Published: Fri, 15 Oct 2021 20:02:04 +0000
Market Blog Friday, October 15, 2021 Index Performance View enlarged chart. U.S. and International Equities Major U.S. and International Markets Finished Higher The major equity markets finished solidly in the green this week as we head into the genesis of … Continue reading →
Published: Fri, 15 Oct 2021 15:58:12 +0000
Economic Blog Friday, October 15, 2021 The U.S. Census Bureau reported overall retail sales grew 0.7% month over month in September vs. forecasts for a 0.2% decline, while retail sales excluding autos and gas also saw solid gains, rising 0.7% … Continue reading →
Published: Fri, 15 Oct 2021 12:00:08 +0000
Market Blog Friday, October 15, 2021 LPL Research is excited to bring the second episode of our new video series: 5 Charts with LPL Research. This week, LPL Financial Chief Market Strategist Ryan Detrick, CMT and Technical Strategist Scott Brown, … Continue reading →
Published: Thu, 14 Oct 2021 18:44:59 +0000
Economic Blog Thursday, October 14, 2021 The U.S. Bureau of Labor Statistics (BLS) released its monthly Job Openings and Labor Turnover Survey (JOLTS) report this week revealing that the number of American workers who are voluntarily quitting their jobs is … Continue reading →
Published: Wed, 13 Oct 2021 15:58:09 +0000
Economic Blog Wednesday, October 13, 2021 The characterization of inflation as ”transitory” by Federal Reserve (Fed) Chair Jerome Powell—which has been the subject of debate for months—is likely to come under renewed pressure after the most recent inflation data release. … Continue reading →
Published: Tue, 12 Oct 2021 15:58:37 +0000
Market Blog Tuesday, October 12, 2021 The week of September 20 was notable for monetary policy as there were eleven central bank meetings, including the U.S., E.U., U.K., Turkey, and Norway, to name a few. While many of these countries … Continue reading →
Published: Tue, 12 Oct 2021 12:25:34 +0000
Market Blog Tuesday, October 12, 2021 LPL Research is excited to introduce a new weekly video series, 5 Charts With LPL Research. Each week, LPL Financial Chief Market Strategist Ryan Detrick, CMT and Technical Strategist Scott Brown, CMT will review … Continue reading →
Published: Mon, 11 Oct 2021 18:00:28 +0000
Market Blog Monday, October 11, 2021 Index Performance View enlarged chart. U.S. and International Equities This quarter provided mostly negative results for the major market indices. The top performer and standout was the bellwether Dow Jones Industrial Average. The international … Continue reading →
Published: Mon, 11 Oct 2021 15:58:52 +0000
Market Blog Monday, October 11, 2021 We have used most of the superlatives we know to describe corporate America’s stunning performances over the past two earnings seasons. Despite lofty expectations, results exceeded estimates by huge margins. We expect solid earnings … Continue reading →
Published: Fri, 08 Oct 2021 20:10:34 +0000
Market Blog Friday, October 8, 2021 Index Performance View enlarged chart. U.S. and International Equities Major U.S. and International Markets Finished Higher The major equity markets reversed course from last week to finish higher. The international markets results were mixed … Continue reading →
Published: Fri, 08 Oct 2021 15:58:17 +0000
Economic Blog Friday, October 8, 2021 The September payroll report likely created more questions than it answered. The U.S. Bureau of Labor Statistics released its September employment report this morning, revealing that the domestic economy added a disappointing 194,000 jobs … Continue reading →
Published: Fri, 08 Oct 2021 12:00:16 +0000
Market Blog Friday, October 8, 2021 There is no reason to panic with all the big news about the bull market—October is known for volatility. As LPL Financial Chief Market Strategist Ryan Detrick discusses in the latest LPL Street View, … Continue reading →
Published: Thu, 07 Oct 2021 16:15:27 +0000
Economic Blog Thursday, October 7, 2021 Based on recent readings of manufacturing and service sector activity, business demand remains strong, further damaging the “stagflation” narrative. At the same time, barriers to meeting demand continue to limit businesses’ ability to respond, … Continue reading →
Published: Wed, 06 Oct 2021 15:58:03 +0000
