Condor Capital Advises Investors Not To Be Alarmed by NJBEST Changes

MARTINSVILLE, N.J., March 30 /PRNewswire/ -- NJBEST, the State of New Jersey's Section 529 College Savings Plan, recently changed the name of their age-based investment options, but "don't be alarmed," said Andrew Novick, Esq., CFP, Vice President of Client Service at Condor Capital.

Franklin Templeton Funds administers the plan and expanded the single age-based investment option into three age-based investment options earlier this year. The original option was renamed the "Growth Asset Allocation" option while they added the "Moderate" and "Conservative" options. Despite the name change, the original age-based option's asset allocations remain unchanged.

"The two new options feature lower risk as they start with a lower equity allocation and shift out of equities faster than the original option," Novick said. For example, the Growth option begins with 100% invested in equities for a newborn beneficiary and gradually decreases to about 25% in equities by age 17. Meanwhile, the allocation into lower-risk fixed income and money market funds is increased correspondingly. The Moderate and Conservative options begin with 75% and 50%, respectively, in equities for a newborn, and gradually decrease to 0% at age 17 for the Moderate option and at age 13 for the Conservative option.

"The increased flexibility of having three age-based options for the NJBEST 529 is a good thing, as it allows individual investors to choose what is best for their situation," Novick said. "However, the original age-based option, now called the Growth option, is probably still the best choice. While the new options have less risk, they also offer the least growth potential. Since the main advantage of using a 529 plan is that account earnings will be tax-free as long as the proceeds are used for qualified higher education expenses, the Growth option provides the most growth opportunity and the greatest potential tax benefit."

NJBEST accounts opened prior to 2005 may still be in the NJ Treasury-managed age-based options. These accounts were not affected by the recent change. The age-based asset allocations used by the NJ Treasury tend to be in between the Franklin Templeton-managed Growth and Moderate options. Anyone using the NJ Treasury options could switch over to Franklin Templeton, but the NJ Treasury option is unavailable to new accounts.

"Since the NJ Treasury-managed options have a significantly lower internal fee than the Franklin Templeton options and a reasonable investment approach, there is little reason for the NJBEST accounts using the NJ Treasury option to switch to Franklin Templeton," Novick said.

Condor Capital

Founded in 1988, Condor Capital is an SEC-registered investment advisor based in Martinsville, N.J. employing 15 professional and support staff. Since Condor is a fee-only, investment management firm, its fees are based on portfolio size, not sales commissions or number of trades. For more information on Condor Capital, please visit www.condorcapital.com or call 732-356-7323.

SOURCE Condor Capital