How do my investments relate to my children’s college tuition funding/costs?
When it comes to getting your children ready for college, you need to understand your full financial picture. This is what schools look at when calculating the financial aid available for your children.
As it stands with investments, your liquid investments (i.e. non-retirement) are assessed at 5.65%. You are allocated a protection allowance on your assets based on the oldest parent. If you’re 50, it’s in the neighborhood of $50,000. Above and beyond that threshold the 5.65% kicks in. Also, important to note is that money in retirement accounts are not assessed.
What this means is don’t be caught off-guard with money that’s slated for retirement, but rather sitting in money-market account. Those dollars will be assessed as part of your contribution. If it’s for retirement, move it into a retirement vehicle (e.g. IRA). Additionally, there are other investments that are not assessed (e.g. annuities) within the formula. In sum, while you have some protection on your assets, don’t have your money sitting around if it’s for retirement. Be fair to yourself.
It’s important to remember that a student’s asset is assessed at 35% with no protection, whether that’s in cash, savings, CDs or UGMA/UTMA custodial account. Again, a 529 is assessed as a parent asset.
In sum, if you’re looking to invest ahead of time for your child’s education, choose a 529. If you have a UTMA/UGMA, try to convert. Some plans allow you do that. But bottom line, having cash, savings, UGMA/UTMAs under child’s name should be avoided.
For more information about preparing for your kids’ college education you can contact Mitch at mitch@collegefinancial-consultants.com, toll free at 877-859-3243 or directly at 408-395-1200
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What is the market like in the San Bruno Area?
There is not one particular market within San Bruno. There are several difference neighborhoods that each have their own unique feel and different market conditions. Depending on if you’re looking to buy for your own use, investment, or fix and flip– there’s a neighborhood in San Bruno that will have what you’re looking for.
There are many thriving “move-up” neighborhoods that have a very nice micro-climate and attract many buyers. These listings tend to experiencing multiple offers, and a lot of interest. Acting fast in these neighborhoods is essential if you’re competing for a home and having your paperwork, including loan pre-approval in place will help you look even more attractive to the sellers.
Then, as there is everywhere nowadays, there are the neighborhoods that are saturated with short sales and foreclosures. These neighborhoods have a lot of charm and are excellent opportunities for investors and first time buyers. If you’re looking for a great deal in a great area, these are the neighborhoods to check out.
For more information contact me at stephan@stephanmarshall.com or 650.455.1528. I’m a San Bruno native and can give you the information you need about the area and show you around.
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What is the difference between an independent advisor and a brokerage house advisor?
An independent Financial Advisor has the opportunity to go out in the marketplace and find the very best products and services for their clients. This is different than advisors who work with a large firm.
Many times a brokerage firm has their own line of investments or insurance products that they offer. One of the large revenue generators of these firms is often the funds or insurance programs themselves and at times they may encourage their advisors to sell those products through incentives.
An independent Financial Advisor can truly find the best programs as they most often have no proprietary products which they are encouraged to sell and because they care about your success, rather than receiving incentives, they will truly find the best products and services for you.
Troy is a financial advisor offering securities through First Allied Securities, Inc. A Registered Broker/Dealer member of FINRA/SIPC For any questions or information on Financial Planning you can contact troy at tcollins@mkfinancial.com or by phone at 650-551-8900.
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How soon is too soon to plan college funding?
It’s NEVER too soon.
A good way to start, is by setting up a 529. For those of you who don’t know what a 529 is, it’s a tax-advantaged investment vehicle designed to encourage saving for the future higher education expenses. It also possesses significant benefits relative to its counter-part, the UGMA/UTMA.
It’s good to start early with a 529 as your investment grows tax deferred and you get the effect of compounded growth. However, stick with a 529 opposed to a UTMA/UGMA account. Some important distinctions to name a few:
| 529 | UTMA/UGMA | |
| Assets | Parent (assessed at 5.65%) | Student (assessed at 35%) |
| Growth | Tax deferred | Taxed annually |
| Beneficiaries | Can change beneficiaries | Cannot change |
| Ownership | Parent | Student |
Also, engage a college financial consultant as early as the student’s Sophomore or Junior year in high school to ensure you’re well positioned and not over exposed. Last, keep in mind for the class of 2011, 2010 is the financial base year. Meaning, your expected family contribution is based on income and asset valuation in 2010, not 2011. Hence, the importance to talk to a professional no later than the student’s Junior year. You’re at a significant disadvantage once the student enters their senior year.
