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[ad_1] Update 6/09/2020: Since writing this post I now have 3 sons and a daughter! Also, Illinois has increased their state tax rates!! My family also now lives in Tennessee.  529 College Savings For Illinois As our son rapidly approaches the age of two, the scary reality that paying for college tuition is just around the corner. We were fortunate enough to start a 529 College Saving plan for him when he was born and make a diligent effort to add to it on a frequent basis. For those that reside in the state of Illinois, I wanted to do a quick rundown of what your options are in the event you want to get a head start on saving for your kids college education. First, let’s take a look at the basics of what a 529 College Savings Plan is. Quick note: You can use any state 529 plan to help pay for college and you don’t have to reside in that state to use the benefit.  Doing so, you will give up a potential state tax benefit. Basics of 529 College Savings Plan 529 Plans are the most commonly used savings tool for college education nowadays.  They are named after Section 529 of the Internal Revenue Code, 529 savings plans provide a tax-advantaged way to save for qualified higher education expenses. These plans are generally sponsored by individual states, while plan assets are professionally managed by independent investment firms or state government agencies. Anyone can open a 529 savings account regardless of income level and contribute up to $13,000 ($26,000 for married couples) a year without gift-tax consequences. You can read these other posts I wrote on the topic: 10 Questions About College Savings Plans, Our Son Just Turned One, Starting College Tomorrow, Can You Take a Tax Loss on 529 Now that we know the basics of the 529 Plan, let’s look at the 529 options for the state of Illinois. Bright Start College Savings The first 529 College Savings Plan option for Illinois residents is the Bright Start Program.  The Bright Start plan is more of a do-it-yourself program.  This is taken directly from the Bright Start site: Starting a Bright Start plan takes as little as $25 and about 15 minutes when you enroll online. Like the 401(k) plan you may use to save for retirement, a 529 plan allows you to invest in various portfolios of stock and bond investments to save for your student’s college education. The portfolios are managed by OFI Private Investments Inc., a subsidiary of OppenheimerFunds, Inc., and include investments managed by industry leaders OppenheimerFunds, Inc. and its affiliates, as well as The Vanguard Group and American Century Investments®. Investment Choices The program allows investors to choose either age based portfolios (where the investment options go from more aggressive to more conservative as the child approaches college age) or Choice Based Portfolios where you choose the investments yourself from all the available fund options. Troubled Times Recently, the program has fallen under great scrutiny with the recent loss of $85 million in the fund which can largely be attributed to steep losses in the Oppenheimer Core Plus Fixed Income bond fund, a fund that sustained steep losses in 2008 due to management’s big bets on illiquid securities. Currently, the Bright Start program is conducting an investigation concerning possible breaches of fiduciary duty by the OppenheimerFunds, Inc., OppenheimerFunds Private Investments, Inc., and OppenheimerFunds Distributor, Inc.   I know this may be a big concern for future investors and rightfully so.  Don’t be too alarmed, though.   There are plenty of other fund choices in the program that you can choose from.  Need more assurance?  Recently, Consumer Reports announced that the Bright Start Program was named as one of the Best Five 529 plans in the country according to the most recent data.  That should give you some confidence in the program. Bright Directions 529 Plan If you are looking for another 529 plan option, you can also look at the Bright Directions program.   It’s a good compliment to the Bright Start program.  The Bright Directions is usually sold through an advisor (such as myself).  Here’s some basic info taken directly from their site: Bright Directions is an advisor-sold, 529-qualified tuition program specifically for those who manage their investments through a professional advisor. This plan allows your advisor the flexibility to build your college savings as aggressively or conservatively as you see fit. Investment Choices Bright Directions has some similar features as Bright Start in that it offers Age Based Portfolios as well as the ability to choose from 26 individual funds.   The mutual fund companies are as follows: PIMCO, BlackRock, American Century, Delaware Funds, Eaton Vance, Northern Funds, William Blair, AllianceBernstein, ING Mutual Funds, T. Rowe Price, Barclays Global Investors, Calvert, PaydenFunds, NCM Capital, Ariel Investments, OppenheimerFunds, Sit Mutual Funds, Forward Funds, Adelante Capital Management, FMA, and Earnest Partners. In addition to those two options, the program also allows you to choose from 7 Target Portfolios that will based on your risk tolerance.  For example, if you are comfortable with 60% in stocks and 40% in bonds, then your portfolio will stay in that mix no matter what. Tax Benefits What Are the Federal Income Tax Advantages? Tax-deferred growth Tax-free withdrawals for qualified higher education expenses 2. What Are the State Income Tax Advantages? Tax-deferred growth Tax-free withdrawals for qualified higher education expenses1 State of Illinois income tax deduction $20,000 if filing jointly $10,000 per individual tax payer College Illinois- Prepaid Tuition Plans Most people that are familiar with 529 plans use plans similar to those noted above.   If the stock market is not your thing, you can then apply for College Illinois which is a prepaid tuition program. College Illinois offers plans to purchase university level semesters (University, University+) and community college level semesters at today’s tuition prices.  You may purchase one semester or several semesters with a maximum of four at a community college and nine semesters at a university.

