The question is whether parents who enjoy a 25 percent return are okay if it drops 25 percent the next year, she says. That's why diversity of risk is important.
Parents should balance their investment choices within their 529 plan accounts based on different levels of risk and the reward of higher returns. Doing so will help them to achieve their savings goals in the amount of time before their children enter college, Washo says. That could mean choosing riskier investments with greater growth potential like stock market-based equity funds.
Discuss all information with financial advisers or the plan manager, Levison recommends. Advisers will help parents balance past performance with other indicators such as fees and tax benefits.
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