For grandparents

Which investment option in the 529 plan should I choose for my grandchild?

Thats up to you to decide. Most 529 savings programs offer a menu of options from which to select, ranging from conservative fixed-income options to more aggressive equity options. Although every investor is different, we find that many grandparents tend towards the more conservative options, because their primary objective is to keep the principal safe, not to maximize investment returns. (Many parents seem compelled to select more aggressive options thinking that they must reach a certain target level of savings.)

The most popular option in many 529 plans continues to be the age-based option that automatically adjusts to a more conservative asset allocation as the beneficiary gets closer to college age. This may be an appropriate choice for many grandparents.

Prepaid tuition plans are also a popular choice for grandparents. State-sponsored prepaid tuition plans are available in a limited number of states and most of them have residency requirements. Independent 529 Plan is the prepaid tuition plan established by a consortium of over 270 private colleges (perhaps your alma mater is among them).


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