Month: March 2021

A Bucket Plan to Go with Your Bucket List

John and Mary are nearing retirement and they have a lot of items on their bucket list. Longer life expectancies mean John and Mary may need to prepare for two or even three decades of retirement. How should they position their money?¹

One approach is to segment your expenses into three buckets:

• Basic Living Expenses— Food, Rent, Utilities, etc.
• Discretionary Spending — Vacations, Dining Out, etc.
• Legacy Assets — for heirs and charities

Next, pair appropriate investments to each bucket. For instance, Social Security might be assigned to the Basic Living Expenses bucket.²

For the discretionary spending bucket, you might consider investments that pay a steady dividend and that also offer the potential for growth.³

Finally, list the Legacy assets that you expect to pass on to your heirs and charities.

A bucket plan can help you be better prepared for a comfortable retirement.

Call today and we can develop a strategy that may help you put enough money in your buckets to complete all the items on your bucket list.

1. John and Mary are a hypothetical couple used for illustrative purposes only. Diversification is an approach to help manage investment risk. It does not eliminate the risk of loss if security prices decline.
2. Social Security benefits may play a more limited role in the future and some financial professional recommend creating a retirement income strategy that excludes Social Security payments.
3. A company’s board of directors can stop, decrease or increase the dividend payout at any time. Investments offering a higher dividend may involve a higher degree of risk. Keep in mind that the return and principal value of stock prices will fluctuate as market conditions change. Shares, when sold, may be worth more or less than their original cost.

Your Must-Know Guide to Current & Future Tax Changes

AQuest Webinar 2/11/21

Dr. Jason Van Duyn discusses the current and future changes for your 2021 Taxes as well as a review of the proposed tax changes by the Biden Administration and how they may affect your portfolio. Understand the newest changes to the tax code, CARES Act, etc. Review the Biden Tax Proposals and how you might make them work for you

Volatility Can Test Your Mettle

Most people understand that stock prices don’t go straight up. But when
market volatility increases, the price action can test the mettle of even the
most seasoned investor.

In recent weeks, stock prices have trended lower with a few eye-popping,
one-day rallies as the financial markets appear to adjust to higher interest
rates on long-term Treasuries. Since the beginning of the year, we’ve seen
a jump in the yield of the 10-year treasury.1

While investors recognize that economic strength may lead to higher bond
yields, it’s the speed at which bond yields increased that proven unsetting.
Generally speaking, when yields rise, bond prices tend to fall.

It’s uncertain what’s next for stock prices, but it’s possible the current
downtrend could take certain market indexes into a correction, meaning a
decline of 10% or greater from a recent high. The Nasdaq market has
flirted with correction territory as the rising bond yields have upended
some high valuation growth stocks.2

But by comparison, the Standard & Poor’s 500 index has seen a modest
pullback from its closing high set on February 11, 2021. The Dow Jones
Industrial Average set an intraday record high in recent trading.2
What matters is what you do next. Right now, it may be best to ignore
some of the short-term price swings. Remember, you craft your
investment strategy to help pursue your long-term goals, regardless of
what the markets do from day-to-day.

You’re always welcome to give me a call with your questions. Rest
assured, we’re keeping a close eye on the financial markets, and most
importantly, watching for any new long-term trends that may emerge on
your behalf.

1. CNBC.com, March 8, 2021
2. CNBC.com, March 5, 2021
Investing involves risks, and investment decisions should be based on your own goals, time horizon, and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. The market value of a bond will fluctuate with changes in interest rates. As rates rise, the value of existing bonds typically falls. If an investor sells a bond before maturity, it may be worth more or less than the initial purchase price. By holding a bond to maturity, an investor will receive the interest payments due plus your original principal, barring default by the issuer. Investments seeking to achieve higher yields also involve a higher degree of risk. The Dow Jones Industrial Average is an unmanaged index generally considered representative of large-capitalization companies on the U.S. stock market. The S&P 500 Composite Index is an unmanaged index that is considered representative of the overall U.S. stock market. The Nasdaq Composite Index is an unmanaged index that is considered representative of small-capitalization companies. Index performance is not indicative of the past performance of a particular investment. Past performance does not guarantee future results. Individuals cannot invest directly in an index. The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite, LLC, is not affiliated with the named representative, broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.

