Just a quick note: My article on the conclusion of my 529 plan selection for my second daughter where I put the conclusion that led me to the selection of West Virginia Smart 529 Select is included in Carnival of Personal Finance - History of College Football Edition hosted by StretchyDollar.

You can read the rest of my 529 selection process where I looked at several 529 plans here.

If you are looking for a review of credit cards, you are not going to get it here.  There are a lot of credit reviews out there.  A lot of publications, such as Money Magazine/CNN Money, publish what they thought is the best credit cards out there. If you search through personal finance blogs, you will find a lot of reviews, but beware with those reviews as sometime the best cards may not be on the list.  That is because they may only list those where they have affiliate links.  Those that they get money from if you sign up for that credit card from their links.

But I will go against the crowd and say that you don't need another credit card.  The best credit card is probably the one that is already in your wallet.  Yes, when you compare with other credit cards, the offer from the credit cards you have may not be the best out there, but I truly believe it may be the best for your case.

Why do I think that way?  Remember, opening a new card will affect your credit scores.  One of the criteria for credit score is the length of time the account has been opened.  Don't just simply chase "best credit cards" just because they offer slightly better cash back.  I have two credit cards, AMEX Blue Cash and Citibank Dividend Platinum Select.  I have had those cards since 2000.  Fortunately for me, AMEX Blue Cash has been considered as one of the best (at least until recently when they made changes to the rewards).  But if you own no-fee credit cards, with or without rewards, don't just sign up for a new card simply because you can get extra 0.5% or more for your cash back.  Review how much you spend, how much you will get back and how it will impact your credit score.  Credit score is still a mystery to me and I think for many people too.

But if you don't have a credit card or have been totally dissatisfied with your credit card provider, then look at those reviews and select on that fits your spending habit.  One warning, for some people, the reward is use as a justification to spend more.  If that will happen to you, here is what I would suggest, go with no-reward credit card.  Yes, you read is right.  Go with no-reward card if you have caught yourself saying or thinking, "Well, at least I am getting 2% of my purchase."

For those that don't use credit card and only use debit card, here is what I would suggest.  If you switch to debit card because of previous issue with running up credit card debt, don't even think about opening a credit card again until you know for sure you have change your spending habits.  But if you think you have good control of your spending habits, I would suggest go open a new credit cards.  I think credit card offers better consumer protection than debit card.  (Note: I will discuss why I think this is the case in the future posts)  In addition, you may get something extra in return.  Again, only if you have good control of your spending habits.

* Photo by Andres Rueda

Do you invest in foreign stocks?  If you do, what is the percentage of your equities are in foreign stocks?  As I mentioned on Managing My Asset Allocation between Different Accounts post, foreign/international stocks account for 40% of my equities part of my portfolio.

Walter Updegrave, editor for Money Magazine, discussed about Dipping your toe into international waters on Money Magazine Ask the Expert column.  One of the reason for investing in foreign stocks is diversification.  While there is certainly correlation between international stocks and U.S. stocks, it is still different enough.  You also get currency diversification by investing in foreign equities. As you can see, the U.S. dollar over the past four or five years has seen declined when compared to currently such as Euro.  Thus the money invested in international stocks has seen some rises due to the rise in the value of Euro when compared to U.S. dollar.

Walter Updegrave also pointed out that U.S. stock market accounts for only 30% to 40% of global stock values.  That shows huge numbers of opportunity.  Also, there are likely more growth on those places, especially in emerging markets.  Those economies should have more upside than U.S. economies.  Of course it may come with more risks and more volatility, but I think with proper diversification and limited portion of your investments in riskier emerging markets and more toward developed market, you can manage those risks.

How should the money invested in foreign stocks?  Well, I am not financial advisors and not qualified to give advises, but I can share with you what I did.  I invest mainly in index funds and that includes international equities.  I don't invest in just global funds, such as Vanguard Total International Funds.  I think to get more growth, some portion should be in emerging market, some in International small cap and value.  You can look at my target asset allocation that I posted few days ago.

This time, it is slightly different.  It is the case for bond index funds.  Here is the snippet from the article Bond Indexes Beat Active Mutual-funds:

A study by Standard & Poor's found that on an asset-weighted basis -- measuring returns by the invested dollar rather than percentage of funds -- index returns beat actively-managed fund returns in all 13 fixed-income categories over one and three years, and in 11 of 13 categories over five year

For me personally, I follow FundAdvice.com recommendation and keep my fixed income securities in short term to intermediate term Treasury bonds and also in Treasury Inflation-Protected Securities (TIPS) as I am not looking at fixed income for growth, but as a way to reduce my portfolio risks.

