Investment Options

Building a Section 529 account that is right for you takes planning. The Path2College 529 Plan offers you a choice of seven Investment Options. These 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.

For more information on the risks involved in investing in such Investment Options, and the type of investor for whom each Investment Option may be appropriate, read the Disclosure Booklet (PDF).

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Investment Options

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 transfer of funds to a Path2College 529 Plan account for a different beneficiary.

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 (Risk level shifts from Aggressive to Conservative as the Beneficiary ages)

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 Options combine equity, real estate, fixed income, and money market mutual funds offered by the TIAA-CREF Funds - Institutional Class. 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 October 2012. Allocations are reviewed and adjusted periodically.


Aggressive Managed Allocation Option (Risk level shifts from Aggressive to Conservative as the Beneficiary ages)

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 October 2012. Allocations are reviewed and adjusted periodically.


100% Equity Option (Risk level - Aggressive)

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 (Risk level - Moderate)

The Balanced Fund Option invests in an equal combination of equity and bond investments offered by TIAA-CREF Funds - Institutional Class. 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 Option offered by the program.

Allocations for all investments are as of October 2012. Allocations are reviewed and adjusted periodically.


100% Fixed-Income Option (Risk level - Moderate)

The 100% 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.


Money Market Option (Risk level - Conservative)

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 (Risk level - Conservative)

This option seeks to preserve capital and provide a stable return. It may be appropriate for you if you have a short investment horizon and are looking for a conservative investment with a low level of risk. The contributions invested in this Investment Option are allocated to a Funding Agreement issued by TIAA-CREF Life to the Board, which is the policyholder under the agreement. The Funding Agreement provides for a return of principal plus a guaranteed rate of interest and allows for the possibility that additional interest may be credited as declared periodically by TIAA-CREF Life. The interest rate guarantee is made to the Board only. The rate of any additional interest is declared in advance for a period of up to 12 months and is not guaranteed for any future periods. The term of the Funding Agreement is intended to coincide with the term of the Management Agreement.

Effective January 1, 2014, contributions received, and accumulations arising from such contributions, under the Funding Agreement for the Guaranteed Option as of December 31, 2013 will be credited to the Path2College 529 Plan with an effective annual interest rate of 1.10% and are guaranteed to earn this rate through December 31, 2014, subject to the claims-paying ability of TIAA-CREF Life.

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.)



Account values are not guaranteed and will fluctuate with market conditions. For a complete discussion of risks associate with each Investment Option, please refer to the Disclosure Booklet.

The Money Market Option is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Money Market Option seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in this option.

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