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Decide what to hold in your college account

You've chosen an account and now you need investments to put in it.

What's "risk" and why do you need to think about it?

It's true in many parts of life: no guts, no glory; no pain, no gain. And when it comes to investing, it's hard to get much reward without taking some investment risk.

But how much? Depending on the investments you choose, your account could take on a little bit of risk or a lot. Ultimately, what matters most is what you're comfortable with.

How do you think about investing and risk?

If you think …

Fluctuations in the market are bad, no matter how long your investment time horizon.

You're more comfortable with investments that have a little more price stability, even if they may provide lower returns.

Your risk tolerance may be:

Conservative, which is a 1 or 2 on a scale of 1 to 5 measuring risk tolerance.


If you think …

You can deal with some market fluctuations.

Mixing different asset classes feels comfortable to you, because if one temporarily loses value, the other can help offset the decline in your account balance.

Your risk tolerance may be:

Moderate, which is a 3 on a scale of 1 to 5 measuring risk tolerance.


If you think …

Market fluctuations aren't a big deal.

You'd rather have the potential for higher returns, even at a higher risk of losing money.

Your risk tolerance may be:

Aggressive, which is a 4 or 5 on a scale of 1 to 5 measuring risk tolerance.


Use your "risk tolerance" to choose your investments

Once you've decided which risk tolerance feels the most comfortable for you, we recommend that you consider an age-based option that matches your needs.

Not only will age-based options save you some time now, they'll require less of your time on an ongoing basis because they're managed for you based on the age of your child.

Open a college account

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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.

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An asset (like a stock or bond) purchased in the hope that it will increase in price or pay income.

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The profit you get from investing money. Over time, this profit is based mainly on the amount of risk associated with the investment. So, for example, less-risky investments like certificates of deposit (CDs) or savings accounts generally earn a low rate of return, and higher-risk investments like stocks generally earn a higher rate of return.

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Asset class

A major type of asset—stocks, bonds, and short-term or "cash" investments.