In August of 2008 I invested some of my kids money into a 529K plan. I am so upset because between the 2 of them they have lost between $500 and $850 dollars f their initial investment alone. I am wondering what I should do. Should I pull the money and take the loss, should I leave and hope the market does better, shuld I reinvest it somewhere safer???
I don’t know how all this works so I don’t know how to even start. Has anyone else experienced this and has anyone else done anything or are you just riding it out? Any input is appreciated.
Thank you everyone. I kind of knew this all along but felt bad at the thought of loosing so much of their money within a few months of investing. Everyone has given the same advice....RIDE IT OUT and this is what I am going to do. It could be a lot worse and since my kids have at least 10+ more years toll college I think we will be fine.
It's just that look at those pesky statements are sooo depressing. I feel better now!!!! Thank You All
We are all in the same boat! I've lost a lot of my initial investment in 529s for my kids, too. I guess what action you take really depends on how old the kids are and when you'll need the money. If they are going to college soon, you need to be conservative.
Well, the 529 is meant to be a long term investment. If your children are young enough that the money is not needed for several years, then you should leave it. As you invest money, you are dollar cost averaging. Meaning you are buyinh the shares at a lower price now, and it will eventually go up and you'll see the investment grow. The same idea is for retirement plans, as long as you don't need it within the next 5 years, you can stay where you are.
Dear L.,
If you are upset about loosing $850 at a time when most people have lost a lot more, I would say that you may want to consider other kinds of investments that give you more peace of mind and let you sleep at night. The market is likely to get worse before it gets better, so you stand to loose a lot more. If that is likely to upset you, get the money out now. Nothing is more important than your sanity and sense of security.
Or leave the 529 as is and invest the next money in a more stable vehicle for your children. Munis, CDs and bonds are probably better options for you and they will also help keep your family diversified. It is not a good idea to keep all your eggs in one basket anyway.
Good luck.
L
Keep the money in! You do not lose a dime until you take the money out just like in the stock market, yes it is beyond horrid right now but you dont lose a dime until you sell your shares. Your kids won't be using this money for over 10-15 years (I'm guessing) by then the market should be beyond straightened up. The people who are really losing out in this are the people who are retiring in the next few years not younger people. We have lost tons in our daughters account but it will become by the time she goes to college. Best of luck.
I know it's tough but the easiest thing is to just NOT look at the returns and obsess. People tend to panic and take the money out or stop investing and this is the opposite of what you should do. I've watched the same thing happen to my 401K and my boss' advice? -- put MORE money in. Things WILL turn around, try to have a long view.
Hi,
Do not take the money out. Like with any other long term investment, such as a 401k plan, you will have gains and losses, but the longterm will be a gain. As time goes on and you get closer to the date where you'll need the money, you should be invested in options that are less risky, so that your money is more stable closer to the date you'll need it. This is a very simplified explanation, hope it helps. GL!
my advice is DON'T TOUCH IT! this is a long term investment plan, and you will see occurances of loss over the period of the investment, but don't be scared. these plans are meant to be aggresive because you have the luxury of time on your side to make up for the losses, and then some. the market flucuates a LOT. granted, this past quarter was not good to say the least, but don't be hasty. keep the plan until maturation, and you will be happy you did. hope that helps!
Hi L.,
I use to work for an investment company. My boss was very good with assisting his clients in making the right decision for their children. Before I left the market had just started to fall. Clients would call with their concerns about the market and their children losing money. He is very big with telling people to "ride it out". The market will get better, and the money you lost will be gained back. If you really concerned talk to your advisor and see what they say. But, in the end you have to do what is best for you and your childs future. I wish you luck!
L.
Don't look, don't touch! Unless your kids are going to college very soon, then you have nothing to worry about. 529's are a long term investment. If you look at any historical data on the economy you will see that there are always highs and lows. We are currently at a low, but history has shown that the market will go back up.
