The Social Security Administration has tightened security in order to prevent hackers and identity thieves. Now, when you log into your Social Security Administration account, you do what you’ve always done: type in your user name and password. Then, you receive a security code sent by text message, and enter that code to complete your login procedure.

In the cybersecurity trade, this is known as multifactor authentication.

The result is better security for people receiving Social Security benefits, but the new protections can cause a big hassle for some users. On the first day, Verizon customers weren’t getting their security codes; the problem has since been fixed. Many older Americans don’t text on their phones, creating an obstacle for those who have not yet embraced this technology. At the same time, multifactor authentication doesn’t prevent cyber criminals from fraudulently creating an online account in your name and siphoning away your benefits.

How should you respond to the new Social Security protections?

• If you don’t already have an account with the Social Security Administration, now would be a good time to create one – before an identity thief decides to do it for you. Visit this link to set up your Social Security account: https://secure.ssa.gov/RIL/SiView.do

• If you aren’t into texting, now would be a good time to get familiar with that feature of your smart phone. If you’re having trouble, ask your grandchild or a younger family member for some quick tech support.

Don’t roll the dice on your social security!

Source: http://time.com/money/4434100/social-security-website-two-factor-authentication/?xid=tcoshare

An important part of managing your personal finances is keeping your financial records organized. Whether it’s a utility bill to show proof of residency or a Social Security card for wage reporting purposes, there may be times when you need to locate a financial record or document–and you’ll need to locate it relatively quickly.

By taking the time to clear out and organize your financial records, you’ll be able to find what you need exactly when you need it.

What should you keep?

If you tend to keep stuff because you “might need it someday,” your desk or home office is probably overflowing with nonessential documents. One of the first steps in determining what records to keep is to ask yourself, “Why do I need to keep this?”

Documents you should keep are likely to be those that are difficult to obtain, such as:
• Tax returns
• Legal contracts
• Insurance claims
• Proof of identity

On the other hand, if you have documents and records that are easily duplicated elsewhere, such as online banking and credit card statements, you probably do not need to keep paper copies of the same information.

How long should you keep your records?

Generally, a good rule of thumb is to keep financial records and documents only as long as necessary. For example, you may want to keep ATM and credit card receipts only temporarily, until you’ve reconciled them with your bank and/or credit card statement.

On the other hand, if a document is legal in nature and/or difficult to replace, you’ll want to keep it for a longer period or even indefinitely.

Some financial records may have more specific timetables. For example, the IRS generally recommends that taxpayers keep federal tax returns and supporting documents for a minimum of three years up to seven years after the date of filing. Certain circumstances may even warrant keeping your tax records indefinitely.

Listed below are some recommendations on how long to keep specific documents:

Records to keep for one year or less
• Bank or credit union statements
• Credit-card statements
• Utility bills
• Auto and homeowners Insurance policies

Records to keep for more than a year
• Tax returns and supporting documentation
• Mortgage contracts
• Property appraisals
• Annual retirement and investment statements
• Receipts for major purchases and home improvements

Records to keep indefinitely
• Birth, death, and marriage certificates
• Adoption records
• Citizenship and military discharge papers
• Social Security card

Keep in mind that the above recommendations are general guidelines, and your personal circumstances may warrant keeping these documents for shorter or longer periods of time.

Out with the old, in with the new

An easy way to prevent paperwork from piling up is to remember the phrase “out with the old, in with the new.” For example, when you receive this year’s auto insurance policy, discard the one from last year. When you receive your annual investment statement, discard the monthly or quarterly statements you’ve been keeping. In addition, review your files at least once a year to keep your filing system on the right track.

Finally, when you are ready to get rid of certain records and documents, don’t just throw them in the garbage. To protect sensitive information, you should invest in a good quality shredder to destroy your documents, especially if they contain Social Security numbers, account numbers, or other personal information.

Where should you keep your records?

You could go the traditional route and use a simple set of labeled folders in a file drawer. More important documents should be kept in a fire-resistant file cabinet, safe, or safe-deposit box.

If space is tight and you need to reduce clutter, you might consider electronic storage for some of your financial records. You can save copies of online documents or scan documents and convert them to electronic form. You’ll want to keep backup copies on a portable storage device or hard drive and make sure that your computer files are secure.

You could also use a cloud storage service that encrypts your uploaded information and stores it remotely. If you use cloud storage, make sure to use a reliable company that has a good reputation and offers automatic backup and technical support.

Once you’ve found a place to keep your records, it may be helpful to organize and store them according to specific categories (e.g., banking, insurance, proof of identity), which will make it even easier to access what you might need.

Consider creating a personal document locator

Another option for organizing your financial records is to create a personal document locator, which is simply a detailed list of where you have stored your financial records. This list can be helpful whenever you are trying to locate a specific document and can also assist your loved ones in locating your financial records in the event of an emergency.

Typically, a personal document locator will include the following information:
• Personal information
• Personal contacts (e.g., attorney, tax preparer, financial advisor)
• Online accounts with username and passwords
• List of specific locations of important documents (e.g., home, office, safe)

Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. 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. 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 in these materials may change at any time and without notice.

