[Kevin]

Advice to new parents:
Start a 529 plan for your child now if you haven’t already. Put as much as you can as early as you can, and do some math to see when you can stop & let compounding take over for you till the end!

I put in 104k over 4 years when my kids were born in 2012, and it’s today sitting at a decent $218k without adding anything after I reached that 104k.

Even if you put in $25 a month get that set up & make it automatic.

Note: make sure the money is invested in the 529 account, and not sitting in cash.

Also, put it in the most aggressive fund available, as it’ll be untouched for 18+ years!

[Noah]

Good for you for saving for your child but are there any tax advantages?

[George]

I wouldn’t put in that much.
I also want to caution the aggressiveness of asset allocation needs to be tuned down from middle school or high school at the latest so you don’t end up selling at loss during market downturn in college.

You want all education expenses to come out of 529 even when stock market is down.

[Richard]

I didn’t have the lump sum but always did monthly contributions and increased them as my salary increased. She’s 12 and I’ve contributed $41k and her account is at $80k.

One tip I give people is to utilize the account for bday gifts and holidays for extended family.

We probably get about $300-$500 additional invested in there each year from it.

[Meagan]

Great advice!!! I need to do this we have a 2 year old and 4 year old and havent done it yet.

[Heather]

I’m sorry, but I completely disagree about buying into a 529. When you fill out the FASFA, which you must do if wanting to get ANY scholarships at all for merit or otherwise, then the amount of money in that 529 plays against you.

We are in MN and had 80k in a 529. We are lower middle class and this is ALL we had for college for two kids. So, we basically had 10k a year per kid.

When filling out the FASFA we found that this amount made us loose 5k a year in aid.

Our financial advisor told us, “yeah, but that’s only 5k and the taxes are worth it.” So here’s my take…..they’re not.

I WANT 5k in a subsidized loan (meaning no interest) because then that 5k is earning at LEAST 5% in a high yield savings account or even more in the S and P 500.

I learned that I could pull money from my Roth to pay for colleges, and it’s the same tax advantage but it doesn’t negatively affect your FASFA.

I’m super bummed we did a 529 now.

but,not each his own.

Some people love them, and that’s ok, too.

[Kate]

What if my kids don’t go to college/university and we put in over 100k. What do we do?

[T’Xal]

I hear 529 affects financial aid which is why some people opt for a Roth instead as that money can also be withdrawn for college expenses.

But if a 529 shows up as an asset, wouldn’t the Roth?

[Marla]

We put in $300/mo since my son was probably 6 mos old. He is a sophomore now in college and his 529 is at $109 after paying for 3 semesters of college.

Approx $60K investment became $132K at the beginning of college.

[Rob]

I looked into doing a 529, but decided to buy rental houses with the college money and earmark those houses for college. The returns were way better.

If you like real estate, I’d recommend going that route.

You can sell them or do a cash out refi to pay for college.

[Author]

Posts