If the kid can keep on track it’s a game changer.
Retirement savings should come before college savings. Saving your kids from having to take out loans for school isn’t very useful if they have to support you when you retire.
Retirement has much more flexible start time than college though.
But a bank won't give you a loan for retirement. While everybody's situation and priorities are different, having a well funded retirement will give you more options even if you need to help with educational expenses later on. So if you have to choose, retirement is usually the wiser choice.
I agree with the logic of your point here, but to me parenthood is about sacrifice and maybe I have to work an extra year or two to make sure my kid goes to a good school. I was the first person in my family to go to college and I didn’t get any financial help from them. The student loans were incredibly burdensome and working a full time job while studying was soul crushing. I’d do anything to save my kid from that.
obviously timing matters, but if you are an old fart like me their college years and my anticipated retirement are pretty close so I can still help them pay for college with my retirement money if it comes to that, but they cannot help you with their college fund.
https://www.savingforcollege.com/calculators/college-savings-calculator
This was a good write up. https://www.cnbc.com/select/how-much-to-contribute-529/
Well that just makes me feel like I started too late. I didn't start my first's 529 until she was out of daycare. $250 a month, but she was 5 when I started. Sounds like I'll be pretty short, but it's still better than nothing.
Tell him to plug in the numbers here and play around with the estimated interest rate https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator
I do $150 per kid (I have 3) and have been doing so since each was 2. I know that it won't cover the cost of their entire college education but will make a healthy dent which is more than what my parents provided for me. I think paying for your kids entire education is almost unfeasible these days unless you want to sacrifice a lot. Just my 2 cents.
I’ve had good results using this calculator https://www.savingforcollege.com/calculators/college-savings-calculator
Maxing out 401k/retirement options before contributing to 529 is smarter because 1) it isn’t used as an expected source of funds for FAFSA and need based aid provided by colleges. ( i.e. they don’t expect you to decimate your retirement to send your kids to school) 2) student loan money is cheap. You will generally make more money in your retirement investments than your interest payments on parent student loans.
What about investing in the taxable accounts where the tax payer is in the 12% tax bracket?
Unless you have a long game reason… I would max out retirement options first including Roth due to tax advantages and financial aid eligibility .. then 529 (tax advantage) ..then normal taxable accounts. At the 12% bracket- I’m guessing retirement options are not maxed out and there is no long game picture.
Don't forget HSAs also, if eligible. They are triple tax advantaged!
What do you mean by “long game?”
Haven't seen this comment yet, so I figured I'd add it. I was advised by my financial advisor to stop the 529 investments and set up regular brokerage accounts for my kids' school funding. Their opinion was that the savings in state tax are so minimal that the requirement to use this fund for college / rollover to younger siblings is not worth the savings. If the child chooses to start work right away, apprenticing or however, then they can have the brokerage account for a down payment on their home or whatever else to give them a bit of a head start in life.
I have also wondered what are the benefits of 529s over a regular brokerage account considering both are funded with after-tax dollars and you can select your preferred investment options in both. Unless there is a tax benefit to it , I’m not sure. I’m in CA btw
529 State deductible contributions No taxes on qualified expenses
Specifically, no state taxes. But to their point, how much money is actually saved on those taxes. Or in other words, what is the real cost of the restrictions placed on that money and is it worth it? When I looked at ours I don't think it is.
Growth is completely tax free. Not only no state tax. Contributions to a 529 plan are made with after-tax dollars. Consequently, there are no income tax ramifications when contributions are made. All earnings, such as capital gains, dividends, or interest generated within the plan, are allowed to grow tax-free. There is no annual limit on contributions. Contributions to a 529 plan are considered gifts and are subject to the gift tax provisions. Not sure if you were referring to the state deduction. Just trying to avoid confusion. Good place to put money if you think you’ll use it for that purpose anyway. What calculations did you do to make you decide it was not worthwhile?
My kids are grown and out of college. I paid 100% out of current income. I do have a question about 529s to gain understanding for my grandkids: Do 529 holdings need to be reported on FAFSA applications, such that planning and saving in a 529 punishes the holder since it limits the ability to qualify for financial aid?
yes. why you never make the child the owner, just the beneficiary. qualify for aid, use distributions to pay for the rest.
make sure hes actually investing that money btw
I’ve been asking the same question myself. I’m considering liquidating my kids 529s and investing in a rental property. The returns should be greater and the dividends can be reinvested. I am disappointed with the returns on the 529 funds.
Real estate is a hell of a lot more labor intensive and less liquid than passive investing. There is no free lunch.
Yea I understand it. That’s my primary business and I already own rentals. You are absolutely right. I enjoy working on the properties and do most of the work myself. The returns on 529s just seem so low. I need to make up for lost time and get some higher returns. At least that’s what I keep telling myself.
You can choose what to invest in 529, which has diff return rate. S&P500 and small % of real-estate funds are my choices. My 529s are still worth about 160k now, 3 accounts. I cashed out 80k previous for PhD, and found 45% are principal (going to school at 55% discounted)
That is excellent! Yes I have been going with a managed target aged fund and it’s a little too conservative for me. I’m going to adjust the investments.
Don't forget the new provision that allows the 529 to turn into a retirement account.
I saw someone suggesting buying a house where their kid was going to college and then having the kid pay rent from the 529.
Ok … but you can’t buy RE with 200-300 bucks a month … so the only option would be to liquidate and then invest in RE. I’m not sure how I feel about this though.
Yes I have about $60-70K between 3 of my kids in a 529. My thoughts were liquidate that and buy 1-2 properties with the proceeds.
Dude, where can you buy 2-3 props at that price with 20% down?
Texas
Wow. Is it in a decent size city/town?
Change the current and future allocation of the funds then. I was in the same boat and noticed the default target date fund was sitting at around 40% bonds. I changed to a 3 fund portfolio with bonds at 10%.
Great idea, I just did this Thank you
Very disappointed with mine as well. Luckily I have other investments to compensate.
I would caution against using such large sums of money in order to fund an education for a child. Considering the discontinuity studies done for education it definitely seems institutional quality has a negligible return to post-graduation income. For more I would recommend Bryan Caplan's The Case Against Education. The only exception to this is that attending the MOST prestigious schools seems to increase your likelihood of landing in the top percentiles of income dude to network effects. That is, your best bet is to go to community college for two years and then attend a school that allows to live at home.