Sunday, November 27, 2022

Your Money: ‘Me time’ and a look at the third quarter

It’s been a wild first half of the year and now is a great time to assess where you are with your current financial plan. In this third article in a series, we focus on the elements that can help you stick to a well-constructed financial roadmap for the next three months.

These Are Portraits Of Bruce Helmer And Peg Webb, Financial Advisers For Wealth Enhancement Group And Business Columnists For Pioneer Press.
Bruce Helmer and Peg Webb


The stock market has been on a roller coaster ride and inflation is dominating the news cycle. Neither development is likely to put you in a very good mood, but neither is likely to have an effect on your long-term financial plan. Allow yourself some space to ignore the noise.

July is one of the few months of the year when not much is happening, from a financial or tax planning perspective. So, get outside and enjoy the summer weather and long sunny days with your family and friends. Take that spontaneous long weekend trip you’ve been keeping in the back of your mind. Borrowing one of our favorite songs, “Live the life you love and love the life you live!”

And if you have time after you’ve enjoyed a little “me time,” the middle of the year is a great time to check your asset allocation in your long-term retirement accounts to make sure it’s still aligned with your retirement goal. stocks/bonds. mixture. Stocks have taken a hit of late, while bonds have recovered only slightly from their lows in recent months. Consider rebalancing your portfolio if an asset class has become too dominant due to recent strong performance. (Rebalancing means you sell assets that have appreciated in value and invest in assets that have depreciated, so you end up with your desired mix of stock and bond funds.) Plus, with the recent spike in the prices of everyday goods and services, this is also a good time to see if you have enough inflation-hedging assets in your portfolio, especially if you’re retired or close to retirement age.

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When it’s back to school, many families get snagged on deep discounts on clothing and supplies at big box department and discount stores. Instead of spending all that back-to-school money on purchases, consider setting aside some money for education in a 529 college savings plan or education IRA. Although contributions are not deductible in a 529 account, earnings grow free of federal taxes and qualified withdrawals are free of federal taxes (and more than 30 states also offer full or partial tax benefits).

But before investing in a 529 Plan, investors should consider whether their home state or that of their designated beneficiary offers any state taxes or other state benefits, such as financial aid, scholarship funds, and creditor protection that are only available for investments. in the qualifying states of that state. enrollment program. Tax treatment at the state level may vary. Therefore, consult your tax advisor before investing.

In addition, a Coverdell Education Savings Account (ESA) offers tax advantages similar to a 529 plan, but limits contributions to $2,000 per year combined from all sources. If you’re contributing less than $2,000 a year, they can be easy to set up and manage. Please note that there are tiered income restrictions when setting up the account and there are no adjustments for inflation. In addition, the funds must be used before the age of 30.


September 23 is the first day of autumn. Put it on your calendar: Make it your personal goal to pay off any high-interest credit card debt before the leaves stop falling in Minnesota (usually late October in central Minnesota and the Twin Cities, in case ask him). Interest rates have been rising, and with inflation raging, your purchasing power may be eroding if you’re servicing debt on high-interest loans. Remember that paying off a credit card that charges 15% is like getting a 15% return on the stock market (there aren’t too many investments that generate those kinds of returns right now).

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Everyone is tightening their wallets these days as prices for groceries and gas to fill up your car reach nosebleed levels. If your expenses are suddenly higher than what you budgeted for the year, you need to track your expenses to see where everything is going. If you can keep your expenses steady but grow your income even at a moderately steady rate over time, that’s a surefire way to build a comfortable nest egg. Look for ways to cut costs before inflation starts to affect your lifestyle, and consult with a financial advisor about ways to set and maintain a budget.

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