Susan asked:

“How does the Utah 529 plan compare to the Ohio CollegeAdvantage 529? I’m having a hard time choosing between the 2″

This is such a good question, I thought the answer deserved its own post.  So here it is.

Overall ratings: Both plans are rated well by both Morningstar and Saving for College.

Program Management Structure: Utah and Ohio are different than most 529 plans in that the programs are managed by state organizations, the Utah Educational Savings Plan Trust and the Ohio Tuition Trust Authority, respectively.  Most other states hire a financial company to do the administration.  By keeping control over the program, these states keep a tighter grip on the investment reins.

Program Management Fees: Both states offer 529 plans with low management fees.  Ohio charges 0.17-0.19% for an administration fee, in addition to the underlying expenses of the investment, which vary from 0.05 – 0.89%.  Utah’s program charges 0.22% for most of its investment options, on top of the underlying expenses of 0.025 – 0.132% .  The fees for the underlying funds are lower for Utah because it sticks to Vanguard funds; Ohio offers investments through a wider range of companies, so its top end expenses reach a bit higher, but there are plenty of good low-expense options within the Ohio Plan.

Investment Options: Both programs offer plenty of investment options.  Ohio offers 23 investment options, including four age-based options.  Utah offers 12, of which five are age-based.  Both of them offer equity- and bond-based investments.  You will likely find an appealing option in either program.

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Tags: 529 funds, asset allocation, investing for college, ohio, saving for college, utah

Asset allocation is perhaps the most important consideration when designing an investment portfolio.  Selecting an appropriate mix of stocks, bonds, and cash and maintaining the proportions through regular rebalancing, is about as sure-fire a winning strategy as it gets.

And the online financial service firms are there to help, right?  If I just follow the directions on the website, it’ll be easy as pie, right?  Wait a minute, hombre, not so fast.  Let’s compare the offerings of three large online services:  Schwab, Fidelity and Morningstar.

What exactly is “aggressive”?

The first step in selecting an appropriate asset mix is to determine what “investing” style matches your investment time horizon and your tolerance to risk.

If you’re nearing retirement, you want to have a more conservative portfolio than if you’re just starting out.  Workforce newbies have the most to gain from a high-risk-high-gain allocation, and more time to recoup, should the markets sour.  Likewise, if you’re the type who loses sleep when the markets see-saw, you might be more comfortable with a lower volatility portfolio, and accept that you might have to work an extra year — that may be a good trade-off for you.  Each website offers a walk-through questionnaire to help you evaluate where you fit on the spectrum of risk tolerance. Read the rest of this entry »

Tags: asset allocation, Fidelity, investment portfolio, investment returns, Morningstar, Schwab