Saving for College in this Climate

I received some interesting information from Brian Meehan of Celtic, Inc. regarding a little practical advice on how to weather a volatile market when it comes to college savings. He notes that if you are like most people, the current market conditions can cause concern when you see your long-term investment accounts, including college savings and retirement plans, losing their value.   He points out that the College Savings Plans Network, a non-profit association representing states who administer 529 college savings and prepaid plans, and an affiliate of the National Association of State Treasurers, encourages people to keep the following principles in mind when making decisions about their college savings accounts during tough economic times:   Stay Focused on Long-Term Objectives: As the market moves in up and down cycles, it is vital that one keep emotions out of affecting financial decisions. Look at the performance of your college savings account since inception as well as shorter-term performance.   Diversify Your Investments: You need a mix of stocks, bonds, and cash investment options or in an age-based option which typically provides this sort of mix.   Make Changes, if at all, Gradually: Invest any new funds into more conservative options and reallocate equity options to more conservative ones. Move funds gradually so as to not lock in, or realize, all of your losses and to be able to take advantage of a market recovery.   Limit Reallocations: All 529 plans have a one-time-per-calendar-year rule on making reallocations between investment options. If you have already made a reallocation of your account this year, you cannot make another change until next year. However, you can always redirect new contributions at any time.   Make Regular Investments: Often referred to as “dollar-cost averaging,” this approach lessens the risk of investing a large amount in a single investment at the wrong time.   Invite Family to Help: Ask your family and friends to help build the college savings by contributing to your account as a holiday or birthday gift. Many plans offer gift certificate forms or contribution slips to facilitate making a contribution as a gift.   Talk to your Plan Provider: If you have specific questions abut your 529 savings or prepaid plan, call your plan provider.   To learn more about the College Savings Plan Network and 529 college savings plan across the country, visit collegesavings.org.