Investing for K–12 goals
Consider our individual options when investing for your K–12 goals. With this do-it-yourself strategy, you'll select your own investments and manage your portfolio over time.
Keep in mind these considerations
Using 529 plans to save for a child's K–12 education presents investors with scenarios that are very different from saving for college with 529 plans.
To pay for the K–12 years, you'll be withdrawing money from your 529 plan over a much longer time frame than you would to pay for college.
You won't have as much time to save for a K–12 education before you start withdrawing as you would when you're saving for college.
3 tips for choosing your K–12 investments
- Determine when you'll need the money to pay for education expenses.
- Choose your investments based on when you'll need to use portions of your savings and your comfort level with risk.
- Revisit your asset allocation each year to see if you have the same risk tolerance and time horizon. Reallocate your investments if necessary.
How you might invest $100
Let's say you have $100 to invest—$75 for college and $25 for high school. You might consider splitting your investment this way:
- $75 in an age-based option designed for saving for higher education based on your risk tolerance.
- $25 in an individual portfolio based on your risk tolerance for a child in kindergarten, who will need the account for private high school in 8 years.
Choose the right investments for your goal
If your goal is 2 years or less away
For the portion of your savings you'll need within 2 years, your main priority for that money should be preserving your principal. Consider low-risk investments that are easy to access.
The Vanguard 529 Plan offers the Vanguard Interest Accumulation Portfolio as an option for pursuing these short-term goals.
If your goal is more than 2 years away
If you won't need a portion of the money for more than 2 years, you can consider additional investment options for that money. Some types of investments offer greater potential to earn more toward your goal, but they also carry greater risk.
There are 2 ways to select individual portfolios for your Vanguard 529 account:
Don't forget to review your investments
Because investing in individual portfolios is a do-it-yourself strategy, you should review your portfolio regularly to make sure it's still in line with your goals, time horizon, and risk tolerance. You may want to consider annual reviews as you get close to making tuition payments since you may be taking money out more frequently for K–12 expenses.
- You can only move money from 1 portfolio to another twice a year. Your portfolio won't automatically become more conservative over time.
- You should revisit your allocation periodically, especially if there are changes to your savings time horizon, risk tolerance, or personal situation.
We're here to help
Talk with one of our education savings specialists.
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The way you divide your portfolio among the asset classes—stocks, bonds, and short-term or "cash" investments.
Usually refers to investment risk, which is a measure of how likely it is that you could lose money in an investment. However, there are other types of risk when it comes to investing.
The amount of time, usually expressed in years, that an investor expects to hold an investment.
The amount of money originally put into an investment.
General categories of investments. The 3 major asset classes are stocks, bonds, and cash investments.
An investment that represents part ownership in a corporation. Each share of stock is a proportional stake in the corporation's assets and profits.
A loan made to a corporation or government in exchange for regular interest payments. The bond issuer agrees to pay back the loan by a specific date.
Investments in interest-bearing bank deposits, money market instruments, U.S. Treasury bills, and short-term bonds.