Just as with other investments, there are pros and cons to investing in gold and silver. Some of the positives are that it serves as a useful hedge against inflation, as well as a safety tool during market uncertainty and political upheaval. But most importantly, it may serve as a good diversifier to other asset classes. Some of the negatives include the volatility that comes from short-term market speculation.

The last two points, market speculation and volatility, are of particular interest. It’s hard to miss news about how well gold and silver have done so far this year as compared to the S&P 500, which is used as a proxy to the overall market. However, viewing these numbers in isolation or in a short-term time frame is like looking at a work of art from only a few inches away. In order to see the true picture, you have to step back to appreciate it. The same is true when looking at investment returns.

So, if we expand our time frame from over a decade or more, history shows us high growth and extreme volatility relative to the market. We now start to see a very different picture: one where the market outperforms by multiples, while gold and silver remain flat.*

At Ciccarelli Advisory Services, we believe in creating a fully diversified portfolio. What does that mean? Well, it means investing in a diverse group of asset classes over the long term. The asset classes have a low level of correlation between each other, allowing some investments to do well when others are not.

In the case of gold, silver, and other precious metals, adding this asset class as part of a fully diversified portfolio may make sense based on the financial plan that you and your financial advisor have designed.

Fortunately, the proliferation of investment products have made it easier to invest in gold and silver, which were once considered esoteric asset classes. For the regular investor, this can be done through ETF’s or ETN’s (Exchange Traded Funds or Notes), as well as through mutual funds, managed accounts, stocks of mining companies, futures contracts, and in the physical form of coins and bars.

In conclusion, gold and silver can be a good investment, but it has to be done for the right reasons – as part of a fully diversified portfolio over the long term.

*The Morningstar Gold & Silver Commodity ER USD benchmarks represent the excess return performance of a fully collateralized position in gold futures where futures contracts are rolled monthly to the nearest contract at least 2 months out. The index is multi-factor weighted and is rebalanced annually.

Section 529 plans can be a great way to save for college – in many cases, the best way – but they’re not the only way. When you’re investing for a major goal like education, it makes sense to be familiar with all of your options.

U.S. savings bonds

U.S. savings bonds are backed by the full faith and credit of the federal government. They’re very easy to purchase, and available in face values as low as $50 ($25 if purchased electronically). Two types of savings bonds, Series EE (which may also be called Patriot bonds) and Series I bonds, are popular college savings vehicles.

Not only is the interest earned on them exempt from state and local tax at the time you redeem (cash in) the bonds, but you may be able to exclude at least some of the interest from federal income tax if you meet the following conditions:

Your modified adjusted gross income (MAGI) must be below $92,550 if you’re filing single and $146,300 if you’re married filing jointly in 2016

• The bond proceeds must be used to pay for qualified education expenses
• The bonds must have been issued in 1990 or later
• The bonds must be in the name of one or both parents, not in the child’s name
• Married taxpayers must file a joint return
• The bonds must have been purchased by someone at least 24 years old
• The bonds must be redeemed the same year that qualified education expenses are being paid

But a 529 plan, which includes both college savings plans and prepaid tuition plans, may be a more attractive way to save for college. A college savings plan invests primarily in stocks through one or more pre-established investment portfolios that you generally choose upon joining the plan. So, a college savings plan has a greater return potential than U.S. savings bonds, because stocks have historically averaged greater returns than bonds (though past performance is no guarantee of future results).

However, there is a greater risk of loss of principal with a college savings plan. Your rate of return is not guaranteed–you could even lose some of your original contributions. By contrast, a prepaid tuition plan generally guarantees you an annual rate of return in the same range as U.S. savings bonds (or maybe higher, depending on the rate of college inflation).

Perhaps the best advantage of 529 plans is the federal income tax treatment of withdrawals used to pay qualified education expenses. These withdrawals are completely free from federal income tax no matter what your income, and some states also provide state income tax benefits. The income tax exclusion for Series EE and Series I savings bonds is gradually phased out for couples who file a joint return and have a MAGI between $116,300 and $146,300. The same happens for single taxpayers with a MAGI between $77,550 and $92,550. These income limits are for 2016 and are indexed for inflation every year.

However, keep in mind that if you don’t use the money in your 529 account for qualified education expenses, you will owe a 10% federal penalty tax on the earnings portion of the funds you’ve withdrawn. And as the account owner, you may owe federal (and in some cases state) income taxes on the earnings portion of your withdrawal, as well. Plus, there are typically fees and expenses associated with 529 plans. College savings plans may charge an annual maintenance fee, an administrative fee, and an investment fee based on a percentage of total account assets, while prepaid tuition plans typically charge an enrollment fee and various administrative fees.

Mutual funds

At one time, mutual funds were more widely used for college savings than 529 plans. Mutual funds do not impose any restrictions or penalties if you need to sell your shares before your child is ready for college. However, if you withdraw assets from a 529 plan and use the money for non-educational expenses, the earnings part of the withdrawal will be taxed and penalized.

