On Friday March 27^th, President Trump signed a $2 trillion financial stimulus known as the CARES Act. This immense package is designed at the federal level to help Americans who will be directly impacted by Covid-19 by providing aid to individuals, support to small business sectors, expanded provisions for health care, updated tax deadlines, and education provisions. Many individuals are still currently battling with substantial student loan payments. However, during these unprecedented times, the CARES act has adopted a few measures to help provide temporary relief.

Key Federal student loan provisions & how they will affect you:

• 6-month grace period on current Federal student loan payments till September 30^th
  • Note: this does not apply to private custodians (ex: Discover, Earnest, Sallie Mae)
    • If you have private loans, we still recommend reaching out to them to see if there are any options available, including forbearance
  • This legislation treats each month during the grace period as if a payment was made towards loan forgiveness
  • No interest will be compounded during the interim, applied to principal only
  • You must manually check your Federal custodial payment portal; this will not automatically change an autopay plan if you need to delay your payments
• Employers can exclude student loan repayments from compensation
  • Employers can contribute up to $5,250 annually toward an employee’s student loans and it is not included in the employee’s income (applies currently to only 2020), meaning it is not taxed
• Look for potential student loan refinancing
  • With recent cuts from the Federal Reserve, this can be a great opportunity to lock in a new rate and start saving on your monthly payments.
    • Need a credit score of at least 650 to qualify and have enough monthly income to make payments
  • If you are quoted rates that are higher than anticipated, look into having a cosigner such as a parent/guardian to see if you are granted a lower rate
• If you are a current student, contact your bursars/financial aid office at your educational institution to check to see if there have been any changes.

All of these recent provisions can be helpful ways to lower some financial burden on student loans. With the addition of the $1,200 stimulus check, aid to vulnerable economic sectors, Federal student loan relief, tax relief, and other various additions, the US government intends that the CARES Act can provide some stability in an unprecedented time of hardship. As history has shown, we are strong and are always capable of overcoming the toughest of challenges.

Bear markets are NO fun and test the long-term investor. This crisis is even more distributing because the coronavirus has thrown our lives upside down and we don’t know the impact of how it will change our lives potential forever.

Things we recommend you do –

1. Review your emergency reserve
2. Review your short & long-term spending plan (Is the plan in line with your goals)
3. Make sure you are maxing your 401K, all new contributions should be directed to stocks
4. Rebalance your portfolio – I have no idea where the bottom is, but it is at least 36% closer than Feb 19^th when the DOW was at 29,500
   1. Rebalancing worked really well in 2002 “DOT COM” & 2008 “Lehman”
   2. As Warren Buffett stated: ‘Be fearful when others are greedy, and be greedy when others are fearful.’
   3. The price of most equities has become much lower, giving equities more room to grow before they reach what we’d consider to be their fair value.
5. Tax Loss harvest – can deduct up to $3,000 of losses on Federal & most state returns. NJ doesn’t allow losses & tax loss carry forwards so you have to be more strategic if you live in the Garden State.
6. Get rid of Individual stock holding that were hard to sell before
7. Remember the Stock market is made up of companies who all want to survive and thrive

Blockchain Technology is in general, a digital ledger that can record a plethora of different information. The information is decentralized, often anonymous and public. The information (often transactional) then cannot be changed or fondled with retroactively or proactively, without the alteration of all previous bits of information. In layman’s terms, it is the most hack-proof, mistake-proof and hinderance-proof way to keep, track and use information in many different areas and industries.

Blockchain Technology is the next big thing in many industries and sectors. It is a trend that has solidified its position as the up-and-comer and is becoming a standing topic in discussions about the future. The Financial Industry is a leader in applications of all Fin-Tech trends, and that translates to the Blockchain technology as well. 2020 is the year that we will be seeing Blockchain Technology gain a lot more foothold in the industry and start to tie in the different uses for the technology into a more streamlined process. