Back to School: College Fund 101

529 College Savings Plan Basics

College for many people is one of the greatest times of their lives.  It is a time where one begins to mature into an adult and find out who they truly are.  Not to mention a greater earning potential (generally speaking.)  However, it is no secret that college is EXPENSIVE and unfortunately it doesn’t seem it will become any cheaper.  Not everyone will be able to pay for their kids complete higher education and THAT’S OKAY!  A little something can go a long way, especially if you start early.

This article today will be discussing one of the most common ways to save for college, a 529 plan.

WHAT IS A 529 PLAN?:  A 529 plan is a college savings account named after the section of the IRS code that created them.

WHAT  ARE THE BENEFITS?:  Although I believe the biggest benefit of a 529 plan is the fact that it identifies a specific account that keeps people accountable to saving…..there are many other great benefits.

A 529 plan allows for tax deferred investment.  This means that as the investments in the account are growing, you don’t have to pay taxes on the growth along the way.  This means more money that can compound over the years.

Here is the kicker, as long as you use the money for QUALIFIED EDUCATIONAL EXPENSES, you do not have to pay taxes when you take the money out. Awesome!

Another great benefit is flexibility.  ANYONE can contribute to the account on behalf of the beneficiary.

WHAT If THE BENEFICIARY DOESN’T GO TO COLLEGE?:  If the beneficiary doesn’t attend a qualified higher education establishment,  you can switch the beneficiary.  You are able to transfer the benefit to a qualified family member (i.e. brother, sister, Mother, Father, First Cousin.)  The worst case is if the beneficiary does not go to college and there is no eligible beneficiary to transfer to, you can take the money out of the account.  You will have to pay taxes on the growth and a 10% penalty.  Hey, at least you had several years of tax deferred growth, not the end of the world.

WHAT  CAN I SPEND IT ON?:  Anything related to qualified educational expenses.  Common expenses are room and board and tuition.  However, you can also use it to purchase a computer, software, textbooks, supplies…. basically anything related to school.

HOW DO I ESTABLISH ONE?:  My advice would be to work with an advisor.  They can help you budget, estimate costs, set expectations, and help you choose your investments.

SUMMARY:  A 529 plan is one of the best ways to save for college.  The flexibility and tax benefits make it one of the most popular options.

If you would like more information on how you can get started with a 529 plan, please do not hesitate to call Granite Wealth Management at 1-888-612-5391 or email at and we would be glad to help you.

Seasonal Analysis: The Dog Days of Summer

Dog Days of summer

One way to reduce the negative effects of potential equity headwinds is to incorporate seasonal analysis into your portfolio management process. This allows you to identify sectors and industries that may outperform the broad market during this historically volatile month.

We are encouraged by three sectors’ seasonal tendency to outperform the S&P 500 Index during August over the last 20 years—a month when the index has on average been lower by 1.2% for equity investors, generating positive returns 50% of the time. As we review the data, note that nonseasonal factors still influence performance and should not be ignored.

The table below highlights sectors’ average over- and under-performance versus the S&P 500 during August since 1997, as well as the top-performing industry groups over the same period:

Looking at the table above, the utilities, information technology, and consumer staples sectors on average tended to exhibit relative strength versus the index in August over the past 20 years. But, if you’re looking for a more targeted strategy, the table also shows the industries underlying the relative strength at the sector level (i.e. “What to Watch in August”).

Drilling down, the information technology and consumer staples sectors experienced broader participation in August among their underlying industries versus utilities, comprising 5 of the top 10 industry categories (50%) listed within the chart. This was due in part to their market cap and overall weighting within the S&P 500.  On the other hand, though a laggard at the sector level, consumer discretionary has shown pockets of seasonal strength in select industries.

Although the index has tended to post negative returns in August, seasonal analysis can help to identify which sectors and industries may fare relatively well, particularly if volatility increases due to potential seasonal headwinds that historically have been more prone to occur toward the end of the summer. Stay tuned to the LPL Research blog for continued analysis of S&P 500 seasonal patterns.


Source:LPL Research



Past performance is no guarantee of future results. All indexes are unmanaged and cannot be invested into directly.

The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security.

The economic forecasts set forth in the presentation may not develop as predicted.
Investing in stock includes numerous specific risks including: the fluctuation of dividend, loss of principal and potential illiquidity of the investment in a falling market.

Stock investing involves risk including loss of principal.

The Standard & Poor’s 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

Because of their narrow focus, specialty sector investing, such as healthcare, financials, or energy, will be subject to greater volatility than investing more broadly across many sectors and companies.

This research material has been prepared by LPL Financial LLC.

To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial LLC is not an affiliate of and makes no representation with respect to such entity.

Not FDIC/NCUA Insured | Not Bank/Credit Union Guaranteed | May Lose Value | Not Guaranteed by any Government Agency | Not a Bank/Credit Union Deposit

Securities and Advisory services offered through LPL Financial LLC, a Registered Investment Advisor Member FINRA/SIPC

Tracking # 1-630655  (Exp. 8/18)