It is no secret that the cost of college is rising with no end in sight, requiring further planning, strategy, and saving. The Section 529 funds are very common recommendations for families saving for college. While this is great for some families, there are good, bad and ugly aspects of these plans and some families will benefit more from other strategies. The Good: The biggest benefit to a 529 fund is the potential tax savings. The growth of the investments within the fund, and the withdrawals are all tax free when used for qualified education expenses (as defined in the IRC). Another benefit is the new 529 laws have expanded qualified education expenses to include trade schools and other forms of higher education. However, there are also several shortcomings.  The Bad: 529’s often have very limited investment options, many of which are age-based investing, often not being as adjustable to risk tolerance and preference. The family does not get a lot of discretion. Another shortcoming is they have to be declared on the FAFSA and can lower your need based aid. The Ugly: If 529 funds are not used for education, they are stuck in this account. The only options are to change the beneficiary to another family member or withdraw and pay income tax on growth, as well as a 10% penalty. While there is a new provision to roll leftover balances into a Roth IRA, read the fine print. There are a lot of strings and checkboxes attached to this provision. In conclusion, while these vehicles are still the best strategy for some families, there are other vehicles referred to as tax or asset advantaged assets that are more beneficial for other families. These assets do not have many of the withdrawal constraints and limitations of 529’s. These assets can often be sheltered from the FAFSA, potentially increasing your need-based aid. Every family needs to understand which strategy will be most beneficial for their family. Contact Boyce & Associate today for expert recommendations on which strategy is best for your family.
This week, CEO Eric Boyce, CFA discusses: 1. What to expect in the GDP numbers this week, and the notable rise in mentions of "uncertainty" and "tariffs" in the new Fed composite survey 2. Hard data still holding up amidst the decline in soft data 3. Outlook for orders, capital spending declining; meanwhile prices paid rising in anticipation of tariffs 4. Inventories rising in advance of tariffs - likely a tailwind for the second quarter, but a headwind for the second half of the year, given the current rhetoric 5. Regional Fed service sector data also showing some weakness... 6. Dollar weakness (off trough, though) - what are the implications 7. Gold strength likely to persist 8. S&P 500 earnings estimates coming down ~15% - an analysis of the current adjustments 9. Evidence that markets have reasonable upside following episodes where the market is down 5% over two days (recent occurrence)
This week, CEO Eric Boyce, CFA discusses: 1. Issues on trade related to China and the length of negotiation for deals 2. the potential impact on small business & on capital spending 3. Soft data is certainly soft at this point due to global uncertainty...among consumers, business owners and investors 4. Some hard data - retail sales, regional Fed surveys - do not yet reflect the increasing impact of tariffs 5. US dollar weaker - implications for trade, bond yields 6. negative wealth impact of stock declines, where is valuation, earnings estimates falling as expected
CEO Eric Boyce, CFA provides a historic perspective on volatility, in light of recent market developments. The discussion includes: 1. Historical major one-day declines and longer-term drawdowns give way to resounding positive future market performance over time. 2. The relative frequency of drawdowns over time might surprise you. 3. Intra-year downturns are common in years where the market is up for the year. 4. Time greatly dampens the near term impact of volatility. 5. The probability of positive performance really goes up the longer you remain invested. 6. Chart showing how the market goes up +70% of the time, and that bull markets are MUCH more prevalent than bear markets. 7. The value of staying invested according to your investment policy throughout your investment horizon and NOT trying to time the market.
Trading goods has been around for millennia - with early written documentation beginning with the silk road to the industrial and now digital revolution - the exchange of goods has led to an interconnected world where products and services change hands between cultures and countries. Globalization (the exchange of goods) started to play a central role in global Gross Domestic Product (GDP): a measure of the total value added from the production of goods and services in a country or region each year with exports accounting for approximately 13% of world GDP in 1970 and near 30% in 2023, according to the World Bank.  Tariffs have been one of the major headlines as Donald Trump entered the Oval Office for his second term as President. To prime the discussion and apply it to current events, it seems judicious to take a moment and look back at the role tariffs have played in policy for the United States. Tariffs are essentially a tax on goods and/or services imported to the United States paid for by the business importing the goods and typically passed onto the consumer in the form of an increase in price of that good. An increase in tariff rates is meant to discourage trade as it makes goods more expensive to buy from other countries compared to buying domestic goods to which the tariff does not apply. Major economies, 23 countries in total, entered the General Agreement on Tariffs and Trade (GATT) in 1947 to lower tariff rates and other trade barriers to encourage trade. This is perhaps what makes President Trump’s stance to raise tariffs more controversial. A look back in U.S. history will show that tariffs were the government’s primary revenue source prior to 1913, when the 16th Amendment introduced the federal income tax. Today, tariff revenues make up less than 2% of the $4.9 trillion in total tax revenue for 2024, with the majority coming from individual and corporate income tax. Given that tariffs are no longer a major element of domestic tax policy, what role do tariffs play in broader economic and policy goals? The implementation of tariffs are now primarily used as a tool to protect and regulate trade practices that could injure domestic industry, advance foreign policy goals or as negotiating leverage in trade negotiations, according to a paper titled: “U.S. Tariff Policy: Overview” by the Congressional Research Service. For policy, the potential benefits are clear. Economically, the benefits are less clear. Retaliatory tariffs, rising costs, and supply chain disruptions all bring into question whether tariffs will result in the desired outcome of benefitting the U.S. consumer.
Dear Clients and Friends,
This week, CEO Eric Boyce, CFA discusses: 1. earnings estimates have come down, but are still growing for the S&P 500, but not for the Russell 2000 2. valuations have come down appreciably for the S&P 500, and the good news is that it's coming from price/earnigns multipl contraxtion and not earnings 3. gold catches a bid, and there's a strong bet that interest rates will come down based on interest in 3-month SOFR futures 4. both individual and institutional investors more cautious amidst the change in leadership within the market (Mag 7 goes on sale) 5. foreign ownership of US investments has picked up, providing both a benefit and potential risk 6. FOMC more concerned with unemployment and inflation, but do not expect recession despite some estimates for negative growth during 1Q 2025 7. Regional Fed surveys highlight caution; trade figures highlight front running of imports ahead of tariffs 8. corporate profits remain high; pending home sales plunge
This week, CEO Eric Boyce, CFA discusses: 1. volatility increases within the market, market sector shifts, market concentration dynamics 2. with higher volatility from trade, etc. policy, markets can actually exhibit better risk-adjusted returns; consumer inflation from tariffs may promote higher profit margins 3. power of long term compounding - EVEN IF price/earnings multiples contract from here 4. international valuations improving relative to S&P500 5. stabilization perhaps in office RE market 6. individual investors very apprehensive about market, think business conditions, employment & income trends worsening. 7. small business outlooks more guarded, higher prices paid showing up in the data 8. housing supply improving, but prices are rising faster than inflation