Need Advice on Education Funds

[scottmn4]

Good afternoon all,


I have been lurking for a few months and this is my first post on the site. There is a wealth of information here and I look forward to reading more as I near FI in the next 5-10 years.


For now, I have a question regarding funds I have set aside in a college savings account for my daughter (Coverdell). I setup the account around 10 years ago and talked with an advisor at TD Ameritrade yesterday and he said that from a risk perspective the funds we own in the account rate at an 8.5. Given that my daughter started college a couple months ago and we will need the money over the next 3.5 years, I need to get this into a more conservative fund(s). The TD Advisor told me they can't recommend a specific fund, but gave me info on how to search their site to find mutual funds and he recommended 25/75 allocation.


The problem is that I can't find a way to search based on AA and I am thus struggling to find something suitable. I have enough money in the account to fund my daughter's 4-year bachelor's degree so I am interested in preserving what I have now, but would like to take advantage of growth over the next 3.5 years if I can find something that isn't too risky.



Do you have any recommendations on some mutual funds that would get me this type of AA, or any other recommendations as I move forward and get this into a more conservative fund?

Thanks

 

[HillCountry]

You are deploying the fund now, so AA should be more close to 0/100. I would do simple CD ladder.

 

[bloom2708]

0 to 20% stocks max.

To get growth you risk loss. Markets do not always go up.

100% Short term bonds for our college freshman daughter. Saved enough. No need to risk.

 

[pb4uski]

....The problem is that I can't find a way to search based on AA and I am thus struggling to find something suitable. I have enough money in the account to fund my daughter's 4-year bachelor's degree so I am interested in preserving what I have now, but would like to take advantage of growth over the next 3.5 years if I can find something that isn't too risky. ....

Since you will need to use this money over the next 3 1/2 years, I would not put any in equities, especially with markets at or near all-time highs. I like the idea of a CD ladder or even a short-term bond fund or money market fund.

If you really want equities then buy 25% equity index funds and put other 75% in CDs or a short-term bond fund.

 

[Fedup]

I had mine all in CDs, even though I was paying out of our income. I didn’t want to risk it for relatively short term.

 

[RE2Boys]

Last two years of HS, with college in near future, I had 20% in equities and 80% in short term bond funds. With the rising interest rates, I felt I would likely lose money with the bond funds, and moved all funds into a stable value fund (and too short of time period to gamble with equities). These funds are in 529 plans. Currently in Colorado's plan, but looking to move them to Utah 529 plan.

Son's are currently a junior and a sophomore.

See https://www.savingforcollege.com/article/when-to-consider-a-coverdell-esa-to-529-plan-rollover for pros and cons of moving Coverdell to a 529 plan

 

[scottmn4]

Thanks for all the responses. I went ahead and sold the mutual funds I had in the account and will leave it in MM until all the funds are used.

 

[Al in Ohio]

You are deploying the fund now, so AA should be more close to 0/100. I would do simple CD ladder.

I just put my oldest through and my youngest is a senior in HS. Once they start college or are a year away I highly recommend getting entirely out of the market and using laddered CD’s or having no more than 25% of your AA in the market. If you hit a bad bear market when they just get started you want at least three years of savings unaffected by it. Can take that long for recovery. Otherwise you risk their education.