Also, mutual funds let you keep much more control over your investment decisions because you can choose from a wide range of funds, and you’re typically free to move money among a company’s funds, or from one family of funds to another, as you see fit. By contrast, you can’t choose your investments with a prepaid tuition plan, though you are generally guaranteed a certain rate of return or that a certain amount of tuition expenses will be covered in the future. And with a college savings plan, you may be able to choose your investment portfolio at the time you join the plan, but your ability to make subsequent investment changes is limited.

Some plans may let you direct future contributions to a new investment portfolio, but it may be more difficult to redirect your existing contributions. However, states have the discretion to allow you to change the investment option for your existing contributions twice per calendar year or when you change the beneficiary. Check the rules of your plan for more details.

In the area of taxes, 529 plans trump mutual funds. The federal income tax treatment of 529 plans is a real benefit. You don’t pay federal income taxes each year on the earnings within the 529 plan. And any withdrawals that you use to pay qualified higher education expenses will not be taxed on your federal income tax return. (But if you withdraw money for non-educational expenses, you’ll owe income taxes on the earnings portion of the withdrawal, as well as a 10% federal penalty.)

Tax-sheltered growth and tax-free withdrawals can be compelling reasons to invest in a 529 plan. In many cases, these tax features will outweigh the benefits of mutual funds. This is especially true when you consider how far taxes can cut into your mutual fund returns. You’ll pay income tax every year on the income earned by your fund, even if that income is reinvested. And when you sell your shares, you’ll pay capital gains tax on any gain in the value of your fund.

Traditional and Roth IRAs

Traditional IRAs and Roth IRAs are retirement savings vehicles. However, because withdrawals for qualified higher education expenses are exempt from the 10% premature distribution tax (also called the early withdrawal penalty) that generally applies to withdrawals made before age 59½, some parents may decide to save for college within their IRAs.

In order to be exempt from the premature distribution tax, any money you withdraw from your IRA must be used to pay the qualified higher education expenses of you or your spouse, or the children or grandchildren of you or your spouse. However, even if you’re exempt from the 10% premature distribution tax, some or all of the IRA money you withdraw may still be subject to ordinary federal (and possibly) state income tax.

Also, any withdrawals for college expenses will reduce your retirement nest egg, so you may want to think carefully before tapping your retirement funds.

Custodial accounts

A custodial account holds assets in your child’s name. A custodian (this can be you or someone else) manages the account and invests the money for your child until he or she is no longer a minor (18 or 21 in most states). At that point, the account terminates and your child has complete control over the funds. Many college-age children can handle this responsibility, but there’s still a risk that your child might not use the money for college. But you don’t have to worry about this with a 529 plan because you, as the account owner, decide when to withdraw the funds and for what purpose.

A custodial account is not a tax-deferred account. The investment earnings on the account will be taxed to your child each year. Under special rules commonly referred to as the “kiddie tax” rules, children are generally taxed at their parent’s (presumably higher) tax rate on any unearned income over a certain amount. In 2016, this amount is $2,100 (the first $1,050 is tax free and the next $1,050 is taxed at the child’s rate).

The kiddie tax rules apply to: (1) those under age 18, (2) those age 18 whose earned income doesn’t exceed one-half of their support, and (3) those ages 19 to 23 who are full-time students and whose earned income doesn’t exceed one-half of their support. The kiddie tax rules significantly reduce the tax savings potential of custodial accounts as a college savings strategy. Remember that earnings from a 529 plan will escape federal income tax altogether if used for qualified higher education expenses; the state where you live may also exempt the earnings from state tax.

But a custodial account might appeal to you for some of the same reasons as regular mutual funds. Though the funds must be used for your child’s benefit, custodial accounts don’t impose penalties or restrictions on using the funds for non-educational expenses. Also, your investment choices are virtually unlimited (e.g., stocks, mutual funds, real estate), allowing you to be as aggressive or conservative as you wish. As discussed, 529 plans don’t offer this degree of flexibility.

Note: Custodial accounts are established under either the Uniform Transfers to Minors Act (UTMA) or the Uniform Gifts to Minors Act (UGMA). The two are similar in most ways, though an UTMA account can stay open longer and can hold certain assets that an UGMA account can’t.

Finally, there is the issue of fees and expenses. Depending on the financial institution, you may not have to pay a fee to open or maintain a custodial account. But generally you can count on incurring at least some type of fee with a 529 plan. College savings plans may charge an annual maintenance fee, an administrative fee, and an investment fee based on a percentage of total account assets, while prepaid tuition plans typically charge an enrollment fee and various administrative fees.

Trusts

Though trusts can be relatively expensive to establish, there are two types you may want to investigate further.

Irrevocable trusts: You can set up an irrevocable trust to hold assets for your child’s future education. This type of trust lets you exercise control over the assets through the trust agreement. However, trusts can be costly and complicated to set up, and any income retained in the trust is taxed to the trust itself at a potentially high rate. Also, transferring assets to the trust may have negative gift tax consequences. A 529 plan avoids these drawbacks but still gives you some control.

