January 31, 2016

The Markets

Investors breathed a sigh of relief last week when U.S. stock markets recovered from a tumble toward bear market territory. Going back in time 12 months it is interesting to see the returns of the various indices. The S&P 500 has been -7.6%, the Dow Jones has been -15.4%, gold has been -15.4% and commodities have been -25.9%. During this time I have implemented edits to try to sidestep areas of the market that were showing signs of weakness. In January of this year, I’ve continued this process and in some cases parking cash to use later. It is important to keep in mind that markets do come back. Most of you have experienced the “Dot Com” selloff, 9/11, and the 2008 Financial Crisis. After all of these major events markets eventually rose again. A lot of blue chip stocks are in the process of being beaten down and opportunities will arise over time. This is a time for patience and keeping a long-term point of view. In addition, try not to be influenced by the mass media or friends and neighbors who claim to be stock market experts. If you have a lot of anxiety during these times feel free to send me a quick note or call and now make sure we spend some time together.

College Savings What will the money in a 529 College Savings plan cover? If you have a child or grandchild who will be heading to college soon, and you have set up and contributed to a 529 College Savings Plan, it’s almost time to tap into those funds. The reason many people start tucking money aside in college savings plans when their children are young is any earnings grow tax-deferred in 529 plan accounts, and are federally tax-free (and often state tax-free) when withdrawn, as long as they’re used for qualified education expenses for a designated beneficiary. Qualified expenses include tuition, fees, books, and room and board. Recently, Congress passed legislation that made computers, Internet access, printers, scanners, education-related software (no games), and other peripheral equipment qualified expenses. Computers were qualified expenses previously, as long as the college required computers for attendance. Now, they qualify even if the school does not require them. According to Kiplinger’s, 529 plan savings can be used for room and board even if the account beneficiary lives off campus, as long as he or she is attending college at least half-time. While you don’t have to document expenses for 529 plan administrators, it’s a good idea to keep a record of all education-related expenses.

Weekly Focus

“Common sense is not so common.” -Voltaire, French writer, historian, and philosopher

Image courtesy used in accordance with Creative Commons version 2.0 Generic License.

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