RSS Facebook Twitter LinkedIn

Featured Advisor

Srbo Radisavljevic
Managing Principal/Investment Advisor

Edge Portfolio Management


State: IL

At Edge, a low client to advisor ratio allows for personal and customized service for each individual.  Our goal is to work as a team for each client to provide not only portfolio management but wealth coordination and financial planning.  We make every effort to have frequent communication with our clients and to provide timely response to calls and emails.  I also enjoy spending time with my wife and three kids, following Chicago sports, enjoying ethnic cooking, and serving as a school board member for Norridge School District 80.

Click to see the full profile

Share |

"Significant Variations" Among States in 529 Plans

What is your risk tolerance in saving for college?

There are wide disparities in how various 529 plans allocate funds, according to a just-released study by

Pre-paid college tuition programs were created to offer protection against escalating tuition costs by locking in current rates. Volatile market conditions have left several state plans underfunded to meet current obligations. Illinois’ College Illinois has seen a decline in new sales following revelations that it has a multimillion dollar deficit, The Chicago Tribune recently reported. found “significant variations” in asset-allocation approaches underlying age-based portfolio options. The study of direct-sold plans (most likely more confident investors who want to save on advisor fees) focused on children ages 17 and up, and those 21 and up, who may be going on to graduate school or who are returning to school after serving in the military.

While some plans invest very conservatively for beneficiaries in college or close to college, others do maintain a significant investment in stocks and longer-term bonds even for those of college age.

The basic concept behind age-based investment, which is offered by most 529 college savings plans, is to shift away from more risky stock-weighted portfolios to income-weighted portfolios as a child approaches college age, thus better protecting monies  that have been earmarked for college from market volatility. This conservative approach is intended to protect parents with older children, while allowing parents of younger children to capture greater returns over time by maintaining a higher concentration in stocks.

For example in Kentucky, investment allocation on the plan for children ages 15-17 comprises more stocks and less cash than its plan for children ages 18 and up. The more aggressive plan offers a one year yield of 7.47 percent vs. 4.73 percent for the more conservative plan. Wisconsin’s aggressive Tomorrow’s Scholar Plan for students with 1-3 years to college is divided between stocks and bonds, while the plan for those in college is weighted toward bonds.

“In the last stock market collapse, parents were surprised when the age-based accounts for their kids lost value,” Joe Hurley, a certified public accountant and founder of, told This study is a recognition that different 529 plans (invest) differently so if you’re shopping around make sure you understand how (each plan) allocates their assets at any particular age. You may be more in tune with one 529 plan than you are with a different one.”