Though the end goal is the same — to help pay for college — everyone’s investment strategy may not be the same and can even differ greatly based on unique circumstances, financial constraints, timelines, and overall savings goals. If you have a longer timeframe to save and grow your money, you might want to choose an age-based option that is a simple, all-in-one option. If you’re an experienced investor, you might choose a multi-fund option you’ll review and change periodically. If your child’s nearing college and you’ve been saving for a while, a principal protected investment might be the best choice.
Age-Based Investment Option
The age-based investment option seeks to match the investment objective and level of risk to the investment time horizon by taking into account the beneficiary’s current age and the number of years before the beneficiary turns 18 or is expected to start college. The risk level automatically shifts from aggressive to conservative as the beneficiary ages. This option is good for people who want a simple, all-in-one investment option.
Guaranteed Investment Option
This investment option seeks to preserve capital and provide a stable return. These options may be good for shorter timeframes to save and for individuals who have lower risk tolerance.
Multi-Fund Investment Options
These investment options seek to provide investment portfolios for account owners who prefer to select an investment portfolio for its specific asset allocation. Each multi-fund investment portfolio is allocated to multiple underlying funds and/or a funding agreement and has a different investment objective and investment strategy. The allocations in the multi-fund investment options do not change automatically as the beneficiary ages as they do in the Age-Based Investment Option.
Single-Fund Investment Options
These investment options are each invested solely in shares of a single underlying fund. Since their performance is entirely reliant on the performance of that underlying fund, they may be more volatile than the age-based investment option or the multi-fund investment options. You should be aware that participants do not own shares of the underlying funds directly. This option may be good for people who are interested in the specific single fund.