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Kids college fund

2,569 Views | 19 Replies | Last: 7 yr ago by JSKolache
malibu9in1
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I'm stupid at this. I have put 16,750 in a college fund since 3/1/2011
I have 19409.66. 5% gain. Does this suck or is this good for today's times? In my mind I can double that 19k in a year or less here at work. School me on what to do. Thx.
Matsui
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AG
Does your household make less than 125K per year? If so, you will prob have free tuition once your kid gets to college.
malibu9in1
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My kid is 13yo
malibu9in1
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Matsui said:

Does your household make less than 125K per year? If so, you will prob have free tuition once your kid gets to college.


Free??? How?
And no. We make more.
malibu9in1
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It's a 529
Duncan Idaho
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malibu9in1 said:

I'm stupid at this. I have put 16,750 in a college fund since 3/1/2011
I have 19409.66. 5% gain. Does this suck or is this good for today's times? In my mind I can double that 19k in a year or less here at work. School me on what to do. Thx.


This needs explanation.
LeFraud
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Duncan Idaho said:

malibu9in1 said:

I'm stupid at this. I have put 16,750 in a college fund since 3/1/2011
I have 19409.66. 5% gain. Does this suck or is this good for today's times? In my mind I can double that 19k in a year or less here at work. School me on what to do. Thx.


This needs explanation.
Maybe he works at a casino?
JustPanda
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AG
I am getting a ~2.58% annualized return based on what you provided which would be underperforming even a 100% fixed income portfolio over that time period. Did you get blown up by MLPs or commodity exposure? Which state 529 plan?
malibu9in1
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ZoneClub said:

I am getting a ~2.58% annualized return based on what you provided which would be underperforming even a 100% fixed income portfolio over that time period. Did you get blown up by MLPs or commodity exposure? Which state 529 plan?


I don't know what that means. I did talk to my guy that handles it, he said it's had a 7% gain this year. Maybe I just need to add more to it.

I want to have something for sure for the kids. Just seemed like very little return thx
RogerEnright
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Duncan Idaho said:

malibu9in1 said:

I'm stupid at this. I have put 16,750 in a college fund since 3/1/2011
I have 19409.66. 5% gain. Does this suck or is this good for today's times? In my mind I can double that 19k in a year or less here at work. School me on what to do. Thx.


This needs explanation.



He means that he could double the amount of the investment via contributions.
JustPanda
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AG
It means that if the numbers you gave are correct, your performance after fees has been about 2.58% per year for the last 5 years and 7 months. Given a bull market for that entire period, and the performance is much worse than the S&P, the Barclays Agg Bond, and most non-emerging market returns.

Annualized S&P return from 1/1/2011 to 12/31/2015 was 12.55% and the market is higher YTD.
ATXAdvisor
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Did you put that in lump sum or through dollar cost averaging? What plan do you use? Is it an age based portfolio? 7% YTD doesn't sound bad, especially if it is an age based portfolio with 30-50% bonds.
Harkrider 93
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Most of the information on here isn't comparing apples to apples.

You most likely have been investing money at different points in time. You may have even plopped some in just before the market corrected.

Look at the performance of a diversified portfolio. Not just the S&P 500.

If you had an 80/20 mix of stocks/bonds and just plopped the money in from day 1, you should average just over 7%/yr. The stocks and bonds both have US and international.
JustPanda
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If you take the amount and for arguments sake DCA it in across the 5 years and 7 months on any rolling 1 month, 3 month, and 12 month time or money weight average, the return is well below the market. That includes a 100% fixed income come tracking the Barclays Agg.
Harkrider 93
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I am saying that there are too many variables to know what is going on. The returns you are suggesting are too high. The OPs returns are too low unless large lumps came at the wrong time. The returns I gave were to give him a diversified benchmark.

You were giving S&P 500 returns and US bond index returns. Most 529s will have 25-35% international stocks and bonds. They will also have small and mid cap stocks in them. Their bonds won't be a lot of government like most indexes are. If you take a highly diversified account, the returns won't be near what you said. The vanguard 2030 (just chose one) is 7.5% per year and that fund is a bunch of index funds.
Harkrider 93
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Malibu,

Ignore all the fighting that will probably happen.

Focus on this - your returns are too low. They may be explainable and justified, but they are low enough to raise a flag of concern.

You should get with your advisor or another qualified one to see why it is low and see what other investment options are out there. I would advise staying in a 529 or at least understand the taxes and penalties you will have for getting out.

It isn't easy for anyone on TexAgs to know what is going on. It could be as simple as you are in a very conservative 529 and should either consider taking on more risk or accepting lower returns. Maybe you wanted a very conservative portfolio initially because the news and forecasters were saying we were going to have a double dip recession. Coming here would mean that you would need to disclose more. I am sure we can fire out some questions to help. However, your advisor probably made money on that 529, so make him/her work to explain why the returns are below 7% when a diversified index during that time frame got that much. Also, ask him what he/she thinks you should do about it.

It is good that it is up YTD about 7% (diversified index is also), but that doesn't really explain why the poor performance happened in the past.

CapCity12thMan
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I just checked one of my kids' 529 plans. Since we opened it we have contributed 12,900 and it is currently up to 24,500. Account was opened in June 2007. Curious what the rate of return is for that.
Harkrider 93
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CapCity12thMan said:

I just checked one of my kids' 529 plans. Since we opened it we have contributed 12,900 and it is currently up to 24,500. Account was opened in June 2007. Curious what the rate of return is for that.
Call me next time you start investing so I can pull everything out!

If you just lumped it in, the return is about 7.5%/yr, but I doubt you did, so it is much more difficult to say. Someone would have to invest 12,900 9 yrs ago to get $24,732, which would be 7.5%.

That is pretty good for starting right before the bottom fell out!

JustPanda
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AG
+1
JustPanda
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Valid Point.
JSKolache
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AG
malibu9in1 said:

Matsui said:

Does your household make less than 125K per year? If so, you will prob have free tuition once your kid gets to college.


Free??? How?
And no. We make more.
I think he means Hillary
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