Market Blog Wednesday, October 6, 2021 And just like that, the calendar turned to October and volatility picked up in a big way, with three consecutive 1% moves for the S&P 500 Index to start the month. As we noted … Continue reading →
Published: Tue, 05 Oct 2021 15:58:44 +0000
Market Blog Tuesday, October 5, 2021 The debt limit—commonly called the debt ceiling—is the maximum amount of debt that the Treasury Department can issue to pay its, already committed, financial obligations. The amount is set through Congress and has been … Continue reading →
Published: Mon, 04 Oct 2021 16:00:51 +0000
Market Blog Monday, October 4, 2021 Index Performance View enlarged chart. U.S. and International Equities September has been the worst performing month over the past 10 and 20 years. Looking at the prior year, the S&P 500 pulled back over … Continue reading →
Published: Fri, 01 Oct 2021 20:01:49 +0000
Market Blog Friday, October 1, 2021 Index Performance View enlarged chart. U.S. and International Equities Major U.S. and International Markets Finished lower The major equity markets finished the week, along with the month of September, lower. The international markets were … Continue reading →
Published: Fri, 01 Oct 2021 15:58:17 +0000
Market Blog Friday, October 1, 2021 The latest weekly data from the American Association of Individual Investors (AAII) show a continued increase in the percentage of individual investors who are bearish (40.7%) about short-term market expectations and a decrease in … Continue reading →
Published: Thu, 30 Sep 2021 15:58:14 +0000
Market Blog Thursday, September 30, 2021 “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 Well, it was bound … Continue reading →
Published: Wed, 29 Sep 2021 15:58:41 +0000
Economic Blog Wednesday, September 29, 2021 Stocks have come a long way since the S&P 500 bear market low way back on March 23, 2020, but despite the general strength of the bull market we’ve seen two very different types … Continue reading →
Published: Tue, 28 Sep 2021 15:58:10 +0000
Market Blog Tuesday, September 28, 2021 The municipal market continues to be a relative bright spot for core fixed income investors. While most of the other “safe” parts of the core fixed income universe have generated negative returns this year, … Continue reading →
Published: Fri, 24 Sep 2021 20:06:23 +0000
Market Blog Friday, September 24, 2021 Index Performance View enlarged chart. U.S. and International Equities Major U.S. Markets Finished higher while International Markets Selloff The major markets finished the week higher, with the Dow Jones Industrials leading the averages. Moreover, … Continue reading →
Published: Fri, 24 Sep 2021 15:58:04 +0000
Economic Blog Friday, September 24, 2021 On Thursday, September 23, the Conference Board released its August 2021 report detailing the latest reading for the Leading Economic Index (LEI), a composite of ten data series that tend to lead changes … Continue reading →
Published: Thu, 23 Sep 2021 15:58:34 +0000
Economic Blog Thursday, September 23, 2021 The Federal Reserve (Fed) ended its two-day Federal Open Market Committee (FOMC) meeting yesterday and, as expected, there were no changes to current interest rate or bond purchasing policies. However, the Fed continues to … Continue reading →
Published: Wed, 22 Sep 2021 16:25:30 +0000
Market Blog Wednesday, September 22, 2021 Few had even heard of distressed Chinese property development giant Evergrande a week ago and now it’s the biggest headline for markets. This week in the latest LPL Market Signals podcast, Ryan Detrick and … Continue reading →
Published: Tue, 21 Sep 2021 15:58:52 +0000
Market Blog Tuesday, September 21, 2021 Well that was fun while it lasted. Yesterday, the S&P 500 closed below its 50-day moving average for the second consecutive day, breaking a streak that had held for the duration of 2021 and … Continue reading →
Published: Fri, 17 Sep 2021 20:02:16 +0000
Market Blog Friday, September 17, 2021 Index Performance View enlarged chart. U.S. and International Equities Major Markets Finish Lower Amid Delta and Earnings Growth Concerns The major markets finished lower for a second straight week. Friday’s quadruple witching where individual … Continue reading →
Published: Fri, 17 Sep 2021 15:58:13 +0000
