Educational Savings Accounts

[Dunit35]

Anybody have one for their children? Or a 529 plan?

We opened a regular savings account for our two year old daughter when she was born. We only put in $10/every other week. We are about to do the same for our newborn. It will amount to $4600 or so. It'll pay for one semester or help with a vehicle.

It looks like a better return would be an education plan. More money will go into it when debt is cleared up.

[Amnorix]

Originally Posted by DaneMcCloud

I opened a 529 account for my newborn in mid-2008. I put in $15k to start.

By 2013, even after the crash and the market recovery, it was at $12k.

The "Stock Market", IMO, has become a "Market of Stocks". Nothing is guaranteed. Long term investments may or not be there in today's economy.

Buyer beware.

Did you do systematic deposit (a/k/a dollar cost averaging)? Sure, if you just throw a wad of money at something like that, then it's all going to depend on the timing of when you put it in, and when you take it out.

If you put in another $100 per month, then your return would likely be much, much better, since you would have kept buying when the market was collapsing.

Finally, you reference "today's economy" as if that's something different from historical performance. Frankly, there are many times in the history of the stock market that it just goes sideways, basically, for years. Does nothing.

Most of the market's gains are done in bursts, that then sustain for a long time. Reaching a new plateau, if you will. But if you miss that burst, then you're often out of luck until the next one.

Dollar cost averaging lets you buy shares when the market sucks, and everyone else is panicking. Then when the burst comes, you reap the reward.

[DaneMcCloud]

Originally Posted by Amnorix

Did you do systematic deposit (a/k/a dollar cost averaging)? Sure, if you just throw a wad of money at something like that, then it's all going to depend on the timing of when you put it in, and when you take it out.

If you put in another $100 per month, then your return would likely be much, much better, since you would have kept buying when the market was collapsing.

Finally, you reference "today's economy" as if that's something different from historical performance. Frankly, there are many times in the history of the stock market that it just goes sideways, basically, for years. Does nothing.

Most of the market's gains are done in bursts, that then sustain for a long time. Reaching a new plateau, if you will. But if you miss that burst, then you're often out of luck until the next one.

Dollar cost averaging lets you buy shares when the market sucks, and everyone else is panicking. Then when the burst comes, you reap the reward.

Personally, after losing hundreds of thousands of dollars after the 2008 crash, I'm done. I'll never put money there, again. I'd rather see a 1% yield and have my money, rather than 60% losses while "hoping" it comes back to even.

[Rain Man]

Originally Posted by DaneMcCloud

Personally, after losing hundreds of thousands of dollars after the 2008 crash, I'm done. I'll never put money there, again. I'd rather see a 1% yield and have my money, rather than 60% losses while "hoping" it comes back to even.

2008 and 2009 blew chunks, but 2010 through 2014 have been fabulous. It is an unsettling ride sometimes, though.

[MahiMike]

Originally Posted by DaneMcCloud

Personally, after losing hundreds of thousands of dollars after the 2008 crash, I'm done. I'll never put money there, again. I'd rather see a 1% yield and have my money, rather than 60% losses while "hoping" it comes back to even.

Agreed. Only thing I trust is real estate and gold. One of the benefits to my recent job change is that I can rollover my 401K into my self-directed IRA and buy more real estate!

[The Franchise]

Originally Posted by Rain Man

2008 and 2009 blew chunks, but 2010 through 2014 have been fabulous. It is an unsettling ride sometimes, though.

Yeah....I lost close to $5000 on my deferred comp during that 2008-2009 time frame.

[ChiefGator]

Originally Posted by MahiMike

We started a 529 plan but stopped it in lieu of Florida Pre Paid. We figured it would take an avg of 15% per year to equal the pre paid plan.

Yeah, that is a good program. Not sure if other states do it.

Does it still freeze the tuition costs?

[lewdog]

Originally Posted by DaneMcCloud

Personally, after losing hundreds of thousands of dollars after the 2008 crash, I'm done. I'll never put money there, again. I'd rather see a 1% yield and have my money, rather than 60% losses while "hoping" it comes back to even.

Yea but you are looking at it wrong. The money you had at your peak portfolio was worth way more than the money you actually put into it. Given decades of compounding interest, it's amazing to actually see what you put in an account and how much it's worth with even 7-8% growth over decades. So while saving in something with little to no growth means you don't lose, you also never would have had the great amount of money the market gained you at your peak portfolio time. Almost in a sense you'd be in the same spot whether you invested and went to the point of the crash and your money's value or whether you only put money into a savings account. But then if you rode out the last bull market, you be back to close to 90%+ of you peak portfolio which contained lots of money that was never really "yours" to begin with.

Hope that isn't confusing......investing is a roller coaster but even with huge swings, long term you still come out way ahead of a savings account in during bear markets. Most people get attached to money that wasn't really there to begin with...interest gains.

[DaneMcCloud]

Originally Posted by lewdog

Yea but you are looking at it wrong. The money you had at your peak portfolio was worth way more than the money you actually put into it.

Unfortunately, this isn't true. I began putting large sums of money into several accounts in 2008. Prior to that, I had been very conservative and had my money in numerous Orange CD's that were paying 4% or more. I was convinced (conned) into investing it in the market and promptly lost 60%.

By 2013, I had only recovered about 20% of that money and pulled it all.

Never again.

[lewdog]

Originally Posted by DaneMcCloud

Unfortunately, this isn't true. I began putting large sums of money into several accounts in 2008. Prior to that, I had been very conservative and had my money in numerous Orange CD's that were paying 4% or more. I was convinced (conned) into investing it in the market and promptly lost 60%.

By 2013, I had only recovered about 20% of that money and pulled it all.

Never again.

Oh well if you didn't start investing until 2008 you're right. If it had been from decades earlier you have been playing with house money.

Missing the last 5 years wasn't great for you.

You also needed to be in more aggressive funds during this bull to have gotten it back. But after losing, most people mentally can't do that.