Some states offer a state tax incentive to participate in the 529plan of their state. However, for California, no advantage exists, so for practical reasons, any of them will do… There are websites that rank the performance of 529 plans…
However, I think more important than which plan “is better” is how are you allocating your investments in the 529k. I chose the Nevada plan simply because it’s run by Vanguard, and I am familiar with Vanguard funds and indexes, and generally I have been happy with them elsewhere. So I stuck to something I’m familiar with. Some people really like the CA ScholarShare plan. Probably good too..
But again, imho, it’s all about the allocation. We had an incredible run if you just allocated most of it to Vanguard total stock market or Vanguard Index 500 + Vanguard Total International Stock Market Index… I’m afraid, though the trend will not continue indefinitely, and especially as your kid gets closer to college (within a 7 year window), it’s time to slowly change the allocation to be “safer”… I’ve been slowly moving out of stock market funds into some corporate bonds, some inflation protected index funds, some income funds, and some cash based funds. So I’m am about 50% in the stock market right now for the 529k’s. That would have happened, irrespective of who is in office, whether we had a trade war or not, or any other external events.
It’s a strategy that people with 401k/IRAs have been preeching to me about… as you get closer to using it, take less risks and put more things into something more predictable that won’t swing wildly. I think for a 529k account ,especially if you only plan on using it for 1 kid at one time, it’s even more so the rule. Assuming you start when your kid turns 1, you have about 18 years. Statistically we have a good run at the market maybe for 10 year period followed by a downturn.. So if you milked it for the first 10 years, imho there is an increasing odd the next 10 years won’t be that great in the same investments… Since I had a pretty decent returns for almost 18 years between my account and my kids, I am over due to take a beating, so I’m not expecting things to continue. It’s time to plot a “safer” course for me. If you have more than 1 kids, then you have a largere timeframe to recover from prolonged downturn, since if you can’t’ take advantage of a large capital gains for your first kid, you can roll it over to an account for your second, third, or four… or their kids eventually… or their kid’s private K-12 now….
The magic number to beat is 4% per year. That’s roughly the average annual increase in college expenses and that has not changed.
