DIY Money | Personal Finance, Budgeting, Debt, Savings, Investing Allocation in 529 Plan
Nov 28, 2025
The hosts discuss how to effectively allocate 529 accounts for education savings. They highlight the importance of adjusting investments as college approaches, with strategies for aggressive early investing. Listeners learn about the five-year rule and the need for gradual de-risking. There's a focus on the pitfalls of overly conservative target-date funds. Finally, practical tips are provided on reviewing and adapting investment strategies to ensure goals are met.
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Be Aggressive Early, Gradually De-Risk
- Start aggressive early in a 529 when you have a long time horizon and no immediate need for funds.
- Gradually reduce equity exposure as costs near, moving portions for imminent years into safer funds to avoid market timing risk.
School Choice And Funding Source Change Allocation
- Consider likely costs, scholarships, and alternative funding sources when setting 529 risk.
- The child's expected school choice and family cash flow meaningfully change how aggressive you should be.
Adjust Risk To The Needed Return
- Review how much you actually need from the 529 and adjust risk based on that required return.
- If the account already covers expected costs, reduce equity exposure earlier rather than staying aggressive.