Should You Keep Investing in 529 Plans During a Bear Market?
Now that we’re in a bear market – in which stocks are down 20 percent – you might be asking yourself if it’s still worth investing in your 529 kids (or grandchildren) plans.
The answer may depend on how long it will take until these 529 plans are used.
As Michelle Singletari explains in the Washington Post , if your student plans to go to college in the next year or two, it might be time to save up some cash instead of buying more stock:
“Since the stock markets are unsure of short-term valuation even in the best of times, I generally recommend that clients as their children approach their junior and high school years, they do not invest in stocks to fund the first At least 12 to 24 months in college, ”said Lynn Ballou, Certified Financial Planner (CFP) and partner at EP Wealth Advisors in Lafayette, California.
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“Keep your money in cash,” David Holland of Holland Advisory Services in Florida told CFP. “This is reasonable given the proximity to use.”
On the other hand, if you are funding a 529 plan for someone who may not be going to college for a few years, invest safely. Buy low when stocks are down and keep buying when they are up (and then down and then up again; this is called dollar value averaging). As Singletary reminds us, many states even give you tax breaks for this.