2503 trusts: There are two types of trusts that can be established under Section 2503 of the Tax Code: the 2503c “minor’s trust” and the 2503b “income trust.” The specific features and tax consequences vary depending on the type of trust that is used, and the details are beyond the scope of this discussion. Suffice it to say that either type of trust is much more costly and complicated to establish and maintain than a 529 plan. In most cases, a 529 plan is a better way to save for college.

Note: Investors should consider the investment objectives, risks, charges, and expenses associated with 529 plans before investing. More information about specific 529 plans is available in the issuer’s official statement, which should be read carefully before investing. Also, before investing, consider whether your state offers a 529 plan that provides residents with favorable state tax benefits. As with other investments, there are generally fees and expenses associated with participation in a 529 savings plan. There is also the risk that the investments may lose money or not perform well enough to cover college costs as anticipated.

This message may contain confidential information and is intended for use only by the addressee(s) named on this transmission. Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. 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. 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 in these materials may change at any time and without notice.

When investing in a mutual fund, you may have the opportunity to choose among several share classes, most commonly Class A, Class B, and Class C. The differences among these share classes typically evolve around how much you will be charged for buying the fund, when you will pay any sales charges that apply, and the amount you will pay in annual fees and expenses.

This multi-class structure offers you the opportunity to select a share class that is best suited to your investment goals.

Costs Associated with Mutual Funds

Mutual funds have costs that are passed on to investors. It’s important for you to understand what the different costs are, since these are usually deducted from the money you’ve invested and can affect the return of your investment over time.

Typically, mutual fund costs consist of sales charges and annual expenses. The sales charge, often called a load, is the broker’s commission, deducted from your investment when you buy the fund, or when you sell it. The annual expenses cover the fund’s operating costs, including management fees, distribution and service fees (commonly known as 12b-1 fees), and general administrative expenses. They are generally computed as a percentage of your assets and then deducted from the fund before the fund’s returns are calculated.

Note: Before investing in a mutual fund, carefully consider its investment objectives, risks, fees, and expenses, which can be found in the prospectus available from the fund. Read it carefully before investing.

So which share class should you choose? The answer to that depends on two factors: how much you want to invest and your investment time horizon.

Class A Shares

Class A shares may appeal to you if you’re considering a long-term investment of a large number of shares. When you purchase Class A shares, a sales charge, called a front-end load, is typically deducted upfront, thus reducing the actual amount of your initial investment.

For example, suppose you decide to spend $35,000 on Class A shares with a hypothetical front-end sales load of 5 percent. You will be charged $1,750 on your purchase, and the remaining $33,250 will be invested.

However, Class A shares offer you discounts, called breakpoints, on the front-end load if you buy shares in excess of a certain dollar amount. Typically, a fund will offer several breakpoints, so the more you invest, the greater the reduction in the sales load.

For example, let’s say that a mutual fund charges a load of 5 percent if you invest less than $50,000, but reduces that load to 4.5 percent if you invest at least $50,000 but less than $100,000. This means that if you invest $49,000, you’ll pay $2,450 in sales charges, but if you invest $50,000 (i.e., you reach the first breakpoint), you’ll pay only $2,250 in sales charges.

You may also qualify for breakpoint discounts by signing a letter of intent and agreeing to purchase additional shares within a certain period of time (generally 13 months), or by combining your current purchase with other investment holdings that you or your spouse and children have within the same fund or family of funds (called a right of accumulation). Since rules vary, read your fund’s prospectus to find out how you may qualify for available breakpoint discounts, or contact your investment advisor for more information.

Class A 12b-1 fees tend to be lower than those of other share classes, thus reducing your overall costs. This may make Class A shares more attractive to you if you wish to hold on to the fund for a longer period of time.

Class B Shares

Class B shares may appeal to you if you wish to invest a smaller amount of money for a long period of time. Unlike Class A shares, there is no up-front sales charge, so all of your initial investment is put to work immediately.

Class B shares have a back-end load, often called a contingent deferred sales charge (CDSC) that you pay when you sell your shares. The load usually decreases over time (typically 6 to 8 years), although this varies from fund to fund. By the end of the time period no charge applies. At that stage your shares may convert to Class A shares.

For example, suppose you invest $5,000 in Class B shares, with a 5 percent CDSC that decreases by 1 percent every year after the second year. If you sell your shares within the first year, you will pay 5 percent of the value of your assets or the value of the initial investment, whichever is less. If you hold your shares for 6 years, the CDSC will be reduced to zero.

Before you purchase Class B shares, however, make sure that this investment fits in with your overall goals. Class B 12b-1 fees can be considerably higher than for Class A shares, so the cost of investing large amounts over time might be more than you would like.

In addition, you don’t benefit from the breakpoint discounts available with Class A shares, and you must pay the CDSC if you sell your Class B shares within the time limit. You should also keep track of when your shares convert to Class A shares, especially if your account has been transferred from one brokerage to another.

Class C Shares

When you purchase Class C shares, a front-end load is normally not imposed, and the CDSC is generally lower than for Class B shares. This charge is reduced to zero if you hold the shares beyond the CDSC period, which for Class C shares is typically 12 months. For those reasons Class C shares may be appropriate if you have a large amount to invest and you intend to keep the fund for less than 5 years.

