After analyzing over 5,000 investment options available through 529 plans, we can conclusively say that 529 plans are not created equal.
Looking at last year’s fund performance, it’s become clear that some states’ offerings were too costly and too aggressive. For example, Maine’s OppenheimerFunds 529, which charges a hefty annual fee of 1.15%, made big bets on mortgage-backed securitie3s and lost 19% last year for students about to enter college. These funds were suppose to be conservative! A comparable plan in Utah that uses index funds and costs just 0.22% gained 2.8%.
You can use our free 529 Plan Comparison Tool to quickly find a 529 plan and investment options that best suit your circumstances (low fees, maximize tax benefits). You will immediately notice that some funds will cost you thousands of dollars more while adding no additional value.
Also, beware of adviser-sold funds. They tend to be high in fees, commissions, and or sales charges. Commissions can eat up between 1% and 6% of your contributions right off the bat.
My daughter is 6 years old. I want to invest in the 529 plan. Please tell me which plan is right for me, which funds options have low fees, and which ones will maximize my tax benefits. Thanks.
LYNDA
Hi Lynda,
To help you out, I need to know a few things like which state you live in. We also have a service that will not only tell you which fund option has the lowest fees and most tax benefits, but also tells you how much you need to save each month.
http://blog.cloudfi.com/college-savings-product/
Thanks!
The information here is great. I will invite my friends here.
Thanks
my daughters are 1& 2,9 years old please educate me about 529 plan we are in the state of delware.