529 plans can be a great way to save for college, but they’re not the only way. When you’re investing for a major goal like education, it makes sense to be familiar with all of your options. Mutual funds Mutual funds are an option to save for college costs. They offer unlimited investment control and flexibility as you can choose from a wide variety of funds that meet your risk tolerance, time horizon, and overall investment preferences. And there are no restrictions or penalties if you sell your shares and use the money for something other than college. But 529 plans are generally a more powerful tool than mutual funds when it comes to saving for college because they offer federal tax benefits that mutual funds don’t. First, assets in a 529 plan accumulate tax deferred, which means you don’t pay incomes taxes each year on the income earned by the fund’s underlying assets. With mutual funds, you’ll pay income tax every year on the income earned by the fund (dividends and capital gain distributions paid by the fund), even if that income is reinvested. Second, withdrawals from a 529     plan that are used to pay the beneficiary’s qualified education expenses are completely free of federal income tax (and typically state income tax). With mutual funds, you’ll pay capital gains tax on any gain in the value of your fund when you sell your shares. The main drawback of 529 plans is that they offer less investment control and flexibility. Regarding investment control, you’re limited to the investment portfolios offered by the plan (investment portfolios typically consist of groups of mutual funds) and you can change your investment options on

To accumulate wealth, people may choose to invest their money into various types of investments. Investing creates opportunities that otherwise would be difficult to manage due to the consistency of contributing to the investment. However, investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments. Whether people choose to invest in stocks, bonds, mutual funds, real estate, alternative investments, or some other investment, often their goal is to increase the value of the cash they contribute toward the investment. Investing your money may have the potential for a higher return versus in a savings account but investing is not without risk. Deciding to invest involves setting a goal, assessing your income, age, risk tolerance, and the time horizon until you liquidate your investment. The reasons people choose to invest also vary as well. Some save for their retirement, pay for education, or to increase their net worth. Here are some additional reasons why people choose to invest: To reduce their taxable income- Investing in a tax-sheltered retirement savings account enables you to invest pre-tax dollars into a retirement fund and reduce your taxable income. In some instances, losses from the investment may offset income from another investment. Your tax professional can help you determine if you’re eligible to take losses on your income tax. To participate in a new venture- New businesses often cannot secure startup funding in traditional ways such as through a financial institution, often relying on investors to fund their business. When investing in a new venture, there is no guarantee that you will make money or receive your investment back. Therefore,

If you are wondering what in the world a “backdoor Roth IRA” is, you’re not alone! In short, if you’ve been frustrated by the contribution limits associated with Roth IRAs, then read on – this article describes a strategy designed to help. We all know that the IRS imposes annual contribution limits for both traditional and Roth IRAs. For most people, that limit is currently set at $6,000 ($7,000 if you’re age 50 or older) 1, but if your income is high (as in ‘healthily into six figures’ high) your permitted Roth contribution may be reduced or eliminated altogether. The calculations for determining those limits are a bit complicated and involve your modified adjusted gross income (MAGI), tax filing status, and more. This page on the IRS site provides all the details. The backdoor Roth IRA is an IRS-sanctioned strategy that involves converting a traditional IRA or 401(k) account (which are not subject to income-determined contribution limits) to a Roth IRA as a legal workaround for high earners whose income would normally prohibit Roth contributions. Some key points to keep in mind about the backdoor Roth IRA strategy: Only one Roth IRA conversion is permitted per year. You’ll still pay taxes on the funds in the year they convert, but the end result will be a Roth IRA account. Funds deposited to a Roth in this manner count as converted funds rather than contributions, meaning that for five years you’ll be subject to penalties if you make withdrawals prior to age 59½. Roth IRA conversions are not subject to the current $6,000/year ($7,000 if you’re age 50 or older) contribution limits. It’s often advisable to convert a traditional IRA established for the conversion

