Choosing Your 529 Plan Investments
And how Upromise can help your college savings grow
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One of the decisions you’ll need to make when you first set up your 529 plan account is to select how you’d like your contributions to be invested. A 529 plan lets you invest in a 529 investment portfolio — or several portfolios — that are managed by a professional investment management company. Each plan offers its own type of portfolios from which you can choose.
These portfolios are investment portfolios that typically invest in a pool of mutual funds, ETFs, or other securities
It’s important to understand that when you invest in a 529 plan you are buying units of the portfolio that the plan offers—not shares of a mutual fund or a single stock or bond
Depending on the plan, you’ll have the ability to reallocate your 529 investment throughout the life of the account, but there may be yearly limitations
You can read about the available 529 investments on the plan’s website and in the enrollment kit you get when you first open your 529 plan account. You can also call the administrator at the plan’s toll-free number and get answers to your questions. It’s important to read the plan’s documents carefully so you can make a choice that’s right for your family’s needs.
Some people like taking an active role in their investments, while others prefer a “set-it-and-forget-it” approach. A 529 plan generally offers choices for each type of investor. Two of the most popular types are age-based portfolios and risk-based portfolios.
Age-based portfolios are based on the year your student (the beneficiary) is expected to start college. If there’s a lot of time before college, the 529 investments can be a little more aggressive, so they can have more time to potentially grow.
As the student’s time to college gets closer, the portfolio is automatically adjusted to become more conservative, because you’ll be using the money for college sooner.
Risk-based portfolios are designed to match the level of risk you’re comfortable with. Some people are comfortable with high-risk investments; others are more conservative.
Some 529 plan providers allow you to adjust your 529 investment allocations on your own, while others are adjusted professionally so that the level of risk and investment allocations stay the same.
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