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URL:  https://boards.fool.com/steve-you-suggested-quotfor-example-if-i-were-16504696.aspx

Subject:  Re: 529 vs. Education IRA Date:  1/19/2002  5:06 PM
Author:  Adenovir Number:  4709 of 8558

Steve,

You suggested "For example, if I were to start of with $1,200 and add $100 per month to the account with an Education IRA invested in an index fund (10.5% return), at the end of 18 years, I would end up with $58,574."

Would you really want to have all of your money in the stock market for the last 5 years of saving prior to the start of school? What if you had been doing this and your last two years were 2000 and 2001? You could move your money to fixed income securities yourself in an Ed. IRA, and this would bring your estimated returns in line your calculations for a 529 plan, assuming that the fees and elimination of state taxes cancel each other.

I have a 529 through Fidelity and use the Upromise citibank mastercard. I put everything I can on that card and pay it in full each month, giving me an extra $20-30/month towards my kids 529's. Fidelity waives the annual fee if you have a direct deposit (of at least $50/month) set up, so the only fees I pay are those inherent to the fund itself. They also allow generous relatives to contribute obscene amounts of additional funds if they want to, which you can't do with an Ed. IRA. Between the Upromise and the Relative's contributions, the scales are tipped toward 529's for us.

Adenovir

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