Why staying the course matters—especially in a volatile market

It’s no secret that market volatility can rattle even the most seasoned investors. When you’re saving for something as important as your child’s education, it’s natural to worry about short-term swings in the market. However, when it comes to investing in a 529 plan, trying to time the market or adjust your strategy during periods of turbulence can often do more harm than good.

One approach for many families is to stay the course and let the plan do what it was designed to do: aim to grow your college savings steadily over time while managing risk appropriately based on your education spending goals and timeline.

Designed to evolve with you: Year of Enrollment Portfolios

One of the biggest potential benefits of 529 plans is that they offer professionally managed portfolios that are built with a long-term mindset. Among the most popular varieties of 529 plans are Year of Enrollment Portfolios, which automatically adjust their risk profile as your child approaches college age.

When your child is young and college is many years away, these portfolios typically hold a higher allocation to equities. As your child gets closer to enrollment, the portfolio steadily becomes more conservative—reducing exposure to riskier assets like stocks and increasing exposure to more stable investments like bonds and cash equivalents. This glide path is designed to smooth out the investing experience and help protect your savings from volatility when you’ll need it most.

So, while the market’s recent swings might be unsettling, they’re already factored into the design of Year of Enrollment Portfolios. In other words, you don’t have to adjust allocations on your own—the strategy includes a built-in shift to reduce risk as college gets closer.

A different approach: Target Risk Portfolios

For those who want more control over their risk exposure, Target Risk Portfolios may be a better fit. Unlike Year of Enrollment Portfolios, these don’t change their risk profile over time. Instead, you choose a portfolio based on your risk tolerance (i.e. conservative, moderate, growth, or aggressive) and the allocation stays consistent over time. This approach requires a more hands-on approach in order to ensure your investment mix stays aligned with your goals and risk tolerance.

Don’t let volatility derail your strategy

When markets drop, it can be extremely tempting to pull back. But history shows that staying invested—especially during downturns—has rewarded patient investors. Selling during a market dip often means locking in losses and missing out on the recovery. If you’re not invested during those rebounds, your long-term returns may suffer.

CollegeBound 529 plans are long-term vehicles. Whether your child is 3 or 13, the goal is still years away. That means your investments have time to recover from short-term downturns.

The value of a financial professional

In uncertain times, you don’t have to navigate your CollegeBound 529 investment plan alone. A financial professional can help you not only develop a plan but stay grounded and on track when emotions are running high. Perhaps most importantly, a financial professional can offer perspective. Having a trusted professional by your side can help you stay confident in your strategy, even when the market feels like it’s on shaky ground.

To learn more about CollegeBound 529 college savings plans, click here.