Financing Your Future – Excerpt From The Financial Shepherd

Planning for Your Child’s Education

Saving for your child’s education is more than just a financial goal; it’s about ensuring a bright and secure future for them. Education opens doors and opportunities; your role is to give your child the tools to succeed. However, with the rising cost of education, starting early and planning wisely has never been more important.

Ways to Fund Your Children’s Education 

It begins with understanding the options available for education funding. Savings accounts dedicated to education, such as the 529 plan, offer a way to invest in your child’s future. These plans are beneficial because they grow tax-free if the funds are used for qualified educational expenses. Starting early takes advantage of the power of compounding, allowing small, regular contributions to develop into a significant educational fund over time. 

Involving family members in contributing to these funds can bolster the savings, giving your child a robust financial start when they reach college age. Investing in a dedicated account from an early age supports your child’s educational aspirations and demonstrates the importance of planning and saving. Additionally, this approach allows for adjusting your financial strategies over time, ensuring you can react to changes in your financial situation or educational costs. Engaging in this planning process early on sets a solid foundation for your child’s future. You’re giving them a chance to have an education without the financial burdens that come with it.

The Added Benefits of Planning

A crucial benefit of early education planning is reducing the future financial burden on your child. The reality is that higher education comes with high costs, which often leads students to take on loans. The average current costs range from $10,000-$40,000 a year. (The lower end is for in-state public schools, and the higher number is for private schools.) Student loans burden your child with debt for many years after graduation. Early planning and saving minimizes or eliminates the need for such loans, freeing your child from the stress and financial strain of debt. You also teach your child valuable financial lessons by saving for their education. They learn the importance of saving, investing, and planning for the future. 

These lessons in financial responsibility and the value of education inspire them to work hard and achieve their dreams. A plan helps your child focus on their studies and career goals, knowing their educational expenses are covered. Planning and saving for education instills a sense of responsibility and appreciation for the value of education in your child, encouraging them to make the most of the opportunities it provides. It also allows them to enter adulthood with fewer financial burdens, giving them greater freedom in their career choices and future financial decisions. This thoughtful approach to education funding has a lasting impact, influencing their financial habits and decisions for the better.

You Deserve to Be Supported Too

We understand the importance of this journey and are here to guide you. Scheduling a consultation with us can give you the insights and strategies to make informed decisions about funding your child’s education. 

Disclaimer: Always consult a financial, tax, or legal professional familiar with your unique circumstances before making any financial decisions. This material is intended for educational purposes only. Nothing in this material constitutes a solicitation for the sale or purchase of any securities. Any rates of return are historical or hypothetical in nature and are not a guarantee of future returns, which may be lower or higher. Investments involve risk. Investment values will fluctuate with market conditions, and security positions, which, when sold, may be worth less or more than their original cost.

Tax Strategies, Businesses & Retirement Planning

Retirement planning for entrepreneurs involves more than just saving a portion of your earnings. It’s about integrating sophisticated tax planning strategies into your retirement plan to maximize wealth and ensure a prosperous retirement. This approach not only safeguards your financial achievements but also perfectly aligns them with your retirement dreams, paving the way for a secure future built on a foundation of financial stability.

Tax Implications & Structure 

Creating a tax-efficient retirement strategy demands that you have a cursory understanding of the tax implications associated with your choice of entity. We said you didn’t have to be an expert because you will (or should be) work with a financial advisor and a business law attorney when making decisions of this magnitude.  

Regardless of whether you pursue a proprietorship, partnership, S corporation, or C corporation, each has unique tax obligations. These are going to influence the best ways to accumulate retirement savings. For instance, earnings from S corporations and partnerships are reported on individual tax returns, which may necessitate a different retirement saving strategy than C corporations, where the business is taxed independently.

As your business grows, you may need to revisit your retirement saving plans or consider different types of retirement accounts to optimize your contributions. Maximizing your tax deductions for retirement contributions impacts your overall tax burden.

Periodically review your retirement strategy to reflect changes in your business dynamics and tax regulations. A tax professional provides customized advice that aligns with your business model and financial aspirations.

Choosing the Ideal Retirement Plan

Selecting the right retirement plan is a significant milestone for business owners. Various plans like SEP IRAs, SIMPLE IRAs, and solo 401(k)s offer unique tax advantages and contribution limits. A SEP IRA, for example, lowers your taxable income through retirement contributions, making it an attractive option for reducing taxes.

Alternatively, a solo 401(k) may be more appealing if your goal is to maximize contributions and have the flexibility to borrow against your savings. It’s essential to fully understand the specifics and advantages of each retirement plan to make an informed decision that suits your financial goals.

