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529 Plans are one of the most popular savings vehicles for higher education, giving individuals a way to save on behalf of a beneficiary.  Also known as qualified tuition plans, 529 plans are “sponsored by states, state agencies or educational institutions and are authorized by Section 529 of the Internal Revenue Code [1].”

WHAT ARE THE TYPES OF 529 PLANS?

Prepaid Tuition Plans:

Prepaid tuition plans allow individuals to prepay tuition at its current rate.  Because this type of plan locks in the rate, it can help to ease concerns about inflation and the rising costs of a college and university level education.

However, many prepaid plans have specific residency requirements and/or guidelines for where a student may choose to attend college/university (typically in-state, public institutions).  At the time of publication, 16 states have an option for a prepaid tuition plan:

• Alabama Massachusetts Tennessee
• Colorado Michigan Texas
• Florida Mississippi Virginia
• Illinois Nevada Washington
• Kentucky New Mexico West Virginia
• Maryland South Carolina Wisconsin

Education Savings Plans

An education savings plan is a savings account made up of mutual funds, ETF’s, etc. from which funds can be used specifically for higher education purposes.  This may include, but is not limited to, tuition, fees, room and board, technology/equipment, and books.

Investors can typically be more aggressive with their investment strategies when children are younger.  However, as the child gets closer to college-age, it is usually recommended to switch to a more conservative approach.

In 2018, a new tax law was implemented so that $10,000 per student per year can be used toward private elementary or secondary school (for tuition only).

You can choose any state’s plan, regardless of your state of residency; however, each has its own set of fees and benefits.  For example, if you are a Georgia resident and you choose to invest in Georgia’s Path2College 529 Plan, you can claim a state tax deduction for your contributions.

WHAT ARE THE BENEFITS?

In addition to state-specific advantages, there are general benefits that all 529 plans provide:

• Anyone can make a contribution
• The plan can be transferred to any family member or beneficiary
• No income limits—anyone can open and contribute regardless of their income
• It is a low maintenance investment option
• The plan owner, not a beneficiary, maintains control of the plan

Tax Benefits

Tax benefits vary from state to state, and it is always best to consult your accountant regarding your specific circumstances. But in general, the following benefits will almost always apply:

• Withdrawals are not subject to federal taxes if taken for qualified expenses
• Earnings grow tax-free
• Contributions are typically exempt from gift taxes
• Contributions may be fully or partially deducted from state income tax (currently in more than 30 states)
• You may only be eligible if you invest in the 529 Plan from your state of residency

HOW DO I OPEN A 529 PLAN?

Before opening a 529 plan, you will want to research all available options.  If your state offers benefits for its residents, that may be the best option.  If not, you may find that another state’s plan will be a better fit.

Once you have made a decision, visit the plan’s website to open the account and choose your investment options.  A money manager, like Howard Capital Management, Inc. (HCM), can then help you make the most of your investment.

WHEN SHOULD I OPEN A 529 PLAN?

Many parents choose to open a 529 Plan as soon as their child is born, allowing the investment to grow for 18 years before using it for higher education. Your financial advisor may also suggest investing in a 529 Plan in conjunction with a Roth IRA to maximize your savings.

Contact Howard Capital Management, Inc.

At Howard Capital Management, Inc. (HCM), we understand how important it is to work with someone you trust, that will create and deliver on a personalized plan which has your best interest in mind. By planning for your financial future now, you can make saving for higher education an exciting and smooth process.

Investing in an employer-sponsored 401(k) is one of the most beneficial approaches to prepare and save for retirement.  There are many ways in which an employee can be proactive to make the most of their investment, however, mistakes are also made that could harm the growth of a 401(k).  The following are 10 mistakes to avoid and what to do to make the most of your 401(k).

1. Not Investing in a 401(k)

Investing in a 401(k) is a great first step when saving for retirement.  If your employer has made a 401(k) available to you, take advantage!  Your contribution will be automatically made each pay period and because these wages are not included in your taxable income, you will pay less in taxes.

2. Not Starting Soon Enough

Due to compound interest, the earlier that you invest in a 401(k), the higher your return can be in the long-run.  The funds you invest can each earn interest of their own, which can allow everything to grow more rapidly. Even if your savings are minimal in the beginning, you will still be in a better position than if you were to wait several more years to get started.

3. Letting Your 401(k) Run on Autopilot

Pay attention to your 401(k).  While your contributions may be automatic, your investments will highly benefit from being consistently managed.  Your 401(k) plan likely has default options; however, those may or may not be the best match for your risk tolerance level and long-term goals. Monitoring your fund diversification and re-balancing if necessary, can ensure that you are taking advantage of all opportunities as the market changes.

