Let’s face it – we live in a world where people expect their needs will be met with instant gratification. Social media, online shopping and the availability of having access to everything right at our fingertips means that consumers have high expectations that their needs will be met immediately without having to wait for what they want. Unfortunately, these kind of short-term reward expectations can have drastic consequences for us both personally and professionally as well as for the economy overall.
When we focus on the short-term gain instead of the long-term goals for ourselves or our businesses, we deprive ourselves of the full benefits (like all of the compound interest) that can come from patience and being self-disciplined when working toward our future goals and we wind up hurting the economy as well. We recently wrote about the benefits of investing for the long-term and in tribute to our beloved Washington Capitals and DC sports in general, patience pays off and success is the reward. We hope they win the cup after 20 years!
I can attest to keeping a long term vision through the building of my own business, as years of hard work and sacrifice have gone into growing Sherman Wealth Management into what it is today. I did not start out reaping the benefits of my efforts right away. It continues to take a lot of patience and planning to grow my company into the vision I have for it long-term. Along the way, I get positive reinforcement that this slow and steady strategy is paying off. In fact, I was just named one of the Top 100 Financial Advisors by Investopedia which certainly did not happen overnight.
Building my company brick by brick and keeping my eye on the endgame is what allows me to successfully grow my company day by day. What if all workers viewed their endgame instead of what they need immediately? Investing in the future is the only way to make sure your endgame is what you want it to be. Resist the “I need it now” mentality that our culture pushes and shift your mindset to an endgame view.
Instead of solely focusing on short term profits, companies should look more at their long-term strategy, growth and sustainability. In this article by Jamie Dimon and Warren Buffet, the pitfalls of what happens to the economy when looking only at the short-term is examined. The compound interest that can be potentially generated from funds invested for the long-term is lost when companies are focused on the short-term fluctuations of the market. The article states that “Short-term-oriented capital markets have discouraged companies with a longer term view from going public at all, depriving the economy of innovation and opportunity. Fewer public companies has also meant fewer opportunities for retail investors to create wealth through their 401ks and individual retirement accounts.”
What does your endgame look like? Can you envision kids’ college tuition paid for, a beach house, summers off or traveling the globe? It is never too late to change your mindset and your daily habits to achieve your dreams.
Many feel they don’t have the money they need to invest, so they forego savings altogether. Sound familiar?
If this is you, the time has come for you to stop shooting yourself in the foot, and start saving today. Consistency while saving is key, and can make all the difference over time. Each dollar that you contribute to your portfolio adds up. In the long run, your investments early on can make a real impact, and when the time comes to withdraw your hard earned savings, the interest you’ve earned on your investments will help to provide a comfortable retirement or any long term goal you might be saving towards.
Start Saving Now
Consider the difference of waiting to begin saving. At age 27 you will need to put away $214 a month to reach a goal of $1 million. When you start at age 37, you will need to put away $541 a month to reach your goal. If you wait until age 47, that number rises to $1,491 a month and if you wait until age 57, you’ll need to put away a hefty $5,168 a month. Waiting until the last minute (age 62) would mean having to stash $13,258 a month to reach $1 million by the age 67 – ouch!
When you factor in things like compound interest, the negative impact of delaying your retirement savings becomes increasingly obvious. Compound interest is often compared to a snowball. If a 2-inch snowball starts rolling, it picks up more snow, enough to cover its tiny surface.
As it keeps rolling, the snowball grows, so it picks up more snow with each revolution. If you invest $1,000 in a fund that pays 8% annual interest compounded yearly, in 10 years you’ll have $2,158.93, in 20 years that will be $4,660.96, in 30 years it will be $10,062.66, and in 40 years it will be $21,724.52. It takes patience, but with time you can turn $1,000 into $21,724.52. That sounds like a lot of money, but if we’re being realistic, $1,000 is often spent on:
• A weekend skiing with friends
• A few months of dining out with friends or your spouse
• A new piece of furniture, or tech that you may/may not need
By hitting “pause” on these non-essential goals, you can easily start saving today and take advantage of compound interest.
No matter where you are right now, the crucial point is to begin putting money aside immediately to achieve your long-term financial goals.
What are your future goals?
Travel? Education for your kids? Paying off your mortgage?
Even when you contribute a minimal amount annually, if you’re consistent with that contribution over many years, the growth your investment will make can maximize your wealth in the long ron.
