The uncertainty of today’s economy, rising interest rates, and market volatility may have you concerned about your 529 plan’s performance over the past months. If your child or grandchild has an upcoming tuition bill soon, now may be an appropriate time to review the 529 plan. Here are some tips to help you maintain your 529 plan during periods of uncertainty:

Check the 529 plan’s allocation- About two-thirds of 529 plans are age-based plans, with the remaining one-third of 529 plans having the investment strategies selected by the plan’s owner. Here are the two options available when it comes to choosing 529 investment strategies that you need to be aware of:

Aged-based plans are designed to automatically change the allocation as the child ages becoming more conservative in the strategy selection as the child approaches college. For example, a two-year-old’s 529 plan may have strategies that have a more aggressive risk profile containing more stocks. A sixteen-year-old child with a 529 plan may have an allocation with more conservative strategies such as index funds or bonds or FDIC-insured investment choices such as CDs.

Independent selection of investment strategies enables the 529 plan owner to select, rebalance, sell and reinvest back into the 529 plan. The 529 plan must continue to be reviewed so that as market conditions change and the child ages, the value of the 529 plan covers tuition expenses, even in a down market. If the owner doesn’t monitor the plan and make adjustments, the investment strategies may be too aggressive or lose value as the timeline of needing the funds approaches.

Continue to save- While it may be tempting to stop contributions to the 529 plan during a declining market, continuing enables you to buy shares at a lower price. Use the opportunity of a down market to buy more if you’re budget allows, as a strategy to accumulate more value when the market recovers.

Remain calm- It’s important not to make any fear-based decisions as the value of your 529 decreases. Visit with your financial professional to determine a strategy appropriate to your risk tolerance and timeline, and then implement the allocation strategy when the market recovers. Remember, liquidating during a down market may not provide an opportunity to recover your 529 plan losses.

Use cash- If you have the financial means, pay cash for tuition versus withdrawing from the 529. Using cash from savings enables you to wait until the market recovers, then pay yourself back. Remember that 529 distributions must be used for expenses in the same year you took the distribution to avoid IRS penalties.

Consider a student loan- Take a student loan now and pay it back with the 529 plan’s distribution once the market recovers. This strategy enables your 529 plan’s allocations to recover versus liquidating shares at a low market valuation.

Talking to a financial professional about your 529 plan can help determine the appropriate time to change your allocation or update your strategy.

It’s essential to revisit and change your estate plan from time to time. Most financial experts recommend that you review and revise your estate plan every three to five years or after you’ve undergone a significant life event. Here’s a closer look at some of the circumstances that may require an update to your estate plan:

A geographic move- Estate planning laws may vary from state to state. While some differences are slight, others are significant and warrant changes related to powers of attorney, advance medical directives, and living wills. If you move to another state or acquire a second residence there, it’s in your best interest to meet with a legal professional to learn how your new state’s estate laws impact your situation.

Significant health changes- An estate plan is designed to protect your health, well-being, and finances. If you or a loved one experience a substantial change in health, it’s essential to revise your estate plan. For example, if your power of attorney is a spouse whose health now prevents them from taking on the role, you may want to consider changing to someone else.

Marital changes– A change in your marital status is the ideal time to review your estate plan. If you get married, you may want to add your new spouse to specific estate planning documents. On the flip side, if you divorced, you might want to remove your former partner from your estate plan.

Birth of a child- It’s essential to protect your children when something unfortunate happens to you or your child’s other parent. That’s why the birth of a child usually requires an update to your estate plan. You can also use the opportunity of updating your estate plan to name a guardian for your child.

Major financial changes- Maybe you purchased a home, or perhaps you made a considerable investment or became a business owner. If there has been a substantial change to your finances, you must update your estate plan to reflect your and your family’s new needs.

Visit with your financial professional- Your financial professional can help you with your estate planning needs by reviewing your financial situation and determining the ideal strategy for your unique situation.

4799463

Interest rates can positively or negatively affect the U.S. economy, the stock markets, and your portfolio. With The Fed increasing the target range for the Federal Funds Rate to help contain soaring inflation, there is no way of knowing how the market will react over time. Rising interest rates, high inflation, and a bear market create market volatility.

