529 Funds?

[preppy]

We got DDs social security card yesterday so I want to open her a 529 with $ she recieved when she was born. Where is the best place to research options? Is it best to just go with the one from your state?

[Deleted]

MA doesn't provide any tax benefits to using it. (Not sure about RI though and I know you are moving back there so I'd check that)

We use Utah. It has good reviews and we have been happy with the performance and the ease of use. Very easy to set up our monthly deposits and one time deposits as well.

[niq]

Oct 9, 2015 9:53:30 GMT -5 @abbycobb said:

At some point I came across this site by some finance guy on tv that I thought was fairly helpful:
www.clarkhoward.com/clarks-529-plan-guide

This is the place to look

You might want to talk to an FP because there are different consequences depending on whose name the 529 is in (kid vs parent vs grandparent)

[SJ]

www.savingforcollege.com has a lot of good resources as well

[whitemerlot]

We don't get a state tax benefit and used Utah. We are in an age based global aggressive fund. I was intimidated about starting but, but when I finally did it took only a few minutes. I wish I hadn't waited until my oldest was 4. I missed some serious gains.

[preppy]

Do most people do a set amount each month? I figure we will put all xmas and birthday $ in there but am not sure how much to set aside monthly. Is there a benefit to monthly additions vs a lump sum each year when we get our bonuses?

[AmyRI]

Oct 9, 2015 9:53:44 GMT -5 @awinter said:

MA doesn't provide any tax benefits to using it. (Not sure about RI though and I know you are moving back there so I'd check that)

We use Utah. It has good reviews and we have been happy with the performance and the ease of use. Very easy to set up our monthly deposits and one time deposits as well.

Contributions are state tax free in RI if you open an RI one. I can't remember if you have to be a resident or not to open an account, though l - you might have to wait until you move to qualify. It's through Alliance Bernstein and has been fine. We have monthly auto deductions ($50/kid) to avoid fees.

[whitemerlot]

Oct 9, 2015 10:30:59 GMT -5 preppy said:

Do most people do a set amount each month? I figure we will put all xmas and birthday $ in there but am not sure how much to set aside monthly. Is there a benefit to monthly additions vs a lump sum each year when we get our bonuses?

I've just done a lump sum each time. I tend to invest like that. I don't try to time the market by waiting. Sometimes I add extra if I think the market seems down.

[AmyRI]

Oct 9, 2015 10:30:59 GMT -5 preppy said:

Do most people do a set amount each month? I figure we will put all xmas and birthday $ in there but am not sure how much to set aside monthly. Is there a benefit to monthly additions vs a lump sum each year when we get our bonuses?

It's plan dependent. Some require monthly contributions to avoid fees, some require a certain balance and don't care how you put money in.

[anna7602]

Oct 9, 2015 10:30:59 GMT -5 preppy said:

Do most people do a set amount each month? I figure we will put all xmas and birthday $ in there but am not sure how much to set aside monthly. Is there a benefit to monthly additions vs a lump sum each year when we get our bonuses?

paging SJ to explain dollar-cost averaging, something I am terrible about doing since I invest in my own retirement accounts exactly once/year at tax time when I know exactly what I cleared the previous year. 

[thebreakfastclub]

Oct 9, 2015 10:30:59 GMT -5 preppy said:

Do most people do a set amount each month? I figure we will put all xmas and birthday $ in there but am not sure how much to set aside monthly. Is there a benefit to monthly additions vs a lump sum each year when we get our bonuses?

Contributing over time helps you in the long run because you aren't reliant on prices on a single day that you purchase. It averages over time.

[SJ]

Oct 9, 2015 10:34:03 GMT -5 anna7602 said:

Oct 9, 2015 10:30:59 GMT -5 preppy said:

Do most people do a set amount each month? I figure we will put all xmas and birthday $ in there but am not sure how much to set aside monthly. Is there a benefit to monthly additions vs a lump sum each year when we get our bonuses?

paging SJ to explain dollar-cost averaging, something I am terrible about doing since I invest in my own retirement accounts exactly once/year at tax time when I know exactly what I cleared the previous year. 