The idea that you don’t have enough money right now to make your investment worthwhile is hurting you and your future. Resist the urge to overthink how much you are investing, and just act by giving what you can to your future savings today. Remember: every dollar counts, and the satisfaction of watching your investment grow over time will give you peace of mind and a freedom to plan for the future.
Don’t Jump Ship When Things Go South
Many investors view themselves as being rationally-minded individuals who don’t take sudden action when the markets become turbulent. Too often, though, people do try to time the markets, and wind up making a wrong decision as a result.
Derek Horstmeyer of the Wall Street Journal writes “Most investors think of themselves as rational and immune from the behavioral elements that periodically roil markets. Human factors, however, do continue to affect our personal portfolio decisions—usually to the detriment of our long-run returns.”
Thinking too much about the “perfect timing” when growing our portfolios is a strategy that will more often than not cause people to lose money in the long run. A far better investment plan is to focus on the big picture, and less on a perfect portfolio – where every decision is made at the exact right time.
Timing the market is less important than time in the market, and getting caught up in getting that “perfect timing” is almost certain to cost you money. Aiming toward a good, solid return on your investment is a smarter strategy than worrying about every detail affecting your portfolio. All too often, people panic as soon as things start to go south (pulling out when the market has already hit bottom and putting in more when at the top). As a result, they often don’t experience this stated return in full. By resisting this urge to make a rash decision, investors showing behavioral restraint may actually wind up saving 1-2 percentage points a year.
Starting early is a critical component to a successful portfolio. It is never too late (or too early) to start, so the sooner the better. Beginning in 2011, studies were conducted where participants were shown a computer generated rendering of what they might look like at their age of retirement. They were then asked to make financial decisions about whether to spend their money today or save that money for the future.
In each study, those individuals who were shown pictures of their future selves allocated more than twice as much money towards their retirement accounts than those who did not see the age-progressed images. Seeing the images gave the participants a connection with their future selves that they did not possess before. As a result, their saving behavior changed dramatically because, “saving is like a choice between spending money today or giving it to a stranger years from now.”
Picture Your Retirement
Instead of viewing your future self as a stranger, think of how you actually might look. Then think of the financial decisions you are making today and how they will affect you in the future.
Are your spending and saving habits today matching up with how well that future self is able to live tomorrow? Every delay you make toward saving for retirement, or investing wisely means a further burden you will place on yourself later on. In fact, starting your retirement saving early is actually more important than earning higher returns at a later date.
The importance of starting now can’t be stressed enough. Luckily, fee-only, fiduciary advisors exist to help everyday people in making wise choices and to lessen the anxiety associated with what can seem like an overwhelming task.
The good news is you don’t even have to be a millionaire to get this customized service. Working with a professional will enable you to maximize your return on investment and tailor a savings plan just for you. Don’t delay getting started. The benefits of starting early and often far outweigh how much you actually save.
Would it surprise you to know that students graduating from high school enter college with little to no knowledge about their finances, how to budget, or save for their futures? The problem has become so severe that 40% of these students wind up going into debt in order to fund their social lives and 70% of these students wind up damaging their credit ratings shortly after college graduation.
Unfortunately, it seems as though this debt will not be going away anytime soon. The average student loan debt for the class of 2016 increased by 6% from the previous year and the financial literacy rate in the U.S. has not improved over the past three years. While college enrollment and the number of college graduates has continued to increase, financial literacy lags among these young people at record lows. Where does this disconnect come from?
Few states offer personal finance or economics courses and even fewer states test students on the financial knowledge they have acquired. It therefore comes as no surprise that American students (and we can infer American adults) have one of the lowest levels of financial literacy when compared to other countries. While the number of student loans has increased,
44% of Americans don’t have enough cash to cover a $400 emergency
43% of student loan borrowers are not making payments
38% of U.S. households have credit card debt
33% of American adults have $0 saved for retirement
Why does it matter? How is it affecting the economy?
Students are graduating with loans they can’t afford to pay back and with minimal financial knowledge in planning for their futures. According to Student Loan Hero, Americans have over $1.48 trillion in student loan debt, which is more than double the total U.S. credit card debt of $620 billion. This debt is becoming a major barrier to home ownership. 43% of student loan borrowers are not making payments and most of these individuals do not have any savings. A lack of sound financial knowledge will affect the economy as these millennials enter the labor force burdened with student loans.
