Savings And Asset Allocation In 529 Plans
As the cost of college tuition climbs year after year, many investors are turning to 529 plans to save for their children’s future needs.
The investment options in these plans can include age-based accounts, in which the asset allocation becomes more conservative as college years approach. A new Vanguard research commentary explains Vanguard’s approach to constructing age-based options for 529 college savings plans. The paper explains how this approach incorporates investment best practices—the principles of asset allocation, diversification, transparency, and maintaining a balance among risk, return, and cost. The authors conclude that, in order to meet the rising costs of education, a prudent choice of investment options should be accompanied by a diligent savings program.
