This article is part of Virginia529’s “Three Things to Know” Investment Portfolio series, highlighting the more than 20 portfolio choices available to Invest529 customers. The information presented is an overview of the plan’s investment options and should not be considered advice. Before selecting a portfolio consider factors such as the age of your child and your tolerance for risk. Past performance is no guarantee of future results.
Looking to help take the guesswork out of the investment process? Target enrollment portfolios are often a popular option for those who don’t feel comfortable navigating the ins and outs of investing.
What is a Target Enrollment portfolio?
A target enrollment portfolio, also known as an enrollment-based fund or target-date fund, is a portfolio that invests based on the year you expect your student to start their higher education journey.
At Virginia529, target enrollment portfolios are offered in three-year increments rather than designating a fund for every single year. This strategy provides more flexibility to families. You can choose a target enrollment portfolio closest to when you estimate you'll start using the funds. If, for instance, your child is entering kindergarten in fall 2024, you may consider picking the fund with the 2036 portfolio because that’s the year they would graduate from high school.
Target enrollment portfolios are generally designed for use after high school and not for K-12 tuition expenses. If investing for K–12 education goals, you may want to consider selecting one of Virginia529’s alternate portfolios that aren’t tied to specific usage dates (like target risk or principal protected options).
How does it work?
Target enrollment portfolios follow a strategy that automatically shifts from riskier investments (think equities) and toward more conservative investments (think bonds and cash) as your student gets closer to their high school graduation.
The goal of these portfolios is to generate strong returns (with higher risk) when your child is younger, and then become more conservative as they get older. As the target enrollment year gets closer, focus is put on protecting the principal investment – your contribution. When your child is in college, the focus shifts to fixed income investments.
Are all Target Enrollment portfolios the same?
No, all target-date funds are not alike. While target enrollment portfolios may share the same target (or enrollment) year naming convention across 529 plans, the underlying investment strategies of the actual fund may be different. That means the types of assets, and the shift from riskier to more conservative investments, can differ by plan.
If you are choosing between various target enrollment portfolios, it's a good practice to check on your portfolio periodically to assess whether you are in the right target portfolio for your personal and financial situation.
Target Enrollment portfolios provide a simplified way to save for higher education.
They shift from riskier investments to more conservative options automatically over time to protect your investment.
Despite their simplicity, it's still a good practice to check on your portfolio periodically.
Low fees, tax advantages and diverse investment options are reasons Invest529 is consistently ranked among the top 529 plans by independent sources.
The examples above are provided for illustrative purposes only and are not intended to reflect or predict the actual performance of any specific investment. Virginia529 cannot and will not provide legal, financial, or tax advice, and nothing herein or in any other written materials shall be construed as such.
For more information on Virginia529’s college savings options, visit Virginia529.com or call 1-888-567-0540 to obtain program materials. These include information on Virginia529 programs, investment objectives, risks, charges, expenses and other important information; read and consider them carefully before investing. Virginia529 encourages prospective participants to seek the advice of a professional concerning any financial, tax or legal implications related to opening an account. For residents of states other than Virginia: before investing, you should consider whether your or the beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protections from creditors that are only available for investments in that state’s qualified tuition program. ©2023 Virginia College Savings Plan. All Rights Reserved.