Market Blog Friday, September 17, 2021 Chinese property developer Evergrande’s liquidity crisis has sparked fear and massive selling in Chinese property stocks over the past several weeks. The big question is could this be the first domino to fall, sparking … Continue reading →
Published: Thu, 16 Sep 2021 15:58:05 +0000
Economic Blog Thursday, September 16, 2021 U.S. consumers shocked economists in August with their willingness to spend in the face of recent jitters over the economic outlook. This morning, the U.S. Census Bureau released August retail sales data showing overall … Continue reading →
Published: Wed, 15 Sep 2021 15:58:22 +0000
Market Blog Wednesday, September 15, 2021 With summer (un)officially over, investment-grade corporate bond sales are ramping up again. Despite a four-day week last week, thirty-eight investment-grade companies sold $60.5 billion in the first two sessions, breaking a record for the … Continue reading →
Published: Tue, 14 Sep 2021 17:41:57 +0000
Economic Blog Tuesday, September 14, 2021 After a crazy summer of nosebleed inflation readings, we may finally be starting to see signs of transitory inflation. The Bureau of Labor Statistics released the August Consumer Price Index (CPI) data this morning, … Continue reading →
Published: Fri, 10 Sep 2021 19:59:12 +0000
Market Blog Friday, September 10, 2021 Index Performance U.S. and International Equities Major Indices Show Modest Weekly Declines as Delta Worries Mount All major markets finished lower as the investor concerns over the Delta variant, Federal Reserve (Fed) tapering, … Continue reading →
Published: Fri, 10 Sep 2021 15:58:02 +0000
Market Blog Friday, September 10, 2021 Fun Fact Friday: The Dow Jones Transportation Average is actually the oldest US stock market index in existence, even older than the more-popular Dow Jones Industrial Average. Charles Dow developed the index, originally called … Continue reading →
Published: Thu, 09 Sep 2021 16:16:03 +0000
Economic Blog Thursday, September 9, 2021 According to LPL Research’s analysis of the Federal Reserve’s (Fed) recently released Beige Book, business sentiment on Main Street has declined in recent months as the economy navigates the latest wave of COVID-19, but … Continue reading →
Published: Wed, 08 Sep 2021 15:58:03 +0000
Market Blog Wednesday, September 8, 2021 This week in the latest LPL Market Signals podcast, Ryan Detrick and Lawrence Gillum discussed global central bank policy, recently weakening economic data, and where stocks and bonds could go the remainder of this … Continue reading →
Published: Tue, 07 Sep 2021 15:58:58 +0000
Market Blog Tuesday, September 7, 2021 The Covid-19 pandemic was an unprecedented shock to a large majority of global economies. But the economic damage was met with an extraordinary global monetary response with the Federal Reserve (Fed), European Central Bank … Continue reading →
Published: Fri, 03 Sep 2021 18:19:55 +0000
Market Blog Friday, September 3, 2021 Index Performance (as of 12:50 PM ET) View enlarged chart. U.S. and International Equities Emerging Markets Rebound The major markets finished mostly higher building on last week’s gains. Emerging markets, as represented by the … Continue reading →
Published: Fri, 03 Sep 2021 15:58:53 +0000
Economic Blog Friday, September 3, 2021 It seems to be two steps forward, one step back for the U.S. labor market. The U.S. Bureau of Labor Statistics released its August employment report this morning, revealing that the domestic economy added … Continue reading →
Published: Thu, 02 Sep 2021 15:58:30 +0000
Market Blog Thursday, September 2, 2021 The Institute for Supply Management’s reading on U.S. manufacturing surprisingly accelerated in August, coming in at 59.9 versus July’s 59.5 and economists’ consensus expectation of 58.5. The solid reading does show the resiliency of … Continue reading →
Published: Wed, 01 Sep 2021 19:00:08 +0000
Market Blog Wednesday, September 1, 2021 Index Performance View enlarged chart. U.S. and International Equities All of the U.S. major market indexes finished August higher despite concerns about the COVID-19 Delta variant, with the S&P 500 Index making it seven … 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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