When these conditions occur, diversification is essential so that if specific strategies decline, others offset the decline and accumulate in value. Diversifying by including strategies from various industries, countries, or risk ratings may help make market conditions much more tolerable to some investors. However, diversification does not guarantee a profit or protection from losses in a declining market. During a bear market, trading strategies often shift toward safety. Here are some strategies to consider:

REITs- Real estate investment trusts (REITs) consist of real estate assets that typically produce income at different times. REITs must distribute 90% of their taxable income as dividends to investors. REITs develop and improve their properties to produce returns, sell them, and reinvest in other properties, aiming to produce positive returns for investors. Specific-sector investing such as real estate can be subject to different and greater risks than more diversified investments. Declines in the value of real estate, economic conditions, property taxes, tax laws, and interest rates all present potential risks to real estate investments.

Indexed annuities- An annuity is a contract with an insurance company that is designed to provide an income stream during retirement. Indexed annuity returns are based on an index like the S&P 500. If the value of the index goes up, you receive a return based on that value. If the value of the index goes down, you receive a guaranteed minimum interest rate. Here are other things to know about indexed annuities:

• Your principal is protected during a down market, and you won’t lose your initial investment or accumulation.
• Accumulates on a tax-deferred basis.
• The return is based on an index, which increases the annuity’s value over time.
• Provides a guaranteed lifetime income and protection against longevity risk since you receive annuity payments for life. Current minimum return, principal value, and prior earnings guarantees by the issuing insurance company, subject to their claims-paying ability, and contract provisions.
• Annuities may not be appropriate for all investors. Please contact your financial professional or insurance producer for complete details.

Dividend-paying stocks- Dividend-paying stocks may pay higher dividends than interest-rate sensitive strategies or depository products. The combination of price growth potential and income may outperform inflation over time. Dividend-paying stocks come with risks, so it’s essential to determine if they are an appropriate strategy for your portfolio.

You should never invest solely on the basis of dividends. Higher dividends will result in lower retained earnings. Dividend payments are not guaranteed by the issuing entity

Short-term debt- Shorter-term bonds such as Treasuries have an inverse correlation to the stock market and tend to rise in price as stock prices fall.

TIPS- Treasury inflation-protected securities (TIPS) are indexed to inflation and twice a year payout at a fixed rate. TIPS come in three maturities: five-year, ten-year, and 30-year.

Precious metals- Precious metals purchased directly or through exchange-traded funds may produce positive returns during prolonged bear markets because they hold their value and offer a hedge against inflation.

Investments in precious metals involve risk. Investments in precious metals are not suitable to everyone and may involve loss of your entire investment.  These investments are subject to sudden price fluctuation, possible insolvency of the trading exchange and potential losses of more than your original investment when using leverage. All investments involve the risk of potential investment losses, and no strategy can assure a profit. Your financial professional can help you determine if these strategies are appropriate for your situation or if now is the suitable time to diversify your portfolio as you work towards your goals.

4799463

During a bear market, emotions may cause anxiety for some as they watch the market valuation of their portfolios decline. However, for others, a bear market is a buying opportunity. The stock market can be volatile and creates both selling and buying opportunities. Here are five things to consider during a bear market:

1. Continue focusing on your goals- Your investment strategy is based on your unique situation and goals. Think about your short-term and long-term goals, then determine if changing your portfolio’s allocation is appropriate. You may find that staying the course and riding out the bear market is suitable for now.

2. Maintain an emergency fund- When the market gets rocky, an emergency fund can help provide peace of mind. Be sure to have at least six months’ worth of living expenses in an account you can access at any time. If you do not have easily accessible cash, you may make decisions based on emotions and fear instead of facts.

3. Consider rebalancing your portfolio– Once you determine which asset classes have deviated from the planned allocation or your financial plan, you may want to rebalance if appropriate. Before rebalancing:

First, consider the tax implications that come with rebalancing. While you do not have to worry about taxes with tax-advantaged accounts like 401(k)s, you will be responsible for capital gains tax on taxable accounts. Consult your tax and financial professionals to help you determine how rebalancing will impact your taxes. 

Second, determine which strategies to sell in the asset classes that have exceeded the planned allocation.

Third, determine if you want to invest in the asset classes that have fallen below your desired allocation, invest in new strategies aligned with your risk tolerance and goals, or stay in cash to invest later.

