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Ask HN: 40K in 2004 – 529 College Plan for my daughter in 2004
My grandmother recently passed. She started a 529 college savings plan for my daughter born in 2004.
My grandmother recently passed, I gained control/access to the account.
She put $40,000 in the account in 2004 with Smith Barney. After they went out of business for fraud, American Funds took over the account.
Since 2004, they took $40,000 and turned it into $70,000
This seems like criminal financial malfeasance to me.
I's like some input. I have transferred the account to me as owner, but I havent moved funds.
What do.
Any recourse, aside from the phone call with American Funds ghetto call center with people who had zero financial acumen, but were supposedly managing daughters account.
Using the same tropey dialog "im sorry you feel that way sir"
Then putting holds on funds for days due to me updating the mailing address for the account.
Do I have any recourse due to the utter failure of these orgs?
- Amfy 4y agoask this in bogleheads.org instead.
- samstave 4y agoThe reason I am bringing this question to HN, is that this community has had to deal with hard financial shifts more than most industries and might have experienced such.... I am livid, but about to puke on the malfeasance from their handling of this account. THERE IS NO FUCKING way you can invest into a college fund, $40K and it hasint even doubled in size in 17 years.
- Amfy 4y agodo you know what they invested this in? maybe they did 10% stocks and 90% bonds or something. (And charged you a 1-2% fee eating major part of the gains) We'll need some more info to know what they did wrong.
- samstave 4y agoIts new to me. I am livid - Would you have any recommendations in how one mey research "what they did wrong" <-- When I called them after I got access to the account I was connected with an absolute piece of shit ghetto person who was talking to me as though she was trying to recover a debt. I am beside myself. How can I even begin to understanding if they were just idiots (legally) or if they were staking that original $40K and what specifically did they invest/not-invest in? May I request a provenance of every transaction made on the account? Do I have recourse/rights/?(thing I dont know how to ask)
- dekhn 4y agoPretty much every brokerage I use shows what the historical asset allocations are. It sounds like you haven't done this much before? Also, you're super-duper angry which is getting in the way of you resolving whatever issue you think there is. I would have started this by contacting my asset manager and introducing myself and thanking them for caring for my money, then having a discussion about what possible asset allocations could have a higher rate of return. Don't forget, 529s are tax-free- you pull from them without paying taxes.
- samstave 4y agoI only gained access to the 529. I dicovered this. Yes, I am not experienced. YES I am fn angry...
- dekhn 4y agoI guess my perspective would be "I'm so thankful my grandmother put this money into savings that grew over time for the benefit of my child, while also feeling somewhat disappointed that the growth wasn't larger". That comes from many years of experience (both positive and negative) in investment.
- dekhn 4y agoI am having trouble understanding exactly what you are complaining about. I think you're saying that you expected the money to be more? I did a quick calculation based on my investments and $70K is about what I expected. Are you using a very high rate of return? Accounts like this are typically managed conservatively to make the likelihood of large losses small.
- icedchai 4y agoA simple S&P 500 Index fund would've netted better returns: https://www.officialdata.org/us/stocks/s-p-500/2004?amount=40000&endYear=2022 https://www.officialdata.org/us/stocks/s-p-500/2004?amount=4... He should be closer to 190K. Most financial advisory firms are more interested in managing their own return (fees!), putting you into high fee "conservative" funds that provide little actual return to the investor. Over a long period of time you should be invested more aggressively. They rely on people being afraid to "manage" their own money. Many people are.
- dekhn 4y agoIs S&P 500 Index fund tax deferred? How much tax will you pay when you sell the shares and take cash?
- icedchai 4y agoTax deferral is based on the account type. So if you held an S&P 500 fund (example: SPY) in a 529 or traditional IRA then yes it would. Taxes are complicated so you’d need to figure that out based on cost basis etc.
- icedchai 4y agoAlso, I wanted to say that $70K barely beats inflation, based on $40K invested since 2004 (almost $63K): https://www.usinflationcalculator.com/ https://www.usinflationcalculator.com/ Basically, he made like $400/year in "real" money! Yeah, at least he didn't lose any...
- spraveenitpro 4y ago