<p>With the recent lousy drop in the stock market, does anyone have an opinion if it is better to cash in savings bonds, liquidate 529 savings plan, or use savings to hope the market comes up to pay the tuition bills?</p>
<p>Relying on the market rising to pay tuition bills is similar to taking a HELOC or a second mortgage and invest in the stock market, taking on a healthy dose of margin in the process to juice up the returns. There is no way to predict what the market will do in 5 or even 10 years 1999 anyone? That was almost 10 years ago:
[NASDAQ</a> 10 year chart](<a href=“^IXIC Interactive Stock Chart | NASDAQ Composite Stock - Yahoo Finance”>^IXIC Interactive Stock Chart | NASDAQ Composite Stock - Yahoo Finance)</p>
<p>Any money that will be required in the next 10 years should be largely in liquid investments that have significant downside protection – cash, savings bonds, CDs, etc. Bonds (the non-savings kind) are NOT that kind of investment. Neither are stocks of any kind.</p>
<p>To answer your original question — if I were in your position I would liquidate the 529 first, then use savings. Stock market decisions need to be dispassionate and completely independent of financial needs. Buying and selling should be done when the time is right, not when you need the money. Just ask the likes of LTCM… Me personally, I am extremely happy that the market is getting hammered. It has been tough to find reasonable investments in the past 3-4 years. Now that many people are running for the doors a few tasty morsels are becoming available. FNM anyone? Not for the faint of heart, but I digress…</p>