Friday, Nov. 13
Posted 2 p.m. EST
What's the opposite of "fortuitous" (something accidental that happens by good luck)?
I ask because the opposite of fortuitous happened this week to OppenheimerFunds, which released a new survey that focuses on women's lack of initiative when it comes to implementing a college savings plan.
Meanwhile, this week the Wall Street Journal ran a piece that led with an anecdote about a high school teacher in Florida who had lost about half of his kids' 529 savings "because of an Oppenheimer bond fund that had bet heavily on mortgage-backed securities." He's bailing from 529 plans altogether and investing in bonds on his own.
The Journal piece, entitled "More parents are becoming 529 dropouts," reports that investors contributed a mere $5.2 billion to 529 plans last year and $4.8 billion so far this year, compared to $15.5 billion in 2006 and $15.2 billion in 2007.
Frankly, I think 529 plans are a great way to save for college. But I went for the prepaid tuition type plans with my own kids -- both of whom graduate next month. (Yippee!) These plans are not infallible, as Bankrate's recent article on prepaid plans describes, but so far no one has lost any money or benefits.
The 529 savings plans are another story. You can easily lose money in those, especially if you've accumulated a lot of money and then get whipsawed by a horrendous market, bad luck or both.
But my experience has been positive. Last year I began investing regularly in the Ohio CollegeAdvantage plan, with 70 percent going into Vanguard's Aggressive Age-Based Option and 30 percent going into the Vanguard Developed Markets International Stock Index Option (because I didn't think the age-based option had enough foreign stock exposure). I'm doing this for my grandson Roman, who exhibits genius-level intelligence at the age of 22 months and is destined to go to college. (That's a completely objective point of view, by the way.)
So far -- and I've only been in this plan for about 15 months -- the 529 account's return is north of 21 percent. Not bad! Of course, there's not a whole lot of money in there yet.
The Aggressive Age-Based Option has an 80 percent exposure to U.S. stocks and 20 percent to international stocks, but when Roman turns six, the stock exposure will be dialed down to 75 percent and bonds will make up 25 percent. When he turns 11, it will have 50 percent in bonds, and at age 16, 75 percent in bonds. And I'm comfortable with that. A big plus: There's no need to calculate capital gains and losses every year since earnings grow tax-free.
In the OppenheimerFunds survey, men and women were asked how well the following statement describes them: "I am planning effectively to cover the cost of my children's college education."
The responses were nearly identical, varying by one percentage point at the most. Nearly a quarter said it "describes me very well." More than half (53 percent of women and 54 percent of men) said it "describes me somewhat well." And nearly a quarter said the statement "does not describe me."
So it may be true that women should take a more active role with college planning investment decisions. But so should men.
Questions? Comments? E-mail boomerbucks@bankrate.com.