OK, so dollar cost averaging refers to the concept of putting in a fixed amount of money periodically. Say $100/month. As the underlying market fluctuates, sometimes that $100 will buy more securities and sometimes it will buy less. But over time, you will be buying at market high points, at market low points, and at market medium points.

The advantage of this psychologically is that you don't have to worry and try to time the market. If you put in $50,000 on one single day and then the market drops, you feel like a failure and that you have lost a ton of money. If you put $5,000 in on 10 different days, it spreads out that risk and loss and cost basis.

Studies are unclear on DCA and whether it really produces superior investment results, but I do think it can help psychologically. The main thing is just to invest and invest early. Does that make sense?

Personally I put $200/month into her 529 and then a larger amount each time bonuses pay out. We also add any gift money that is designated for college.

[Deleted]

We contribute a set amount each month. Then whenever they receive gift money I add that in as a one time deposit. Then around bonus time or if my H sells stock options from work and we have some extra money we make additional one time deposits.

[preppy]

Oct 9, 2015 10:31:46 GMT -5 AmyRI said:

Oct 9, 2015 9:53:44 GMT -5 @awinter said:

MA doesn't provide any tax benefits to using it. (Not sure about RI though and I know you are moving back there so I'd check that)

We use Utah. It has good reviews and we have been happy with the performance and the ease of use. Very easy to set up our monthly deposits and one time deposits as well.

Contributions are state tax free in RI if you open an RI one. I can't remember if you have to be a resident or not to open an account, though l - you might have to wait until you move to qualify. It's through Alliance Bernstein and has been fine. We have monthly auto deductions ($50/kid) to avoid fees.

Thanks! I will look into this and see if it makes sense to wait till April to open one in RI:)

[preppy]

Oct 9, 2015 10:46:04 GMT -5 SJ said:

Oct 9, 2015 10:34:03 GMT -5 anna7602 said:

paging SJ to explain dollar-cost averaging, something I am terrible about doing since I invest in my own retirement accounts exactly once/year at tax time when I know exactly what I cleared the previous year. 

OK, so dollar cost averaging refers to the concept of putting in a fixed amount of money periodically. Say $100/month. As the underlying market fluctuates, sometimes that $100 will buy more securities and sometimes it will buy less. But over time, you will be buying at market high points, at market low points, and at market medium points.

The advantage of this psychologically is that you don't have to worry and try to time the market. If you put in $50,000 on one single day and then the market drops, you feel like a failure and that you have lost a ton of money. If you put $5,000 in on 10 different days, it spreads out that risk and loss and cost basis.

Studies are unclear on DCA and whether it really produces superior investment results, but I do think it can help psychologically. The main thing is just to invest and invest early. Does that make sense?

Personally I put $200/month into her 529 and then a larger amount each time bonuses pay out. We also add any gift money that is designated for college.

This makes a lot of sense. I might do a smaller monthly contribution along with gifts and a lump sum at bonus time as well.

[hbomdiggity]

We set it up through our FP. Went with VA over UT and monthly contributions. Monthly contributions kept us honest in a pay yourself first kind of way.

[vmars]

Check out diff states and what fund has the best returns. We ended up doing trowe price (I think it was Alaska). My FIL set it up so he did all of the research.

[dancingirl21]

We live in IL and have tax benefits here but our FP strongly advised us to go with the Virginia plan. He likes the performance of VA more than the tax benefits in IL. We contribute a monthly amount plus usually 2 lump sums per year at each of our bonus times.

[FoxInFiji]

Oct 9, 2015 9:53:30 GMT -5 @abbycobb said:

There are probably other people that know much more about this than me, but - a lot of times you can get additional tax benefits if you go through your own state, but some state plans are better than others.

At some point I came across this site by some finance guy on tv that I thought was fairly helpful:
www.clarkhoward.com/clarks-529-plan-guide

That's an interesting article. DHs FP specifically told us to open a 529 in a grandparents name for future financial aid benefits but that article says otherwise. Of course the link it provides is to the WSJ which I don't have access to. Has anyone had a grandparent open one vs yourself?

ETA: NM Google has the answer.
mobile.reuters.com/article/idUSBRE93S0LZ20130429