4. Making Decisions Based on Emotions

The market will inevitably fluctuate, but making an investment decision based on one particular cycle may not be in your best interest, as your 401(k) is a long-term investment.  Discuss any potential changes with a financial professional and let your personalized action plan, not your emotions, dictate your next steps.

5. Improper Asset Allocation

Allocating your assets in a way that aligns with your financial goals can set your retirement plan up for success. However, as the market moves, your investments may shift out of line with your initial investment strategy.  Re-balancing is a simple solution that helps to both manage risk and support growth in your funds. Many plans may even feature an automatic re-balancing tool which would allow investors to be more hands-off.

6. Investing Too Much in Company Stock

While investing in company stock may be part of your investment strategy, it is generally not recommended to dedicate a large percentage of your portfolio to this asset.  These assets are generally more unpredictable and can, therefore, increase your portfolio’s risk level.

7. Leaving Money on the Table

If your company offers a matching contribution, you are being given the opportunity to invest “free” money, which will help you build your retirement nest egg.  Ideally, you’ll want to contribute as much as financially feasible, even beyond the match maximum. However, a good place to start is to contribute at least enough to take full advantage of the match.

8. Borrowing From or Cashing Out Your 401(k)

Withdrawing funds from your 401(k) before age 59 ½ can result in large penalty fees and taxes.  Doing so would require that you pay back the 401(k) loan in a specified period of time, or it would be considered an early distribution.

Cashing out your 401(k), in an indirect rollover, for example, could also subject you to additional fees and taxes.  In this scenario, because you technically have use of the funds before they are rolled over into your new 401(k) plan, it is required that 20% of the funds are withheld for federal income taxes.  However, you are still responsible for redepositing the full amount that was in your 401(k) within 60 days, or it would be considered an early distribution.

9. Abandoning Your 401(k) When you Change Jobs

When you make the decision to change jobs, don’t forget to take your 401(k) funds with you.  In general, it is recommended to either move your funds to your new company’s 401(k) plan or to roll them over into a traditional or Roth IRA.  Whichever option you choose, this will ensure that your investments are continuously being put to work for you.

10. Not Getting Professional Advice about Your 401(k) Investments

A financial professional can help you determine your risk tolerance level and long-term goals and allocate your portfolio accordingly. Additionally, he or she can alleviate concerns or point out a potential opportunity as the market shifts, ultimately helping you to earn more.

Contact Howard Capital Management, Inc.

At Howard Capital Management, Inc. (HCM), we understand how important it is to work with someone you trust, that will create and deliver on a personalized plan which has your best interest in mind. By planning for your financial future now, you can make your retirement an exciting and smooth transition.

Planning for retirement is a lifelong process.  In your 20’s you may open your first 401(k) or Roth IRA account; in your 40’s you may pay off all of your debts and start contributing those funds to your retirement; And in your 60’s you may make your bucket list, looking forward to your last day of work.

You have put money, hard work, and time into saving and preparing for your retirement. As you approach this incredible milestone, there are a few action steps you can take to ensure you set yourself up for financial, and personal, success.

CREATE A PLAN

There are a few questions to ask yourself as you prepare for retirement, as the answers to those questions should be a part of your comprehensive retirement plan.

When do I want to retire officially?

Becoming more specific about your retirement timeframe, as well as estimating how much money you will need, can provide you with beneficial information that you can use to fine-tune your current savings plan. Are you on track to meet your retirement goals or are changes needed?

How much money do I need to retire and be able to live the lifestyle I want?

You may also want to work with your financial advisor to do a full evaluation of your current retirement savings and to create a financial plan for pre- and post-retirement.  Once a plan is in place, re-evaluate it at least once a year to ensure that you are staying on track to reach your goals and to make any adjustments if necessary.

When do I plan to collect Social Security?

Although you can begin collecting Social Security at age 62, it may be best to wait until age 70 or later, as the longer you wait to collect your benefit, the larger that benefit may become.  Your specific circumstances—family, health, current income, etc.—will help you determine the ideal time to begin collecting, as this is a very personal decision.

ASSESS FINANCIAL STATUS

The status of your current retirement savings vehicles can provide you with good insight into your readiness for retirement.  The first step is to look at what you have available in all of your accounts—Do you need to adjust your risk tolerance level? Do you need to increase the amount you are saving?

In general, younger investors are able to take more risk with their funds and can be more aggressive with their portfolios.  However, as an investor approaches retirement, it is typically recommended to take a more conservative approach, minimizing overall risk.

