Published: Wed, 21 Oct 2020 15:59:41 +0000
Market Blog Now that we have your attention with that eye-grabbing title, there’s definitely something to the idea that stocks perform better the year after a sitting president wins reelection. “Think about it—usually when a president wins reelection, it means … Continue reading →
Published: Wed, 21 Oct 2020 14:59:01 +0000
Daily Insights Markets opened slightly lower. US equities are flat this morning following Tuesday’s solid session. Optimism over stimulus talk progress prevails, even though Senate approval may be a big hurdle to completing a deal. Improving earnings results so far … Continue reading →
Published: Tue, 20 Oct 2020 15:59:08 +0000
Market Blog The 10-year US Treasury yield, at 0.77% as of October 19, is still near historical lows set earlier this year. Historically, 10-year Treasury performance for the next 10 years has tended to track the Treasury yield at the … Continue reading →
Published: Tue, 20 Oct 2020 14:58:30 +0000
Daily Insights US equities look to rebound from Monday’s selloff. The S&P 500 Index opened higher this morning after lack of progress on stimulus talks contributed to broad-based losses Monday. Investors may start looking ahead to a post-election stimulus package, … Continue reading →
Published: Mon, 19 Oct 2020 14:58:15 +0000
Daily Insights Stocks opened higher. Reports over the weekend suggested the White House may be able strike a stimulus deal with the US House Democrats before the election, but the odds are still long, and early 2021 appears more likely. … Continue reading →
Published: Fri, 16 Oct 2020 20:00:21 +0000
Market Blog Index Performance S&P 500 Index: 0.2% Dow Jones Industrial Average: 0.1% Nasdaq Composite: 0.8% US and International Equities Markets generally finished higher this week, the third straight weekly gain for the S&P 500 Index and capped off by … Continue reading →
Published: Fri, 16 Oct 2020 15:58:23 +0000
Market Blog There are many charts that caught our attention this week, and today we share the top 5 charts we’re watching. The S&P 500 Index recently had a four-week losing streak and fell nearly 10% along the way, while … Continue reading →
Published: Fri, 16 Oct 2020 14:59:55 +0000
Daily Insights Markets opened higher. US equities opened higher, bucking the trend from Thursday’s mixed trading. The bulls are taking the lead this morning, brushing aside the resurgence of COVID-19 cases in Europe. House Speaker Nancy Pelosi and US Treasury … Continue reading →
Published: Thu, 15 Oct 2020 15:56:57 +0000
Economic Blog We continue to monitor real-time COVID-19 and economic data to provide insight into how the pandemic is affecting economies around the world. Traditional economic data sometimes can be too slow to pick up the changes that are occurring. … Continue reading →
Published: Thu, 15 Oct 2020 14:58:33 +0000
Daily Insights Stocks opened sharply lower. Stocks opened sharply lower in the face of dimming hopes of a pre-election stimulus package, rising jobless claims, and surging COVID-19 cases, particularly in Europe. Concerns that renewed restrictions would slow Europe’s economic recovery and … Continue reading →
Published: Wed, 14 Oct 2020 15:58:51 +0000
Market Blog With Election Day just under a month away and voting already taking place in many states, it is still anyone’s guess who will win on November 3. With all of the noise surrounding the election, we prefer to … Continue reading →
Published: Wed, 14 Oct 2020 14:58:17 +0000
Daily Insights Markets mixed overnight. S&P 500 Index opened little changed after taking a breather yesterday amid noisy headlines around fiscal stimulus and vaccine trials. Asian markets finished mixed with South Korea, China, and Australia trading lower, while European stocks … Continue reading →
Published: Tue, 13 Oct 2020 17:27:16 +0000
Market Blog The 10-year Treasury yield has stayed in a narrow range since April 2020, helped by a supportive Federal Reserve and ongoing concerns about the COVID-19 pandemic. As shown in LPL’s Chart of the Day, the 10-year Treasury yield … Continue reading →
Published: Tue, 13 Oct 2020 14:58:09 +0000
