Ask Terry Questions Bright Start – Opeenheimer

Bright Start – Opeenheimer

By Terry Savage on March 26, 2014 |

Hi terry: Question: In the past there was concern over Bright Start Illinois performance etc Is this still an issue? Or can I feel secure opening an account for my Grand Children?? THANKS MUCH!

I assume state program better than something like Fidelity 529?

If you’re saving for college for a child (or grandchild), what you should do is invest money that you’ve already paid taxes on, and put it in a 529 where it can grow tax-free if used for college expenses for any child in the family. Fidelity is a great place to start a 529 plan, although if you invest in a plan managed for your state you might get a small break on state taxes for the money you invest. – See more at:

Terry Says:  According to Morningstar, the Illinois direct-sold Bright Start plan ranks 19th for its performance for the past year, so that’s not shabby.  My grievance against the plan is long standing, and really has nothing to do with performance.  In 2007, one of the managers in the plan suffered a huge loss in the most conservative plan, the one designed for those headed to college in the next year.  It turns out the portfolio managers speculated — and lost money — in the financial crisis.  The portfolio managers left, and the state accepted a settlement (along with several other states in the same position).  But the settlement did not make the investors “whole” — returning, as I recall, only about 85 cents on the dollar.  And the management company to this day manages assets of the fund and was not fired.

I find this despicable cronyism, and unpardonable.  I stand on this principle. So, despite the slight tax break you get for investments in the Illinois plan, I have never again recommended BrightStart.    Go to to read about the performance of other plans, since you are not required to invest in your own state’s plan.

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