A blog about writing . . . and a lot of other things

Wednesday, May 30, 2012

Interesting follow-up to college savings post

Okay, this might only be interesting to me.

Last week I wrote on my blind panic at the thought of college savings.  I didn't discuss this in my previous post,  but while I haven't invested much, I have been investing in a college savings plan for my son since he was a toddler.  We have an Oregon 529 plan for him, and were planning to add one for Mindy and start investing more into both since, you know, time is of the essence and all that.

However, Isaac now has just slightly more in his 529 plan than we have invested.  That's pretty pathetic, actually.  Managing to merely recoup our losses after nearly a decade of investing?  I wouldn't call that a good track record.  Yes, there were some rough years in there for the stock market, but our 401(k)s have performed much better. (Especially mine because it was inadvertently all transferred into a cash account right before the stock market crashed in 2008.  I still giggle whenever I think about it.)

So I have been reticent to fling more money at what has been a losing investment thus far.

Then this morning I was reading some articles online and came across Brent Hunsberger's It's Only Money column for today.  Apparently the Oregon 529 plan has been given a 5-cap rating by savingforcollege.com.

This is a sea-change from the bad press that the plan got a few years ago, when the state sued OppenheimerFunds for mismanagement of the plan's assets.  In 2008 when similar funds lost about 5% of their value, the Oppenheimer Core Bond Fund lost 35.5% of its value.  Ouch!

Bonds are supposed to be safe, boring investments. Investors expect to make very little money, but feel safe that their investment is not at risk.  This is where you put your child's college fund they are getting close to graduating from high school.  So for this bond fund to lose nearly half of its value, from $10.15 in May 2008 to $5.36 in March 2009 was a nightmare to families who thought they were being wise to save for college.  You expect to get whacked like this occasionally if you're invested in stocks, but not when you need that money for your kid's tuition in the fall.

In late 2009, OppenheimerFunds agreed to pay investors $20 million, over half of what they'd lost, and in 2010 the Oregon College Savings Plan changed management to TIAA-CREF, and they've been working on reducing fees ever since.

What do I do?  Do I trust the new, improved Oregon College Savings Plan and start saving more for the kids' college education?  Do I hunt down another investment?  Or do I just stick my head back into a hole and not think about it?  For the moment, I'm going to not think about it.  After all, tomorrow is another day.

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