Editor's Note: While I usually try to write for a national audience, today's topic is more fitting for residents of my state, Rhode Island. However if you stick around until the end, you might have a chance at some free money.
It's good to be back to work after a week's vacation. We just got back from a trip that was very similar to last year's when we traveled from Rhode Island to kids' parks in New Jersey and Pennsylvania. Last year the stops included: Sesame Place, Hershey Park, Please Touch Museum, and the Crayola Experience.
This year we kept Hershey and Please Touch on the itinerary. We substituted out Sesame Place and Crayola for Diggerland and Knoebel's Theme Park. This article isn't about my vacation, but I do want to mention a couple of quick things. We should have waited until our boys were 5-7 for Diggerland as they weren't tall enough to do much. Knoebel's was much better than I anticipated, but we got a really hot day and it was last on the trip, so we couldn't really give it the fair shake it deserved.
When we got home yesterday, I noticed that the mail contained the new program description of CollegeBound Saver, Rhode Island's 529 plan. Rhode Island decided to change the management group of the 529 plan from CollegeBound Fund by AllianceBernstein to the new "Saver" by Ascensus. We were finally getting details about what the new program was about.
I knew much of the program wouldn't change. There are laws in place that govern the general details of the state's 529 plan. My biggest concern was that we'd have to leave the sweet, sweet, low expenses of the Vanguard funds at AllianceBernstein.
I'm a skeptic by nature and figured that because we were being thrust into this new system with no vote that it wouldn't be good.
I was wrong.
I found the CollegeBound Saver program description a little confusing. I think it was because it was designed to introduce people who are new to 529 plans and saving for college in general. The book is 80 pages long with some information about unrelated programs like Coverdells.
The "meat" of what I was interested in was the investing options. The new CollegeBound Saver program has three core "goals" which are each broken down into smaller investing options. There are target date portfolios, target risk portfolios, and individual portfolios. I can target 2030, an aggressive mix, or just choose the funds that I want.
I like to choose my funds, so that's the option I focused on. The CollgeBound Saver individual portfolios have names like "U.S. Stock Portfolio" and "Bond Portfolio." These are mapped to underlying funds such as Vanguard's Total Stock Market Index Fund and Vanguard's Total Bond Market Index.
It took a little digging, but I finally found what I was looking for. My assets were moved from my previous Vanguard Total Stock Index funds to the new Vanguard Total Market Index. I'm investing in the same thing!
The big change is that the expenses are estimated to be 0.04% which is the lowest I recall seeing outside of my wife's Thrift Savings Plan. The book includes a chart of hypothetical $10,000 investment cost chart. The easy math shows that I'll be spending a whopping $4 a year in management costs a year. In 10 years, it will be $51 total. The other investment options are also very low for the most part.
Years of reading personal finance magazine have drilled the following in my head: Control expenses, because you can't control the market and expenses add up over time. The new 529 plan has two funds with expenses over 0.16%: a 0.37% stable value option and a 0.61% Invesco Global Sustainable Equity option. As long as investors steer clear of those, the expenses mean almost nothing over the 15 years (give or take) that the money is going to be invested.
Now for that chance at free money. Later on this week, I'm going to be sending out my VIP email newsletter. It's free to join (of course). You can join it here. Readers of the newsletter will have a chance to win $25 (payable in Paypal or Amazon gift card, I haven't decided yet). I know it isn't life-changing money, but I will easy for even the laziest of people.
Next: How To Be a Millionaire in 20 Years