With a shorter time horizon, the late starter will likely have a different investment mix than an early starter.

A common mistake is to make up for lost time by gunning for the most returns possible in an aggressive investment plan.

As evidenced by recent market performance, that mistake can be costly if you're caught in a downdraft with your pants down. 

Whether you've invested in a 529 plan or just make regular contributions to a taxable account, by the time your child is a sophomore in high school, at the latest, the college investment portfolio should be almost entirely in conservative instruments.

"In my opinion, you have to be very conservative with at least 80 percent in fixed-income investments -- whether CDs, municipal bonds or good-grade corporate bonds," says Michael Gaer, president of Gaer Financial Group. "I hate to say it, but even cash or savings," he says.

Many 529 plans offer age-weighted plans for parents who prefer to remain hands-off when it comes to their investments.

While the set-it-and-forget-it option may have worked in the early years of college planning, in the final years before college parents should check to make sure that the investments reflect the amount of risk they're comfortable taking with their college fund.

According to Gaer, some age-weighted plans may be too risky for some investors, with as much as 60 percent of a 529 plan's portfolio invested in equities in the lead up to college matriculation.

"In general, I always try and recommend an age-weighted plan, but if I see it's too aggressive I will tell them to switch out of it. Most 529 plans have an option where you can invest in 100 percent bonds," he says.

With today's recession goggles firmly in place, it's easy to see the wisdom in staying on the safe side of Wall Street. But in the heady days of a bull market, walking away from good returns to reap modest returns may be difficult, though necessary.