The S&P 500 was up almost 6% last week. While the recent drops may have seemed scary, the rapid rebounds show why it’s important not to panic. The index averages an increase of about 10% a year. We saw over half of that last week – so sitting in cash could have a huge impact on your long-term returns.
As summer approaches, there are important things for your children to do, starting at age 14. If your child is working a summer job, they can open a Roth IRA. It’s considered a custodial account, in that someone 18 or older must be the custodian. When the child turns 18, it is transferred into an account that is solely in their name. They can contribute the lesser of what they earn or $7,000. Some parents choose to match a child’s contributions – just like their employer matches their retirement contributions.
At 18, your child needs to complete Power of Attorney and Medical Power of Attorney documents. These allow you to continue making legal and medical decisions for them. They can choose whether the documents are immediately usable or require them to be incapacitated to take effect.
If your child is graduating and starting their career, encourage them to enroll in their employer’s retirement plan – a 401(k), 403(b), or TSP. They should contribute at least enough to get the full match from their employer.
If they have student loans, they will need to choose a repayment plan. Many people choose the income-driven repayment option. This limits their payments to a percentage of their discretionary income, depending on family size. If they have loans and will be working for the government or a non-profit organization, they need to both enroll in an income-driven program and work with their HR department to certify their work for the Public Service Loan Forgiveness program.
Finally, when they choose benefits at work, they should opt in for long- and short-term disability coverage if it is offered.
Your action item this week is to check all your air filters – in your home and your car. Clean filters reduce the workload on your HVAC and your car engine.
Check out our website at covingtonalsina.com, or our Facebook page, for more information and to see our other upcoming educational events.
CovingtonAlsina is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.