CA 529 or Vanguard 529?
We recently had a baby and are trying to determine whether it would be better to open a 529 through CA (ScholarShare 529) or Vanguard.
We are looking at target enrollment portfolios and there doesn't seem to be a big different in fees (.12 for ScholarShare and .14 for Vanguard). From what I can tell, the Vanguard 529 is more aggressive in the earlier years with more equities than ScholarShare 529, but then levels off later with more bonds. Curious whether any other parents considered these two plans and which one you decided on?
Thank you!
Jan 24, 2022
Parent Replies
We used to have the CA529 but switched it to the Utah program because of fees. But this was years ago and fees in CA529 may have gone down to be similar to the Utah529.
We use the Vanguard fund given lack of tax benefits in CA for 529 contributions, and ease of use of Vanguard (since all of my family’s IRAs, taxable brokerage funds are there). Vanguard does not require using the target age adjusted funds; you can also use a wide variety of funds (eg total stock market indices) if you prefer to be more involved in picking funds.
We also switched to Utah's my529 program, based on Morningstar ratings. They allow 3 investment options - target enrollment, static investment and customized. Customized is the highest, ranging from 0.14-0.49; target is 0.14, and static is 0.11-0.22. I almost went with Vanguard, but Morningstar had downgraded it last year, which you can read about in the 2021 Morningstar report.
We are also enrolled in the Utah 529 because of fees and rate of return. We started it 7 years ago, so not sure whether the CA 529 plan has improved. Good luck!