4. Do not obsess over your portfolio’s performance– Checking your portfolio frequently may do more harm than good if it causes you to make decisions you regret later. Limit the frequency you check your portfolio since it benefits your emotional and financial wellbeing.

5. Evaluate buying opportunities- A bear market may provide opportunities to purchase strategies at lower prices. During bear markets, the stock index companies’ share values, such as the S&P 500, may fall, but not always at the same time or by similar amounts. Your financial professional can help you identify buying opportunities that align with your risk tolerance, time horizon, and goals that are appropriate for your situation.

If you are unsure what to do during a bear market, reach out to your financial professional. They can help you understand how your portfolio may be impacted, help you control your emotions, and avoid bad decisions you may regret later.

4799463

Financial wellness is a state of being where you are in control of your personal finances. Financial wellness means you can cover expenses and save for future goals. Consider financial wellness as your relationship with money- healthy or unhealthy. Improving your financial wellness is essential to meeting your goals and being financially secure throughout your life. Here are eight indicators of financial wellness to help you gauge your financial wellness:

#1- Your income and spending are in balance. You are aware of your spending patterns, limit your use of credit, and are mindful of not spending more than your income.

#2- You follow a monthly budget. Each month you know exactly where your money is going and aren’t living paycheck to paycheck due to overspending. Budgeting can help you save for retirement, pay off debt, and learn to live without wants because you can see where each hard-earned dollar is going.

#3- You save money to cover unforeseen emergencies. Ideally, you have three to six months of living expenses saved in an easily accessible account that you intend to use only for emergencies. Once you reach six months of emergency savings, continue to save into your emergency fund until you reach another milestone, such as one year of living expenses.

#4- You save for retirement and other financial goals. You invest in yourself first by automating your monthly 401(k), IRA, or Roth IRA retirement savings contributions. 

#5- You discuss financial decisions with others. Before making financial decisions or purchasing big-ticket items, you consult with others before spending. Discussion helps determine if the financial decision aligns with your budget and goals.

#6- You regularly monitor and adjust your financial plan. You have a written financial plan that aligns with your goals, and timeline, and adjust it as necessary. 

#7- You work with a financial professional. You work with a financial professional who helps you determine strategies appropriate for your investment objectives. A financial professional enables you to develop a budget, create a financial plan, save for your child’s education, and keep you on track to achieve your goals.

#8- You don’t let your emotions impact your financial decisions. Weighing out the pros and cons of financial decisions before making a final decision is essential to financial wellness. When it comes to investing, emotions can be tricky since investors don’t always make rational decisions, according to the CFA Institute. Financial decisions require evidence and reasoning to make the most thoughtful choice so that you don’t regret your decisions later.

Financial wellness is essential for many reasons since it can impact your mental and physical health and overall quality of life. By improving your financial wellness, you can take the steps toward building wealth for a more financially secure future.

4799463

If you plan to gift a sizable amount of money to a loved one, gift tax should be on your radar. Gift tax is a federal tax imposed on transfers of cash or property valued above a certain threshold. Gift tax is paid by the gift giver, not the receiver. Fortunately, there are several ways you can still give generous gifts without being responsible for taxes. Here are five ways you can give tax-free gifts:

1. Stay within the IRS Gift Tax exclusion

The annual gift tax exclusion is the amount of money you can give away each year before the gift tax kicks in. In 2022, you won’t be responsible for gift tax unless you give a friend or family member cash or property worth more than $16,000 per year. If you’re married and file a joint income tax return, you can gift up to $32,000 per year without paying taxes.

2. Spread out your gift over time

You can spread a gift over a few years to avoid gift tax if you don’t exceed the gift tax exclusion in one year. Giving your gift over several years is an excellent strategy if your goal is to maximize the amount of money you give but wish to reduce your tax burden at the same time.

3. Give a gift to help cover medical expenses.

If your gift is for medical expenses, you may not have to pay gift tax if you pay the medical facility or insurance company directly. You will, however, be subject to gift tax if you write a check to the recipient instead. If you want to cover your parent’s nursing home stay, for example, you can ask the nursing home to bill you so you can pay for your parent’s medical costs without exceeding the annual gift limit.

