Published: Fri, 09 Apr 2021 20:01:02 +0000
Market Blog Friday, April 9, 2021 Index Performance View enlarged chart. U.S. and International Equities The major United States markets were mostly higher this week. The Nasdaq Composite was the best performing index while the Dow Jones Industrial Average gained … Continue reading →
Published: Fri, 09 Apr 2021 15:58:13 +0000
Market Blog Friday, April 9, 2021 Stocks have kicked off the year in a strong fashion, and history shows this may give reason to be optimistic for the rest of the year. After a solid—but certainly turbulent—year in 2020, the … Continue reading →
Published: Fri, 09 Apr 2021 14:58:08 +0000
Friday, April 9, 2021 Top Story Was the first quarter the sweet spot for returns? The S&P 500 Index rose 5.8% in the first quarter, and historically this has been in the “Goldilocks” range of returns that isn’t too hot, … Continue reading →
Published: Thu, 08 Apr 2021 15:58:44 +0000
Economic Blog Thursday, April 8, 2021 Before the pandemic we had begun to warm up to international stocks. Valuations relative to the U.S. markets had become increasingly attractive after a long stretch of outperformance by U.S. stocks compared with those … Continue reading →
Published: Thu, 08 Apr 2021 14:58:58 +0000
Thursday, April 8, 2021 Top Story Global GDP forecasts are on the rise, led by the U.S. A look at consensus expectations for economic growth around the world supports our preference for U.S. over developed international equities. Gross domestic product … Continue reading →
Published: Wed, 07 Apr 2021 16:58:56 +0000
Economic Blog Wednesday, April 7, 2021 On the LPL Market Signals podcast, Equity Strategist Jeff Buchbinder and Asset Allocation Strategist Barry Gilbert update forecasts based on how the economy’s recovery from the pandemic, aided by vaccine distribution, massive stimulus, and … Continue reading →
Published: Wed, 07 Apr 2021 15:58:18 +0000
Economic Blog Wednesday, April 7, 2021 The United States, and the rest of the world, are looking to emerge from the shadow of COVID-19, and business conditions may already have put the pandemic in the rear-view mirror—at least according to … Continue reading →
Published: Wed, 07 Apr 2021 14:58:43 +0000
Wednesday, April 7, 2021 Top Story Record surge in Purchasing Managers’ Index surveys U.S. businesses are looking to escape from underneath the shadow of COVID-19, and the Institute of Supply Management’s (ISM) Purchasing Managers’ Index (PMI) surveys may be suggesting … Continue reading →
Published: Tue, 06 Apr 2021 15:58:18 +0000
Market Blog Tuesday, April 6, 2021 Coming into this year, we expected longer-maturity U.S. Treasury yields to rise, consistent with improving economic growth dynamics. That is indeed what we have seen, with the yield on the 10-year Treasury higher by … Continue reading →
Published: Tue, 06 Apr 2021 14:58:53 +0000
Tuesday, April 6, 2021 Top Story Raising Economic And Market Forecasts…Again On the LPL Market Signals podcast, Equity Strategist Jeff Buchbinder and Asset Allocation Strategist Barry Gilbert update forecasts based on how the economy’s recovery from the pandemic, aided by … Continue reading →
Published: Mon, 05 Apr 2021 14:58:22 +0000
Monday, April 5, 2021 Top Story Raising Forecasts…Again LPL Research revises previous forecasts to better reflect the growing optimism of an economy on the rebound in this week’s Weekly Market Commentary, available at 1 p.m. ET. Daily Insights U.S. stocks … Continue reading →
Published: Thu, 01 Apr 2021 20:16:37 +0000
Market Blog Thursday, April 1, 2021 Index Performance U.S. and International Equities The major United States and international markets were higher this week. The Nasdaq Composite was the best performing index while the Dow Jones Industrial Average gained a fraction. … Continue reading →
Published: Thu, 01 Apr 2021 16:58:52 +0000
Market Blog Friday, April 1, 2021 Index Performance View enlarged chart. U.S. and International Equities This month provided positive results for the U.S. major market indexes. The top performer was the Dow Jones Industrial Average, returning over 7% for the … Continue reading →
Published: Thu, 01 Apr 2021 15:59:02 +0000