Planning for College

The cost of college continues to escalate. If you have children or teens, develop a savings plan to help support their education. For most Americans, college is expensive (so much so that for those with young children, imagining the day when they enter college and reach out to you for their quarterly tuition check is terrifying, to say the least). Have you begun saving for the big day?

There are a number of savings options to address your children’s or grandchildren’s college costs. They vary in terms of contribution limits, tax benefits, and even college choice. Understanding what’s available may help lessen the anxiety — and financial sting — for when the school bell rings.

Roth IRA

Roth IRAs (Individual Retirement Account) feature enhanced flexibility that allow you to make after-tax contributions and even tax-free withdrawals. Interest that accrues is tax deferred, and you can make taxfree withdrawals from your earnings if you comply with the rules. Consult your financial professional to determine current law and its impact on the benefits of Roth IRAs.

Early withdrawals that you use to pay for qualified education expenses avoid penalties that would otherwise be assessed for non-educational purposes. You are limited to $6,000 per year in contributions — or $7,000 if you’re 50 years of age or older — though high-income earners have other restrictions that limit their contributions.

Finally, a Roth IRA value isn’t included on the Free Application for Federal Student Aid (FAFSA)®, though any withdrawals you make are counted as base year income.

U.S. Savings Bonds

You can purchase up to $10,000 per year (per-owner, per-bond type) in qualified U.S. savings bonds, redeeming them tax-free (of federal taxes) when you apply them to college expenses. The bonds earn modest interest, though an interest exclusion is phased out for those in the higher-income bond category.

529 Plan

A 529 plan provides generous benefits, allowing couples to contribute up to $30,000 a year without triggering the gift tax (you can even increase this amount if you take the money from your lifetime gift tax exemption). Money that you put into a 529 plan earns tax-deferred interest, while withdrawals you make for qualified college expenses are tax-free and exempt from reporting on the FAFSA.

Contributions to 529 plans can be made regardless of your income, and 529 plans are available to pay for college in all 50 U.S. States. Before investing in a plan, consult your financial professional to determine whether your state offers state tax benefits.
NOTE: Non-educational withdrawals from a 529 Plan are subject to taxes and penalties.

UGMA and UTMA Accounts

You can also make contributions pursuant to the Uniform Gifts to Minors Act (UGMA) and the Uniform Transfers to Minors Act (UTMA), adding up to $15,000 ($30,000 for couples) in a child’s name free of the gift tax. If you use some of your lifetime gift tax exemption, you can contribute even more.

Keep in mind, any interest, dividends, or capital gains income in excess of $2,100 may be subject to a tax. However, if this is the child’s only income and it is less than $10,500, you can report the income on your own tax return.

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal.

Prior to investing in a 529 Plan investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s qualified tuition program. Tax treatment at the state level may vary. This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

The Importance of Your Credit Score

Understanding the value of your credit score is an important first step to improving your financial health.

Anyone who has ever applied for a loan to purchase a car or house has encountered their credit score. This elusive figure can be perplexing, a three-digit assessment of your credit worthiness that has the potential to impact your financial health. We offer insights into understanding your credit score and taking steps to improve it.

What’s In a Number?

Your credit score most commonly used by lenders is FICO, a three-digit number from 300 to 850. It fluctuates continually, reflecting the interest rate of your credit cards, outstanding loans, and even a lack of credit.

Aim for at least a score of 700, a good figure by many lending standards. You can request a copy of your credit report (there is a small fee) from the three major credit reporting companies, Experian, Equifax, and TransUnion.

Credit Worthiness

Check your credit report periodically, making sure that there are no errors, while using it as a tool to make sure that you’re paying your bills on time and staying within your established credit limits. Such actions have the potential to increase your credit score. You can request free copies of your Experian, Equifax, and TransUnion credit reports from AnnualCreditReport.com.

If you spot any errors, report the discrepancies to the appropriate credit bureaus (the report may differ among the three). They are required to take reasonable steps to correct any errors.

Establishing Credit

If you are a first-time credit seeker — applying for a credit card or loan, for instance — you may have to establish your credit score, which you can do in several ways, including by getting a secured credit card or becoming an authorized user of someone else’s card.

Improve Your Score

Not satisfied with your credit score and want to increase it? There are a number of steps you can take, like paying your bills on time, decreasing the amount of debt you carry, and staying within your established credit limits.

By taking control of your credit score, you are taking prudent steps to improve your overall financial health.