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Okay it's long been tabbed as one of the best tools for saving for your kids college tuition.
The 529 plan turned out to be a disappointment for many during the stock market crash of -- -- but now they're coming back they're stronger than ever.
So with so many choices out there are deciding which 549 to -- can be overwhelming.
Here to help us sort it all out as Joseph Crowley -- saving for college dot com Joseph welcome to the show.
Great to be here thank you -- and I just have to say we couldn't have a better guest on this because your web site as a resource for so many families out there.
Really describing what these investments are and how they work.
Series with a 101 of the 529 how to these things work.
-- they desired tax advantage savings vehicles for college their state sponsored.
But they come with both federal and state income tax advantages.
So if you have some money you have a child that's going to be going off to college in the future.
It's really a great way to save.
BI and a lot of people were doing that and boy did they get ticked when the stock market crashed.
You know we -- stories back then about have a 529.
It's not a good program.
But it was really about the returns from the market that was the real disappointment here right.
It was but these accounts have rebounded along with the rest of the market.
And they're performing very strong right now we.
We took a look at returns for 2010.
And we saw that the a 100% fixed income options averaged about six point 3% return.
The the options that were 60% in stocks and 40% in bonds.
We're 12% in return and a 100% equity options were over 14%.
In their returns in 2010.
And -- don't want to have to pay taxes on those -- so in fact there is more interest in the five point nine fans.
-- -- -- -- talk about how you choose a plan because even by a plant in your state or you know by one across the country it doesn't really matter how do you pick the right one.
It's it's not.
-- easy certainly come to saving for college dot com we have a lot of comparison tools you can.
Compare 1520 ninth inning against another -- expenses -- the underlying investments.
-- the investment performance.
But what I advise is always the -- in state plan first because there may be some tax benefits specific here state that you don't get -- a not a state plan.
But then feel free to shop around.
And take a look and see if the plan that that you're that you're going to join actually meet your own objectives.
Do you have to go to school in the state that you buy.
Your -- between nine to five by California find 292 -- -- perhaps in the kids California.
Not not at all you your kid can go to college anywhere in the country.
The fact that you're invested in California -- has no impact on where he or she may go to college.
All right so when you look at the big plans that they look like they're run by brokerages.
Is that necessarily the best option because from what I hear there are lots of fees and commissions that go with the brokerage plan.
See the broker sold 549 fans are more expensive because you're working with a broker who's going to be receiving.
Some commissions and some of the bigger plans are broker plans because -- reflects the fact that so many people do rely.
On these financial advisors to help them win their investments.
There's no need necessarily to go to a brokered plan.
Unless you're already working with a broker or perhaps you have a large amount of money -- in you really want that that advice.
-- -- talk about how to pick one of these things and and what exactly they are but how to run this over time how I manage it over time.
Over time there's really not much that you have to do certainly I recommend contributing regularly.
But if you're invested in what's called an age based option in one of these plans and that it does happen to be the most popular option.
Your account is adjusted automatically to become more conservative.
As your child gets close to the college age so that's a very nice wrist -- mechanism that prevents.
Large shortfalls if if the stock market turned south just before your your kid goes off to college.
That's right so is it manages your allocations for you you don't have to do it yourself.
It's down by the pros so that makes life easier -- I know there's now some parents want to do more than spend dollar nights.
They you have -- 549 investments Joseph Hurley thanks for the time today we really appreciate it was great to see you.
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