The academic year has begun, and with the new season it’s a logical time to reassess planning for educational expenses. Typically, 529 plan funding is handled by a parent or grandparent with the goal of simply covering the costs of each of their children or grandchildren. For those with the means and interest in doing so, however, a Dynasty 529 Plan can be used to cover qualifying expenses for extended family and across multiple generations.

This note provides a simplified overview of the Dynasty 529 concept. For extended or multigenerational families, discussions of goals, strategy, reach, and the like can be quite complex and entail considerations much deeper than financial objectives. Our goal in sharing this information is to stimulate conversations around those complexities.

August was a difficult month for markets. The S&P 500 and Nasdaq fell -1.6% and -2.1%, respectively. Bonds fared little better, with yields rising during the month.  Jobs grew faster than forecasted in August; however, this was the third consecutive month of gains below 200k and figures for the prior two months were revised lower by a combined 110k. Inflation edged a little higher and the headline Consumer Price Index now stands at 3.2% year over year after rising 0.2% since last month.

Key Takeaways

• Investor sentiment and market momentum have markedly improved in the past quarter, driving equity valuations to loftier levels, specifically in U.S. Large Caps. Other asset classes such as Small Cap and Non-U.S. equities offer more attractive relative returns.
• Economic fundamentals remain mixed, with strong employment data persisting while corporate profit growth has softened in the past three quarters despite falling inflation.
• We believe central banks are nearing the end of their tightening cycle, as inflation continues to cool, but future interest rate cuts remain far off in the distance given solid GDP growth.
• A slowdown in private market exit activity has led to a slowdown in fundraising activity and therefore a reset in private market prices. This may well pave the way for more robust returns for those that have the capacity to deploy into private equity and credit markets.
• The greatest risks in the marketplace surround the need to refinance debt in the near term given more onerous borrowing rates. In addition, tighter lending standards raise the probability of choking off economic activity.  Though the risk of recession may be reduced, we believe stretched valuations increase the risk of a normal market correction.