As parents, we play a vital role in educating our children about the importance of personal finances. In the Sherman household, we are teaching our children the importance of finances on a daily basis. Our 4 year old son is learning about savings by doing chores in return for an allowance, which he saves in his piggy bank. He is learning to save and spend his money wisely.
Parents can begin educating their children at home in order to increase the financial literacy of their kids. By demonstrating wise financial habits, parents can serve as role models for their kids. Talking in an age appropriate way to your children about the dangers of debt and the importance of saving a portion of any money they earn instills financial values and lessons your child can use throughout life. You may find that using an allowance is a way that you can teach your kids about saving and spending appropriately. Since it has been shown that kids who manage their own money have been found to demonstrate better financial habits in the future, giving your kids the opportunity to spend and save their own allowance or money earned is a good way to prepare them for later on. Even a simple trip to the store can be used as an opportunity to start the conversation about the danger of credit cards and how they should only be used in an emergency. Educating your kids at an early age will enable them to better learn and practice sound financial habits while under your watchful eye and cause them to be less likely to make irrational decisions once they are out on their own.
This issue is not only affecting students and young adults. Many professionals with advanced degrees have spent countless hours studying and researching information in their particular field. Despite all of the hours spent earning their degrees, many of these people have never taken a single course in financial education and are surprisingly not prepared to deal with the important financial decisions affecting their futures. As a result, many extremely smart and successful people are making critical financial errors which can negatively impact the amount of money they have saved upon retirement.
Beginning in 2011, studies were conducted where participants were shown a computer generated rendering of what they might look like at their age of retirement. They were then asked to make financial decisions about whether to spend their money today or save that money for the future. In each study, those individuals who were shown pictures of their future selves allocated more than twice as much money towards their retirement accounts than those who did not see the age-progressed images. Seeing the images gave the participants a connection with their future selves that they did not possess before. As a result, their spending/saving behavior changed dramatically because “saving is like a choice between spending money today or giving it to a stranger years from now.”
The benefits of educating your children about the importance of personal finances are undeniable, and you’ll be able to set them up for a promising future and help them prepare for retirement. Visit us online for more information about how we can help improve your financial life.
While the stock market has been steadily climbing for the past few years, a surprising number of people are keeping a surprising amount of money in cash. And while everyone is going to have a certain amount of cash allocation, what’s even more surprising is how many people are losing out on maximizing the interest rates for those assets.
Advisors typically recommend holding 3%-5% of your assets in cash – for emergencies, short term savings goals, a new home or a vacation, or simply as a hedge against volatility. Yet, according to the latest Capgemini World Wealth Report, high-net-worth Americans are currently holding more than 23% of their assets in cash.
Treasury yields are climbing
Why would investors prefer cash over a booming stock market? Studies, like this one, have shown that “cash on hand” – the balance of one’s checking and savings accounts – is a better predictor of happiness and life satisfaction than income or investments. Put simply, people like having “money in the bank.”
There’s no reason for that “money in the bank” to be earning zero though, particularly when there are many FDIC-insured, highly-rated, savings account options that may be yielding a higher interest rate on your savings than your current bank or investment firm’s savings options.
Short terms saving rates generally follow moves by the Federal Reserve and, as indicated by the chart to the right, short term interest rates, as reflected in short term Treasury yields, are rising. But is your bank raising your interest rates too or are they pocketing the difference and profiting? While the percentages seem small, there is actually a significant difference between earning .05% and 1.5%: the difference between earning $5 and $150 on a $10,000 savings account.
Put simply, if your cash is in a zero percent interest account, it’s no better than putting it under your mattress. You’re losing money, both in lost interest and because inflation can reduce the value of your savings.
Do you know if your own savings account’s interest is keeping pace with rising interest rates? If not, check with your advisor to make sure you are maximizing your money’s earning power. If you’re not, consider shopping for a higher rate. Cash should be an asset class, but it shouldn’t earn zero.
If you’re not sure, we’re always available for a free consultation to see if you’re getting the best rates and you’re maximizing the earning power of your cash reserves.
Investors often choose big banks and investment firms over smaller financial advisors because they think the brand name and size makes the service and product offerings better. In actuality, it’s often the reverse.
Unless your firm is a Fiduciary, chances are there are sales quotas and contests for the non fiduciary, “suitability” reps, who are often paid extra to put clients in proprietary funds that are not in the clients’ best interests, but that reap commissions for the brokerage house.