However, like Class B shares, the 12b-1 fees are greater for Class C shares than for Class A shares. Unlike Class B shares, these expenses will not decrease during the life of the investment, because C Class shares generally don’t convert to Class A shares. In addition, there are no breakpoints available for large purchases.

Other Options

Some mutual funds may not offer all three share classes and others may offer different classes, such as hybrid load shares or mid-load shares. Another option you may consider is a no-load mutual fund that you can purchase directly from an investment company or through an investment advisor. As the name implies, these funds have no front-end or back-end loads, and their expenses are typically lower than for other share classes.

Before you decide if these shares are suitable for you, you should look at their past performance and also at any expenses that may apply. 

• Check out the mutual fund in advance. Read the prospectus carefully, especially the discussion of fund classes and fees and how they apply to you.

• Make sure you understand how breakpoints work and how to take advantage of them.

• Compare the fees and expenses of different fund classes, to see how purchasing different share classes can affect your return. Take into account your investment amount, the length of time you plan to hold the fund, and the expenses and share load per share class.

• Review your mutual fund holdings regularly. Keep yourself informed of possible upcoming deadlines, such as an impending breakpoint, or when any Class B shares you may own are scheduled to convert to Class A shares.

• Keep your broker informed. To take advantage of all breakpoint discounts, you need to tell your broker about (a) your holdings within the mutual fund, and those of your family, (b) your holdings at other brokers, (c) any additional purchases you may have in mind.

As you consider how best to invest in mutual funds, keep in mind that there’s no guarantee any mutual fund will achieve its investment objective. You should discuss all of your investment goals with a qualified financial professional.

Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. 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. 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 in these materials may change at any time and without notice.

We all know that money can’t buy you happiness, right?  As it turns out, this is not exactly true.

A recent study by University of Michigan economists Betsey Stevenson and Justin Wolfers, examining data from more than 150 countries using World Bank data, has shed new light on the interaction between happiness and the size of your bank account.  Their first conclusion: the more money you have, the happier you tend to be, regardless of where you are on the income spectrum. They concluded that multi-millionaires don’t think of themselves as “rich.”

However, there do seem to be income levels where a person’s happiness can be increased faster than others.  Princeton University economist Angus Deaton has found that peoples’ day-to-day happiness level rises until they reach about $75,000 in income—a point where a person can comfortably afford the basic necessities of life without worrying where his or her next meal is going to come from.  After that, this type of happiness levels off.

In fact, a report in Psychological Science magazine found that the wealthier people were, the less likely they were to savor positive experiences in their lives.  Another study found that lottery winners tended to be less impressed by life’s simple pleasures than people who experienced no windfall.

Once you’ve had a chance to drink the finest French wines, fly in a private jet and watch the Super Bowl from a box seat, then a sunny day after a week of rain doesn’t produce quite the same jolt of happiness it used to.  The additional money tended to have a cancelling effect on day-to-day happiness.

It’s another kind of happiness, which focuses on something the researchers call “life assessment,” that continues to rise at all levels of wealth.  The more money people have, the more they feel like they have a better life, possibly (Deaton hypothesizes) because they feel like they’re outcompeting their peers.

Is there any way to more efficiently buy happiness with money?  A study by the Chicago Booth School of Business found that people experienced more happiness if they spent money on others than when the money was spent on themselves.  Treating someone else—or, more broadly, charitable activities—are among the most powerful financial enhancements to personal happiness.

Other research has shown that you get more happiness for your buck if you buy experiences rather than things.  An epic trip to Paris, or a weekend at a bed and breakfast near the coast, can be more enduringly pleasure-inducing than buying a new watch or necklace.  The watch or necklace quickly become a routine part of your environment, contributing nothing to happiness.  But your travel experience can be shared with others and reminisced about.

Finally, you can buy time with money—decreasing your daily commute by moving closer to work, hiring somebody to help around the house, hiring an assistant to clear your desk—all giving you leisure time to pursue your interests.  With the free time, take music lessons or learn to dance—and you’ll be happier than somebody with millions more than you have.

Sources:

http://fortune.com/2013/05/01/proof-that-money-does-in-fact-buy-happiness/

http://www.scientificamerican.com/article/can-money-buy-happiness/

http://www.nydailynews.com/life-style/health/money-buy-happiness-article-1.1458890

Ask your five-year old where money comes from, and the answer you’ll probably get is “From a machine!” Even though children don’t always understand where money really comes from, they realize at a young age that they can use it to buy the things they want.

So as soon as your child becomes interested in money, start teaching him or her how to handle it wisely. The simple lessons you teach today will give your child a solid foundation for making a lifetime of financial decisions.

Lesson 1: Learning to handle an allowance

An allowance is often a child’s first brush with financial independence. With allowance money in hand, your child can begin saving and budgeting for the things he or she wants. It’s up to you to decide how much to give your child based on your values and family budget, but a rule of thumb used by many parents is to give a child 50 cents or 1 dollar for every year of age.

