A Rule Change Allows Grandparents To Give More To A 529

Do you have a young child in your life that you want to save college money for? In honor of 5/29 day, it’s a great time to think about putting money aside for your grandchild’s and child’s future education. Also, great news, theres a new rule change that may be beneficial to you and your grandchild! With rising inflation, we don’t know what the price of tuition will be when your young grandchildren are finally old enough for college, so, now is a great time to begin looking into contributing to a 529 savings plan. 

So, for those of you who don’t know, 529 plans are a type of investment vehicle that allows you and encourages you to save for your child or grandchild’s higher education using tax incentives, such as such as tax-free earnings and withdrawals for qualified educational expenses. Depending on the state in which you reside, choosing your state’s 529 plan may offer a tax deduction; however, consult with your CPA or financial advisor to see if the deduction outweighs the investment options and fees versus an out-of-state plan. 

You can think of a 529 account like a traditional IRA or 401(k)account, where the growth compounds tax deferred as long as its used properly. In addition, parents and guardians have the potential of earning more by investing instead of leaving the money in a traditional bank account.

In fact, for you grandparents out there, there was a recent change to the financial aid rule allowing you to contribute to a 529 savings plan without penalizing or interfering with your grandchild’s eligibility for financial aid. This eligibility has long been issue for many individuals, so starting in the 2024-25 school year, children will no longer have lessened eligibility for financial aid while also having a grandparent 529. “The fear that a grandparent helping their grandchild by using their own 529 plan would interfere with them getting financial aid, that worry is gone now with the new rules,” said Stuart Siegel, president of college financial-aid service FAFSAssist.

A 529 plan is a great idea for parents and grandparents who place importance on a college education and want to save money when making financial contributions. Also, given the new rule change, if you are a grandparent, you now have the opportunity to contribute even more dollars towards college education. The benefits seem so advantageous! So, even if you think your grandchildren have many years until they are off to college, it’s never too early to start thinking about saving for it.  For more information on 529s, check out the IRS website here. If you have any questions about setting up a 529 plan, please reach out to us at info@shermanwealth.com or schedule a 30-minute complimentary intro-call here -we are here to help!

 

A Look At Market Volatility Thus Far In 2022

What a wild start to the year it’s been with inflation surging, the Russia-Ukraine war, and the Federal Reserve rising interest rates. When the world and country faces economic events such as these, the markets, just like the consumer, digest and respond. So, let’s take a look at how some of these economic events have impacted not only the consumer, but the stock market as well.

As you probably already know, inflation has skyrocketed this year, having a large impact on the cost of living and pretty much everything, as you can see in the YoY CPI report charted below.

As we’ve watched inflation take off, we’ve been thinking a great deal about the consumer and what they have been seeing and feeling. Have you been spending more recently? If so, what areas are you spending more money on? Have higher gas prices impacted your interest in travel? The chart below shows consumer sentiment near all time lows, really depicting the effects that inflationary prices are having on individuals’ financial picture.

Are rising prices beginning to alter the way you spend your money? If so, we are here to help, so let us know if you would like for us to revisit your budget and financial plan during this time. 

For those of you who have been investing in the stock market, you may be feeling a sense of anxiety as the market has been extremely volatile in response to earnings season, rising interest rates, inflation, and more.

However, we want to show a zoomed out picture of stock market returns and pullbacks over time. At Sherman Wealth, we always emphasize the importance of time in the market instead of timing the market. As you can see in the J.P. Morgan slide on the right, time is your best friend. Try to remember to stay calm and think about your reason for investing in the first place along with your time horizon. If you are a long-term investor saving for retirement, take a close look at the overall returns and drawbacks overtime, as you have many years ahead of you for your money to grow. 

We know the past few months have weighed heavily on the economy; however, we urge you to stay calm. If you have any questions about the current market environment or your own specific financial portfolio, please let us know and we are happy to help. Email us at info@shermanwealth.com or schedule a complimentary 30-minute consultation here.  

The Return Of Beers with Brad

After a two and a half year hiatus due to COVID-19, we were extremely excited to be back to host Beers with Brad on May 19th, 2022. It was great to gather with local centers of influence, peers, friends, and clients to discuss all the economic data we have been seeing and the market has been digesting. Not only did the event provide an open space for individuals to ask their own personal finance questions, but it was a great opportunity to network with local professionals and enjoy some beers.

For those of you who may own a small business and would like us to host a Beers with Brad for your employees to provide them the opportunity to learn about financial literacy and ask questions they may have about personal finance or their benefits at work, please email us at info@shermanwealth.com or schedule a complimentary intro call here to learn more. Due to the great outcome and positive feedback, we will be hosting another Beers with Brad on July 14th, 2022 At Launch Workplaces (9841 Washingtonian Blvd #200 Gaithersburg, MD 20878). Please rsvp to the link following or email ashley@shermanwealth.com. https://www.eventbrite.com/e/beers-with-brad-july-14-2022-tickets-347954359857 to RSVP.

Ep. 86 Launch Financial-How Rising Rates Will Impact Your Home-Buying Process

Overview: Join us for a very speicial episode of Launch Financial this week as we are joined with recurring guest, Jody Eichenblatt. On this week’s episode we are going to continue our discussion of rising interest rates and get Jody’s professional opinion on how these hikes will ultimately impact the consumer and the home-buying process. Tune in for a great episode! 

A little about Jody, Jody Eichenblatt (NMLSR# 181198) is a Senior Mortgage Consultant with over 18 years of experience in the mortgage industry holding a license in Virginia, Maryland, the District of Columbia and Florida.  Jody’s professional service is founded on delivering the best possible customer experience for his clients and partners.

Whether you are a first time homebuyer or seasoned refinancer Jody understands that each transaction is unique and special and treats it as such.  Listening to his clients objectives and clearly communicating all of the available options is what makes Jody a success.

Jody graduated from the University of Maryland Robert H Smith School of Business with a MBA, and a BS in Marketing and Logistics.   In his free time Jody enjoys running, hiking, biking, traveling and most of all spending time with his wife Kim, son Ryan daughter Taylor and mini Aussiedoodle Teddy. For questions about the episode, email info@shermanwealth.com. 

Check out this episode!