Allocating Your Assets

There is no way to predict how well the markets or particular investment options will perform over time.

Diversifying your assets, or spreading them around to different investments, stocks, bonds and money markets, is a useful strategy as it allows you to greatly reduce your portfolio's exposure to any one type of asset class.

Overall, a diversified portfolio is less risky because even if some of your holdings go down, others may go up.

In 529 plans, many follow the rule of thumb to start out with an "aggressive" portfolio (with more equity funds) and later shift toward "conservative" investments like fixed income funds, which seek income and principal protection as the beneficiary nears college.