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What to Do if Market Drops Took a Bite Out of Your College Savings

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Some plans offer federally insured bank savings options, Ms. Biar said.

Jeff Brooks, who works for a family publishing business in Seattle, said he was shocked to seek out that his children’s accounts through Utah’s my529 plan had lost about $19,000 combined in the primary half of the yr. One child is in college, and the second is a highschool senior. He paid all upcoming college expenses as soon as he could, he said, and moved remaining balances to a stable value fund throughout the 529.

“I desired to stop the bleeding,” he said.

The plan, which has a top rating from Morningstar, had been “solid” until now, Mr. Brooks said. But he cautioned that age-based portfolios shouldn’t be viewed as a “set it and forget it” option.

Brad Ledwith, an authorized financial planner in Morgan Hill, Calif., suggested that families with students in college might consider moving an amount equal to several tuition payments right into a low-risk option throughout the 529 plan, similar to a money-market fund or perhaps a certificate of deposit.

Mr. Ledwith, a father of 4, including twins who’re juniors in highschool, said he had accrued $1 million in a 529 plan as of Jan. 1, however the balance had fallen about 23 percent by July. (He selected a more aggressive investment option with greater stock exposure, relatively than an aged-based portfolio.)

“It was an eye fixed opener,” he said, adding that he has a high tolerance for risk.

He said he was confident that the market would rebound. Even so, he has moved $100,000 right into a more conservative option throughout the 529 plan.

Despite the present market gyrations, Mr. Ledwith said, people whose children are only starting highschool should stay invested in a growth portfolio: “Loads can occur in five years,” he said. And folks with very young children, he said, should consider contributing much more to their 529, since they might be investing when prices are generally lower.

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