Your college financing strategy may be one of the most important investment decisions you will make. What if you're not an investment professional? We know most people aren't, so we've set up a choice of seven investment options. You can invest new contributions in any one or combination of these seven investment options: the Managed Allocation Option, Aggressive Managed Allocation Option, 100% Equity Option, Balanced Fund Option, 100% Fixed Income Option, Money Market Option, and the Guaranteed Option.
Effective March 10, 2008, transfers from the Guaranteed Option to the Money Market Option will not be permitted. (If this restriction changes, investors will be notified prior to the effective date of any such change.)
These investment options vary in their investment strategy and degree of risk, allowing you to select an option or combination of options that may fit your needs.
Changing Your Investments
Once you invest in a particular investment option, you can transfer contributions and any earnings to another investment option once per calendar year or upon a change in beneficiary to a member of the family. (See the Disclosure Booklet and Participation Agreements (PDF, 1189KB)
Periodically Review Your Investments
It's a good idea to periodically re-evaluate your investment strategy as your goals, investment horizon, and personal situation change - for example, annually at tax time, on a yearly basis if your income changes, or upon the birth of another child.
Managed Allocation Option
Investing in the Managed Allocation Option follows the method of using the number of years an investor has for saving to determine the appropriate investment allocation. The Managed Allocation Option is the core investment for the Path2College 529 Plan. Although there is no guarantee that the investment objectives will be met, this option offers the opportunity to invest aggressively when the beneficiary is young, and over time, more conservatively, thus creating a balanced approach.
Aged-based investment portfolios combine equity, real estate, fixed income, and money market mutual funds offered by the TIAA-CREF Institutional Mutual Funds. Younger beneficiaries will have a higher exposure to equities and real estate investments, and that exposure will decrease significantly as they approach college age, as the following charts illustrate.
To find the allocation that would apply to your account, look for the appropriate "age band" for your beneficiary. As your beneficiary nears college age, more of your money would be moved into bonds and money market investments and out of equities.
Allocations for all investments are as of December 2007. Allocations are reviewed and adjusted periodically.
Aggressive Managed Allocation Option
Like the Managed Allocation Option, the Aggressive Managed Allocation Option uses the age of the beneficiary as a guide in determining the proper mix of equities, bond, and money market investments. The Aggressive Managed Allocation Option allocates a higher percentage of the investments to equities. Younger beneficiaries will have a higher and longer exposure to equities than under the Managed Allocation Option, and that exposure will decrease significantly as they get older. While equities have higher risk, they offer greater opportunity for higher returns than bond or money market investments over the long term. Past performance is no guarantee of future results.
To find the allocation that would apply to your account, look for the appropriate "age band" for your beneficiary. As your beneficiary nears college age, more of your money would be moved into bonds and money market investments and out of equities.
Allocations for all investments are as of December 2007. Allocations are reviewed and adjusted periodically.
100% Equity Option
The 100% Equity Option provides a blend of domestic mutual funds which, depending on performance, may provide greater investment return opportunities over the long-term. Given the higher volatility of this option, the risk of loss can be greater over a shorter investment horizon.
Balanced Fund Option
The Balanced Fund Option invests in an equal combination of equity and bond investments offered by TIAA-CREF Institutional Mutual Funds. The Balanced Option has approximately 50% of its holdings invested in equity funds and 50% of its holdings invested in bond funds.
The Balanced Option is designed to appeal to moderately conservative and moderately aggressive Account Owners who are willing to accept and can tolerate a degree of volatility in exchange for potentially higher returns over time. This option may be appropriate for use as a single Investment Option, or for use in conjunction with other investment options offered by the program.
100% Fixed Income Option
The Fixed Income Option is designed for Account Owners who are willing and able to accept some volatility in returns in order to attempt to achieve a long-term rate of return potentially higher than that offered through less volatile investments such as the Guaranteed Option. It may not be appropriate as a single investment option, but may provide a useful means by which to obtain incremental exposure to fixed-income markets as part of an overall college savings strategy.
Allocations for all investments are as of December 2007. Allocations are reviewed and adjusted periodically.
Money Market Option
This option seeks to provide safety of principal for account owners with a low-risk tolerance, and can offer a short term rate of return that may be greater than the declared rate of the Guaranteed Option. This option may be useful for investors with shorter investment time frames who intend to receive distributions from their account to pay higher education expenses.
Guaranteed Option
Contributions under this Investment Option are allocated to the Funding Agreement issued by TIAA-CREF Life. The current Funding Agreement is an insurance contract which provides the Program with a guaranteed return of principal and an annual minimum rate of return, with the opportunity for additional returns. The guarantee is to the Path2College 529 Plan, not directly to account owners. The rate of any additional returns is declared in advance by TIAA-CREF Life for a period of up to 12 months and is not guaranteed for future periods. However, the Path2College 529 Plan cannot predict the amount of any such additional returns under the Funding Agreement beyond such 12-month period. The minimum rate over the term of the Funding Agreement will not be less than 1% nor greater than 3% and will be reset each year beginning on October 1. Please refer to the disclosure booklet for more detailed information regarding the calculation of the minimum rate.
Effective December 11, 2007, accumulations under the Funding Agreement for the Guaranteed Option as of December 10, 2007, are credited to the Path2College 529 Plan with an effective annual interest rate of 3.65%, and are guaranteed to earn this rate through September 30, 2008, subject to the claims-paying ability of TIAA-CREF Life Insurance Company. The Path2College 529 Plan will be credited with an effective annual interest rate of 3.65% on contributions received and earnings on such contributions under the Funding Agreement for the Guaranteed Option from December 11, 2007, until further notice, and is guaranteed to earn this rate through September 30, 2008, subject to the claims-paying ability of TIAA-CREF Life Insurance Company.
Effective March 10, 2008, transfers from the Guaranteed Option to the Money Market Option will not be permitted. (If this restriction changes, investors will be notified prior to the effective date of any such change.)
Underlying TIAA-CREF Institutional Mutual Funds
Following is the list of underlying TIAA-CREF Institutional Mutual Funds. For the Managed Allocation Option, Aggressive Managed Allocation Option, 100% Equity Option, Balanced Fund Option, Money Market Option, and Fixed Income Option, an investment in Path2College 529 Plan is not the same as a direct investment in the mutual funds. Please read the prospectus for the TIAA-CREF Institutional Mutual Funds for more information.
- S&P 500 Index Fund
- Equity Index Fund
- Small-Cap Blend Index Fund
- Large-Cap Value Index Fund
- Real Estate Securities Fund
- International Equity Fund
- International Equity Index Fund
- Bond Fund
- Inflation-Linked Bond Fund
- High Yield Bond II Fund
- Money Market Fund
Please read the prospectus for the TIAA-CREF Institutional Mutual Funds before investing. However, keep in mind that an investment in the Path2College 529 Plan is not the same as a direct investment in the underlying mutual funds.
The TIAA-CREF Institutional Money Market Fund is not insured by the federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to maintain a stable net asset value of $1.00 per share, you can lose money by investing.
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