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I live in a state that allows you to deduct your 529 investments up to 10k a year. It seems like there are many schools of thought on the "best" vehicle for college savings. We know people who plan to use their rental property sale in 15 years for their kids education. Is that safe or even a good idea? Curious on the experts opinion on college savings.
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I think it depends greatly on individual circumstances.
My primary problem with 529 accounts is they are sold with a "one size fits all" mentality. They clearly aren't worth the restrictions if you don't need the tax break. So, we are personally not utilizing them because we don't need the tax break. (A 529 is easy to fund if circumstances change down the road).
The $10k tax break sounds nice if you actually can utilize the tax break and if you aren't limited in your 529 plan choice. What I'd like to know, in your shoes, is literally how much tax you are saving, to evaluate if it is worthwhile. & hopefully your only choice is not some really bad 529. (Sometimes the catch is you have to invest in that State's 529 plan. I think DC has that rule and a $10k-ish tax break).
Another factor why we personally don't utilize 529s is because you are penalized if you do not utilize for college. IT is very likely we will not need large sums for college. So, in our case, maybe a rental property would make more sense. As is, we are just sticking to taxable mutual funds.
Both the stock market and the real estate market have inherent risks. I don't think one is clearly better than the other, except that a 529 plan is probably better diversified. In some world, the rental property may way out-perform the 529, but usually a more diversified investment plan would have better odds.
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