This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Finding the Best College Savings Plans

In another approach, the allocation is age-weighted, gradually becoming more conservative over time. So a portfolio for a four-year-old might have 80% of assets in stocks. By the time, the child reaches 19, the fund will only have 10% of assets in stocks. The thinking is that savers cannot afford to hold risky stocks near the time when tuition checks are due.

You are free to invest in any state program you want. But some states provide big incentives to keep savers at home. Indiana offers tax credits of up to $1,000 annually for state residents who invest in the local program. Some states say earnings in 529 plans are free from state taxes, provided that the money is invested at home. If you live in a state like Texas, which has no state income taxes, there is no tax incentive to stick with the home state program. So you can shop for the investment that suits your taste.

A top choice is the Maryland College Investment Plan, which holds a basket of T. Rowe Price (TROW) mutual funds. The Maryland age-weighted portfolio that is designed for youngsters who will attend college around 2018 has about 56% of assets in stocks and most of the rest in fixed income. The allocation is a bit more aggressive than its average competitor, which has 52% of assets in equities. The stock-heavy approach has boosted returns.

During the past 10 years, the Maryland portfolio returned 8.4% annually, while the average peer returned 7.2% annually. The portfolio has 22% of assets in T. Rowe Price Equity Index 500 (PREIX) and 6.8% in T. Rowe Price Blue Chip Growth (TRBCX). About 47% of assets are in T. Rowe Price Spectrum Income (RPSIX), which holds a mix of bond funds.

Another strong choice is Utah Educational Savings Plan. The program invests primarily in Vanguard index funds. By sticking with low-cost investments, the plan offers total expenses as low as 0.18%.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Stan Luxenberg is a freelance writer specializing in mutual funds and investing. He was executive editor of Individual Investor magazine.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
AAPL $123.25 0.00%
FB $83.30 0.00%
GOOG $548.34 0.00%
TSLA $185.00 0.00%
YHOO $45.10 0.00%


DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs