Market's down! Should you market time it?

The temptation is surely there. I'm tempted myself. I had a couple of investments pending; I've put them on hold for a bit thinking "Hey, I can make an extra percentage here or there by investing nearer the market bottom."

Don't market time your investments. If you're going to invest, get the money into the market. You'll hear people say "Your return is much higher if you miss the X worst days." That stat is exactly as meaningful as the opposing idea that "Your return is much lower if you miss the X best days" in the market.

I ran across an interesting graphic while taking the risk capacity survey on Index Fund Advisors. It drove the point home because I've considered subscribing to a few of these, including a free trial subscription to ValueLine. I still read ValueLine stock reports at the local library, and I still occasionally listen to the Moneytalk radio show.

And yet I've always wondered how their investment ideas compare to the market. Check this out:

Illinois changes its Bright Start 529 Program

Illinois has planned to change the Bright Start administrator for a while, and I was told the change would happen August 20th. I called a couple of weeks ago, and the change had already happened. Lo and behold, the changes are VERY nice! Morningstar has a review as well.

Bright Star now basically has 2 options:

Age Based Portfolios

Within the age based portfolios, there are active allocation (managed mutual funds) and index allocation (index fund) portfolios. You choose which you want; whether active or index, the portfolio has the same percentage of equities based on the age of the beneficiary. Note that, within active vs. index portfolios, fixed income and money market allocations can vary slightly.

You throw your money into an account and they split it up for you based on the beneficiary's age. 0-6 years has 90% equity, 10% fixed income. 7-9 years has 70% equity, 30% fixed income. 10-11 years (I think we're cutting it a bit fine here) has 60% equity, 40% fixed income. 12-14 years is split 50/50. 15-17 goes to 60% fixed income and 10% money market, with the remaining 30% in equity. Age 18 has 70% fixed income, 20% money market, and only 10% equity.

Static Portfolios

The static portfolios are available, again, in either active allocation portfolios or index portfolios. You choose one of these portfolios and the allocations within the portfolio remain the same no matter the age of the beneficiary.

You can choose a 100% equity portfolio, a 50% equity portfolio, or a 0% equity portfolio. Frankly, I'd rather see a 60% equity/40% fixed income portfolio (standard portfolio allocation) but I guess 50/50 is close enough.

The Kicker

But here's the kicker. The reason Morningstar likes the new Illinois plan so much. The expense fees are low! The age based active allocation portfolios have expense ratios around 0.6%. The static active allocation portfolios have expense ratios that vary from 0.38% to 0.63%.

The index allocation portfolios, whether age based or static, have expense ratios that vary from 0.2% to 0.23%. That's outstanding; equivalent to the lowest cost Vanguard funds or ETFs you can find.

Low expense ratios = more money for the beneficiary and a potentially better investment.

You can check out the investment options here and and expense ratios here.