Last Friday the SEC issued a statement announcing that three investment advisers “have settled charges for breaching fiduciary duties to clients and generating millions of dollars of improper fees in the process.” The release goes on to say that “PNC Investments LLC, Securities America Advisors Inc., and Geneos Wealth Management Inc. failed to disclose conflicts of interest and violated their duty to seek best execution by investing advisory clients in higher-cost mutual fund shares when lower-cost shares of the same funds were available.”
And according to an article in Investment News last week, it turns out smaller credit card and savings customers may not have been the only ones who were misled in the Wells Fargo “fake account” scandal. The article states that “according to inside sources, some clients of the bank’s wealth-management division were steered into investments that maximized revenue for the bank and compensation for its employees.”
When will this stop and why would any one continue to do business with one of these non Fiduciary firms?
The big problem is lack of transparency. Most investors don’t understand how the business works and how broker-dealers make their money. That means the investors are, in effect, investing blindfolded. And while there are many good, principled people at the larger firms, because they are not bound by the Fiduciary Standard, there is lots of potential for recommending something that is “almost as good” as the best product for you.
The result is that, according to a survey just released by the CFA Institute, a majority of investors believe that their advisors fail to fully disclose conflicts of interest and the fees they charge. Only 35% of individual investors polled believe that their advisor always puts their clients’ interests ahead of their own and only 25% of the institutional investors who participated in the survey.
April is National Financial Literacy month and one of the most important Financial Lessons investors – and potential investors – can learn this month is what “Fiduciary” means and why it’s so critical to your financial health.
When you’re working with a fee-only Fiduciary, they have sworn to only recommend financial products that are the best for their clients. Most broker-dealers in large wire houses have only agreed to uphold the “suitability” standard, which means they are allowed to recommend investments that are “suitable” – not best – for you but potentially yield a markup for their company or bonus or commission for them.
If you’re unclear about what fees you are paying, share classes you own, or how much your funds are costing you in annual expenses, contact us for a free analysis of your currents investments and the costs associated with them.
Particularly during Financial Literacy Month, make sure your Financial Advisor is working for you.
There was an excellent article in the WSJ last week about a topic most of us don’t really want to think about (but really need to:) how to prepare in case you die young.
No one likes to think about dying and absolutely no one likes to think about the possibility of dying young. Lately it’s hit home for me, though, because two of my high school friends were diagnosed with cancer over the last year. Both are in remission now, thankfully, but it brings home the fact that it never hurts to be prepared.
The bottom line is: if you’re old enough to be filing your taxes this month, you’re old enough to take basic steps to create basic estate documents. And yes, things will evolve and there will be adjustments to make over your – hopefully – long and prosperous life. But it’s never too early to get started.
The single most important thing we all need is a will and/or account beneficiaries, so that it’s clear where you want your assets to go. Statistics show that not only do most young people not have a will, but that most young parents who do have wills haven’t updated them when they had a second or third child. At the very least make sure you’ve named beneficiaries for all your bank and investment accounts (also known as TOD or “transfer on death” provisions), to prevent having the courts probate and decide how to transfer your assets. If you need help we can connect you with our excellent network of Washington area professionals who can advise you about making the best choices for you and your loved ones.
If you have kids, naming guardians for them is critical, to protect them should the unthinkable happen.
And don’t forget yourself! My mother just had knee replacement surgery about two weeks ago and, just before she did, she handed me her advanced medical directive. I was grateful she did (she’s fine!) and your loved ones will be grateful to know what your preferences are if they ever need to make decisions for you. In addition to a life insurance policy, don’t forget disability insurance in case for some reason you can’t work. I’ve never had to use the policy I took out in my 20s but I’m glad it’s there.
And finally, why not create a notebook or file where all your important documents are handy? It’s a great habit to get into when you’re young. Or you could gather your documents in a tool like the online document vault our clients have access to. So take a moment and get organized – most likely you wont need it for a long time but you’ll have created a great habit for yourself.
April is a great time for an overall financial check-up: you have all your tax documents organized, which means it will be that much easier to get these important personal documents organized as well. April is also Financial Literacy Month so, as always, call us if you have questions or for a free consultation and financial check-up.
Last Thursday, the U.S. Court of Appeals for the Fifth Circuit struck down the Department of Labor’s Fiduciary Rule, stating that it was “unreasonable’ that brokers handling investors’ retirement savings should be required to only act in clients’ best interest.