Economic Blog Thursday, April 1, 2021 It’s tempting to predict runaway 1970s inflation as an April Fools’ Day joke. But at the risk of upsetting our friends in the compliance department, we’ll shoot straight here. With that important disclaimer out … Continue reading →
Published: Thu, 01 Apr 2021 14:58:24 +0000
Thursday, April 1, 2021 Top Story Expect contained inflation long term It’s tempting to predict runaway 1970s inflation as an April Fools’ Day joke, but we don’t want to upset our friends in the compliance department, so we shoot straight … Continue reading →
Published: Wed, 31 Mar 2021 15:58:33 +0000
Market Blog Wednesday, March 31, 2021 As we continue LPL Research’s Inflation Week, today we will examine how stocks have historically done at different inflation levels. For more color on our views on inflation, please read here and here, and … Continue reading →
Published: Wed, 31 Mar 2021 14:58:00 +0000
Wednesday, March 30, 2021 Top Story Gallon-sized Improvement in Employment In the latest LPL Street View, Research Chief Investment Officer, Burt White, makes the case that even though unemployment claims are at their lowest level since the pandemic started, we … Continue reading →
Published: Wed, 31 Mar 2021 12:00:00 +0000
Market Blog Wednesday, March 31, 2021 “History doesn’t repeat itself, but it often rhymes.” Mark Twain What more can we say other than few months have been kinder to stocks lately than the month of April. In fact, it was … Continue reading →
Published: Wed, 31 Mar 2021 06:00:36 +0000
Market Blog Wednesday, March 31, 2021 Is higher inflation on the way? This is the question nearly everyone is asking, and this week the LPL Strategists will explain why the answer is likely no, contrary to what so many expect. … Continue reading →
Published: Tue, 30 Mar 2021 15:58:02 +0000
Market Blog Tuesday, March 30, 2021 Inflation is coming and, according to certain market-based inflation metrics, markets are expecting sustained inflation rates not seen since the late 2000s, although likely still at manageable levels. Inflation, which captures price increases in … Continue reading →
Published: Tue, 30 Mar 2021 14:58:36 +0000
Tuesday, March 30, 2021 Top Story Let’s Talk About Inflation LPL Financial Chief Market Strategist Ryan Detrick and Equity Strategist Jeff Buchbinder examine inflation concerns and explain why they think any increases in inflation will most likely be fleeting in … Continue reading →
Published: Mon, 29 Mar 2021 15:58:50 +0000
Market Blog Monday, March 29, 2021 It has been a little over a year since the S&P 500 Index bottomed on March 23, 2020, and it was certainly an eventful year, to say the least. It’s also been one year … Continue reading →
Published: Mon, 29 Mar 2021 15:00:27 +0000
Monday, March 29, 2021 Top Story Are We on the Brink of an Inflation Crisis? LPL Research explains why any upticks in inflation will ultimately prove transitory in this week’s Weekly Market Commentary, available at 1 p.m. ET. Daily Insights … Continue reading →
Published: Fri, 26 Mar 2021 19:58:00 +0000
Market Blog Friday, March 26, 2021 Index Performance View enlarged chart. U.S. and International Equities Major United States markets were mixed this week. U.S. small caps (Russell 2000 Index) have been the worst performing index for two straight weeks while … Continue reading →
Published: Fri, 26 Mar 2021 15:00:27 +0000
Friday, March 26, 2021 Daily Insights US stocks mixed as S&P 500 Index looks to avoid a second straight weekly decline; Nasdaq set to underperform The Federal Reserve announced that banks that clear the next round of stress tests will … Continue reading →
Published: Fri, 26 Mar 2021 14:00:57 +0000
Market Blog Friday, March 26, 2021 Our friends at Goldman Sachs recently announced a 2021 growth target for Gross Domestic Product (GDP) of 8% (Q4/Q4). Should this happen, it would be the biggest annual increase in GDP since 1951. Of … Continue reading →
Published: Thu, 25 Mar 2021 15:58:47 +0000
Market Blog Thursday, March 25, 2021 It has been just over a year since the S&P 500 Index bottomed on March 23, 2020, and while global stock markets have provided historic returns since the low, the biggest winners come from … Continue reading →
Published: Thu, 25 Mar 2021 14:59:11 +0000
Thursday, March 25, 2021 Top Story Commodities the biggest winners since the low. While stock markets have posted solid returns since the S&P 500 Index bottomed in March 2020, commodity markets have been on an absolute tear as economy activity … Continue reading →
