When investing for college through Illinois’ Bright Start 529 plan, investors have a variety of investment options to choose from. Selecting the right investment portfolio is crucial to meet college savings goals while managing risk. This article analyzes the Bright Start age-based and static investment options, providing key factors to consider when deciding which options align with your risk tolerance, time horizon, and savings needs.
Understand Bright Start’s age-based versus static investment options
Illinois’ Bright Start 529 college savings plan offers age-based portfolios that automatically shift to more conservative mixes as the child gets closer to college age. Static options keep the same asset allocation regardless of the beneficiary’s age. Consider time horizon, risk factors, and personal preference when deciding between age-based and static.
Review the underlying investments in each Bright Start portfolio
The specific mutual funds or ETFs held within each Bright Start investment portfolio can significantly impact historical returns and risk metrics. Research the underlying holdings in both age-based and static options to find a comfortable risk-return balance.
Factor in any Illinois state tax benefits for Bright Start contributions
Illinois provides a state income tax deduction for Bright Start contributions made by Illinois taxpayers. Understanding the potential tax savings can inform decisions between Bright Start and any out-of-state 529 plans.
Consider combining age-based and static Bright Start portfolios
Investors aren’t limited to just one Bright Start investment portfolio. Utilizing both age-based and static funds can provide broader diversification and balance college savings goals with risk management.
Navigating the variety of investment options offered through Illinois’ Bright Start 529 requires research into underlying holdings, risk factors, time horizons, and potential state tax benefits. Finding the right blend of age-based and static portfolios provides the best opportunity to meet college savings needs.