How will Wealthfront invest my 529 account?

We invest your 529 account in a portfolio of municipal securities, each with a single underlying low-cost, index ETF, that represent up to nine separate asset classes, according to your investment plan.

Your 529 account’s investment plan is designed to optimize return for your unique investment goals and risk tolerance. Our 529 investment questionnaire evaluates your:

  • Subjective willingness to take risk.
  • Consistency in your responses to subjective risk assessment questions.
  • Objective ability to take risk based on your projected resources to fund college expenses compared to the projected cost of education (for all children, where relevant).
  • Desired type of higher education institution (e.g. public/private, 2- or 4-year institution) for your beneficiary.

Using this data, we compute a risk score and use it to recommend an optimal investment plan with an appropriate level of risk and return.

A distinctive feature of the Wealthfront 529 College Saving Plan is the glide path that transforms your investment mix over time. A glide path consists of a collection of asset allocations that automatically adjust over time to decreasing levels of expected risk as the expected matriculation date of the beneficiary approaches. It is designed to maximize returns in the earliest years of college savings and investing. Then, by shifting assets to expected lower-risk portfolios over time, it can better protect plan savings from a potentially large market downturn in the years leading up to college.  This risk reduction can be particularly valuable when the account balance is at its highest point and relatively few years remain to make up for a shortfall in college funding.

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