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| Mutual Funds |
| Many 529 plans provide a variety of investment options. Very similar to 401k plans, these choices offer different asset classes (US stocks, corporate bonds, etc.), risk levels (aggressive, moderate, conservative), and objectives (growth, income, etc.). Some plans even offer CDs and other fixed options. A popular selection is an age-based portfolio. Age-based portfolios automatically change the risk level from aggressive to conservative as the child grows older. However, the composition of age-based portfolios can vary from provider to provider.
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| Some 529 plan providers charge an annual fee. Also, advisor-sold plans offer different share classes (A, B, C shares). Each share class carries varying loads, fees, and internal expenses. Review the prospectus and offering statements carefully before investing.
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| Certificates of Deposit (CDs) |
| Currently, several plans such as Virginia College Savings Plan's CollegeWealth, Utah Educational Savings Plan, Ohio CollegeAdvantage offered certificate of deposits (CDs) as part of the their investment options. |
| Arizona and Montana’s 529 plans provide CollegeSure CDs, certificates of deposit offered by the New Jersey-based College Savings Bank. Unlike ordinary bank CDs, the rate of return on CollegeSure CDs are linked to the rate of tuition inflation as determined by the College Board's Independent College 500® Index (IC 500®). The College Board's Independent College 500® Index (IC 500®) measures the amount of tuition inflation among a group of 500 colleges in the United States. |
| According to the College Savings Bank, “For the last ten years, the college inflation rate has averaged more than 5.00% a year,” so the rate of return would very attractive in low interest rate environments. |
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