Daily Insights Stocks open slightly lower as earnings season begins. Once launched by Alcoa, the unofficial start to earnings season now begins with several financial firms reporting. The S&P 500 Index opened slightly weaker Tuesday morning following four straight up … Continue reading →
Published: Mon, 12 Oct 2020 14:58:42 +0000
Daily Insights Stocks add to last week’s solid gains. While most attribute the recent bump up in stocks to stimulus and position jockeying ahead of Election Day, earnings season has quietly snuck up on us and will be a big … Continue reading →
Published: Fri, 09 Oct 2020 20:03:07 +0000
Market Blog Index Performance S&P 500 Index: 3.7% Dow Jones Industrial Average: 3.3 % Nasdaq Composite: 4.6% US and International Equities The S&P 500 Index posted its best week in more than three months, boosted by renewed stimulus talks and … Continue reading →
Published: Fri, 09 Oct 2020 15:58:14 +0000
Market Blog In the recent LPL Market Signals video, LPL Financial Chief Market Strategist Ryan Detrick, Equity Strategist Jeff Buchbinder and Asset Allocation Strategist Barry Gilbert discussed the upcoming election, looking at it from all different angles, and more, including: … Continue reading →
Published: Fri, 09 Oct 2020 14:58:48 +0000
Daily Insights Markets move higher. US equity markets opened in the green following Thursday’s positive session. Renewed stimulus talks, with targeted business-aid hopes, are influencing today’s action. Asian markets were mixed, with China’s stock market higher after their holiday, while … Continue reading →
Published: Thu, 08 Oct 2020 15:59:41 +0000
Economics Blog Stimulus talks in Washington, DC, are getting a lot of attention from investors—and for good reason. The midpoint of the two offers—roughly $1.6 trillion from the White House and $2.2 trillion from US House Democrats—is about 9% of … Continue reading →
Published: Thu, 08 Oct 2020 14:58:15 +0000
Daily Insights Stocks opened higher. Sentiment is getting a lift this morning from speculation that piecemeal stimulus, if not more, may be forthcoming as Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi are slated to talk again today. Markets also … Continue reading →
Published: Wed, 07 Oct 2020 16:59:13 +0000
Market Blog In the recent LPL Market Signals video, LPL Financial Chief Market Strategist Ryan Detrick and Equity Strategist Jeff Buchbinder discussed recent market volatility, the president contracting COVID-19, and more, including: COVID-19 in the White House The latest on … Continue reading →
Published: Wed, 07 Oct 2020 14:58:10 +0000
Daily Insights S&P 500 opens higher on better stimulus tone. Markets moved to a risk-off stance Tuesday after President Donald Trump halted stimulus negotiations. The S&P 500 Index finished the day down 1.4%, but the broad US index moved higher … Continue reading →
Published: Wed, 07 Oct 2020 14:58:04 +0000
Market Blog Stocks fared well during the third quarter despite September’s weakness, with the S&P 500 Index returning about 9%. The quarterly gain brought the return through the first nine months of the year to 5.6%. Here we peel back … Continue reading →
Published: Tue, 06 Oct 2020 16:01:18 +0000
Market Blog The third quarter was characterized by the carry-over of economic momentum from the second quarter, as states continued to lift restrictions to reopen their economies. Perhaps it was no surprise that some of the hardest hit and most … Continue reading →
Published: Tue, 06 Oct 2020 15:05:32 +0000
Daily Insights S&P 500 opens near flat following Monday rally. The MSCI Asia Pacific Index climbed overnight, although China’s markets were closed for a holiday. Most major European indexes are showing modest gains midday. Federal Reserve Chair Jerome Powell will … Continue reading →
Published: Tue, 06 Oct 2020 14:09:49 +0000
Market Blog Index Performance View expanded table. View expanded table. View expanded table. US and International Equities The S&P 500 Index gave back some gains in September after a strong five-month run, with most sectors finishing in the red. The … Continue reading →
Published: Mon, 05 Oct 2020 15:07:36 +0000
Daily Insights Stocks open solidly higher on President Trump’s improving health. Today the S&P 500 Index will try to start another winning streak coming off its first positive week in the last five. Reports that President Donald Trump may leave … Continue reading →