Unreasonable for advisors to only act in their clients’ best interests? Let that sink in for a moment…
In a nutshell: it’s still considered acceptable in the financial industry for advisors to give clients advice that is less than the best for the clients when it yields a higher commission for the broker.
In case you were wondering, the plaintiffs challenging the DOL’s Fiduciary Rule were the U.S. Chamber of Commerce, the Securities Industry and Financial Markets Association, the Financial Services Institute, Financial Services Roundtable, and Insured Retirement Institute. None of whom, clearly, are friends to the individual investor.
Because different Courts’ decisions have not been consistent about this Obama Administration effort to protect individual advisors, there is speculation the question will climb at some point to the Supreme Court, so this isn’t over. And while the Fiduciary Rule was not perfect, this is clearly worse.
Meanwhile, what can you as an individual investor do to make sure your interests are not being sacrificed for the benefit of your advisor? Very simple: make sure your advisor is ALREADY a Fiduciary. And if they’re not, switch. Why leave your money in a big brokerage house where conflicts of interest and commissions potentially eat into your gains and your future? Or where – instead of being given the full picture – you’re being steered toward a product that isn’t the best possible choice for you because of brokers’ sales goals or “contests”?
Individual investors have the power to tell the industry that this is unacceptable by voting with their feet (or computers.) Choose an advisor who has sworn to uphold the Fiduciary Standard and ONLY recommend choices that are in your best interest.
Just because the 5th Circuit is willing to settle for less doesn’t mean you should.
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If you’re concerned you’re not getting the fullest picture about what’s right for you and the best, un-conflicted advice, give us a call for a free portfolio review or learn more about our fee-only, Fiduciary approach.
One of the most important elements of a good financial plan is regular saving. Unfortunately, it is one of the biggest stumbling blocks as well, with 57% of Americans reporting they had less than $1000 in savings in a 2017 survey. To make matters worse, 1 in 3 American has no retirement account, and only 1 in 4 Americans has over $100,000 in their retirement account.
These are concerning figures, particularly now. As interest rates keep rising – short term treasuries at their highest in nine years – and the market continues its climbing streak, you’re missing out if you are not putting savings to work for you.
Why aren’t more people saving when, according to a recent you.gov survey, “saving more money” was the 4th most popular New Year’s resolution for 2018?
One factor our clients have cited that kept them from saving in the past is discouragement due to past failures. The solution is to make sure your goals are SMART goals: goals that are Specific, Measurable, Attainable, Relevant, and linked to a Timetable.
It is important to set Specific and Relevant immediate, short, and long-term savings goals that you can visualize – like a beach vacation, a bigger home, or a child’s graduation ceremony. Tying savings goals to images that align with your life and your values can make them more emotionally compelling and easier to keep in mind.
Equally critical is to make your goals Measurable and set a Timetable: how much you are planning to save each month, or by a certain date. Don’t set figures or dates that are impossible; make sure they are Attainable as well.
Just like physical fitness, financial fitness is best achieved by setting specific, achievable, and measurable goals. A defined goal, whether it’s “save 5% of each paycheck” or “add extra hours to save for a vacation,” gives you a much better shot at success rather than a simple “I should be saving more.”
A huge part of good financial planning is goal setting. A good financial planner can help you calculate the long-term benefits of saving more and on a regular sustainable basis. It’s particularly important that your financial planner is a fee-only Fiduciary: that means there will be no “additional charges” or investment recommendations with commissions for the broker that could throw off your savings calculations.
And if you’d like help defining financial goals and evaluating whether you are saving enough to achieve them, please feel free to contact me for a free introductory call. We are always on call to help you realize your highest financial potential.
Last week, in response to confusion surrounding the 2018 tax law that was passed in December, the IRS released an updated online Withholding Calculator. The tool is designed to help taxpayers make sure they are not wildly underpaying or overpaying what they will owe.
The new law is highly complex and made changes that included increasing the standard deduction, removing personal exemptions, increasing the child tax credit, limiting or discontinuing certain deductions, and changing the tax rates and brackets.
The online calculator should go a long way to help employed taxpayers plan ahead, particularly those in middle-income and upper middle-income brackets.