[ad_1] So here we are just a month later,  in a full-blown economic panic, and at the start of the most sudden recession ever. The pandemic has spread much further and faster than most uninformed people (including me) would have ever guessed, and the whole world is on some form of lockdown. Nothing quite like this has ever happened before in the modern world. What should we do? On the financial side,  I’ve seen media stories about “The End of FIRE movement”, and a close friend even said to me, “Well, I’ve got to go back to work now because with all my investments down 35%, I’m not financially independent any more.” And I’ve seen plenty of similar statements out there on the Internet: Is it time to be worried like this commenter on my last article? Even worse, some people are trying to time the stock market, selling off their investments at a discount in the hopes of “protecting” them, hoping to subsequently outsmart everyone else and re-buy them at an even lower price just before some future rebound. On the human side, we have seen a death toll of thousands of people per day in the US alone with best-case forecasts of 200,000 by the time things calm down, which implies several million worldwide. And so far, we have not been performing like a best-case country so these numbers will probably be higher. This all sounds terrible, doesn’t it? It makes sense that many people are fearful and pessimistic. So why is it that I remain as optimistic as ever, with the full expectation that you and I will come through this humbled but also wiser and better than ever? It’s because I already know how this all ends. The world will keep rallying and doing its best to slow down contagion. Caring people will keep helping each other. People will stay home and heal, hospitals will expand, nurses and doctors will do their best to save as many lives as possible, and the 80% of us in jobs that allow us to keep working, will keep doing our jobs. Meanwhile, innovators are still innovating all over the world. People are staying up late working in labs, vaccines are being tested, genes are being sequenced and the current virus will end up beaten and then written up as a very significant chapter in the history books. But apart from all of this, there is still way more going on out there, which just isn’t making it to the headlines. Engineers and scientists are still inventing things that will drastically improve the future. Solar panels are still streaming out by the trainload and being installed worldwide. Better and better batteries which will eventually displace all fossil fuel use are evolving. The most efficient factories in history are being built. Gene therapies are advancing which will eventually make a mockery of all of our current health conditions. Internet connectivity and education is becoming more widely available and cheaper which is allowing the next generation of brilliant kids to to grow up and learn faster and do more than you or I could have even dreamed. And all this will happen regardless of the course of the current pandemic. If all that is true, then why is the world so Scary right now? I get it – never before has something from the daily news come home to affect our daily lives so much. Grocery stores are cleaned out, people are wearing masks, and you probably have friends who are currently unemployed, or sick, or both. But in this situation, it really helps to understand the big picture of what is actually going on. The world is not ending. The air outside your windows is not a swirling cloud of certain death. All that has changed is that we are in a self-imposed economic slowdown that has been created purely to save the lives of our most vulnerable people. Which is one of the most compassionate things our society has ever done. To me, this is a remarkable and wonderful moment and I would not have guessed that such a capitalist country would ever have the balls to do it. To put it into a visual, we have decided to prevent the following worst-case scenario: (IMPORTANT NOTE: The timing of these hypothetical deaths is not real medical data, just an illustration of my own personal guess – made with a mouse pointer rather than a spreadsheet. However the US background death rate really is about 2.8M per year per the CDC) In the worst case, we might lose 1-2% of our people, biased towards the most vulnerable. There is some overlap because this accelerates some other deaths that would have happened this year, and pulls some future deaths into the present, which is why the death rate dips for a while afterwards. And turn it into this: With enough prevention, we cut the death rate by twentyfold, to about 0.04-0.06%. 200,000 is still an enormous number, but the existing death rate at least puts it into perspective. In the worst case, our public officials would all downplay the risk of COVID-19, and we’d keep working and traveling and spreading it freely. We’d maximize our economic activity and let the disease run its course. From the disease models I have seen so far, about 70% of us would eventually contract it. Half of those would have no symptoms or very mild ones, a smaller (but still huge) number would get sick or very sick, 10% might end up in a very overloaded hospital system, and in total about 1-2% of our population would die from complications – partly depending on how quickly we could put up temporary treatment centers to cycle through 30 million people in only a few years. It would feel cruel and chaotic, but in reality we would still not be even approaching the conditions that people in the developing world deal with every day. Our world has always been

