Which 529 Savings Plan is Best?

One of the smartest things that you can do for your college-bound child is save through college via a 529 plan. While stocks and bonds are subject to either income tax rates or capital gains tax rates depending on how long you hold them for, 529 plans come with an abundance of tax advantages that you simply cannot get in a standard brokerage account.

But of course, 529 plans aren't perfect. Some state plans offer severely limited options in what you can invest in, and other charge exorbitant fees that almost seem to offset the tax advantages that a 529 plan can provide. If you have to choose between paying a 2% fee for a mediocre fund with say, investing taxable money in a Vanguard account that only charges 0.09%, then the decision to use a 529 plan in the first place may not be all that clear.

You should probably visit your state 529 plan account website, see if they offer a decent fund selection, and make sure that the expenses are below 1.5%. Otherwise, a 529 plan may not necessarily be better than using a taxable brokerage account. To read a great article on the topic, be sure to check out Consumer Boomer's commentary on the subject by clicking here: http://consumerboomer.com/choosing-the-best-section-529-plan/ .