Savingforcollege.com
You are not logged in. [Log In] Savingforcollege.com » Forums » General Discussion » 529 Plans / College Savings » 10% bonds or TIPS to diversify a 529?
Register User       Forum List       Calendar       Active Topics       Search       FAQ
Page 1 of 1 1
Topic Options
#43401 - 05/24/08 01:24 AM 10% bonds or TIPS to diversify a 529?
Stoney
Registered: 11/16/06
Posts: 13 		We currently have a 529 in an Ohio plan (College Advantage) by Vanguard, but looking to possibly change to a Virginia plan (VEST). ER are fairly similar (Ohio is slightly better), but Virginia offers slightly more diversity (i.e. Total Intl Stock Mkt vs. VG Intl Developed Mkt Index). Live in PA, so any state's 529 is tax deductible.

If we were to do so, we'd probably go:

60-65% VG Total US Stock Mkt Index
25-30% VG Total Int'l Stock Mkt Index
10% either Total Bond Mkt Index or TIPS????

Which is a better long-term (17+year) investment in your opinion to diversify in this investment tool?
Top
#43402 - 05/24/08 08:54 AM Re: 10% bonds or TIPS to diversify a 529? [Re: Stoney]
anonymous
Registered: 03/29/05
Posts: 1981 		Over a 17+year time horizon, do you think stocks will outperform bonds/tips? If so, why put any money into bonds? Diversification for the sake of being diversified makes no sense. On the other hand, if you want to be diversified because your risk tolerance demands it, that is a different story.

That being said, your portfolio with or without the bonds/tips is not diversified. Do you realize that the vast majority of all of your money will be invested in large companies?
Top
#43403 - 05/24/08 10:47 AM Re: 10% bonds or TIPS to diversify a 529? [Re: anonymous]
bwilk
Registered: 05/14/01
Posts: 3281 		If you live in PA is there a reason you are not using the GSP? I think it is one of the best options available.
Top
#43416 - 05/28/08 01:37 AM Re: 10% bonds or TIPS to diversify a 529? [Re: anonymous]
Stoney
Registered: 11/16/06
Posts: 13 		True, anonymous, it was just a bad choice of phrasing. I don't mean to FULLY diversify like one should do with a 401k or retirement account, as I personally prefer 20-30% in bonds for those accounts.

Yes, I believe that stocks will more likely outperform bonds over the next 17+ years, but taking out a 10% stake to soften some possible bad downturns would set my mind at ease a little more.

VTSMX (Vanguard Total Stock Market Index) consists of over 70% lg cap and was my domestic blueprint in setting up my child's 529. We're definitely sticking with Ohio's CollegeAdvantage plan for now after looking more in depth into Virginia's VEST -- great plan as well but not enough to make the switch.

So current plan will remain:
40% Vanguard 500 Index
30& Vanguard Developed Mkt Intl Index
20% Vanguard Extended Market Index
10% Vanguard Total Bond Mkt Index

Feel very comfortable and confident in this mix until her graduation starts to get much nearer.
Top
#43417 - 05/28/08 08:06 AM Re: 10% bonds or TIPS to diversify a 529? [Re: Stoney]
Drew
Registered: 01/09/00
Posts: 2457 		I too would suggest a careful look at PA GSP---in a sense its rate of return is indexed to college tuition inflation rate--which is sort of what you want to insure, match or better--and with a bit of timing midsummer you can get an extra 5+% buy in incentive, essentially you buy 2009 tuition units at 2008 rates etc.

Keep in mind that PA income tax incentives (3.07%) allow a bit of front end loading by use of multipe plans for others on the family tree---if you can afford to front end load its worth considering
_________________________
Drew

Top
Page 1 of 1 1


Moderator:  Joe Hurley 
Hop to:
Privacy statement · My Cookies · Mark all read Powered by UBB.threads™ Contact Us · Savingforcollege.com · Top

Bankrate.com ®, Copyright © 2008 Bankrate, Inc., All Rights Reserved, Terms of Use.