If the total of your accounts is lower than you expected, you may also want to look at your options for increasing income and/or reducing expenses so you can contribute more to your retirement.  Start by developing a budget to see where your money is going each month. Which expenses are obligatory? Which are optional? From this, you can determine where you may be able to cut costs or if you would prefer to have additional income from a part-time job or side hustle to cover the difference.

DETERMINE FUTURE WORK PLANS

Part of your post-retirement plan will be determining if you and/or your spouse will continue working.

If you are hoping to stop working altogether, then you will need to know if you have enough in your current retirement savings accounts.

One example may be that you have enough to cover all of your living expenses but your bucket list has grown, so an extra income would allow you to check off many of those items.  Monetizing a hobby or taking a part-time position could be possible solutions.

Whether you continue to work because of need or want, or you decide to no longer be employed, your plan should take this income, or lack thereof, into account.

EVALUATE HEALTH

Your physical health can play a large role in your retirement years, impacting both your ability to enjoy retirement and the amount that you may need to save.  Being, and staying, proactive can help you achieve retirement success.

Begin by scheduling appointments to meet with your doctors to evaluate your overall physical health.  Together, you can discuss a plan to maintain a healthy lifestyle.  Of course, eating healthy, exercising and getting enough sleep are things that everyone can do, but your doctor can provide you with more personalized recommendations based on your medical history and needs.  The healthier you are, the more likely you will be able to enjoy your retirement years and accomplish the goals that you have made.  In addition, better health typically means lower healthcare costs, letting you enjoy more of your hard-earned savings.

As you create your retirement plan, you will also want to research which healthcare options will be available to you once you decide to retire.  You will likely be eligible for Medicare at age 65; however, this may not cover all of your medical expenses.  Does your current employer offer any health benefits that continue into retirement? Would COBRA be an option?  No matter which route is best for your situation, ensure that you have accounted for these costs when preparing your retirement budget.

DISCUSS PLAN WITH PARTNER/SPOUSE

Communication is the key to successfully planning for retirement with your partner/spouse.  It is so important to ensure that you are both on the same page about post-retirement plans. While one partner may be thinking about traveling, the other may be more focused on visiting the grandchildren more frequently.

Have a discussion about what you each want out of retirement.  The options are endless—starting a side business, taking on a new hobby, downsizing, visiting, moving to a new place, etc.  Evaluate any differences and work through your bucket lists to create a plan in which each of you can accomplish your individual goals, as well as the goals you set together. This will be just one part of your overall retirement plan and can help you as you assess your financial status and determine funds needed to maintain a stable financial future in your retirement years.

Contact Howard Capital Management, Inc.

At Howard Capital Management, Inc. (HCM), we understand how important it is to work with someone you trust, that will create and deliver on a personalized plan which has your best interest in mind. By planning for your financial future now, you can make your retirement an exciting and smooth transition.

Since 2006, Howard Capital Management, Inc. (HCM) has been building and perfecting the 401(k) Optimizer®. The 401(k) Optimizer® is an easy, automated online tool designed to help you manage your company-sponsored retirement plan investments through personalized allocation recommendations. The system uses your risk tolerance and long-term goals to generate portfolio allocation recommendations and will recommend changes you should make to your investment strategy based on your plan’s investment options and market fluctuations.

In an attempt to optimize returns in your retirement plan, the 401(k) Optimizer® will suggest what investments to buy, when to buy them and when to sell them. It can also suggest when it may be time to make changes to your investment strategy based on market fluctuations.

The 401(k) Optimizer® was made with you, the investor, in mind, and gives you the tools you need to confidently manage your retirement savings plan.

USER-FRIENDLY ACCOUNT

Once you create an account on the 401(k) Optimizer® website and complete the risk tolerance questionnaire, you will be asked to upload your employer’s plan.  After completing an in-depth analysis, the system will provide you with a personalized recommendation on how to appropriately allocate your portfolio.

Your account’s online dashboard is user-friendly and allows you to see a detailed picture of your portfolio’s holdings and your personalized recommendations. Track stocks, update your profile and contact your financial advisor all in one place.

ONGOING GUIDANCE

The 401(k) Optimizer® consistently monitors your portfolio.  When the time comes to make a change or update your portfolio, you will receive both a notification and detailed instructions to guide you through the process.  In addition, you can expect a quarterly email update on how to rebalance or reallocate your portfolio, if needed.

STOCK PERFORMANCE INDICATOR

The Optimized Trend Indicator® (OTI) tool allows you to check the performance of any single stock, giving you an additional resource to use when making personal investment decisions.

