seattle prattle wrote:
investing noob wrote:
Thanks! His account is up 30% since 2018. Although that is great, my wife's Roth is up 40% since I moved her funds into an S&P in May 2020. I will be bumping up the 529 contributions to $1000/mo. Hopefully after 5 years, that'll be enough to compound until he's 18.
This is an involved topic.
As for your choice of investment options within the 529, you can look at it this way: if you have the resources to make up the difference should the investment underperform, then you can afford to be more aggressive with your selection. If, on the other hand, underperformance would lead you to hardship, you really wouldn't want to open yourself up to that possibility, and you would want to be a bit more conservative, even at the risk of missing out on a little potential gain/appreciation. Also, you can change the investment track up to one or two times per year for most plans if you find it is not working as expected.
You are within the contribution limits of the 529 at that level, so that's good.
And that will be a very solid start, with all the benefits of more than a few years in which it may accrue and compound.
College can be really expensive, depending on the school,. For a state school, in-state tuition, you would be right in line with covering the costs, if all goes well. Private might still leave room for out of pocket expenses or financial aid or a merit scholarship.
Do understand that when it comes time to apply for financial aid and scholarships, the colleges do look at your savings and income and 529 account assets and take that into account into their awards.
Lastly, as you probably know, the 529 can also be used for graduate school or another child's education, if your accumulated account holdings exceeds what it costs for your child's undergrad. education.
But as others have said, nice job planning ahead.