To come up with the right amount, you might also want to consider what your child will need to pay for out of his or her allowance, and how much of it will go into savings. Some parents ask their child to earn an allowance by doing chores around the house, while others give their child an allowance with no strings attached. If you’re not sure which approach is better, you might want to compromise. Pay your child a small allowance, and then give him or her the chance to earn extra money by doing chores that fall outside of his or her normal household responsibilities.

If you decide to give your child an allowance, here are some things to keep in mind:

• Set some parameters. Sit down and talk to your child about the types of purchases you expect him or her to make, and how much of the allowance should go towards savings.
• Stick to a regular schedule. Give your child the same amount of money on the same day each week.
• Consider giving an allowance “raise” to reward your child for handling his or her allowance well.

Lesson 2: Opening a bank account

Taking your child to your local bank or credit union to open an account (or opening an account online) is a simple way to introduce the concept of saving money. Your child will learn how savings accounts work, and will soon enjoy making deposits.

Many banks and credit unions have programs that provide activities and incentives designed to help children learn financial basics. Here are some other ways you can help your child develop good savings habits:

• Help your child understand how interest compounds by showing him or her how much “free money” has been earned on deposits.
• Offer to match whatever your child saves towards a long-term goal.
• Let your child take a few dollars out of the account occasionally. Young children who see money going into the account but never coming out may quickly lose interest in saving.

Lesson 3: Setting and saving for financial goals

When your children get money from relatives, you want them to save it for college, but they’d rather spend it now. Let’s face it: children don’t always see the value of putting money away for the future. So how can you get your child excited about setting and saving for financial goals? Here are a few ideas:

• Let your child set his or her own goals (within reason). This will give your child some incentive to save.
• Encourage your child to divide his or her money up. For instance, your child might want to save some of it towards a long-term goal, share some of it with a charity, and spend some of it right away.
• Write down each goal, and the amount that must be saved each day, week, or month to reach it. This will help your child learn the difference between short-term and long-term goals.
• Tape a picture of an item your child wants to a goal chart, bank, or jar. This helps a young child make the connection between setting a goal and saving for it.

Finally, don’t expect a young child to set long-term goals. Young children may lose interest in goals that take longer than a week or two to reach. And if your child fails to reach a goal, chalk it up to experience. Over time, your child will learn to become a more disciplined saver.

Lesson 4: Becoming a smart consumer

Commercials. Peer pressure. The mall. Children are constantly tempted to spend money but aren’t born with the ability to spend it wisely. Your child needs guidance from you to make good buying decisions. Here are a few things you can do to help your child become a smart consumer:

• Set aside one day a month to take your child shopping. This will encourage your child to save up for something he or she really wants rather than buying something on impulse.
• Just say no. You can teach your child to think carefully about purchases by explaining that you will not buy him or her something every time you go shopping. Instead, suggest that your child try items out in the store, then put them on a birthday or holiday wish list.
• Show your child how to compare items based on price and quality. For instance, when you go grocery shopping, teach him or her to find the prices on the items or on the shelves, and explain why you’re choosing to buy one brand rather than another.
• Let your child make mistakes. If the toy your child insists on buying breaks, or turns out to be less fun than it looked on the commercials, eventually your child will learn to make good choices even when you’re not there to give advice.

This message may contain confidential information and is intended for use only by the addressee(s) named on this transmission.

Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information presented here is not specific to any individual’s personal circumstances.

If you’re already saving for college, you’ve probably heard about 529 plans. 529 plans are revolutionizing the way parents and grandparents save for college, similar to the way 401(k) plans revolutionized retirement savings. Americans are pouring billions of dollars into 529 plans, and contributions are expected to increase dramatically in the coming decade. Where did these plans come from, and what makes them so attractive?

The history of 529 plans

Congress created Section 529 plans in 1996 in a piece of legislation that had little to do with saving for college–the Small Business Job Protection Act. The law on 529 plans was later refined in 1997 by the Taxpayer Relief Act, in 2001 by the Economic Growth and Tax Relief Reconciliation Act, and in 2006 by the Pension Protection Act.

In this short period, 529 plans have emerged as one of the top ways to save for college. Section 529 plans are officially known as qualified tuition programs under federal law. The reason “529 plan” is commonly used is because 529 is the section of the Internal Revenue Code that governs their operation.

What exactly is a 529 plan?

A 529 plan is a college savings vehicle that has federal tax advantages. There are two types of 529 plans: college savings plans and prepaid tuition plans. Though college savings plans and prepaid tuition plans share the same federal tax advantages, there are important differences between them.

College savings plans

College savings plans let you save money for college in an individual investment account. These plans are run by the states, which typically designate an experienced financial institution to manage their plan. To open an account, you fill out an application, choose a beneficiary, and start contributing money.

However, you can’t hand pick your own investments as you would with a Coverdell ESA, custodial account, or trust. Instead, you typically choose one or more portfolios offered by the plan–the underlying investments of which are exclusively chosen and managed by the plan’s professional money manager. After this, you simply decide when, and how much, to contribute.

