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A.) What do you think of 529 plans? Do you believe they are too restrictive in terms of what you can do with your money as opposed to the tax benefit.

I like them, and it's where I intend to put a big chunk of our college monies. We don't have kids yet, but I'm planning to open an account in my name now and start contributing (I've figured out that the chances of our having kids or my going to grad school approximate 100%.)

There is the concern that the tax advantage runs out in a few years, and who knows what Congress will do about it. However if you have a state tax advantage, I would say go for it.

B.) With or w/out a 529 plan, how would you allocate your investment of the $50K w/ an 18 year time horizon in from of you? (ie. index funds/ Stocks/ Bonds, Cash, etc.)

Personally we're putting all of our college funds in index funds and stocks, and will do so for at least the next ten years. One of the reasons I like the 529 plans current is that several of the respectable low fee funds have 100$ equity options, which are in index funds. I'm happy with the rule of thumb that says keep money in equities that you don't need for more than five years. However we are living well below our means, and can emotionally and financially weather a drop in the value of such funds.

If I were going to put money into cash or bonds I would not do so in the 529 plan as there would be little tax advantage to doing so (barring a rebate from the state).

- Megan
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