SIGNATURE STOPLOSS PROTECTION

By overlaying your investments with the HCM-BuyLine®, HCM’s signature stoploss protection tool, the 401(k) Optimizer® can offer downside risk management.  These proprietary tools work together to mitigate risk by indicating when it may be time to move your investments to cash or a more conservative investment option. Don’t let the fear of a market downturn hold you back!

BACKED BY SOPHISTICATED ANALYSIS

• The technology behind the 401(k) Optimizer® is non-emotional and repeatable.  It carefully analyzes:
• Asset Classes
• Fund Managers
• Fund Performance
• Asset Turnover
• Current Market Conditions

Contact Howard Capital Management, Inc.

At Howard Capital Management, Inc. (HCM), we understand how important it is to work with someone you trust, that can create and deliver tools and technology to help you navigate the market with ease.  By planning for your financial future now, you can make your retirement an exciting and smooth transition.

Established in 1999, Howard Capital Management, Inc. (HCM) is an SEC-Registered Investment Advisory Firm offering professional money management services to private clients, brokers and broker-dealers. HCM specializes in various types of trading systems to assist clients in reaching their financial goals and to navigate complex and ever-changing market conditions. Whether you are an investor, planning for or in retirement, you can put the Howard Difference to work for you.

EXPERIENCE

With over 30 years’ experience, our disciplined strategies are backed by extensive research, sophisticated analysis, and proprietary computerized tools.  Vance Howard, CEO and Portfolio Manager, has been mentioned in numerous publications including Kiplinger Magazine, Investor’s Business Daily (IBD), MorningStar and Investment News.  In addition, HCM has recurrently made the monthly top 10 list in The Wall Street Journal’s Category Kings for the performance of Equity Income Funds and Multi Cap Growth Funds.

FLEXIBILITY

Asset flexibility is a key feature of HCM’s trading philosophy. All of our portfolios are fully liquid, as we do not lock investors in an investment that cannot be changed or easily withdrawn from. This flexibility ­also gives us the ability to act when the HCM-BuyLine® signals, to move to cash and/or cash equivalents in the event of a market downturn in an attempt to preserve capital.

TACTICAL MANAGEMENT

HCM believes in active management through a tactical approach. Through tactical management, we are able to hold a range of percentages of asset allocations in each of our portfolios. This type of diversification gives HCM portfolios the ability to seek income and growth for investors with all levels of risk and return objectives.

STOPLOSS MANAGEMENT

Most of HCM’s investment portfolios and retirement tools work in conjunction with our proprietary stoploss tool, the HCM-Buyline®.  By doing so, we aim to keep assets on the right-side of the market.

The HCM-BuyLine® is an indicator that mitigates downside risk by signaling when funds should be moved out of equities and into cash and/or cash equivalents, while taking advantage of market upturns. It strives to protect profits while providing a highly complex and technical quantitative trading tool for the universal client.

PROPRIETARY TOOLS

The 401(k) Optimizer® is an online allocation tool designed to deliver personalized recommendations based on an individual’s investment options, risk tolerance level, age and long-term goals. Another tool, built for the public sector, the TSP Optimizer®, allows federal employees to upload their fund options and quickly allocate their Thrift Savings Plan (TSP) Funds based on their risk tolerance and long-term goals.

All of HCM’s proprietary retirement tools are delivered with the use of the HCM-BuyLine®, protecting investments through market downturns while also pursuing opportunities for growth.

Contact Howard Capital Management, Inc.

For more information on any of HCM’s proprietary tools or to learn more about portfolio management services, please contact HCM at (770) 642-4902 or visit www.howardcm.com.

1. Start Early & Take Advantage of a Company Match

Thanks to compounding interest, the earlier that you can invest in a 401(k) plan, the greater your return can be in the long-run. You earn interest not only in the funds you initially invested in your 401(k) plan but also on the interest it has already earned, allowing your savings to grow more rapidly.

Devoting any amount to your 401(k) plan now, no matter how small, is going to be more beneficial than waiting another few years; and you can always increase your contribution at a later date.

In addition, your employer may offer to match your investment up to a certain dollar amount or percentage of salary.  Take advantage by contributing as much as you can up to the match—your company is giving you free money to participate!

2. Tend to Your 401(k)

Many employers offer an option for employees to contribute to their 401(k) plan through an automatic payroll deduction.  While this is a valuable tool that can increase savings, it does not mean that the investment should run on autopilot.

Consistently managed funds tend to produce higher returns.  Maintaining an open line of communication with your financial advisor can ensure that you are able to rebalance your portfolio as needed and take advantage of any opportunity that arises as the market fluctuates.