[ad_1] As I write this, the biggest story in the entire world is a virus that is making its way around the planet, leaving a trail of sickness and death in its wake, while sending a much bigger shockwave of fear and uncertainty out front. Last week, the US stock market dropped 15% in just a few days, the most shocking correction since the 2008-2009 financial crisis (and the most interesting drop since the founding of this blog in 2011). I am sure you’ve been hearing, reading or watching plenty about it already, but the real question is, what should we do about it? The Scary Side Is this a screenshot from the fear-mongering TV news? Nope, just a moment from a classic zombie movie, although sometimes it is hard to tell the difference. The fear and doubt seems to be what the news stories have been emphasizing. The disease is highly contagious, and very sneaky. Each carrier seems to infect 2-3 additional people, which means exponential growth. And with an observed death rate of about 1% so far (on a limited data set of older people on a cruise ship) it may be several times times more deadly than the common flu. On the news, we see rows of hastily installed hospital beds, people wearing paper face masks even here in our own country, empty supermarket shelves and shuttered factories and public venues. And we are reminded that we ain’t seen nothing yet, because with mild symptoms that can hide for days, most cases are going unreported and the disease is pumping its toxic tentacles through the arteries of our economy, plotting its attack while we are left POWERLESS UNTIL THE RIOTS IN THE STREET START AND PEOPLE ARE SMASHING THROUGH OUR WINDOWS TO TAKE OUR LAST FEW CANS OF BEANS AFTER WE RUN OUT OF AMMO IN OUR SHOTGUNS. Some people are just prone to this type of thinking, and I even have a few in my own life. They have warned me to gather “at least a few months worth” of nonperishable food in my pantry and make sure I have a generator and plenty of fuel, at the very least. And to reconsider my stance of not keeping any guns in the house. The Not-So-Scary Side I went out on the town early on in the scare. The reality was different from the news headlines, although restaurants did close a few weeks after this post was first published. As I write this on March 2nd, there have been about 90,000 confirmed cases of COVID-19. And while the number is still growing rapidly, at the moment it is still a tiny number, about one thousandth of a percent of the world’s population. So even if it multiplies 100-fold, it would be a tenth of one percent. And out of these 90,000 people, about half are already recovered and have moved on with their lives. And the vast majority of the remaining ill, and all those who are so far undetected, and those who are yet to get infected, will also recover. Past and current status of the outbreak. But do we have any idea how bad it will get, before it gets better? As it turns out, we do. But first, some perspective. Here are this year’s numbers for the tried-and-true traditional flu for the 2019 flu season in the US alone (and remember the USA is only four percent of the world population): Wow, 32-45 million cases of the flu already, and tens of thousands of deaths. Even I had no idea it was that serious, and yet the flu is something I don’t even worry about – ever! Even scarier: every year, about 2.8 million people die in the US alone, and a full 70% of these deaths (over two million people per year) are caused by “lifestyle factors”, which to put it plainly means ignoring Mr. Money Mustache’s advice about bikes, barbells and salads every day. So if we start with the common flu, which is surprisingly scary, choosing car-based transportation and TV-based entertainment and consuming processed high-carbohydrate food and soft drinks should feel at least an additional hundred times scarier than that. But do you feel the appropriate ratios of fear in these two situations? And a much smaller amount of fear about the Coronavirus? Probably not, because we humans generally suck at putting numbers, statistics and probabilities into perspective. We Have Been Here Before In my lifetime alone, we have seen the rise and decline of quite a list of worldwide health scares, each of which was covered in the news with similar intensity to what we see today. AIDS, Ebola, SARS, Bird Flu, and the 2009 Swine Flu pandemic, also known as H1N1. That one was particularly serious in retrospect, having infected between 11-21% of the world’s population and taking the lives of about 500,000. Yet here we are, with that fearful event gone from the rearview mirror and a global economy that is far richer than it has ever been. Which is exactly what we will eventually be saying about the present moment in time, from our vantage point in the even more prosperous future. And Math Can Help Create Perspective Contagious diseases don’t just grow forever until everybody is dead. They follow an S-curve, like this recent prediction for Covid-19’s spread. It currently estimates that we may see things flatten out fairly soon, but more importantly it continually updates to new information and makes an educated guess – a great strategy for dealing with unknowns in life in general. One mathematical model that a researcher is updating each day – image source. On the other hand, some estimates are more pessimistic. Disease modelers at Northeastern University used different assumptions in mid-February to predict between 550,000 and 4 million cases in China*, before we reach the flat top of our “S”. That because of extreme quarantines, that turned out to be pessimistic as well and China flattened out well

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[ad_1] The lead story for Thursday’s morning shows: The impending vote to advance Brett Kavanaugh’s nomination to the Supreme Court. [ad_2] Source link

[ad_1] Honouring tradition, French artisans harvest salt from the sea [ad_2] Source link

