How could age-based 529 portfolios help you save — even in volatile markets?

When it comes to college savings plans, not all portfolios are created equal

A reader recently asked, “With all the volatility in the market right now, I’m getting nervous that the money I saved for my kids’ college education is now at risk. Should I move my balance into a money market fund until things improve?”

As the parent of three college grads, I know this anxiety all too well. You have been saving diligently for your child’s college education, and now the market is having some really bad days — who wouldn’t be concerned?

Market volatility certainly has a way of reminding us to pay attention to our investments, especially money we have earmarked for something specific, like a child’s higher education. But not all investments are created equal, especially in these tumultuous times, and trying to time the market is virtually impossible. Rather than trying to predict short-term market behavior, I believe parents may be better-served by a “set it and forget it” strategy, like an age-based 529 portfolio.

How do age-based 529 portfolios work?

529 plans offer a variety of portfolios from which investors can choose. An individual portfolio is invested in a single underlying investment (such as equity, fixed income, or capital preservation), which provides “building blocks” across major asset classes for investors to use when creating a diversified portfolio. Investors can also select from target risk portfolios, which are tailored to the investor’s desired level of risk. Finally, many 529 plans offer an age-based portfolio option, which is designed to align with the child’s expected year of college enrollment. These portfolios follow a glide path to gradually become more conservative as the expected date of college enrollment nears, by starting out with a high percentage of assets invested in equities and moving with an increased allocation to bonds and cash as the student gets older.

I believe age-based options are designed to shine in volatile market conditions like we are experiencing today. If your child is young (say, five years old), you have time on your side. Day-to-day market volatility may be unsettling in the short term, but long-term effects on returns tend to be mitigated, as you’d have more than a decade to recover from stock market shocks.

But what if your child is already close to high school graduation? This is where an age-based portfolio can really help. By the time your child is wrapping up high school, the aged-based track has taken care of ratcheting down your exposure to equities in favor of lower-risk bonds and cash. (For example, the Invesco 2020-2021 Age-Based Portfolio asset allocation only has an exposure of around 15% to equities.)  

529 plans are built for up and down markets

I personally used age-based 529 portfolios to save for my own children’s future college expenses, and I didn’t shift my money into cash even in the market downturn in 2008. (By way of comparison, the stock market lost 38.49% in 2008.1) Equity investors felt that pain, but in the ensuing 10 years, the S&P 500 gained more than 260%, about 15% per year.2 Hindsight is 20/20, and past performance is not indicative of future results, but history keeps teaching us that when it’s most painful to be an equity investor, it’s often the best time to buy more stocks.

In the long run, I believe a 529 plan is a great way to save for college — and with an age-based portfolio, parents can ease the worry of investing in down markets.

1 Source: S&P 500 Historical Annual Returns,

2 Source: Bloomberg, L.P., January 2009 through December 2019

Important information

Blog header image: jovo jovanovic / stocksy

Diversification does not guarantee a profit or eliminate the risk of loss.

Before you invest, consider whether your or the beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in that state’s qualified tuition program.

For more information about CollegeBound 529, contact your financial advisor, call 877-615-4116, or visit to obtain a Program Description, which includes investment objectives, risks, charges, expenses, and other important information; read and consider it carefully before investing. Invesco Distributors, Inc. is the distributor of CollegeBound 529.

An investment in the Portfolios is subject to risks including: investment risks of the Portfolios which are described in the Program Description; the risk (a) of losing money over short or even long periods; (b) of changes to CollegeBound 529, including changes in fees; (c) of federal or state tax law changes; and (d) that contributions to CollegeBound 529 may adversely affect the eligibility of the Beneficiary or the Account Owner for financial aid or other benefits. For a detailed description of the risks associated with CollegeBound 529, and the risks associated with the Portfolios and the Underlying Funds, please refer to the Program Description.

Thomas Rowley
Director, Retirement and Education Strategies

Thomas Rowley is director of retirement and education strategies and one of Invesco’s most frequently requested speakers. He provides analysis of the evolving retirement landscape and develops actionable strategies to help investors and financial advisors maximize their retirement-planning opportunities. Mr. Rowley regularly shares his insights online at in addition to his speaking engagements.

Mr. Rowley’s insights reflect more than 20 years of experience in the investment industry. He translates his comprehensive knowledge of retirement planning into lively, clear explanations of the complexities of legislative, investing, tax and social issues.

Mr. Rowley shares his analyses of retirement-related issues through regular personal appearances, continuing education webinars and Web-based commentaries.

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