Stay the course: Investing for college through volatile markets

Three keys to staying invested longer for college

1. Put time on your side
   The risk of loss has historically decreased as time horizons increased. If you’re already investing, stick with your plan. If not, get started now. The longer you invest, the more time your college fund has to ride out short-term volatility and maximize long-term return potential.
2. Diversify your portfolio
   Different investments tend to rise and fall at different times. When stocks are down, for example, bonds are often up. Combining both into a diversified portfolio helps reduce risk and avoid the large fluctuations that can derail college plans.
3. Focus on your goals, not the market
   Avoid the temptation to make major changes when stocks are dropping. Instead, take a step back and remember why you’re investing and when you will need the money. If your goals haven’t changed and college is still years away, doing nothing is usually the best course of action.

How a 529 plan can help you better navigate market volatility

Tax benefits

Money grows tax free in a 529 plan when used for qualified education expenses, providing a strong incentive to stay invested.³ In fact, only 1.9% of plan participants take early withdrawals before a child turns 18.⁴

Broad investment menu

Plan offerings typically range from conservative to aggressive, so families can choose investments meeting their goals, timeframe and comfort level. Popular options include “age-based” or “enrollment year” portfolios, which automatically reduce risk as college gets closer and there’s less time to recover from any market declines.

Professional investment management

In addition to building 529 plan portfolios, some investment managers take extra steps to respond to volatile markets. For example, J.P. Morgan’s Multi-Asset Solutions team actively monitors and adjusts portfolios to control risks and capture return opportunities as conditions change.

Automatic investing

Most 529 plans allow regular investments from bank accounts or paychecks. Contributing the same amount according to a set schedule – no matter how markets are performing – is an effective way to remove guesswork and emotion from investment decisions.

Flexibility

Because 529 plans have no mandatory withdrawal ages, investors aren’t forced to sell at a loss if markets are down when tuition bills come due. If they have other ways to pay, they can stay invested for later college years, younger siblings or future generations. Another option is to transfer 529 plan assets to a tax-free Roth IRA for the account beneficiary’s retirement.⁵

Investing involves risks, including possible loss of principal.

¹ FactSet, Standard & Poor’s, J.P. Morgan Asset Management. Returns are based on price index only and do not include dividends. Intra-year drops refer to the largest market drops from a peak to a trough during the year. Returns are calendar-year returns from 1980 to 2024, over which the average annual return was 10.6%. Data are as of June 30, 2025. For illustrative purposes only.

² Bloomberg, FactSet, Standard & Poor’s, J.P. Morgan Asset Management. Stocks are represented by S&P 500 Index, from 1988 to 2024. Time in months is calculated based on trading days between drawdown and the subsequent recovery. Data are as of June 30, 2025.

³ Earnings on federal non-qualified withdrawals may be subject to federal income tax and a 10% federal penalty tax, as well as any applicable state and local income taxes. Please consult your tax professional about your particular situation.

⁴ Statistics gathered for illustrative purposes only, using an average of 2018 and 2019 participant behavior data for New York’s 529 Advisor-Guided College Savings Program.

⁵ Tax- and penalty-free rollovers are subject to certain requirements and limitations. State tax treatment of Roth IRA rollovers may vary by 529 plan. Please consult your financial or tax professional for more information.