The right college financing strategy may be one of the most important investment decisions you will make. What if you're not an investment professional?
We know most people aren't, so we've set up a choice of six investment options. You can invest new contributions in any one or combination of these six investment options: the Managed Allocation Option, 100% Equity Option, Balanced Option, 100% Fixed-Income Option, Money Market Option and the Guaranteed Option.
Effective November 1, 2007, transfers from the Guaranteed Option to the Money Market Option will not be permitted. (If this restriction changes, investors will be notified prior to the effective date of any such change.)
These investment options vary in their investment strategy and degree of risk, allowing you to select an option or combination of options that may fit your needs.
Changing Your Investments
Once you invest in a particular investment option, you can transfer contributions and any earnings to another investment option once per calendar year or upon a transfer of funds to a Minnesota College Savings Plan account for a different beneficiary. Effective November 1, 2007, transfers (including transfers when there is a change of the Beneficiary) from the Guaranteed Option to the Money Market Option will not be permitted. (If this restriction changes, investors will be notified prior to the effective date of any such change.) (See the Minnesota College Savings Plan Disclosure Booklet and Participation Agreements (PDF, 773KB) for more information.)
Periodically Review Your Investments
It's a good idea to periodically re-evaluate your investment strategy as your goals, investment horizon, and personal situation change - for example, annually at tax time, on a yearly basis if your income changes, or upon the birth of another child.
Managed Allocation Option (Risk level shifts from Aggressive to Conservative)
This Investment Option seeks to match up the investment objective and level of risk to the investment horizon by taking into account the Beneficiary’s current age and the number of years before the Beneficiary turns 18 and is expected to enter college. Depending on the Beneficiary’s age, allocations to this option will be placed in one of six Age Bands, each of which has a different investment objective and
investment strategy. The Age Bands for younger Beneficiaries seek a favorable long-term return by investing primarily in Mutual Funds that invest in equity or real estate-related securities, each of which has a high level of risk, but greater potential for returns than more conservative investments. As a Beneficiary nears college age, the Age Bands allocate less to Mutual Funds that invest in equity and real estate-related securities and allocate more to Mutual Funds that invest in fixed-income and money market securities to preserve capital.
As the Beneficiary ages, assets in your Account that are attributable to this option are moved from one Age Band to the next on the first “rolling date” following the Beneficiary’s fourth, eighth, twelfth, fifteenth and eighteenth birthdays. The rolling dates are March 20, June 20, September 20 and December 20 (or the first business day thereafter).
Allocations for all investments are as of September 2009. Allocations are reviewed and adjusted periodically.
100% Equity Option (Risk level - Aggressive)
This Investment Option seeks to provide a favorable long-term total return, mainly from capital appreciation, by allocating primarily to Mutual Funds that invest in a blend of equity index securities and real estate-related securities. Because of the high exposure to domestic and foreign equities, and the corresponding high degree of risk, this option may be appropriate for you if you already have substantial college savings from less volatile investments (e.g., fixed-income) or you have a long investment horizon and you can tolerate a higher level of risk.
Allocations for all investments are as of September 2009. Allocations are reviewed and adjusted periodically.
Balanced Option (Risk level - Moderate)
This Investment Option seeks to provide a favorable long-term total return by allocating to a balanced mix of Mutual Funds that invest in domestic and foreign equity securities, fixed-income securities and real estate- related securities. Because of the high exposure to domestic and foreign equities, and the corresponding degree of risk, this option may be appropriate for you if you can tolerate a degree of volatility in exchange for potentially higher returns over time. This Investment Option may be appropriate for use as a single investment option, or for use in conjunction with other Investment Options offered by the Plan.
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Allocations for all investments are as of September 2009. Allocations are reviewed and adjusted periodically.
100% Fixed-Income Option (Risk level - Moderate)
This Investment Option seeks to provide preservation of capital along with a moderate rate of return through a diversified mix of fixed-income investments. This Investment Option may be appropriate for you if you have a medium to short investment horizon and can tolerate a moderate level of risk.
Allocations for all investments are as of September 2009. Allocations are reviewed and adjusted periodically.
Money Market Option (Risk level - Conservative)
This Investment Option seeks to provide high current income consistent with preserving capital and may be appropriate for you if you have a short investment horizon and are looking for a conservative investment with a low level of risk. This Investment Option is allocated to the TIAA-CREF Money Market Fund – Institutional Class.
Guaranteed Option (Risk level - Conservative)
This Investment Option seeks to preserve capital and provide a stable return. It may be appropriate for you if you have a short investment horizon and are looking for a conservative investment with a low level of risk. The contributions invested in this Investment Option are allocated to a Funding Agreement issued by TIAA-CREF Life to the Board, which is the policyholder under the agreement. The Funding Agreement provides for a return of principal plus a guaranteed rate of interest and allows for the possibility that additional interest may be credited as declared periodically by TIAA-CREF Life. The interest rate guarantee is made to the Board only, and not to Account Owners or Beneficiaries. The rate of any additional interest is declared in advance for a period of up to 12 months and is not guaranteed for any future periods. The term of the Funding Agreement is intended to coincide with the term of the Management Agreement.
Transfers from the Guaranteed Option to the Money Market Option are not permitted. If this restriction changes, you will be notified prior to the effective date of any such change.
Effective April 1, 2010, contributions received, and accumulations arising from such contributions, under the Funding Agreement for the Guaranteed Option as of March 31, 2010 will be credited to the Minnesota State Board of Investment (on behalf of the Minnesota Office of Higher Education) with an effective annual interest rate of 2.65% and are guaranteed to earn this rate through March 31, 2011, subject to the claims paying ability of TIAA-CREF Life.
The investment approaches described are not recommendations and do not take into consideration personal goals or preferences. After evaluating information you consider important in making an investment choice, the ultimate decision is up to you. It is a good idea to revisit your investment strategy periodically as your goals, personal financial situation, and market conditions change.
Underlying TIAA-CREF Funds - Institutional Class
Following is the list of underlying Institutional Class Shares of the TIAA-CREF Funds -Institutional Class:
- International Equity Fund
- Large-Cap Growth Index Fund
- Large-Cap Value Index Fund
- Equity Index Fund
- S&P 500 Index Fund
- Small-Cap Blend Index Fund
- Real Estate Securities Fund
- Bond Fund
- Inflation-Linked Bond Fund
- Money Market Fund
Please read the prospectus for the Institutional Class Shares of the TIAA-CREF Funds -Institutional Class before investing. However, keep in mind that an investment in the Minnesota College Savings Plan is not the same as a direct investment in the underlying mutual funds.
The TIAA-CREF Institutional Money Market Fund is not insured or guaranteed by the federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to maintain a stable net asset value of $1.00 per share, you can lose money by investing.
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