Summary: I'm trying to start a college savings fund for my newborn daughter in Virginia. I understand 401ks, IRAs, etc. fairly well, but I'm having trouble translating Virginia 529's portfolio offerings to comparably behaving funds. I just need some help making sense of the differences between:
- Age-based portfolios
- Passively-managed static portfolios
- Actively-managed static portfolios
Questions: (I don't need/want these answered line-by-line, but this may help you figure out how/why I'm confused)
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Isn't the phrase "Actively-managed static portfolio" an oxymoron? Based on what "actively-managed" means in my 401k, I assumed that meant you pay a high expense ratio, for a fund manager to actively monitor and change the composition of a specific fund, based on market factors. Based on what I see on their website for one of their funds, it seems to me like their goal there is to maintain a static composition ratio of asset classes, and perhaps "actively manage" the assets in each class? If so, I'm not even sure I understand why someone would want this for a target-year based event like college, since you'd likely want that composition to change over time.
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Aged-based portfolios seem the most familiar and comparable to my 401k options, namely the retirement target-date funds, where you pay the high expense ratio, and just let a fund manager handle the rest. But if that's the case, why are there only options for every 3 years instead of every one year? Also, is the target date typically based on the year you enter college or graduate college?
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The passively-managed static portfolios look almost identical to the actively-managed static portfolios. What's the difference? Are the allocations in the passively-managed portfolio just "starting places" for the account holder?
Goal:
I'm very comfortable and familiar with my retirement monitoring through personal capital. It knows when I want to retire, how much income I want to have, tells me what my target allocation should be, and then makes recommendations on what asset classes to adjust to get there. I'd love an experience like that, except for college savings, where I plug in the projected year my child will attend college, assume what the average in-state tuition will be at that time, receive a target allocation recommendation, and then make the investments myself to avoid high expense ratios. It's the bolded part that I'm at a complete loss on how to accomplish here.
Can anyone provide any clarity or make a recommendation?
Submitted July 04, 2017 at 03:39PM by foogama http://ift.tt/2uHrEWk
