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What Would Elon Musk Do? A Billionaire’s Take on Virginia529



What Would Elon Musk Do? A Billionaire’s Take on Virginia529

Based on Elon Musk's publicly stated principles, his approach to saving for college in a Virginia529 plan would likely be unconventional and highly strategic, focusing on efficiency and the long-term mission. He'd probably view traditional higher education as a potentially over-priced and inefficient system. Here's a breakdown of what his strategy might look like:

1. The First Principles Approach: Questioning the Need for a 529

Musk's core philosophy is to reason from first principles, boiling a problem down to its most fundamental truths.1 For a 529 plan, his first question wouldn't be "Which plan is best?" but rather, "Is a college education necessary, and is a 529 plan the most efficient way to achieve my goal?"

He has famously questioned the value of a traditional college education, stating that a university is primarily "for fun and to prove you can do your chores" rather than for learning. He prioritizes skills and real-world application over credentials. He also created his own school, Ad Astra, which focuses on problem-solving and hands-on learning, further highlighting his skepticism of conventional schooling.

Therefore, he might not see a 529 plan as a guaranteed path to a valuable degree, but rather as a highly flexible, tax-advantaged tool that could be used for a variety of educational purposes, including vocational training or even personal learning.

2. The Optimal Allocation: Fees and Performance Over State Benefits

Musk is known for being ruthlessly efficient and focused on maximizing returns. This would be his primary driver in selecting a 529 plan.

  • Lowest Fees Win: He would likely choose a plan with the absolute lowest fees, regardless of the state. He'd see every basis point in fees as a direct drain on efficiency and long-term growth. This is where a plan like Virginia529, which is known for its ultra-low fees, would be a top contender. He would likely ignore any minor state tax deductions from a different state's plan, reasoning that the long-term compounding of lower fees would provide a much greater return than a one-time tax break.

  • Focus on Core Investments: His investment strategy is concentrated, not diversified. He would apply this to his 529 plan, likely choosing a small number of low-cost, high-performing index funds or age-based funds, and not straying from that strategy. He'd look for a plan with reputable managers and a track record of strong performance.

3. The Exit Strategy: Flexibility is Key

Musk always thinks several steps ahead. He would recognize that the needs of his children could change, and therefore, the flexibility of the 529 plan's funds would be a critical factor.

  • Student Loans: He'd view the ability to use 529 funds for student loan repayment as a valuable escape hatch. If his child chose an alternative path or was a scholarship recipient, he could use the leftover funds to eliminate debt, which is a powerful way to reduce financial friction and free up resources for future endeavors.2

  • The Roth IRA Rollover: Recent legislation allows for a portion of unused 529 funds to be rolled over into a Roth IRA.3 This would appeal to Musk as it provides an additional, tax-advantaged avenue for the beneficiary's financial future. He would view the 529 not just as a college fund, but as a strategic tool for lifelong financial planning.

In a hypothetical world, Musk would view a 529 plan as a logical, albeit not strictly necessary, tool for wealth creation and transfer. He'd be less concerned with the traditional use case of the fund and more with its core utility as a tax-advantaged account with a favorable exit strategy.

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