Since I just went through 529 College Savings Plan selection for my second daughter where I ended up selecting West Virginia Smart 529 Select, I will share several things and the process that I went through.  Note that I only discuss investment plan, not pre-paid or guaranteed saving plans.

Tax Consideration
Each state offers different tax break for 529 plan.  I live in Pennsylvania where I get tax deduction no matter which state 529 plan I selected.  In most states, you will only get tax break if you invest in your state 529 plan.  Even though there may be better plan other than your state 529 plan, the tax break offer by your state may make your state 529 plan more desirable for you. Savingforcollege.com is obviously one easy way to find out the information on this.

Of course you won't be eligible for some plans simply because of residency requirement, such as Pennsylvania GSP plan which is open only to PA residents.

Review "Best 529 Plans"
There are several publications that listed their best 529 plans.  This is a quick way to limit the number of other plans you may want to review.  There are so many options out there that it will be a waste of your time to review each plan to see the advantages and disadvantages.  I listed several "Best 529 Plans" articles here.

As a fan of Vanguard, I actually limited myself somewhat to 529 plans offering Vanguard funds (with the exception of West Virginia Smart 529 Select with its DFA funds).  To find out list 529 plans offering Vanguard funds, you click here.

Funds Family
Does funds family matter to you?  It does for me.  I focus mainly on Vanguard and DFA.  I am not saying that other options are bad.  In fact there are many other good ones, such as those offering TIAA-CREF, T. Rowe Price, and others.  However, I want  either Vanguard or DFA due to my familiarity with those funds.

Funds selection
How flexible is the funds selection?  Do you have enough options?  Do you think you can create enough diversification with the options available?  Plans such as Nevada 529 College Savings plan are great since you have a lot of options, but there are minimum for each options, which make it hard to create proper diversification when your account value is low.  One thing to remember too, there is no reason to match your the asset allocation with your 529 asset allocation.  Your asset allocation for your retirement have different time horizon when compared to education savings.  In most cases, you may need the college education funds for only 4 to 5 years (ignoring graduate degree, since I think the kid should pay for that themselves) and the time to invest is around 18 years.

Fees and expense ratios
While I listed this last, I consider this as one of the most important considerations.  Check the fees and expense ratios for each plan.  For example, while Illinois Bright Start College-Savings Plan has a really low expense ratio, it has annual maintenance fees.  Thus if you are going to have a low balance, that fees will be a bigger part of your investment.  If you have higher balance, then the plan could easily become one of the cheapest.

Other considerations
There are certainly other things to consider when researching 529 plans.  One example, in Pennsylvania, the contribution by PA resident toward PA 529 plans are excluded for state financial aid consideration.

Comparison Tool
One website that I found very helpful in doing comparison can be found on Vanguard.  Vanguard has 529 Savings Plans comparison tool.  The tool is powered by Archimedes Systems, thus the website URL is at archimedes.com.  Of course as I mentioned earlier, check out Savingforcollege.com.  Not only you can find detail about each plan there, there are a lot of helpful tools and articles there too.

Update: Added more links

Recently, I just went through research of 529 plans for my second daughter. I ended up with selecting West Virginia Smart 529 Select plan. I used several online resources and direct links to each plans that I reviewed. I looked at the fees, details, funds offering, and other information for each plans. The best source to do research for 529 plan is probably www.savingforcollege.com.

I also looked at top 529 plans selection by several publications. Here are several links to "Best 529 Plans" articles that I found.

Kiplinger - Best 529 College-Savings Plans
The best 529 college-savings plans according to Kiplinger are:

• For low fees: Illinois Bright Start College Savings Program (Note: From all the plans I review, I agree with this. It is actually the runner-up for me personally)
• For overall investment mix: Alaska's T Rowe Price College Savings Plan
• For conservative investors: Michigan Education Savings Program
• For fund choices: College Savings Plan of Nebraska
• For adviser-sold plan: Virginia CollegeAmerica plan

The Best and Worst 529 College-Savings Plans
This article from MorningStar.com listed the best and worst 529 plans. The best 529 college-savings plans according to morningstar.com are:

• Ohio CollegeAdvantage
• Indiana CollegeChoice 529 Direct Savings Plan
• Utah Educational Savings Plan Trust
• Virginia Education Savings Trust
• Virginia CollegeAmerica 529 Savings Plan (Broker-sold)
  

The worst 529 college-savings plans according to morningstart.com are:

• Nebraska State Farm College Savings Plan (Broker-sold)
• New Jersey Best 529 College Savings Plan
• Montana Pacific Life Funds 529 College Savings Plan
• Ohio Putnam CollegeAdvantage (Broker-sold)
• Nebraska AIM College Savings Plan (Broker-sold)

You can see a lot of broker-sold 529 plans are rated low, which I think come down to the fees.

