College Planning: FAFSA Deadline Approaching
The deadline for submitting the FAFSA for the 2023-2024 academic year is 11:59p.m. CT on June 30, 2023. Any corrections or updates to your filing must be submitted by 11:59p.m. CT on September 9, 2023. In addition to these federal deadlines, each state may have their filing deadlines for aid; the same applies to many colleges and universities as well. FAFSA stands for Free Application for Financial Student Aid. The application for the next school year becomes available each October 1. Many students do not apply because it is possible to think that federal financial aid is only for those who might be considered to be poor. The reality is that most Americans are eligible for some type of aid, and not submitting the FAFSA could mean leaving money on the table, so to speak. Both the submission deadline and the first date of availability are important as some of the aid is distributed on a first come, first served basis. Benefits of submitting FAFSA on time Submitting the FAFSA on time, or before the deadline, is beneficial as the earlier you apply, the more financial aid options that may be available. While some students and families may be intimidated by the process, the FAFSA is generally straightforward and easy to complete. The FAFSA opens the door to opportunities with federal student loans, offering a number of advantages: Generally lower interest rates than private student loans. In fact, almost half of the borrowers who used private student loans could have benefited from lower rate federal loans. Federal student loans have a fixed interest rate. They do not require that the borrower have a credit history and do not require a cosigner. The FAFSA can open the door for other aid opportunities including: Eligibility for federal grants that do not need to be repaid. Possible qualifications for forgivable student loans. Eligibility for federal work-study programs that assist both in funding your education and in helping you build a resume. The FAFSA may be required in order to be eligible for a number of scholarships, grants and other types of aid from colleges, the state or a number of private organizations. Many colleges and universities use the FAFSA as the basis for their aid decisions College savings strategies While most college students should complete the FAFSA, ideally parents will start saving for their child’s education as soon as possible. Here are a few strategies to consider. A 529 plan is an investment account that offers tax-free growth and tax-free withdrawals for qualified educational expenses. Some 529 plans are in the form of prepaid tuition plans, others are college savings accounts. Under rules updated in the past few years, some K-12 expenses can be paid from a 529 as well. Money left unused for college in a 529 can be used to pay off student loans for the account beneficiary and their siblings, within limits. Additionally, under SECURE 2.0, there is a provision to allow up to $35,000 left unused in a 529 plan to be rolled into a Roth IRA in the account beneficiary’s name. A 529 can be opened by a parent, grandparent or other relative. There is minimal impact on financial aid eligibility if the account was opened by a parent; the impact is generally greater if the account was opened by a grandparent or other relative. UGMA (Uniform Gift to Minors Act) and UTMA (Uniform Transfer to Minors Act) accounts are both custodial accounts. These can be a good option for a minor child if you are not 100% sure they will attend college. These accounts are opened for a minor. Once the minor reaches the age of majority in their state, they become the owner of the account. An UGMA can only hold financial assets while an UTMA can hold both financial and non-financial assets, such as real estate, collectibles and others. A custodial account can be used for college or other purposes. Earnings in UGMA and UTMA accounts are taxable, but these taxes are waived if the money is used for college. UGMAs and UTMAs will count as assets for your child when completing the FAFSA and can hurt your child’s eligibility for aid under the FAFSA. A Coverdell Education Savings Account is another type of custodial account designed for educational savings. Unlike with an UGMA or UTMA, there is a limit on the amount that can be contributed of $2,000. For parents above a set income limit, these contribution amounts are reduced. If the child does not use the money by age 30, any funds left in the account will be distributed to them and taxed. The funds in a Coverdell account can be used for a wider variety of educational expenses than a 529. How to make the most of college-saving tactics Funding college takes some planning. Completing the FAFSA is a key part of this process for most families. However, starting a college savings plan as early as possible is also important. Your Wedbush financial advisor can help with this as part of your overall financial planning strategy. Disclosure These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. The information in these materials may change at any time and without notice. Securities and Investment Advisory services are offered through Wedbush Securities, Inc. Member NYSE/ FINRA / SIPC Investing in securities involves a risk of loss. Past performance is never
Mid-Year Portfolio Check-up
Investors have been through a lot of ups and downs over the past several years with the pandemic, interest rate moves by the Fed, recent bank failures and a host of other market and economic factors. A periodic review of your portfolio is always a good idea, perhaps even more so in our current environment. Mid-year is a good milestone to review your portfolio and your financial situation. This review should include: A review of your portfolio in terms of assessing how it is configured in terms of your overall financial goals. A review of your spending and savings needs to consider an adjustment of your portfolio in line with any changes if needed. A review of your financial goals and priorities, an evaluation of your tax exposure and an assurance that your investment portfolio is aligned with your time frame and risk tolerance to meet those goals. An assessment of where you stand relative to financial goals like saving for college or retirement and make adjustments as needed. Assessing Your Investment Goals Your mid-year portfolio review is a good time to review your overall financial goals and to determine if you are on track towards achieving them within the timeframe you have set. If the markets have been doing well, perhaps you are ahead of where you thought you would be at this point. Depending upon where you are relative towards achieving your goals, this may dictate a change in your strategy. If you are ahead of the curve, perhaps you will want to reduce your investment risk. If you are behind, you may want to take a bit more risk and perhaps save more each year if you can. You will also want to assess your goals in light of any life changes. These can include things like having received a raise or promotion, the fact that you are another year older or a host of others. Performance Review A mid-year portfolio review is an appropriate time to review your portfolio’s performance relative to its blended benchmark. If you have outperformed the benchmark, that is great. If your portfolio has underperformed, you should assess why this occurred. Is this the result of the underperformance of one or two holdings, or is it based on widespread underperformance? If you determine that certain holdings have underperformed, you will need to assess whether this