Published: Mon, 05 Oct 2020 15:01:51 +0000
Market Blog As concern over the upcoming election continues to build, one of the questions we’re getting is whether investors should sell ahead of the election for fear the party they don’t want to win takes over the White House. … Continue reading →
Published: Fri, 02 Oct 2020 20:04:54 +0000
Market Blog Index Performance S&P 500 Index: 1.8% Dow Jones Industrial Average: 1.9% Nasdaq Composite: 1.5% US and International Equities As news concerning President Trump affected Friday’s markets, the S&P 500 Index still managed to end the week higher. Energy has … Continue reading →
Published: Fri, 02 Oct 2020 17:57:59 +0000
Market Blog First and foremost, we wish President Donald Trump and First Lady Melania Trump a swift and full recovery. This October surprise raises the already high level of political uncertainty markets are dealing with as Election Day approaches. As … Continue reading →
Published: Fri, 02 Oct 2020 15:01:51 +0000
Daily Insights President Donald Trump and First Lady Melania Trump test positive for COVID-19. First, we wish the President and the First Lady a swift and full recovery. This October surprise raises the already high level of political uncertainty that … Continue reading →
Published: Thu, 01 Oct 2020 18:08:17 +0000
Economic Blog With the election drawing near, politicians, pundits, and especially voters will be paying even closer attention to the state of the US economy. It’s been a wild ride since the outbreak of COVID-19 around the world, and with … Continue reading →
Published: Thu, 01 Oct 2020 16:23:08 +0000
Market Blog “October: This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August, and February.” Mark Twain After a historic 60% rally, stocks pulled back … Continue reading →
Published: Thu, 01 Oct 2020 15:00:15 +0000
Daily Insights Stimulus hopes give stocks a lift. Stocks ended a down month with solid gains on Wednesday, the fourth gain in five sessions. Markets are looking to add to those gains this morning to kick off October (and the … Continue reading →
Published: Wed, 30 Sep 2020 17:58:27 +0000
Market Blog In the recent LPL Market Signals video, LPL Financial Chief Market Strategist Ryan Detrick and Equity Strategist Jeff Buchbinder discussed recent equity weakness and why it isn’t a major warning, along with COVID-19 worries and more, including: Recent … Continue reading →
Published: Wed, 30 Sep 2020 16:32:12 +0000
The first presidential debate is now in the books, with two more (maybe) ahead and a vice presidential debate on October 7. The debate was raucus, occasionally uncouth, and more than a little surreal for viewers at home. But did … Continue reading →
Published: Wed, 30 Sep 2020 15:05:55 +0000
Daily Insights Stocks opened higher. US equities reversed earlier losses following a contentious US presidential debate Tuesday night that raised more questions of a potentially contested election. On the flipside, House Speaker Nancy Pelosi noted positive discussions with US Treasury … Continue reading →
Published: Tue, 29 Sep 2020 16:00:03 +0000
Market Blog An old Wall Street adage says bond markets are smarter than equity markets, so when stocks encounter volatility, investors often look to the bond market for clues about the potential severity of equity market weakness. The option-adjusted spread … Continue reading →
Published: Tue, 29 Sep 2020 14:58:36 +0000
Daily Insights S&P 500 Index opens near flat after gains in four out of the last five sessions. US stocks saw broad gains Monday with a cyclical tilt as value stocks, led by energy and financials, kept pace with growth; … Continue reading →
Published: Tue, 29 Sep 2020 13:58:16 +0000
Market Blog The first presidential debate is tonight, September 29, with millions of people expected to tune in to see how each candidate handles the pressure. With tensions heightened amid an election that may be much closer than the polls … 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.
Check the background of investment professionals associated with this site on FINRA’s BrokerCheck.