The way retirement savings are taxed is fundamental. Contributions to traditional retirement accounts, such as SEP IRAs and solo 401(k)s, can lower your immediate tax liability but will be taxed upon withdrawal in retirement. Roth accounts work differently because they are funded with after-tax money, offering tax-free withdrawals in retirement, which can be beneficial if you expect to be in a higher tax bracket later on. A strategic mix of traditional and Roth accounts can offer tax diversification, providing greater control over your tax situation in retirement.

Embarking on a Tax-Optimized Retirement Path

Incorporating tax planning into your retirement strategy requires a comprehensive analysis of your financial landscape, business structure, and future income needs. Addressing these components reduces your tax obligations while increasing your retirement savings. If you are an entrepreneur looking to manage retirement planning and tax strategies, contact us for a consultation. Worth Advisors, LLC will devise a customized plan that fits your and your business’s needs. 

How To Integrate Charitable Donations Into Your Financial Plan

Charitable contributions are much more than acts of kindness; they’re pivotal elements of a well-rounded financial strategy. Close to $500 billion ($499.3M) was donated to charities in 2022. Ireland’s Gross Domestic Product (GDP) is around $530 billion, demonstrating how staggering that number actually is. When your charitable contributions are thoughtfully integrated into your financial planning, it can lead to tax advantages and establish your legacy.

Tailoring Donations to Reflect Your Values

Charitable donations and financial planning stand out because they exemplify how your values and financial objectives can align. Unlike other investment decisions focused on returns, philanthropic contributions are driven by the aspiration to effect positive change.

This is particularly significant for high-income individuals. They offer a way to balance tax management with support for causes that you are passionate about. This balance is important for those prioritizing impactful legacy-building alongside wealth conservation.

Diverse Strategies for Charitable Contributions

There are several different ways to approach charitable donations. Each one varies from the other, and this allows for a customized approach. Choices range from direct cash gifts to donating assets like stocks or property.

Donor-advised funds (DAFs) and private foundations are attractive for donors seeking greater control over their philanthropic initiatives. These methods allow you to take advantage of financial perks such as tax deductions and the potential for tax-free growth of contributions.

Navigating Tax Benefits & Financial Planning

Understanding charitable donations’ tax nuances and financial aspects is key to optimizing financial plans. Donations typically offer tax deductions against taxable income, lowering overall tax obligations. This benefit varies based on donation type, amount, and income bracket.

Cash donations are generally deductible up to a percentage of your adjusted gross income (AGI). Donating appreciated assets directly to charities circumvents capital gains taxes upon sale. This offers a dual advantage: a tax deduction for the donor and a more substantial benefit for the charity.

Strategically timing donations, such as ‘bunching’ contributions in a specific year, can help surpass the standard deduction threshold and enhance your tax benefits. This tactic has gained attention because of the increased standard deduction under our current tax laws.

Establishing a DAF or a private foundation can be a practical approach for sustained philanthropic involvement. These vehicles facilitate charitable donations and allow for tax deductions and strategic fund distribution.

Worth Advisors, LLC

At Worth Advisors, we understand the significance of incorporating charitable giving into comprehensive financial plans. We bust through the door to serve, respect, and appreciate your desire to do the same for others. 

Our team is dedicated to guiding you through your philanthropic activities’ tax implications and benefits. We invite you to book a consultation to discuss integrating charitable donations into your financial strategy. We can also help you manage tax liabilities, support the causes that you’re passionate about, and craft a meaningful legacy. 

Navigating Market Volatility: Investment Tips for Steady Growth

Market volatility, the dynamic and often unpredictable fluctuations in investment prices, is a fundamental characteristic of financial markets. Understanding and navigating these fluctuations is crucial for any investor. Investors need to remember that such volatility is not only expected but can also present opportunities for long-term growth.

The stock market, for instance, has experienced numerous episodes of volatility, yet it has consistently demonstrated resilience, often rebounding to achieve new peaks. This historical perspective is vital in forming a balanced investment approach, emphasizing the importance of patience and a long-term outlook.

Understanding Market Volatility

Market volatility refers to the rate at which the prices of investments increase or decrease for a given set of returns. It’s essential to recognize that volatility is an inherent aspect of investing. For example, the stock market has seen numerous periods of rapid fluctuation. Despite this, it has historically shown an ability to recover and achieve new heights over time.

One key factor in dealing with market volatility is to avoid making decisions based on short-term fluctuations. Emotional responses, such as panic selling during downturns, often result in missed opportunities. Instead, focusing on the long-term potential of investments can lead to better decision-making. This approach involves looking beyond temporary market drops and understanding that these are often followed by recoveries.

