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Most Would Be Well Served by This 529 Plan

Tue, 7 Nov 2017

If your state doesn't offer a college savings plan tax benefit, Gold-rated Invest529 from Virginia is a good choice with low fees and a sensible mix of strategies.

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Video Transcript

Janet Yang: When it comes to 529 plans, about half of Americans would be better off looking beyond their state's borders for a college savings plan. That could be because their state doesn't offer a state tax benefit or the state's tax benefit can carry over to any state's plan. For any of these investors, we think one of the best is the Gold-rated Invest529 plan.

This plan is managed and offered by the state of Virginia, and it's available directly to residents across the U.S. Most investors in 529 plans use age-based portfolios that automatically move from stocks to bonds over time. We like how Virginia puts together its age-based portfolio using a sensible mix of active and passive strategies.

Gold- and Silver-rated funds from Vanguard give index-based exposure to broad asset classes like U.S. large-cap equities. Meanwhile, a number of medalists, like Gold-rated American Funds EuroPacific Growth and Silver-rated Aberdeen Emerging Markets, fill out the portfolio with well-regarded actively managed strategies.

This approach has helped the portfolios deliver for investors. Over the last five and 10 years through the end of September, most of the age-based portfolios that have been around that long beat their custom benchmarks; that's a feat that most actively managed strategies have struggled to accomplish during that time.

The portfolio's competitive fees helped to make this happen. We especially like how Virginia continues to lower its fees to keep this edge. All considered, the Invest529 plan remains a top-notch choice.

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