Consumer Reports - Some of the best and worst 529 plans
Consumer Reports also has a list of best and worst 529 plans. The best 529 plans according to Consumer Reports are:

• Georgia Path2College 529 Plan
• College Savings Iowa
• Illinois Bright Start College Savings Program
• Mississippi Affordable College Savings Program
• Colorado Direct Portfolio College Savings

The worst 529 plans according to Consumer Reports are:

• Wisconsin Tomorrow's Scholar
• Arkansas John Hancock Freedom 529
• New Jersey Franklin Templeton 529 College Saving
• Columbia New York Advisor 529 Plan
• Nevada Columbia 529 Plan

Money Magazine - Best low-risk 529 plans
Money Magazine list is slightly different, since it is focused mainly on "low-risk 529 plans".

• Illinois Bright Start College Savings Program
• Ohio CollegeAdvantage Savings Plan
• Utah Educational Savings Plan

In term of asset allocation, the ideal thing is to have your asset allocation from your different accounts to reflect the true asset allocation. But it is a hard thing to do when you have to deal with 401k, 403b or 457 accounts that have limited selection. This discussion is trigger by the article on FundAdvice.com - When your 401(k) plan doesn't have everything you need.

We have four different accounts where we invest our money

• Joint Vanguard Taxable account
• His Vanguard Roth IRA account
• Her Vanguard Roth IRA account
• His 457b Retirement account

I decided that I am going to look at each account separately and handle it that way. It is not ideal solution, but I think I still can get good diversification without over complicating my asset allocation. I modified slightly from FundAdvice.com suggested Vanguard Portfolio. Here is my target asset allocation for each account:

Joint Vanguard Taxable Account

Fund	Asset Class	Percentage
Vanguard Tax Managed G&I	LCB	15%
Vanguard Value Index	LCV	15%
Vanguard Tax Managed Small Cap Index	SCB	15%
Vanguard Small Cap Value Index	SCV	15%
Vanguard Tax Managed International	Intl LCB	10%
Vanguard International Value Index	Intl LCV	10%
Vanguard FTSE All-World ex-US Small-Cap Index Fund	Intl SCB	10%
Vanguard Emerging Markets Stock Index	EM	10%

For our joint taxable account, we invest in 60% US and 40% International. Yes, for some people, this is quite a lot of international equities. FundAdvice.com suggestion is actually 50-50 US-International. I feel comfortable with 60-40 US-International split. Again, remember that I am not financial expert and I do not even consult with financial professional for this asset allocation.

His or Her Roth IRA

Fund	Asset Class	Percentage
Vanguard 500 Index	LCB	8.40%%
Vanguard Value Index	LCV	8.40%
Vanguard Small Cap Index	SCB	8.40%
Vanguard Small Cap Value Index	SCV	8.40%
Vanguard Developed Market Index	Intl LCB	7%
Vanguard International Value Index	Intl LCV	7%
Vanguard FTSE All-World ex-US Small-Cap Index Fund	Intl SCB	7%
Vanguard Emerging Markets Stock Index	EM	7%
Vanguard Short Term Treasury	Bond	9%
Vanguard Intermediate Term Treasury	Bond	15%
Vanguard TIPS	Bond	6%

Similar to Joint Taxable Account, we have 60-40 US-International split on the equity portion. And fixed income portion of our allocation total to 30%. This may seems high for someone in early 30s, but since we don't have any bonds outside our Roth IRA, from our total investments, our bonds allocation is actually rather small, around 15%.

His 457b Account

Fund	Asset Class	Percentage
Stock Index Fund	LCB	30%
Extended Market Fund	MCB & SCB	18%
EAFE Equity Index Fund	Intl LCB	32%
Aggregate Bond Index Fund	Bond	20%

For my 457b account, as expected, the option is limited. There are other options available, but I feel this allocations is the best for me. I could have increase my extended market fund and decrease my stock index fund, thus moving toward my preference of small cap and value fund. However, I don't feel comfortable with that option for this account and funds selection. Also, you will notice 60-40 US-International split for the equity portion.