In 2007 I started my children’s 529 Savings Plan. I chose the North Carolina 529 Savings Program. Recent research shows that this program has a 4-Cap rating and scores well compared other 529 Programs in the nation. I noticed it is not in the Top 10 nationwide but the fund has fared well overall from a performance and fees perspective.
As I have mentioned before, the key is getting started and regularly funding the account.
For demonstration purposes I will show the steps that I followed to open the account, select the investments, and fund the account. The intent to show how easy it was to complete the process in North Carolina.
You will choose from the 100+ Programs that make the most sense for your situation.
Step 1. Go To The 529 Administrator Site When You Have Determined The Right 529 Plan For You
The North Carolina state administrator has a web site at CFNC.org.
Step 2. Select Enroll to Set Up Your 529 Account
At Account Setup I was prompted to create a CFNC.org profile. I was sure to use a user name and password that I will remember. This is a site that I do not frequent so was sure to remember the web address and the online credentials to be able to access.
Once I had created the online profile I was able to enter basic information about me, the account beneficiary for both accounts I was opening, and then was able to complete the enrollment process. I opened two Individual 529 Accounts, one for each of my children.
Step 3. Select Investment Allocations
Once I setup my account and enrolled then I was prepared to define HOW I wanted future contributions invested into the different mutual funds available in the Plan.
A nice feature of the North Carolina Plan is that it allows you to keep it super simple if you prefer to just use an Age Based Investment Plan. If you want to not have to decide what type of fund class or classes to invest in then you can Select an Age Based Investment Plan.
This Age Based Plan is based on your risk tolerance. They offer Aggressive, Moderate, and Conservative Age-based tracks for you to choose from.
The investments will align to your risk tolerance AND factors in the age of your child. As your child approaches the college age of 18 then the fund begins to diversify into the funds that are most appropriate.
For example, you will likely not be in a lot of aggressive stock/equity growth funds at age 18 because dramatic stock market swings or corrections could wipe out your funds at a time you need access to the funds to pay for college.
It should be noted that just because the fund is an Age Based plan does not mean it will completely remove your equity exposure 2-3 years before college age of 18. Be sure you understand your plan’s investment objectives and asset mix.
Alternatively you can choose to allocate 100% of your investments yourself in an assortment of individual fund options ranging from Aggressive Growth to Conservative Growth to International Stock Index Portfolio.
You can research each individual option as much as you need.
Remember that contacting a fee-based financial advisor and your accountant would be a wise approach to get professional guidance on your options.
The below illustration demonstrates how you can select to do Age Based Investment contributions or manually pick Individual investment options.
Step 4. Make Automatic Contribution for Future Allocations
For me, investing has to be automatic. The 529 Plan should have multiple options for you to be able to fund the plan.
You can make a one-time transfer, set up a recurring automatic draft, or setup a payroll deduction.
It was easy for me to establish an automatic recurring draft by providing my bank name, bank routing number, and bank account number.
Step 5. Define Communications Preference
I do not need to monitor this fund every day, week, or month. I believe investing is like planting a tree and every dollar contributed will grow – over time.
If I put a seed in the ground and checked every day to see if it has grown I may go nuts. If I measure it daily I may also go nuts.
But if I checked it every once in a while and measure it each year, then I would be happy and responsibly monitoring progress while keeping my automatic contributions in force.
I was sure to register my account with an email address that I plan to keep for awhile. Using gmail or yahoo email accounts are typically more long-term than those tied to cable or internet service providers. If I do change my email address I will need to be sure to log into the CFNC site and update the email address accordingly.
Also one can choose to receive paper statements as opposed to digital statements. This is your preference. If you move be sure to update the residential information as part of your online account profile. Some administrators charge a fee to ship you paper statements.
This North Carolina fund does charge a $1.50 monthly fee for each beneficiary account so I have opted to NOT have a paper statement shipped to my personal residence, saving $36 per year for my two accounts.
Regardless, by simply accessing the CFNC account online I am able to view the online statements and transactions for any time period.
Get Started Saving
The key is starting a college savings plan now, to keep contributing to this savings plan and in being prudent in making your future college decision.
The end goal is a degree with a job and limited debt.
Remember to be awesome.
Information is for illustrative purposes only and is not intended as investment advice. Please consult a financial advisor and accountant for advice specific to your financial situation. Hired Graduate does not provide financial services and any information shared should be verified with a financial advisor and/or accountant.