Smart Saving Strategies: Preparing Your Finances for Back-to-School Season
While it might seem that summer has just started, back-to-school season is almost upon us. Sending your kids back to school comes with a cost, whether they will be attending elementary school, high school or college. Before embarking on back-to-school shopping it is important to take the time to prepare a “shopping list” and more importantly to set a budget. Much More Than Books Over time, computers and computer supplies have become among the most expensive back-to- school items. With the trend towards the use of technology it is not surprising that this has become one of the top back-to-school expenses for most students. Textbooks, new clothes, fees for school-related activities also represent significant back-to-school expenses for many families. For families with students who are off to college, they will need to budget for the costs of transportation to and from college, living expenses either on or off campus as well as the costs of tuition and fees. Set a Budget Setting a back-to-school spending budget is important for two reasons. First, it helps parents ensure that they include everything that their child needs for the upcoming school year. While as parents we are always susceptible to the whims and wants of our children, laying out a shopping list helps ensure that the important items are covered. You can then decide on a case-by-case basis for the ad hoc requests your kids might make. The second and equally important reason to prepare a back-to-school budget is to get a handle on how much this will cost. This is especially critical if you are shopping for multiple children. Knowing what you will need to spend can help you adjust your budget on other areas for a month or so if needed. Look for Discounts Preparing a list upfront can also help you in your efforts to find the items you need at the best price. Online shopping is a good vehicle for your back-to-school shopping. You can shop for what you want and compare prices. Especially on the higher ticket items, it is likely you will find a wide range of pricing. In some cases, there may be several options beyond one particular brand for items on your list. This might be the case with technology items such as a laptop or a tablet. Within any specifications supplied by the school, prices on these types of items can vary widely. Do your homework and look at the specifications, if any, supplied by the school for these items. Look for Summer Sales and State Tax Holidays Many major retailers offer summer sales for back-to-school shopping, both in store and online. These include the likes of Walmart, Amazon, Target and Best Buy. Be sure to watch for these and other sales to do as much of your shopping as possible. About a dozen states offer a state sales tax “holiday” over the summer to help parents save on their back-to-school shopping. Check to see if this applies to your state and if so, how the rules pertaining to this sales tax break work. Involve Your Children As early as you feel is reasonable, try to involve your children in the process. Especially as your children reach middle school and high school age, they should be heavily involved in the process of building the list and shopping for the best prices on certain items. Involving them at these ages can help them understand the cost of things and the importance of budgeting. Once your children reach college age, it might be that you ask them to prepare the list and the budget and then tell them how much you are able to contribute to these costs. Let them take charge of the process and then be there as parents to help as needed. Involving your children in the back-to-school shopping process at an early age is an excellent way to teach them about budgeting and the cost of things. It is not that you want to deprive them of anything for school, but rather this is an important life lesson for them. The earlier they learn about how much things cost and that a “dollar” only goes so far, the better they will understand these important principles as they move into adulthood. Teaching your children about money is perhaps the most important lesson you can teach them to support a successful life as an adult. Contact your Wedbush financial advisor for tips on teaching your child about money and about saving for your child’s college educational expenses. Disclosure Wedbush Securities does not provide tax or legal advice. Please consult your tax or legal advisor. 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. Fixed income securities are subject to increased loss of principal during periods of rising interest rates and are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors. Investors should consider carefully information contained in the prospectus, including investment objectives, risks, charges, and expenses. You can request a prospectus by contacting your Wedbush Financial Advisor and/or Registered Representative.
Strategic Shifts: Aligning Your Investment Strategy with Mid-Year Market Projections
The stock market is showing nice gains so far in 2024, with the S&P 500 up over 12% as of this writing. Other major averages, including the Dow Jones and the NASDAQ, have also shown strength so far in 2024. Several major averages are at or near all-time high levels. After suggesting that we might see several 75 basis point rate cuts, the Fed recently indicated that we will only see one rate cut in 2024. The market’s initial reaction to this announcement was positive, but only time will tell how this plays out. Second-Half Trends and Opportunities The adage “sell in May and go away” will likely not be applicable to the rest of 2024 based on comments by several economists and market analysts. This being an election year, investors may be concerned about the impact the outcome will have on the markets. However, it should be noted that the stock market has historically performed well in the second half of an election year under a first term president such as what we have with Joe Biden. A number of market analysts are forecasting slowing, but moderate growth in GDP and other economic indicators. They point to the Fed’s cautious approach to cutting interest rates as a positive as well. Many are predicting an economic “soft landing” this year based on a combination of inflation returning to more normal levels and the economy managing to avoid a recession. With the Fed delaying interest rate cuts and reducing the number of those cuts for the rest of 2024, this provides investors with an opportunity on the fixed income side of their portfolio allocation. With interest expected to remain at or near current high levels, this can be a good opportunity for investors to lock in these current high rates in their portfolios. Opportunities exist in bonds, Treasuries, CDs and other fixed income vehicles. This can be a good time for investors to consider building a ladder of fixed income securities that fits their time horizon and cash needs. Implications for Your Investment Strategy For stock investors, the forecasts of continued upside, even if this upside is somewhat moderate, is good news. Investors will want to review their own portfolios to see if their equity holdings are performing in line with expectations given the stock market’s results so far in 2024. As in any type of market environment, you will want to review your portfolio’s asset allocation and rebalance as needed. This is especially important given that gains in the stock have not been evenly distributed among the main asset classes that many investors use. For example, large cap growth stocks have significantly outperformed large cap value stocks on average. As of mid-June the Vanguard Growth ETF had gained almost 19.5% for the year-to-date while the Vanguard Value ETF was up just under 7.9% for the year.1 While nobody can predict when large cap value stocks will make a move, they do seem undervalued and could offer solid future growth potential. Regardless, long-term investors will want to revisit their asset allocation periodically to help ensure that it is in line with their financial goals, their time horizon for those goals and their risk tolerance. Generally, your target asset allocation should be based on your longer-term goals versus reacting to current stock market or economic trends. That said, understanding current market trends can be a useful tool in both rebalancing your portfolio and in determining which holdings to utilize within the asset classes in your allocation strategy. The 2024 Wildcards As you know, there is a presidential election coming up in November. While there are many statistics showing how markets have performed in past election years under a multitude of scenarios including which party wins, we truly will not know what impact the 2024 elections have on the markets and your investments until they happen. Additionally, the Fed’s recent announcement of only one projected interest rate cut in 2024 is a change from what they were projecting going into 2024. If the Fed changes their policy again in 2024, this could have an impact on the markets. So far, 2024 has been a good year for many investors. As always, you need to stay on top of your holdings and be ready to make adjustments as needed. That said, investors are wise not to overreact to every change in the markets or the economy, but rather to have a long-term investing focus. Please feel free to reach out to your Wedbush financial advisor to discuss current market trends and their potential impact on your long-term financial goals. 1: Morningstar.com Other sources: https://www.cnbc.com/2024/06/12/heres-the-feds-new-rate-forecast-thats-moving-the-markets.html https://www.forbes.com/advisor/investing/stock-market-outlook-and-forecast/ https://www.morningstar.com/economy/why-todays-fed-outlook-may-be-best-case-scenario-stock-investors https://www.cnbc.com/2024/06/12/fed-meeting-today-on-interest-rate.html Disclosure Wedbush Securities does not provide tax or legal advice. Please consult your tax or legal advisor. 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.