Published: Wed, 24 Mar 2021 17:24:45 +0000
Market Blog Wednesday, March 24, 2021 A year ago this week the stock market bottomed and thus ended one of the most vicious bear markets of all-time. In our recent Market Signals video, LPL Financial Chief Market Strategist Ryan Detrick … Continue reading →
Published: Wed, 24 Mar 2021 15:59:32 +0000
Economic Blog Wednesday, March 24, 2021 It has now been a little over a year since the first COVID-19 restrictions and lockdowns were implemented in the United States, with California having implemented the first stay-at-home order on March 19, 2020. … Continue reading →
Published: Wed, 24 Mar 2021 15:03:47 +0000
Wednesday, March 24, 2021 Top Story High frequency data one year after lockdown. It’s been a little over a year since the first COVID-19 restrictions were implemented in the United States, when California put in place the first stay-at-home orders … Continue reading →
Published: Tue, 23 Mar 2021 15:59:47 +0000
Market Blog Tuesday, March 23, 2023 While most market participants have been (rightly) focusing on the sell-off in the Treasury markets this year, U.S. corporate credit markets have sold off as well. Corporate credit markets, as defined by the Bloomberg … Continue reading →
Published: Tue, 23 Mar 2021 15:00:06 +0000
Tuesday, March 23, 2021 Top Story The Bull Market Turns One On the LPL Market Signals podcast, Chief Market Strategist Ryan Detrick and Equity Strategist Jeff Buchbinder consider what could be in store for stocks in year two of the … Continue reading →
Published: Mon, 22 Mar 2021 15:00:22 +0000
Monday, March 22, 2021 Top Story The Second Year Of The Bull Market Begins LPL Research discuss the end of the bear market and the trends of a bull market in year two in this week’s Weekly Market Commentary, available … Continue reading →
Published: Fri, 19 Mar 2021 20:10:29 +0000
Market Blog Friday, March 19, 2021 Index Performance View enlarged chart. U.S. and International Equities All major United States markets declined this week. U.S. small caps (Russell 2000 Index) were last week’s best performing index. This week, they reversed course … Continue reading →
Published: Fri, 19 Mar 2021 16:00:42 +0000
Economic Blog Friday, March 19, 2021 In almost every direction we turn, we see optimism mounting over a mid-2021 economic reacceleration. Unfortunately, it seems we will have to wait at least another month for that optimism to make their way … Continue reading →
Published: Fri, 19 Mar 2021 15:18:18 +0000
Friday, March 19, 2021 Top Story The day after Yields soared, with the 10-year yield closing at 1.72%, its highest level in 14 months, with the 10-year on pace to be up eight consecutive weeks. Worries that the Federal Reserve … Continue reading →
Published: Thu, 18 Mar 2021 17:04:08 +0000
Market Blog Thursday, March 18, 2021 March is here and with it comes some Madness! In our recent Market Signals video, LPL Financial Chief Market Strategist Ryan Detrick and Equity Strategist Jeff Buchbinder discuss four things that matter the most … Continue reading →
Published: Thu, 18 Mar 2021 15:59:43 +0000
Economic Blog Thursday, March 18, 2021 Last week we reviewed updated global economic growth forecasts from the Organisation for Economic Co-operation and Development (OECD), highlighting the significant increase in their gross domestic product (GDP) forecast for the United States this … Continue reading →
Published: Thu, 18 Mar 2021 15:00:25 +0000
Thursday, March 18, 2021 Top Story The Federal Reserve (Fed) wrapped up its two-day meeting There were no surprises as the Fed upgraded growth and inflation expectations. Monetary policy was left unchanged with the Fed funds target rate remaining at … Continue reading →
The best savings vehicles offer special tax advantages if the funds are used to pay for college. Tax-advantaged strategies are important because over time, you can potentially accumulate more money with a tax-advantaged investment compared to a taxable investment. Ideally, though, you'll want to choose a savings vehicle that offers you the best combination of tax advantages, financial aid benefits, and flexibility, while meeting your overall investment needs.