If 2020 made you fantasize about a trip as soon as travel restrictions were lifted—and you’re still waiting—you aren’t alone. Although 2021 was poised to be a comeback year, it is shaping up to be another summer of staycations or socially distanced road trips, with many Americans passing on air travel. While sacrifices are being made and large trips may not be possible for many, that doesn’t mean you can’t plan other kinds of vacations—and it just might save you money in the process. Additionally, planning ahead for your next big trip is guaranteed to help you save. Start implementing these tips (which are ordered from easiest to most involved) now to make your travel dreams come true. Start a savings jar It might sound simple (and old-fashioned), but a savings jar is a great way to slowly build up cash to treat yourself and your family to your ideal vacation. Granted, with travel limited for over a year now, you may have already been saving. But if you haven’t, it’s not too late to start. Anytime you have spare change left over from a cash purchase, put it in the jar. At the end of the month, take the money out, count it, store it in a safe place, and record the amount in a spreadsheet or a notebook. This is also a great way to get children involved in the process, as you’ll be teaching them savings skills in a way that is tangible and easy to understand. Travel locally If you are comfortable traveling by car and your state’s regulations allow it, consider planning a series of day trips or weekend excursions. If you live within driving

LPL Research Midyear Outlook 2021: Picking Up Speed is designed to help you navigate the risks and opportunities over the rest of 2021 and beyond. While the speed can be exhilarating as economic growth accelerates, it can also be dangerous. Midyear Outlook 2021 looks ahead for opportunities, but also watches for new hazards created by the reopening. With the U.S. economy reopened, the growth rate may peak in second quarter 2021, but there is still plenty of momentum left to extend above-average growth into 2022. Inflation must be closely watched, but LPL Research believes recent price pressures are transitory, and that the strong economic recovery may continue to drive strong earnings growth and support further gains for stocks in the second half of 2021. The strong economic recovery and potentially higher inflation expectations may help push interest rates higher and lead to flat or potentially negative core bond returns in the second half. The LPL Research team’s Midyear Outlook 2021 covers the economy, policy, stocks, and bonds. Prepare for a fast-paced second half with the economic insights and market guidance in LPL Research Midyear Outlook 2021: Picking Up Speed.   View the digital version: http://view.ceros.com/lpl/midyear-outlook-2021       IMPORTANT DISCLOSURES This material is for general information only and is not intended to provide specific advice or recommendations for any individual. The economic forecasts may not develop as predicted. Please read the full Midyear Outlook 2021: Picking Up Speed publication for additional description and disclosure. This research material has been prepared by LPL Financial LLC. Tracking # 1-05155985 (Exp. 07/22)

Financial capacity – the ability to manage your finances in your own best interest – involves everything from paying bills to reading a brokerage statement and weighing an investment’s potential risks and rewards. And preparing for the potential decline of that capacity is as important as planning for long-term-care expenses or keeping your estate plan up to date. Declining financial abilities may not only result in a few unpaid bills but also leave you vulnerable to financial abuse and exploitation, drain your nest egg, and place heavy burdens on your loved ones. Nobody likes to think about financial decision-making ability declining with age. Yet “it’s extremely common. In fact, I might say it’s inevitable,” says Daniel Marson, a neurology professor at the University of Alabama at Birmingham. While many people assume they’ll only need help to manage their finances if they develop dementia, the normal aging process can adversely affect faculties such as short-term memory and “fluid” intelligence, or the ability to process new information, Marson says. “Just the fact that you’re 70 or 80 years old may be impacting your financial skills,” he says, “quite apart from the fact of whether you have Alzheimer’s or any cognitive disorder of aging.” To be sure, many people remain perfectly capable of managing their own money as they age. Indeed, among people ages 18 to 86, credit scores increase by an average of 13 points for each decade lived, according to a recent study by researchers at the University of California Riverside and Columbia University. Yet all older adults should consider organizing and simplifying their finances to make their money easier to manage at an advanced age and prepare for the possibility

When you refinance your mortgage, you take out a new home loan and use some or all of the proceeds to pay off the existing one. Why refinance your mortgage? There are a variety of reasons why you may want to consider refinancing your mortgage, such as: Lowering your monthly mortgage payment by refinancing to a lower interest rate Shortening the length of your loan (e.g., from a 30-year mortgage to a 15-year mortgage) to potentially reduce interest charges over time Accessing extra cash through a cash-out refinancing to pay for home improvements, pay for college, or consolidate debt Refinancing your adjustable rate mortgage (ARM) to a fixed rate mortgage or to a new ARM with better terms When should you refinance? It used to be said that you shouldn’t refinance unless interest rates were at least 2 percent lower than the interest rate on your current mortgage. However, even a 1 to 1.5 percent differential may be worthwhile to some homeowners. In addition to interest rates, you should also consider the length of time you plan to stay in your current home, the costs associated with getting a new loan, and the amount of equity you have in your home. Ultimately, it may make sense to refinance if you’re certain that you’ll be able to recoup the cost of refinancing during the time you own the home. So, it’s important to do the math ahead of time and calculate your break-even point (the point at which you’ll begin to save money after paying fees for closing costs). Ideally you should be able to recover your refinancing costs within one year or less. No cash-out versus cash-out refinancing No cash-out