With early college savings plans, plan managers commonly invested your money based only on the age of your beneficiary (known as an age-based portfolio). Under this model, when a child is young, most of the portfolio’s assets are allocated to aggressive investments. Then, as a child grows, the portfolio’s assets are gradually and automatically shifted to less volatile investments to preserve principal. The idea is to take advantage of the stock market’s potential for high returns when a child is still many years away from college, while recognizing the need to lessen the risk of these investments in later years.

Though the age-based portfolio model is certainly logical (indeed, many parents were already trying to invest this way on their own), offering only this type of portfolio made college savings plans seem a bit inflexible. After all, with other college savings options like Coverdell ESAs, custodial accounts, mutual funds, and trusts, you can invest in practically anything (thereby taking into account your risk tolerance), and you have complete freedom to sell an investment that’s performing poorly (though in some cases the proceeds must still be used for education purposes, or for the child’s benefit in general).

Now, college savings plans are older and wiser. Today, more plans offer a wide array of portfolio choices. So, in addition to choosing an age-based portfolio, you may also be able to direct your 529 plan contributions to one or more “static portfolios,” where the asset allocation in each portfolio remains the same over time. These static portfolios usually range from aggressive to conservative, so you can match your risk tolerance. But keep in mind that college savings plans don’t guarantee your return. If the portfolio doesn’t perform as well as you expected, you may lose money.

When it’s time for college, the beneficiary of your account can use the funds at any college in this country and abroad (as long as the school is accredited by the U.S. Department of Education).

Prepaid tuition plans

Prepaid tuition plans let you save money for college, too. But prepaid tuition plans work differently than college savings plans.

Prepaid tuition plans may be sponsored by states (on behalf of public colleges) or by private colleges. A prepaid tuition plan lets you prepay tuition expenses now for use in the future. The plan’s money manager pools your contributions with those from other investors into one general fund. The fund assets are then invested to meet the plan’s future obligations (some plans may guarantee you a minimum rate of return). At a minimum, the plan hopes to earn an annual return at least equal to the annual rate of college inflation for the most expensive college in the plan.

The most common type of prepaid tuition plan is a contract plan. With a contract plan, in exchange for your up-front cash payment (or series of payments), the plan promises to cover a predetermined amount of future tuition expenses at a particular college in the plan. For example, if your up-front cash payment buys you three years’ worth of tuition expenses at College ABC today, the plan might promise to cover two and a half years of tuition expenses in the future when your beneficiary goes to college. Plans have different criteria for determining how much they’ll pay out in the future. And if your beneficiary attends a school that isn’t in the prepaid plan, you’ll typically receive a lesser amount according to a predetermined formula.

The other type of prepaid tuition plan is a unit plan. Here, you purchase units or credits that represent a percentage (typically 1 percent) of the average yearly tuition costs at the plan’s participating colleges. Instead of having a predetermined value, these units or credits fluctuate in value each year according to the average tuition increases for that year. You then redeem your units or credits in the future to pay tuition costs; many plans also let you use them for room and board, books, and other supplies.

A final note to keep in mind: Make sure you understand what will happen if a plan’s investment returns can’t keep pace with tuition increases at the colleges participating in the plan. Will your tuition guarantee be in jeopardy? Will your future purchases be limited or more expensive?

What’s so special about 529 plans?

Section 529 plans–both college savings plans and prepaid tuition plans–offer a combination of features that have made them attractive to college investors:

• Federal and state tax-deferred growth: The money you contribute to a 529 plan grows tax deferred each year.
• Federal tax-free earnings if the money is used for college: If you withdraw money to pay for college (known under federal law as a qualified withdrawal), the earnings are not subject to federal income tax, similar to the treatment of Coverdell ESA earnings.
• Favorable federal gift tax treatment: Contributions to a 529 plan are considered completed, present-interest gifts for gift tax purposes. This means that contributions qualify for the $14,000 annual gift tax exclusion. And with a special election, you can contribute a lump sum of $70,000 to a 529 plan ($140,000 for joint gifts), treat the gift as if it were made over a five-year period, and completely avoid gift tax.
• Favorable federal estate tax treatment: Your plan contributions aren’t considered part of your estate for federal tax purposes. You still retain control of the account as the account owner but you don’t pay a federal estate tax on the value of the account. But if you spread today’s gift over five years and you die within the five years, a portion of the gift will be included in your estate.
• State tax advantages: States can also add their own tax advantages to 529 plans. For example, some states exempt qualified withdrawals from income tax or offer an annual tax deduction for your contributions. A few states even provide matching scholarships or matching contributions.
• Availability: Section 529 plans are open to anyone, regardless of income level. And you don’t need to be a parent to set up an account. By contrast, your income must be below a certain level if you want to contribute to a Coverdell ESA or qualify for tax-exempt interest on U.S. education savings bonds (Series EE bonds and Series I bonds).
• High contribution limits: The total amount you can contribute to a 529 plan is generally high. Most plans have limits of $300,000 and up. Coupled with the tax-deferred growth of your principal and the income tax-free treatment of qualified withdrawals, it’s easy to see how valuable your money can be in a 529 plan.
• Professional money management: For college investors who are too busy, too inexperienced, or too reluctant to choose their own investments, 529 plans offer professional money management.
• College savings plan variety: In many cases, you’re not limited to the college savings plan in your own state. You can shop around for the plan with the best money manager, performance record, investment options, fees, state tax benefits, and customer service. (You can’t generally shop around with prepaid tuition plans, though.)
• Rollovers: You can take an existing 529 plan account (college savings plan or prepaid tuition plan) and roll it over to a new 529 plan once every 12 months without paying a penalty. This lets you leave a plan that’s performing poorly and join a plan with a better track record or more investment options (assuming the new plan allows nonresidents to join).
• Simplicity: It’s relatively easy to open a 529 account, and most plans offer automatic payroll deduction or electronic funds transfer from your bank account to make saving for college even easier.
• Innovation: Section 529 plans are a creature of federal law, but the states are the ones that interpret and execute them. As Congress periodically revises the law on 529 plans, states will continue to refine and enhance their plans (and their tax laws) in order to make them as attractive as possible to college investors from all over the country.