Since their creation in 1996, 529 plans have become to college savings what 401(k) plans are to retirement savings--an indispensable tool for helping you amass money for your child's or grandchild's college education. That's because 529 plans offer a unique combination of benefits unmatched in the college savings world.
There are two types of 529 plans--college savings plans and prepaid tuition plans. Though each is governed under Section 529 of the Internal Revenue Code (hence the name "529" plans), college savings plans and prepaid tuition plans are very different college savings vehicles. There are typically fees associated with opening and maintaining each type of account.
Note: Investors should consider the investment objectives, risks, charges, and expenses associated with 529 plans before investing. More information about specific 529 plans is available in each issuer's official statement, which should be read carefully before investing. Also, before investing, consider whether your state offers a 529 plan that provides residents with favorable state tax benefits. As with other investments, there are generally fees and expenses associated with participation in a 529 savings plan. There is also the risk that the investments may lose money or not perform well enough to cover college costs as anticipated.
A 529 college savings plan is a tax-advantaged college savings vehicle that lets you save money for college in an individual investment account. Some plans let you enroll directly, while others require that you go through a financial professional. The details of college savings plans vary by state, but the basics are the same. You'll need to fill out an application, where you'll name a beneficiary and select one or more of the plan's investment portfolios to which your contributions will be allocated. Also, you'll typically be required to make an initial minimum contribution, which must be in cash.
529 college savings plans offer a unique combination of features that no other college savings vehicle can match:
But college savings plans have some drawbacks too. You relinquish some control of your money. Returns aren't guaranteed—the risk is based on the investment portfolios you've chosen, and your account may gain or lose money.
Prepaid tuition plans are distant cousins to college savings plans—their federal tax treatment is the same, but just about everything else is different. A prepaid tuition plan is a tax-advantaged college savings vehicle that lets you pay tuition expenses at participating colleges at today's prices for use in the future. Prepaid tuition plans can be run either by states or colleges. For state-run plans, you prepay tuition at one or more state colleges; for college-run plans, you prepay tuition at the participating college(s).
As with 529 college savings plans, you'll need to fill out an application and name a beneficiary. But instead of choosing an investment portfolio, you purchase an amount of tuition credits or units (which you can then do again periodically), subject to plan rules and limits. Typically, the tuition credits or units are guaranteed to be worth a certain amount of tuition in the future, no matter how much college costs may increase between now and then. As such, prepaid tuition plans provide some measure of security over rising college prices.
Prepaid tuition plans have some limitations, though, compared to college savings plans. One major drawback is that your child is generally limited to your own state's prepaid tuition plan, and then your child is limited to the colleges that participate in that plan. If your child attends a different college, prepaid plans differ on how much money you'll get back. Also, some prepaid plans have been forced to reduce benefits after enrollment due to investment returns that have not kept pace with the plan's offered benefits. Even with these limitations, some college investors appreciate the peace of mind that comes with not worrying about college inflation each year by locking in college costs today.
A Coverdell education savings account (Coverdell ESA) is a tax-advantaged education savings vehicle that lets you save money for college, as well as for elementary and secondary school (K-12) at public, private, or religious schools. Here's how it works:
Unfortunately, not everyone can open a Coverdell ESA--your ability to contribute depends on your income. To make a full contribution, single filers must have a modified adjusted gross income (MAGI) of less than $95,000, and joint filers must have a MAGI of less than $190,000. And with an annual maximum contribution limit of $2,000, a Coverdell ESA probably can't go it alone in meeting today's college costs.
