You don’t need to be a savvy investor to participate in the Michigan Education Savings Program (MESP).
It’s not about choosing ‘the right’ investment, it’s about choosing the investment that’s right for you. For many people, an Age-Based Investment Option can be that choice. Because it automatically shifts from aggressive-to-conservative investments as your child ages, you maximize the opportunities of your investment horizon without needing to manually rebalance your investment options each year.
Changing Your Investments
Once you invest in a particular investment option, you can transfer contributions and any earnings to another investment option only twice per calendar year or upon a transfer of funds to a MESP account for a different beneficiary.
Periodically Review Your Investments
It’s a good idea to periodically re-evaluate your investment strategy as your goals, investment horizon, and personal situation change — for example, annually at tax time, on a yearly basis if your income changes, or upon the birth of another child.
How Age-Based Investment Options Work
The Age-Based Investment Option seeks to match the investment objective and level of risk to the investment horizon by factoring in the child’s current age and the number of years before they turn 18.
Depending on this age, contributions to these Investment Options will be placed in various age bands, each of which has a different investment objective and investment strategy.
As discussed in more detail below, the age bands for younger Beneficiaries seek a favorable long-term return by primarily investing in mutual funds that primarily invest in equity and real estate securities, which may have greater potential for returns than debt securities, but which also have greater risk than debt securities.
As a Beneficiary nears college age, the age bands invest less in mutual funds that invest in equity and real estate securities and more in mutual funds that invest in debt securities and in other investments that seek to preserve principal.
|Conservative Age-Based Allocation Option|
|Moderate Age-Based Allocation Option|
|Aggressive Age-Based Allocation Option|