3. Diversify Your Investments

Perhaps the most important rule for investing in your 401(k) plan is to diversify your funds. Having a mix of assets in your portfolio allows you to proactively balance your risk.  The goal is to protect your balance in an economic shift or a decline in performance by building a foundational safety net.

Your risk tolerance level will help to determine how you build your portfolio.  Are you aggressive (higher risk), conservative (lower risk) or somewhere in between? Your financial advisor can help identify the level with which you most closely align, helping you to allocate assets in a way that best represents your goals.

4. Rollover

If you move from one company to another, you will have several choices on how to manage the funds in your current 401(k) plan.  Do you move the funds into your new employers 401(k) plan, convert them into an IRA or do you cash out? There may be a minimum balance, but you may even be able to keep the funds at your old company; however, this may not always be the recommended approach.

The best option for you can depend on the amount of your current investment as well as new investment options. It is always recommended discuss your options with your financial advisor to help you make an informed decision.

5. Stay Informed

While a financial advisor may help with the day-to-day management of your 401(k) plan, improving your financial knowledge will help you stay involved in the development of your investment strategy and short- and long-term goals.

By staying educated and informed, you are in a better position to understand the performance of your investments and will ultimately feel more confident as you make decisions.

6. Manage Emotions

Decision making, particularly when it involves a significant financial investment, can be easily influenced by emotions. However, feeling optimistic when the market is up, or concerned when the market is down, does not mean that you need to take immediate action.

Before making any changes, refer back to your initial goals. What short- and long-term goals did you set for your investment? What is your risk tolerance level? Are you happy with your current asset allocation or would you be more comfortable rebalancing?

In addition, discussing market changes as well as a potential plan of action with your financial advisor can all help to ease your emotional investment.

7. Know When to Withdraw

The government has several rules regarding withdrawals from a 401(k) plan.  In general, you can begin accessing funds at age 59 ½.  There are special circumstances, but most withdrawals made before this age would typically be subject to a 10% early distribution penalty.

Also, by age 70 ½, you must begin withdrawing a required minimum distribution (RMD). The amount of your RMD will vary and will depend on your account balance as well as an IRS table based on age.

Your financial advisor can let you know if you qualify for any special circumstances or if you have any other opportunities to maximize your investment in your retirement years.

Contact Howard Capital Management, Inc.

By planning for your financial future now, you can make your retirement an exciting and smooth transition. Receive guidance and have your questions answered by contacting Howard Capital Management, Inc. (HCM) to find an advisor in your area.

The TSP Optimizer® is a simple, online tool designed to assist you with the management of your Thrift Savings Plan.  By helping you properly allocate your account, the system uses your risk tolerance and long-term goals to generate a personalized portfolio and will recommend changes to make to your investment strategy based on market fluctuations.

BACKED BY SOPHISTICATED ANALYSIS

Powered by Howard Capital Management, Inc.’s (HCM) proprietary systems, the technology behind the TSP Optimizer® is non-emotional and repeatable.  By carefully analyzing fund managers, fund performance and current market conditions, this highly advanced tool will provide recommendations for which specific funds to choose in your TSP, how much to invest in each fund and what to do with your investments when the market rises or falls.

BENEFITS

Designed with you, the investor, in mind, the TSP Optimizer® provides many benefits to its users, including:

• Detailed instructions for all action steps, delivered straight to your inbox
• Technology that runs around the clock to ensure your portfolio is consistently monitored
• Additional resources like the Optimized Trend Indicator® (OTI) tool which allows you to check the performance of any single stock
• Investments overlaid with HCM’s signature stoploss risk management tool, the HCM-BuyLine®, to manage your risk in a market downturn
• Notifications when it is recommended to make a change, update or re-balance

HOW DOES IT WORK?

Visit the TSP Optimizer® website to create your account.  Once established, you will be asked to complete a risk tolerance questionnaire to identify your investing personality.  Your answers will determine how much risk you are comfortable taking and will take your age, financial goals and investment timeline into consideration.

The system will then perform an in-depth analysis of your fund options and will generate a personalized recommendation for how to allocate your investment portfolio.  The TSP Optimizer® uses mathematical algorithms to keep a close eye on the market and will inform you of any changes you may need to make.  You will also receive quarterly updates when applicable on how and when to re-balance or reallocate your portfolio.

Contact Howard Capital Management, Inc.

At Howard Capital Management, Inc. (HCM), we understand how important it is to work with someone you trust, that can create and deliver tools and technology to help you navigate the market with ease.  By planning for your financial future now, you can make your retirement an exciting and smooth transition.