Before 529 plans and Coverdell ESAs, there were custodial accounts. A custodial account allows your child to hold assets--under the watchful eye of a designated custodian--that he or she ordinarily wouldn't be allowed to hold in his or her own name. The assets can then be used to pay for college or anything else that benefits your child (e.g., summer camp, braces, hockey lessons, a computer). Here's how a custodial account works:
A custodial account provides the opportunity for some tax savings, but the kiddie tax sharply reduces the overall effectiveness of custodial accounts as a tax-advantaged college savings strategy. And there are other drawbacks. All gifts to a custodial account are irrevocable. Also, when your child reaches the age of majority (as defined by state law, typically 18 or 21), the account terminates and your child gains full control of all the assets in the account. Some children may not be able to handle this responsibility, or might decide not to spend the money for college.
Series EE and Series I bonds are types of savings bonds issued by the federal government that offer a special tax benefit for college savers. The bonds can be easily purchased from most neighborhood banks and savings institutions, or directly from the federal government. They are available in face values ranging from $50 to $10,000. You may purchase the bond in electronic form at face value or in paper form at half its face value.
If the bond is used to pay qualified education expenses and you meet income limits (as well as a few other minor requirements), the bond's earnings are exempt from federal income tax. The bond's earnings are always exempt from state and local tax.
The bonds are backed by the full faith and credit of the federal government, so they are a relatively safe investment. They offer a modest yield, and Series I bonds offer an added measure of protection against inflation by paying you both a fixed interest rate for the life of the bond (like a Series EE bond) and a variable interest rate that's adjusted twice a year for inflation. However, there is a limit on the amount of bonds you can buy in one year, as well as a minimum waiting period before you can redeem the bonds, with a penalty for early redemption.
Ask your tax professional or go to www.irs.gov to find the adjusted gross income that married couples or individuals must have at the time bonds are redeemed to be able to exclude bond interest from federal income tax.
Your college saving decisions can impact the financial aid process. Come financial aid time, your family's income and assets are run through a formula at both the federal level and the college (institutional) level to determine how much money your family should be expected to contribute to college costs before you receive any financial aid. This number is referred to as the expected family contribution, or EFC.
In the federal calculation, your child's assets are treated differently than your assets. Your child must contribute 20 percent of his or her assets each year, while you must contribute 5.6 percent of your assets.
For example, $10,000 in your child's bank account would equal an expected contribution of $2,000 from your child ($10,000 x 0.20), but the same $10,000 in your bank account would equal an expected $560 contribution from you ($10,000 x 0.056).
Under the federal rules, an UTMA/UGMA custodial account is classified as a student asset. By contrast, 529 plans and Coverdell ESAs are considered parental assets if the parent is the account owner or for student-owned or UTMA/UGMA-owned 529 accounts (accounts owned by grandparents aren't counted as a parent asset). And distributions (withdrawals) from 529 plans and Coverdell ESAs that are used to pay the beneficiary's qualified education expenses are not counted as parent or student income on the federal government's aid form, which means that the money is not counted again when it's withdrawn (however, money withdrawn from a 529 account is counted as student income if the grandparent is the account owner). Other investments you may own in your name, such as mutual funds, stocks, U.S. savings bonds (e.g., Series EE and Series I), certificates of deposit, and real estate, are also classified as parental assets.
Regarding institutional aid, colleges are generally a bit stricter than the federal government in assessing a family's assets and their ability to pay college costs. Most use a standard financial aid application that considers assets the federal government does not, for example, home equity. Typically, though, colleges treat 529 plans, Coverdell accounts, and UTMA/UGMA custodial accounts the same as the federal government, with the caveat that money withdrawn from 529 plans and Coverdell accounts might be counted again as available income.
Contact a VyStar Investment Services Financial Advisor today by phone (904) 908-2495 or email VISMarketing@vystarcu.org.
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