Monday, March 23, 2009

529 Plans Suck

From the first time I heard about College Savings 529 plans, they seemed awful.  I heard these hucksters on the radio peddling them and they just sounded like a way for them to grab fees. Now people that invested in them are f-ed.

Let's just say...any plan that doesn't let you put close to 100% in cash within a year of having to use it is criminal. Yet: "Last April, Oregon doubled the stock exposure in its "1-3 Years to College" portfolio to 40%. In 2004, an in-college student in Rhode Island's aggressive age-based portfolio would have had 40% stocks, 31% bonds and 29% cash. By 2008, the equivalent was 40% stocks (including real estate), 55% bonds and a measly 5% cash."

In these plans, the flexibility to do the right thing was taken away by bureaucrats.  My plan is simple- give the kids their own money.

Why don't all government savings accounts include some kind of commodities choices?

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