I’m often asked, “What’s the best college savings plan for me to open?” You probably know the answer from Independent Financial Planning, “It depends.” Because it always depends! What’s your situation, your children’s ages, your ability to cope with the risks of investing, and a host of other factors? But I know what you’re asking for. “Assuming my children are young and I want to save for their college costs, what’s my best option without any other information except that I live in Virginia?” In general then, I’d encourage you to consider the Virginia529 inVEST program, http://www.virginia529.com/invest/index.php.
529 programs are state-sponsored saving programs that you can use toward any qualified higher education institution, even outside of the state’s plan you’ve chosen. It just happens to be that Virginia’s direct-sold savings program (529 inVEST) is quite good. Morningstar rated the plan a silver and I think that’s too low (only a few plans were rated silver or gold). Not only does an investor have age-based plans to choose from (where the asset allocation decisions are made for you) but they also have low cost index funds and a good quality socially responsible investment option.
There are several other 529 plans available in Virginia, prepaid plans, insurance based plans and advisor-sold plans. But each one of those plans has some significant downsides – only a single family of relatively expensive (and narrow) investment options, or low potential return options. 529 inVEST, the direct-sold plan, is cost-effective, diversified, and almost entirely online. Saving for college really couldn’t be much easier. In a later post I’ll share more about what makes a 529 plan unique and often a better choices for investors than other education savings plans but for now I encourage anyone interested in saving for college to consider Virginia’s 529 inVEST savings plan. It’s where Independent Financial Planning is often referring clients to go.
Want to sign up with the Virginia 529 inVEST Program? This video will tell you how.
Morningstar Names Best 529 College-Savings Plans for 2014, http://ibd.morningstar.com/article/article.asp?id=669116&CN=brf295,http://ibd.morningstar.com/archive/archive.asp?inputs=days=14;frmtId=12,%20brf295
