College investing age-by-age

You know you should be saving for college. But how, when, and where to start?

Think baby steps. Literally. That’s because the clock starts ticking the day your child is born.

Although you may not have many extra dollars to save right away, the important thing is to get going as soon as you can. After all, depending on the age of your child when you start, you could give your money up to 19 (or more) years to grow and compound. And if you choose to invest in a 529 college savings plan, you get tax benefits added in as well.*

Let’s look at steps that can help you save as kids make their way toward college.

Early years

Once you make the commitment to save, you’ll want to think about how to save. And how you want to save often hinges on the age of your child and the amount of investment risk you’re willing to take. If your child is very young, let’s say between zero and five years, you have time on your side, and you can afford to be more aggressive, investing most—or maybe all—in stocks. Stocks generally generate the most returns, and although they’re also more risky, you have more than a decade to recover from any major market shocks.

Now’s also a good time to get in the habit of saving consistently. If you’re the type who tends to slack off or may be tempted to purchase a smart TV one month instead of contributing to your child’s savings, then why not play it safe and enroll in an automatic investment plan (AIP)?

An AIP automatically transfers your money from a bank account directly into your college savings account on a regular basis. It’s money you never really see, so you’re less apt to miss it, and it can increase your potential return, reduce risk, and help you take better advantage of tax breaks.

Here’s another tip. You know how grandparents are always eager to give gifts to little kids? Well, why not suggest that they also set up an AIP account for your child? You get to ramp up your savings, and they get the satisfaction of playing a meaningful part in a child’s education early on.

Mid years

Once children reach elementary to middle school age—usually somewhere between 6 and 12—it’s a good idea to ratchet up your contributions and rebalance your allocation to take on slightly less risk since you have fewer years to recover if the markets tumble. And if the idea of college saving seemed to elude you until these mid years, there’s no reason to panic. You still have time to make a sizeable dent in what’s needed for college expenses later.

At this point, it makes sense to have a more moderate allocation of roughly an even mix of stocks and bonds. Those who are more conservative may drop stocks altogether, while others may want to still stay a little on the aggressive side by giving stocks a bit more weight than bonds.

And of course it’s still important to save regularly and include family—and friends—in the funding whenever possible. Every little bit means that you have more that can grow and compound. You’d be surprised how much even small contributions can add to your savings.

Later years

This could be crunch time if you’ve waited until now to begin. But take heart. Even if you’ve put saving on the back burner until your child is nearing high school or about to step into college, it’s not too late to open an account, especially if you invest in a 529 plan where you’ll get tax benefits. You still have time to take advantage of those benefits—and certainly be in a much better position than if you’d never saved at all.

Whether you’ve been contributing from the get-go or are a late bloomer, now’s the time to go into preservation mode and adjust your investments to a much more conservative allocation of bonds and short-term reserves. That’s because you have little time left to make a comeback if the markets hit a downturn, and you need to eliminate as much risk as you can when you’re close to your first tuition bill.

Once again, don’t forget to invite grandparents, aunts, uncles, friends—whomever—to pitch in. Let them know that college contributions are great gifts for any occasion—and especially appropriate for high school graduations.

Keeping up with allocations not your thing?

If you’d rather not commit to choosing and rebalancing your college investments on your own or feel you don’t have the time or ability to manage them properly, a 529 plan age-based option could be a great fit for you.

Choosing an age-based option is as simple as knowing your level of risk tolerance—conservative, aggressive, or somewhere in between. Then you’ll invest in an account that adheres to that risk level and gradually moves from more stocks to more bonds as your child gets closer and closer to college. In other words, with an age-based option, your risk is dialed back automatically, and your to-do list is as well.

*Earnings on nonqualified withdrawals may be subject to federal income tax and a 10% federal penalty tax, as well as state and local income taxes. The availability of tax or other benefits may be contingent on meeting other requirements.

For more information about MOST—Missouri's 529 Savings Plan, download a Program Description, Privacy Policy, and Participation Agreement or request one by calling 888-414-MOST. Investment objectives, risks, charges, expenses, and other important information are included in this document; read and consider it carefully before investing. Vanguard Marketing Corporation, Distributor.

If you are not a Missouri taxpayer, consider before investing whether your or the designated beneficiary's home state offers any state tax or other benefits that are only available for investments in such state's qualified tuition program. Other state benefits may include financial aid, scholarship funds, and protection from creditors.

Missouri taxpayers can use MOST 529 assets to pay for K–12 tuition at public, private, and religious institutions, with no Missouri state tax consequences. State tax treatment of K–12 withdrawals is determined by the state where the taxpayer files state income tax. If you're not a Missouri taxpayer, please consult with a tax advisor.

Federal legislation allows rollovers from 529 plans to Achieving a Better Life Experience (ABLE) accounts without incurring federal taxes up to the annual ABLE contribution limit. Missouri statute may allow for rollovers of MOST 529 assets to ABLE accounts without Missouri state tax consequences. We suggest MOST 529 account owners who are residents of other states consult with a tax advisor about their state laws.


The Missouri Education Savings Program (the "Program Trust") is a trust created by the State of Missouri. When you invest in MOST—Missouri's 529 Savings Plan (the "Plan"), you are purchasing portfolio units issued by the Program Trust. Portfolio units are municipal securities. The Plan has been implemented and is administered by the Missouri Education Savings Program Board (the "Board"). Ascensus College Savings Recordkeeping Services, LLC, serves as the Program Manager and Recordkeeping and Servicing Agent, and together with its affiliates, has overall responsibility for the day-to-day operations of the Plan. The Vanguard Group, Inc., serves as Investment Manager for the Plan. Vanguard Marketing Corporation, an affiliate of The Vanguard Group, Inc., markets and distributes the Plan. The Plan's portfolios, although they invest in mutual funds, are not mutual funds.

Investment returns are not guaranteed, and you could lose money by investing in the Plan. Participants assume all investment risks, including the potential for loss of principal, as well as responsibility for any federal and state tax consequences.

© 2020 State of Missouri.