I opened up a 529 account for my son right after his birth. I went through a local Edward Jones adviser, and right now I'm only contributing $50 per month, since I'm a po' grad student. In this two-year grad school period, I'm not contributing to my own retirement, and I know what people like David Ramsey would say about that. (I do have other investments and can very reasonably also expect to inherit other assets in the future). But it's really important to me to at least contribute that nominal amount, both for the compound interest and as a philosophical statement that I value education for him.
My question is, I feel like I'm really getting hit by fees in this current 529 that I'm on. It's a CollegeAmerica account through American Funds. The sales fee is 5.74 percent, and it seems like that is really chipping into the value of the portfolio. There's also a $40 annual fee. Granted, they're administering the account so I don't really have to worry about it, and I know that has value.
I've researched it a little bit and I understand that I can buy into my state's 529 plan as an independent investor. Is that a reasonable thing to do? Are there any risks that I should be aware of if I went that route? For example, is my broker monitoring the investments in a way that I would have to take on. I mean, I know that everyone should always monitor their own investments, but while I'm somewhat educated, I'm not a finance professional. Is having a broker ultimately an asset to me in a way that would grow the account more than I likely could, despite the fees? Would I be paying those fees anyway even if I bought into the state plan on my own?
Also, if I did decide to switch to a different 529 plan, would I have to pay any penalties in moving that money? Currently,after three years, I have about $3000 invested in the 529, so it's not a huge amount.
And why am I not more knowledgeable about this on my own? Grrr.