Retirement is inevitable, but knowing exactly when to do so is often unclear. No matter when you actually begin your retirement, you’ll benefit from planning your post-work life as early as possible. According to Gallup, the percentage of Americans who expect to retire at age 66 or older has risen dramatically, from 21% in 2002 to 41% in 2018. People expect to live and work longer than ever, so it’s never been more important to know when to stop working and how to carefully plan for the big event. The Social Security full retirement age. For people born in 1960 or later, the Social Security full retirement age is 67. You will receive 70% of your monthly benefit if you retire at age 62, and 86.7% at age 65. However, you’ll get the maximum monthly benefit if you wait till age 70. These milestones might be an important consideration if your Social Security benefit will be a sizable portion of your retirement income. Separate financial considerations from emotional ones. If you’ve successfully executed your long-term investment plan, you might be financially prepared to retire well before you are emotionally ready. Facing lifestyle changes at retirement might cause anxiety about how your life will evolve and how you’ll spend your time. It’s important to objectively evaluate your financial condition to support your decision-making, even as you contend with your feelings about retirement. Many folks need more money than they think. It’s virtually certain that life will offer you one or more surprises along the way. You might find you will need more money than anticipated to fund a comfortable retirement. Creating a post-retirement budget can give you a general idea if

High Net-Worth executives and those that have been self-employed, can experience common problems in their financial planning journey. Often, they have missed opportunities in their financial planning because they haven’t planned adequately for their retirement even though they make a high income. It’s easy to think that everything will work out with their retirement plan, and it can, but a high-income often masks the reality of having a deficit once a career ends. Just like average income earners, failing to save in the early working years can lead to a retirement savings shortfall. Retirement today means independence for many Americans. Flexible retirements are desirable when retirees can work, volunteer, golf, or do anything they choose because they have saved enough to decide when to retire and on their own terms. Many high-income, self-employed executives often focus on the business being their retirement nest egg to get them financially through the rest of their lives. The sale of their business funding their entire retirement is an unknown until the liquidation event actually happens. Financial planning for the ‘what-ifs’ can put the executive in a better position if they take the opportunity to save through these retirement savings options: Creating Your Own Deferred Comp Plan (DCP) allows you to defer a much larger portion of your compensation to supplement your retirement later on.  A strategically planned DCP creates beneficial options when it comes to choosing between the employer’s corporate lower tax bracket and the employee’s higher personal tax bracket. Maximizing Your Own Solo 401(k) or SEP IRA each year allows you to save more than a traditional 401(k), with some additional requirements. For the self-employed, these retirement plan options are an obvious

In recent years, the cost of higher education has risen well ahead of inflation. At some private colleges and universities, the net cost for one year’s full-time education, including tuition, fees, and room and board, tops $40,000 (Trends in College Pricing—2013, The College Board). At these prices, the final cost of a bachelor’s degree from a private institution could exceed $160,000. In addition, with many professions requiring graduate degrees, it quickly becomes apparent that very few families may be able to cover education expenses with their current incomes. With only one child, the costs can be prohibitive; for families with three or more children, college and graduate school costs could easily be hundreds of thousands of dollars. How can parents and grandparents build a fund for college? They need to look ahead and prepare a “blueprint” as early as possible, and there are a number of ways to do this. The best method will depend on the age of the child, the family’s resources and cash needs, and a number of other considerations. No matter what the age of the child, there are legal techniques for placing money and property in a child’s name. Since it is generally inadvisable for minors to own property or have large bank accounts in their own names, gifts to minor children are usually made either to a custodian or to a trust. The Custodial Account While some of the tax advantages of a custodial arrang­ement have been affected by tax law changes, the technique is still worth investigating. It is the simplest method to give money or property to a child, involving very little paperwork, hassle, and legal fees. All states have adopted either the Uniform Gift to