4. Help pay for education expenses.

Like gifts for medical expenses, educational gifts can also be exempt from gift tax if they’re directly paid to the college, university, or other institution. You may pay for tuition and other qualifying expenses without worrying about gift tax. Unfortunately, gifts intended for books, supplies, and room and board will go toward the annual gift limit.

5. Leverage your marital status

The gifts you give will be considered separate from your spouse’s gifts. That’s why it’s a good idea to give gifts together. In 2022, you’ll each be able to donate up to $16,000 without exceeding the annual gift tax limit.

Consult your financial and tax professionals

Financial and tax professionals can help design a strategy to help you to save as much as possible on gift taxes. Contact them today to get started. 

If you currently invest in real estate or have plans to do so in the future, it’s essential to understand its risks. Now, we’re in a seller’s market, which means fewer homes are for sale, prices exceed list prices, and fewer incentives from sellers. Be sure to keep these four tips in mind if you plan to invest in real estate in the near future:

Home values may decrease– Home prices continue to rise, but no one can predict what will happen to the housing market. Therefore, if you’d like to invest in selling within a specific period, consider the risks of a short-term real estate investment since home prices may fall and take a toll on your plans.

Overpaying is easy- Many people are looking to buy properties. If you know a property has received several offers, you may spend more. By understanding the maximum price you want to spend, you can avoid paying more than a property’s market value.

It can be challenging to find suitable properties- A seller’s market means low supply, and it may take a while to find an investment property or multiple properties that check off all your boxes. You may have to settle for a less-than-ideal property for your needs.

Consider the alternatives- No one has a crystal ball that can predict whether the housing bubble will burst. While you can invest your money in property now and hope that property values continue to go up, you may also want to consider holding off and using other strategies to diversify your portfolio. Here are some options to consider after consulting your financial professional:

REITs: REITs or real estate investment trusts are companies that invest in income-producing real estate. To generate income, you can buy publicly traded REIT shares, a REIT fund on stock exchanges, or private REITs.

Consult your Financial Professional

A financial professional can help you determine if now is an appropriate time to invest in real estate in the current market based on your financial situation.

Disclosure: Specific-sector investing such as real estate can be subject to different and greater risks than more diversified investments. Declines in the value of real estate, economic conditions, property taxes, tax laws, and interest rates all present potential risks to real estate investments.

Investors looking for diversification during market volatility and high inflation often ask their financial professional about strategies that may be appropriate for their situation. With the Fed Funds rate near zero, and inflation the highest since 1982, A-Series I Bonds have received a lot of attention lately from investors. A-Series I Bonds are appropriately named since the ‘I’ stands for inflation and are a strategy that investors use during a low-rate, high-inflation period as a low-risk investment to achieve a positive return.

I Bond features

I Bonds are designed as low-risk investments that are not bought or sold in the secondary market and can be purchased electronically through Treasury Direct, the U.S. Treasury’s online platform. I Bonds are issued by the U.S. Treasury, making them a higher-returning, lower-risk investment. Here are other features of I Bonds for investors to consider:

• I Bonds combine a one-year fixed rate with a variable inflation rate to give investors a return plus protect their purchasing power during inflationary periods.
• If the I Bond is used to pay college tuition and fees at an eligible institution it is 100% tax-free.
• Exempt from State and local income tax
• I Bonds are not exempt from Federal taxation.
• Are an ‘electronic’ bond
• Can be purchased as paper certificates only when filing your taxes with a minimum of $50.
• Investors can purchase up to $10,000 worth of I Bonds through Treasury Direct per year and $5000 worth of I Bonds through their tax return, bringing the purchase to $15,000 per year.
• Earn a fixed interest rate for the life of the bond and a variable rate that is adjusted for inflation each May and November.
• Have a 20-year initial maturity with a 10-year extended period for a 30 year maturity.
• Must be held for one year, and if redeemed before five years from purchase, the previous three months of interest is forfeited.

Other things investors should know about I Bonds:

• This is a long term investment. I-Bonds should not be used for money that may need to be drawn upon immediately, or for the next five years. As per the lock up provisions, your money will either be inaccessible or will fail to reap the full return should you need it any earlier.
• As with any investment, there is risk of loss of principal.
• With a $10,000 maximum investment amount, it won’t be a large portion of your portfolio if you hold a large amount of assets.

