529 plans - a gamble?

I've got a 2yr old and an 8month old and we just made about $50K
from selling a house. My wife & I both think the best plan is
to save it for college for our kids.

Looking at 529 plans they seem risky to me. What happens if we
have a few down years when they're in highschool? They could
end up losing 20-40% of their savings.

I'm in Ohio and we don't have guranteed returns on our 529 plans
(sounds like some states do that).

Is there a more guranteed method for saving for college?

-John

Re: 529 plans - a gamble?

Did you ask this question at misc.invest.financial-plan?

It's moderated, so posts should appear within a day but not immediately.

Re: 529 plans - a gamble?

John D wrote:
> I've got a 2yr old and an 8month old and we just made about $50K
> from selling a house. My wife & I both think the best plan is
> to save it for college for our kids.
>
> Looking at 529 plans they seem risky to me. What happens if we
> have a few down years when they're in highschool? They could
> end up losing 20-40% of their savings.

Well, everyone has different risk tolerances. Investing in the stock
market is inherently risky. One has to balance the risk reward ratio.

You sound like a glass half empty kind of guy ("They could end up
losing 20-40%", on the other hand, they could end up graining 20-40% or
more, no?)

>
> I'm in Ohio and we don't have guranteed returns on our 529 plans
> (sounds like some states do that).
>
> Is there a more guranteed method for saving for college?
>

There are no guarantees in this world. You could put your money in
Treasuries, which is about as safe an instrument there is. But then
you may not be able to keep up with inflation and end up under-funding
your kids college costs.

Again, risk reward ratio is the key.

> -John

Re: 529 plans - a gamble?

I have heard of people buying permanent life insurance for kids
college. The policy cash value can pay for school if parent does not
die, if parent does die, education is paid with the death benefit.

I think this strategy has been discussed on misc-financial-planning