underperformance is a one-time thing or if these holdings are likely to be a permanent drag on the performance of the portfolio. If it is the latter, it might be time to make some adjustments to your holdings. Asset Allocation Based on your progress towards your goals and your performance review, you will want to assess if your asset allocation is still appropriate for you. Do you need to adjust to be more or less aggressive? Have changes in market conditions had an impact on your strategy? For example, do you need to adjust your asset allocation based on recent increases in interest rates? Tax Considerations While taxes should not be your primary consideration in developing an investment strategy, your tax situation is still a factor to consider. Will any of the recent tax law changes impact your investments? One issue there might be asset location. Certain investments might do better for you in a tax-deferred account like an IRA from a tax standpoint. This might be a consideration in the rebalancing process. Rebalancing Your Portfolio A key element in your mid-year portfolio review should be a review of your overall asset allocation. This includes all accounts: taxable investment accounts, IRAs, workplace retirement accounts like 401(k)s and others. Ideally, you have set parameters in terms of the variation from your target allocation that would trigger rebalancing. You will also want to consider any changes in market conditions, your goals and your personal situation as part of the rebalancing process. When rebalancing, you should consider opportunities for tax-loss harvesting in taxable accounts. Also take into account any new money that you will be adding to any accounts and use these new funds to shore up asset classes that you are under allocated to. Conclusion A portfolio review should be conducted on a regular basis. At least annually or semi-annually is generally recommended, in some cases quarterly might be appropriate as well. Each review should entail an assessment of whether your investment strategy is still appropriate in light of any changes in your situation, or in market conditions. A review to determine if any rebalancing is needed should be conducted as well. While we do not suggest looking at your portfolio on a frequent basis, we do strongly suggest a comprehensive review on a regular, periodic basis. Contact your Wedbush financial advisor to schedule a mid-year portfolio review to help ensure that your investment strategy is on track. Disclosure These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. The information in these materials may change at any time and without notice. Securities and Investment Advisory services are offered through Wedbush Securities, Inc. Member NYSE/ FINRA / SIPC Investing in securities involves a risk of loss. Past performance is never a guarantee of future returns. Wedbush Securities does not provide tax or legal advice. Please consult your tax or legal advisor.
National Insurance Day 6/28: Is it time to review your insurance policies?
With National Insurance Day approaching on June 28, this is a good time to review your current insurance policies to ensure that your coverage is aligned to your needs. Whether life, disability, or property and casualty policies, it is important to review your coverage in light of any life changes. There are a number of things to consider when reviewing your policies. Check coverage levels It is important to check your coverage levels for life and disability insurance. Life insurance provides a death benefit for your beneficiaries; it is important to periodically review if this death benefit is sufficient or if it is still needed at your current stage of life. This might also include estate planning considerations. Disability insurance has often been cited as more important than life insurance in that it protects your lifestyle. Do you have enough disability coverage if needed due to a disability that keeps you from working for a prolonged period? As far as homeowners insurance, it is important to consider if your benefit has kept up with increases in the value of your home. Do you have adequate personal and professional liability coverage that is in line with the potential risk? Important considerations Your annual insurance review should take any changes in your situation into account. In the case of life insurance policies, consider if there been any major life changes such as: Getting married or divorced The birth or adoption of a child The death of a spouse In the case of your homeowners insurance, have you made any major improvements to your home such as an addition, a new garage or others? These could increase the value and the replacement cost of your home, and it is important that your coverage level keeps up with these improvements. Have you made any significant safety enhancements to your home? This might include adding an alarm system, an upgrade of your heating system, or others that might result in a discount on your homeowners or umbrella liability policies. With your auto insurance, do you now have a new driver in the form of a teenager in the home? This could increase your costs, and this might be a good time to review your coverage to ensure you are adequately covered at the most reasonable price. Review deductibles Homeowners, renters, auto and other types of policies have a deductible. This is the amount you pay out of pocket before the policy’s coverage kicks in. Generally, the higher the deductible amount, the lower your premium will be. In reviewing these policies, if your situation is such that you can afford a bit more out-of-pocket-costs, it might make sense to increase your deductible. Health insurance also has a deductible and generally works the same way in terms of premiums. If you get your insurance through your employer, you might consider a high deductible plan if appropriate for your situation. Bundling policies The somewhat corny commercial we see from a major insurer about bundling is actually spot on in many cases. This may vary from one insurance company to another, but many companies will offer a discount or preferred rate if you bundle several types of coverage with them. This might include having auto, homeowners and an umbrella policy with the same company. Or it could include a life and disability policy with the same company. You should look at these options over the course of your annual policy reviews to see if you can save money by doing this. However, it is important to keep in mind that while saving money is good, the most important consideration is the quality of the coverage. Does the new policy provide you with the type of coverage needed? How to Observe National Insurance Awareness Day National Insurance Day is a great reminder to review your insurance policies and ensure your coverage still meets your needs. This review can help ensure you have the best coverage for your situation, and in some cases can save you money. The issues discussed above are a great starting point for this review, but there are many insurance-related issues across the full range of your various policies to consider each year. If you are not sure where to start with your insurance review, consider consulting with a professional like your Wedbush financial advisor. They can help you review your coverage in light of your overall financial situation. Disclosure These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. The information in these materials may change at any time and without notice. Securities and Investment Advisory services are offered through Wedbush Securities, Inc. Member NYSE/ FINRA / SIPC