This is important because you don’t want to be withholding too much –in effect giving the government a free loan of money you could be investing in your home, the market, educational savings funds, or just your day-to-day needs. On the other hand, you don’t want to be withholding to little and risk facing an unexpected tax bill or penalty at tax time in 2019
According to the IRS some of the groups who should check their withholding are:
Two-income families
People with two or more jobs or seasonal work
People with children who claim the Child Tax Credit (or other credits)
People who itemized deductions in 2017
People with higher incomes and more complex tax returns
According to Acting IRS Commissioner David Kautter, about 90 percent of taxpayers would have “some adjustment one way or the other” to the amount they are withholding. That’s most of us.
The changes do not affect 2017 tax returns due this April. Your completed 2017 tax return can, however, help you input data to the Withholding Calculator to determine what you should be withholding for 2018 to avoid issues when you file next year. And if you do need to change the amount you are withholding (remember- 90% of us might), there is also a new version of the W-4 form to download and submit to your employer.
Are you saving for your child’s education with a 529 account?
If you are already contributing to a 529 plan, reduced deductions in the new 2018 tax law mean you may want to increase your contributions – or even create a second 529 account – to offset higher state taxes.
If you haven’t yet opened a 529 account, this year’s important changes in tax and 529 regulations have made 529 accounts an even more valuable option for parents of school-aged or college-aged children.
Here are the changes and why contributing to a 529 account is more important than ever:
K-12 Tuition is Now Covered by 529 Plans
529 plans were originally created to let you to save and invest for your child’s college education – while paying no federal tax on qualified withdrawals. The good news is that benefit has now been expanded: you’ll be able to withdraw up to $10,000 per year per student for elementary, middle, and high school tuition if your child attends or will attend a private or religious school. And, if you’ve already been saving for K-12 with a Coverdell ESA, you can also rollover that account to a 529 plan without tax consequences.
Saving by Off-Setting State Taxes
The new 2018 tax law limits deductions for your state income and property taxes to $10,000, so you might find yourself paying more state tax this year. But if you live in one of the 34 states that offers a state tax deduction for contributions to a 529 plan, you can lower your state taxes by contributing more to your 529. In most states you have to be enrolled in one of that state’s own plans to take the deduction, but several allow you to deduct contributions from any state plan. And, if you live in one of the several states whose 529 plans include state tax credits, you could also find yourself paying considerably less.
Turbo Charging the Benefits for Younger Children
529 plans allow “front-loading,” a term for making up to five years of contributions at once. This not only allows you to “catch up” for a child already in elementary or secondary school, it also allows you to maximize state tax deductions or credits. And anyone can make contributions to your child’s 529 plan. Friends and relatives can each contribute up to $15,000 per recipient, they can also “front-load” up to five years of contributions as well, maximizing their own tax savings. Additionally, if they make direct payments to services provided for beneficiaries’ tuition or medical expenses, these expenses would be tax-free, even though the costs surpass the annual gift tax exclusion.
New Benefits for Special Needs Students
The new tax law allows assets in 529 accounts to be transferred to ABLE accounts without any penalties as long as they are transferred by 2025. ABLE plans – named for the Achieving a Better Life Experience Act – are designed to provide tax-favored savings for people with disabilities without limiting their access to benefits such as Medicaid, Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI). The annual contribution cap for ABLE plans is $15,000 and an account can reach $100,000 without affecting SSI benefits. You can also make tax-free withdrawals when paying for expenses such as housing, legal fees and employment trainings.
Plans Can Be Transferred to Another Child
If you no longer need the account for the child it was created for, you can change the plan’s beneficiary to another family member, saving you the income tax on 529 earnings and 10% federal penalty you pay if you withdraw money for non-educational purposes.
The Bottom Line
Every parent – and grandparent – should consider opening one or more 529 accounts for their children’s education. There is no limit to the number of plans you can contribute to, or the number of accounts that can be opened for any child, so study up to determine which plans make the most sense for you. But remember: each state’s rules are different so – like your kids – you’ll want to do your homework.
Then, as with all smart savings plans, contribute on a regular basis over time, through market ups and downs, to benefit from dollar cost averaging and watch your interest compound – and your child’s educational opportunities grow.
For how the new tax law affects the “Kiddie Tax” for Uniform Gifts and Transfers to Minors (UGMAs and UTMAs) please click here.
At Sherman Wealth Management we’re passionate about children’s education so please give us a call if you have any questions about your state’s 529 options.
A version of this article initially appeared on Investopedia.com