For more information about preparing for your kids’ college education you can contact Mitch at mitch@collegefinancial-consultants.com, toll free at 877-859-3243 or directly at 408-395-1200
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What types of investments are the most solid and how does my Financial Advisor help me find them?
Investing is not a one size fits all endeavor. If anyone can answer the first part of this question without doing a serious and comprehensive financial plan then they are an investment broker, not a financial advisor. Essentially, just as a doctor cannot prescribe the correct treatment without testing and analysis, a Financial Advisor needs the full picture before they start to offer advice and ‘treatment’ for your financial portfolio.
As a Financial Planner– as it comes to investments–I believe you first need to determine the time frame for which you are investing. There are investments such as CDs that can protect principle up to guideline amounts, however, they may not keep pace with inflation and after taxes could yield a negative net return. Thus it is important to determine the length of time you have to invest as well as your NEED to determine what return to strive for and consider the risk of each alternative versus the need for higher returns.
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When should I think about discussing my finances with a financial planner?
You should consider talking to a Financial Advisor when you are making a life change such as getting married, having children, changing jobs or have some financial questions outside of your personal expertise. Don’t assume that you can find financial answers on the internet. You are about as likely to become an expert in financial planning over the internet as you are to become a brain surgeon.
Financial planning takes into account many different aspects of the current marketplace and a strategic financial plan helps those aspects to work together for the greatest reward. This isn’t something that a novice to the financial world can understand fully and create for themselves after doing a little internet research. So, don’t do it yourself! Your financial future is rather important to plan for properly the first time and you don’t always get a second chance. Rather than searching the web for good investments, most should start by searching for a good financial planner.
A few tips to finding a good Financial Planner:
- You should find a financial planner who you feel listens to your concerns and desires. This is your financial plan and needs to focus on what you want to accomplish.
- You should expect a series of appointments, often 2-4 before doing any investing. (Anyone giving investment recommendations at the first meeting is not a true financial planner.)
- You should expect a written financial plan that covers the areas of:
Investments
Retirement Planning
Education Funding
Risk Management/Insurance
Estate Planning/Trusts
Tax Strategies
Note:
As important as finding a financial advisor is deciding on a financial plan and sticking to it. Most people start with a strategy and the minute it starts to not work perfectly they will give up on it and change to another strategy or another advisor. Though a few changes may be needed, “Don’t throw the baby out with the bath water.”
*Troy is a financial advisor offering securities through First Allied Securities, Inc. A Registered Broker/Dealer member of FINRA/SIPC
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Why do I need a Financial Planner?
A Financial Planner can play an important part in how you achieve your financial goals. They look at your full financial situation then create a plan and strategy to help achieve your goals faster and more efficiently.
Financial planners are knowledgeable in areas of investment, risk management, estate and trust work, tax reduction strategies and more. Using this knowledge they can make sure that all of these areas are working together effectively to help protect all that you have worked so hard to achieve. A Financial Planner doesn’t just do investments, but they can help you to invest your money wisely.
A study done in 2005 showed that the average growth mutual fund investor had earned an annual average return of less than 4.5% while the average growth mutual fund had returned better than 10% for the same time period. This study suggested that people moved from fund to fund based on “emotional decisions” that had hurt their performance. By having a financial advisor to keep you emotionally distant, you can make logical decisions that can help avoid major investment mistakes.
A financial advisor has access to a world of financial products and services that you may not be able to access on your own and will weed through a huge spectrum of options to find the best ones and eliminate the poor ones.
*Troy is a financial advisor offering securities through First Allied Securities, Inc. A Registered Broker/Dealer member of FINRA/SIPC
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