Tuesday, June 30, 2015

Paragon Perspectives

The first thing every investor should know and accept is that there is no such thing as a sure thing when it comes to investments.  Risk is a part of the investing process; we need some risk in order to generate profits.  There is always the possibility that your investment won’t be profitable.  Or worse, you can lose some or even all of what you have invested. In this quarter’s newsletter we will examine how you can manage total portfolio risk by reducing systemic risk though asset allocation and by reducing non-systematic risk with portfolio diversification.

At first glance, dividends and income-producing securities may seem like an attractive way to generate income in retirement.  But investing exclusively with income distributions may end up being riskier than you thought.  Income producing securities can leave retirees susceptible to the current interest-rate environment and the possibility of a decrease in revenue.  We will also discuss how a diversified portfolio may be a more stable way to generate revue in retirement.

In order to avoid unnecessary risk and account for living expenses in retirement you should adjust your portfolio accordingly. Even if you are comfortable with a decent amount of risk, the closer you get to retirement, the more conservative your investment portfolio may need to become. 

At Paragon Financial Advisors, we try to assist our clients in doing a thorough risk analysis to determine their risk tolerance.  We also design portfolios with diversification and asset allocations that suit the client’s current investing and income needs.   Paragon Financial Advisors is a fee-only registered investment advisory company located in College Station, Texas. We offer financial planning and investment management.

If you are not on our email list for our quarterly newsletter and would like to be added please email info@paragon-adv.com to request a copy of Paragon Perspectives.

Wednesday, June 3, 2015

5/29: National 529 College Savings Plan Awareness Day

School Yourself Before You Invest

May 29th is National College Savings Plan Awareness Day. This annual day celebrates the importance of preparing for future college expenses and the advantages of 529 College Savings Plans. Did you know that an alarming 70% of students who graduated from college in 2013 left college with an average of $28,400 in debt per borrower1? It’s shocking how quickly tuition rates have risen and how expensive the price tag of a college degree has become.  Planning for future expenses has become a crucial necessity. See: Shocking Trends in College Expenses and College Debt Necessitate Earlier Planning for Families

College Savings 529 accounts have been getting a lot of exposure nationally and are starting to get the positive recognition they deserve. 529 plans offer a simple, affordable way to save for rising higher education expenses. These investment accounts allow tax-deferred growth, high contribution limits, and unique ownership features. See: School “Daze”

Characteristics of 529 College Savings Accounts:
  • Anyone, regardless of income, can open a 529 account to save for their dependents or even their own educational expenses.
  • Individuals can contribute annually up to the federal gift-tax exclusion ($14,000 for 2015 or $28,000 if married) per beneficiary. Keep in mind these contributions are made with after tax dollars.
  • Under a special election you can combine up to five years’ worth of contributions into one contribution of up to $70,000 ($140,000 for married couples).
  • Anyone (i.e. family) can also contribute until the account value reaches $350,000.
  • Money from a 529 plan can be used for tuition, fees, books, supplies, and equipment required to study at any accredited college, university, or vocational school here in the United States.
  • The money can also be used for room and board, as long as the beneficiary is enrolled as at least a half-time student.
  • A distribution from a 529 account that is not used for the above qualified educational expenses is subject to ordinary income tax and maybe an additional 10% distribution penalty on the gains unless other conditions are met.
  • Accounts are transferable: unused amounts are able to transfer to other qualified members of the beneficiary’s family without incurring any tax penalty.

Do you know how much do you need to save to send your child to college? Will your children need to take out student loans? See: Student Loan repayment and Forgiveness Programs

* Numbers are rounded for illustrative purposes and are not intended to portray an actual investment. Values are in today’s dollars and are not adjusted for inflation

May 29th is recognized as ‘National 529 College Savings Day’ and we invite you to celebrate with us the importance of setting aside money for higher education. A little preparation to put money aside today could mean a lower financial burden for your children down the road and greater freedom for those of the next generation to pursue their own financial goals.

Do you have a child attending college this fall? Do you have questions about saving for future college expenses and how that fits into your overall financial picture? Contact us today and schedule a consultation. We, at Paragon Financial Advisors, are happy to have a more in-depth conversation with you about your personal circumstances.

Paragon Financial Advisors is a fee-only registered investment advisory company located in College Station, Texas. We offer financial planning and investment management.