[ad_1] The bhumi pujan of Ram Mandir is scheduled to be held on Wednesday at Ayodhya. [ad_2] Source link

[ad_1] The Bharatiya Janata Party has accused the Trinamool Congress led by Mamata Banerjee of appeasement politics. [ad_2] Source link

[ad_1] The average American has only a little over $200,000 saved for retirement by age 65. It’s a small wonder that 50% of married couples and 70% of individuals receive 50% or more of their retirement income from Social Security. But that doesn’t have to be you. In fact, you don’t even need to wait until you’re 65 to retire. It’s possible you can retire in 10 years – as in 10 years from where you are right now. It doesn’t matter if you’re 25, 35, or 45, with the right mix of discipline, commitment, and financial strategies, it’s a goal you can reach. Many thousands of others have already done it, which means you can too. And you can do it even if you have no money saved for retirement right now. Here’s how… But first, let’s touch on a few important concepts. Determine “Your Numbers” What are your numbers? The amount of income you’ll need each year to live in retirement, and the amount of money you’ll need in your portfolio to produce that income. Let’s say you decide you’ll need $40,000 per year to live in retirement. It’s possible to determine the amount you’ll need to have saved to provide that income. It’s known loosely as the safe withdrawal rate. It’s a theory mostly, but one that’s been shown to be reliable in a number of studies. It holds that if you withdraw it no more than 4% from your investment portfolio each year, you’ll have an income for life, and your portfolio will remain intact. It works something like this: if you earn an average of 7% on your portfolio in retirement, and withdraw 4% for living expenses, that will leave 3% in the portfolio to cover inflation. If we look at the rate of inflation going back to 1990, it ranged between 1.1% to 5.3% per year, with an average of something less than 3%. Over the past 20 years the average has been closer to 2%. But since early retirement will bring long-term planning consequences, let’s go with 3% as an average. Can You Earn an Average of 7% Annually for the Rest of Your Life? Investing is all about playing the long-term averages, and that’s what works in your favor. Here’s how: The average return in stocks has been about 10% per year going all the way back to 1928. It varies quite a bit from one year to the next, but that’s the return you can expect over 20 or 30 years. Meanwhile, safe investments, like high-yield online savings accounts, are currently paying between 1% and 2% per year. But to be conservative, let’s go with 1.5% for our calculations. If you create an investment portfolio comprising 65% stocks and 35% in high-yield online savings, you can achieve a 7% average annual return. Here’s how it breaks down: 65% invested in stocks at 10% per year will generate a 6.5 % return. 35% invested in high yield online savings at 1.5% per year will generate a 0.525 return. The combination of the two will produce an average annual return of 7.025%. That will allow you to withdraw 4% each year for living expenses and retain the remaining roughly 3% in your portfolio to cover inflation. Why have only 65% in stocks when a higher allocation will get you a bigger return? If you’re planning to rely on your investments for the rest of your life, you’ll need to build some safety into your portfolio. A 35% allocation in safe assets means that even if the stock market takes a big hit, your portfolio won’t go down with it. Another important point on this front is that though interest rates are low by historical standards right now, that situation could change. If interest rates were to return to 5%, the savings allocation would make a much bigger contribution to your annual returns, and do it risk-free. Back to “Your Numbers” Now that you can see how the 4% safe withdrawal rate works mechanically, it’s time to determine your portfolio number. If you need $40,000 in income, you can determine your portfolio size by multiplying that number by 25. Why 25? If you really like math, you can divide $40,000 by 4%, and you’ll get $1 million. But for those of us who don’t like mathematical formulas and number-crunching, it’s easier to simply multiply your income number by 25 to get your portfolio size. If you multiply $40,000 by 25, you’ll get $1 million. It’s just a simpler calculation, and it’ll get you to the portfolio amount you need quickly. Commit to Your Numbers I’ve used $40,000 as an income number for retirement, but it’ll be different for everyone. For example, if you have other income sources you expect to continue in retirement you may need less. But if you want a little bit more fun and luxury in your life, you’ll probably need more. I’ve only used this number as an example. You can come up with an income number that will work for you. As you can see from my calculations above, your portfolio number will be determined by your income number. You’ll need to know both. For example, if you think you’ll need $50,000, you’ll need to build a portfolio of $1.25 million ($50,000 X 25). If you’ll need $100,000 in income, your portfolio will need to reach $2.5 million ($100,000 X 25). To reach your goal, you’ll need to work toward three objectives: Saving the money needed to build your portfolio. Earning a return on your investments that will not only help you build your portfolio, but also keep it growing once you retire. Implement spending reductions and controls that will enable you to live on what will probably be less money than you are right now. If you plan to retire in 10 years, you’ll need to commit to all three. Your retirement income and portfolio numbers must serve as a guiding light from now on. As you

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