Long-Term Investing Strategies

Investing with a long-term perspective means considering investments that can grow over years or even decades. This approach is beneficial for several reasons:

  • Historical Recovery: Despite short-term market drops, the overall trend of the stock market has been upward. Investors can benefit from the market’s historical tendency to rebound by staying invested during downturns.
  • Risk Minimization: The longer the investment period, the more time there is for recovery from temporary losses. This reduces the overall risk of underperformance.
  • Compounding Effect: Reinvesting returns can increase gains, amplifying growth over time. Albert Einstein referred to compounding interest as the “eighth wonder of the world,” illustrating its power in wealth building.
  • Avoiding Emotional Decisions: Focusing on long-term goals helps make rational investment choices, avoiding the pitfalls of emotional reactions to market swings.
  • Strategic Planning: Long-term investing allows for more strategic and informed investment choices, contributing to a solid financial stability and growth foundation.

Worth Advisors Will Guide You 

At Worth Advisors, we understand that navigating market volatility can be challenging. We are committed to helping our clients focus on achieving steady, long-term growth. Our approach includes personalized investment strategies tailored to individual risk tolerance and goals. We provide guidance and reassurance through all market conditions.

Our investment philosophy is not about chasing short-term gains but building a sustainable financial future. We recognize the unique financial needs of our clients, many of whom are women-led homes, business owners, and executives in the Charlotte region and beyond. Our focus on tax planning and individualized investment strategies sets us apart, allowing us to address our diverse clientele’s specific concerns and objectives.

By partnering with Worth Advisors, you gain a team committed to your financial success. We offer more than just annual portfolio reviews; we provide continuous support and education to help you navigate market volatility and toward your long-term financial dreams.

Secure Your Financial Future

We invite you to contact Worth Advisors. Schedule a consultation to discuss your financial goals and how we can help you build a portfolio for long-term success. Together, let’s create a path towards achieving your financial aspirations.

Disclaimer: Always consult a financial, tax, or legal professional familiar with your unique circumstances before making any financial decisions. This material is intended for educational purposes only. Nothing in this material constitutes a solicitation for the sale or purchase of any securities. Any rates of return are historical or hypothetical in nature and are not a guarantee of future returns, which may be lower or higher. Investments involve risk. Investment values will fluctuate with market conditions, and security positions, which, when sold, may be worth less or more than their original cost.

Asset Allocation & Portfolio Design: A Guide for Worth Advisors Clients

Investing is a critical component of financial planning, and asset allocation is essential to this process. Asset allocation is a phrase that means spreading investments across various asset classes. This is done to balance risk with potential returns. On the other hand, portfolio design revolves around choosing which investments within these asset classes are suitable for the client. Worth Advisors, LLC embraces these strategies to create sustainable wealth for generations.

The Value of Tailored Approaches 

At our core, Worth Advisors, LLC helps people plan for the future. There is no one-size-fits-all approach either. Financial solutions can only be created after we understand our client’s concerns. That is why we are dedicated to understanding each client’s needs before crafting tailored asset allocation models and portfolios.

The Basics of Asset Allocation and Portfolio Design

When discussing asset allocation, investors distribute their investments across various asset classes previously mentioned. Examples of these classes include stocks, bonds, and cash. Different levels of risk and return accompany each one of these. To determine where your assets will be allocated, we must first know your investment goals, risk tolerance, and where you are in your life. Stocks, for instance, can yield high returns, but they come with increased risk. (We invest over the long term and do not attempt to “time the market.” We have written why in a previously published blog that you can read here.) Bonds present a safer alternative but offer lower potential returns. Cash stands out for its liquidity, albeit with the least return potential.

Developing an asset allocation model requires you to evaluate your financial objectives and risk appetite thoroughly. A balanced and thoughtful approach can lead to a model that aligns with your needs. Implementing this model involves selecting specific investments, a process made easier with the assistance of experienced financial advisors.

Achieving financial stability and growth is a long-term commitment. It requires a strategic blend of asset allocation and portfolio design. Maintaining and adjusting your asset allocation model is crucial as your life changes. You could move, start a new career, or experience a divorce. Regular reviews and periodic rebalancing ensure your strategies align with your goals and risk tolerance. Worth Advisors encourages a disciplined approach, emphasizing the importance of avoiding panic-driven decisions, particularly in volatile market conditions.

Worth Advisors, LLC
Are you ready to take charge of your financial future? Schedule a consultation with Worth Advisors today. Our team is eager to assist you in developing a tailored asset allocation model and portfolio that aligns with your unique financial goals and circumstances. Let us help you create the foundation for your financial future.