Guest Commentary: Keep saving for college in a volatile market


Colleen Davis is the state treasurer of Delaware and an Executive Board member of the College Savings Plans Network.

By Colleen Davis

Recent market volatility has many people questioning the safest way to save. Given that unpredictability, it’s important to remain calm and evaluate risk tolerance, savings time horizon and overall investment goals when considering investment choices.

When it comes to saving for education, remember that your child’s dreams and your goals for their future are long-term. Staying the course with regard to investing in the future is an essential part of keeping those dreams moving forward.

If you’ve been thinking about saving for your child’s postsecondary education, you may be surprised to learn that now is an ideal time to start investing in a 529 college savings plan. These plans provide opportunities to set oneself up for success in investment downturns.

Investing in year-of-enrollment or age-based portfolios helps to weather market volatility. These options are designed to fit the particular amount of time you expect to hold the investment. A 529 plan contribution is invested based on the anticipated time to college enrollment or the age of the beneficiary. They will typically be invested more heavily in underlying equity investments when the beneficiary is younger and more heavily in fixed-income and money market investments as the beneficiary nears enrollment in college. As the beneficiary gets older, the portfolio will shift to become more conservative.

My office administers the DE529 Education Savings Plan, providing tax-advantaged accounts designed to help parents, grandparents and others pay for higher education expenses. As of December 2022, more than 23,000 accounts in the Delaware plan had a total of $612.67 million saved.

As a member of the Executive Board of the College Savings Plans Network, I work with my colleagues to prioritize equipping 529 plan participants and the public with the information and tools they need to minimize student debt for the next generation. In situations like those we experienced with the markets in 2022, that can mean staying the course and focusing on children’s long-term and limitless dreams.

You can’t control the markets or the economy; however, you can control how much you save and the diversification of your investments. Investment professionals suggest focusing on your risk tolerance or comfort level, the long-term savings strategy and staying the course. When markets get rocky, it’s tempting to act, but that may only disrupt long-term goals. It continues to be a good idea for account owners to periodically assess their investment choices with their time horizon, risk tolerance and investment objectives in mind.

Investors who do not jump in and out of the markets, and who consistently contribute, are those that have the potential to be rewarded over the long term. Remember and focus on the big picture — especially during unpredictable market periods.

So don’t let the market’s unpredictability keep or delay you from investing in your loved one’s future. Opening a 529 college savings plan and setting up recurring contributions — even in small amounts — can potentially add up to big savings down the road.

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