What are the drawbacks of 529 plans?

No college savings option is perfect, and 529 plans aren’t, either. Here are some of the drawbacks:

• Investment options: 529 plans offer little control over your specific investments. With a college savings plan, you may be able to choose among a variety of investment portfolios when you open your account, but you can’t direct the portfolio’s underlying investments. With a prepaid tuition plan, you don’t pick anything–the plan’s money manager is responsible for investing your contributions.
• Investment guarantees: College savings plans don’t guarantee your investment return. You can lose some or all of the money you have contributed. And even though prepaid tuition plans typically guarantee your investment return, some plans sometimes announce modifications to the benefits they’ll pay out due to projected actuarial deficits.
• Investment flexibility: If you’re unhappy with your portfolio’s investment performance in your college savings plan, you typically can direct future contributions to a new portfolio (assuming your plan allows it), but it may be more difficult to redirect your existing contributions. Some plans may allow you to make changes to your existing investment portfolio twice per calendar year or upon a change in the beneficiary.

But in either case, it depends on the rules of the plan. However, you do have one option that’s allowed by federal law and not subject to plan rules. You can do a “same beneficiary” rollover (a rollover without a change of beneficiary) to another 529 plan (a college savings plan or a prepaid tuition plan) once every 12 months, without penalty. This gives you the opportunity to shop around for the investment options you prefer.

• Nonqualified withdrawals: If you want to use the money in your 529 plan for something other than college, it’ll cost you. With a college savings plan, you’ll pay a 10 percent federal penalty on the earnings part of any withdrawal that is not used for college expenses (a state penalty may also apply). You’ll pay income taxes on the earnings, too. With a prepaid tuition plan, you must either cancel your contract to get a refund or take whatever predetermined amount the plan will give you for a nonqualified withdrawal (some plans may make you forfeit your earnings entirely; others may give you a nominal amount of interest).
• Fees and expenses: There are typically fees and expenses associated with 529 plans. College savings plans may charge an annual maintenance fee, administrative fees, and an investment fee based on a percentage of your account’s total value. Prepaid tuition plans may charge an enrollment fee and various administrative fees.

Note: Investors should consider the investment objectives, risks, charges, and expenses associated with 529 plans before investing. More information about 529 plans is available in the issuer’s official statement, which should be read carefully before investing. Also, before investing, consider whether your state offers a 529 plan that provides residents with favorable state tax benefits. As with other investments, there are generally fees and expenses associated with participation in a 529 savings plan. There is also the risk that the investments may lose money or not perform well enough to cover college costs as anticipated.

This message may contain confidential information and is intended for use only by the addressee(s) named on this transmission.

Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. 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. 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 in these materials may change at any time and without notice.

In our modern age of technology, cybercrime is on the rise – and attackers are getting more creative in how they attempt to break into your financial accounts.

In an effort to protect you and your family from financial breaches and identity theft, we’ve put together an explanation of the most recent trend in cybercrime – credential replay – and how you can protect yourself.

Credential replay is a two-step process. First, the online attacker intercepts your log-in credentials when you log into your account on a financial institution’s website. With those credentials, the attacker then attempts to log into your accounts at other financial institutions. Because many account holders use the same credentials across different institutions, the cybercriminals are able to access numerous accounts.

Any financial institution is vulnerable to this type of attack, and many overseas hackers are targeting major U.S. companies – banks, brokerage firms, credit card companies, etc.

The best method for protecting yourself from credential replay attacks is to use different log-in credentials for each of your financial accounts.  By doing so, cybercriminals will not be able to use credential replay to hack into your accounts.

 
Recently, several insurance providers – MetLife, Genworth, Transamerica, John Hancock and others – have been sending premium increase notices of 60% or more to their policy holders.

If you have a long-term care insurance policy, please contact us before you take action. We would like the opportunity to answer any questions you may have, and to evaluate the options with you.

By carefully assessing the financial interests of your family, we will work with you to determine the best course of action.