As your child is a year or 2 away from going to college, I would strongly advise you to consult your financial advisor to discuss altering the asset allocation of the education portfolio in the 529 Plans or Coverdell Funds.

Most financial planners will advise that the closer the child is to attending college, say 1 to 2 years, the more moderate the investment portfolio should be! This is because any negative volatile market reaction will take a couple of years to work out, and it would be unfortunate if there was a severe market correction a year before your child attends college. You simply will not have the time on your hands for this correction to work its way out.

However, some Education plan's automatically adjust the portfolio based on the proximity to child attending college. These are Age-based portfolio's! I prefer this type of portfolio as parents don't have to worry about re-balancing or re-adjusting portfolio as child turns college age.

In summary, when you have Education funds earmarked for your childs college education, one should bear in mind as time approaches for child to attend college, one should consider altering the asset allocation from an aggressive to moderate allocation, thus avoiding risks in last couple of years prior to your childs attending college.

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