How the I Bond Rate calculates

The fixed rate and variable rates are expressed as the composite rate. For example, I Bonds purchased between now and the end of July 2022 may yield over 7% on U.S. Treasury I Bonds for a year.

The combined I Bond rate will never be less than zero, but the combined rate can be lower than the fixed rate. If the inflation rate is negative (deflation,), it can offset the fixed rate. The variable rate is based on the non-seasonally adjusted Consumer Price Index for all Urban Consumers (CPI-UC) for all items, including food and energy.

Questions about I Bonds?

Although you can’t purchase I Bonds through your financial professional, they can answer your questions and help you understand how I Bonds may be a part of your investing strategy.

This information is general in nature and cannot be interpreted as a recommendation specific to any one individual. Only an in depth analysis of your goals and risk tolerance can determine if any investment is suitable for you. If you have inflationary concerns, there are other ways to counterbalance this exposure than simply purchasing I-Bonds. It starts with a conversation about your financial plan, objectives, and investment strategy. If you would like to discuss, let us know.

Half way through the year is an essential time to examine your financial situation and determine if you need to make any changes to your strategies or increase contributions. A mid-year financial review can help ensure that you’re headed in the right direction financially and help plan for tax season. Here’s a list of tips to help you make the most out of your mid-year financial review: 

#1- Assess your portfolio’s performance. It’s essential to review each investment’s performance and take action to improve your portfolio’s future performance. While you can’t control market performance, you can take action to help ensure that your investments align with your goals. During this time, review performance net fees, and discuss other investment vehicles and strategies appropriate for your situation with your financial professional.

#2- Understand your tax situation. Understanding how you can max out your retirement savings accounts or give charitable donations to help lower your taxable income is essential. Also, determine whether you qualify for any new tax credits or deductions. Since taxes can get complicated, you may need help from your financial and tax professionals to help you prepare for tax season before the end of the year by initiating tax-advantaged strategies now.

 #3- Evaluate your financial plan. As you review your financial plan, make sure you’re saving enough this year and make adjustments to help keep you on track for retiring on your retirement timeline. You may consider increasing your pre-tax retirement savings contributions at work or contributing more to your other retirement savings accounts.

If you’re already retired, your financial professional can help determine whether your spending down plan is appropriate for the current economic environment or if you should consider other strategies.

#4- Review your savings goals. Since your ability to save will play a vital role in your financial success, review your savings goals and determine if your goals have changed.  If possible, increase your savings rate each year to help compound your money over time.

#5- Examine your budget. A budget helps you track how much money is coming in and going out each month. When you meet with your financial professional for your mid-year review, examine your budget for the past six months and use it to design your budget for the next six months. Reviewing your budget will help you determine where you can cut any unnecessary expenses.

14 Ways to Support Small Business

The way Americans shop and travel has dramatically changed over the past few years due to COVID-19. The idea of supporting ‘mom and pop shops’ has re-ignited as people realize they want a robust local economy that supports their friends’ and neighbors’ livelihoods. The places we meet others are small businesses in our communities that need our help to keep their doors open and pay their employees. . Local restaurants, boutiques, coffee shops, and other small businesses risk closing without support. Here are ways you can support small businesses and help foster a thriving local economy:

Show your support in person.

Buy gift cards to give later.

Tip generously

Buy locally made items

Order takeout from a locally-owned restaurant

Buy branded merchandise from a local shop

Shop now for later

Show support digitally

Write a positive review

Follow on social media

Buy online from a local business

Attend virtual events

Sign up for newsletters

Show gratitude

Refer friends and family

Check-in with owners and employees

Thank them and say something nice

These 2021 statistics provide insight into small businesses across America, and they impact our economy:

10.5 million jobs’ created- Small businesses created 10.5 million net new jobs between 2000 and 2019, accounting for 65.1% of net new jobs created since 2000, according to the Bureau of Labor Statistics’ Business Employment Dynamics report.

$48 of every $100 spent at a small business stays local- When you spend $100 at a small business, $48 stays in the community, according to the Small Business Administration. Spend the same $100 at a big-box store or national retailer, and only $14 stays.

Source- Small-Business Statistics: By the Numbers as of 2021, Nerdwallet. 

Small businesses help keep the local and U.S. economies stable by providing jobs and financial support to their communities. This summer, remember to shop small in your community to help create a more vibrant and sustainable local economy.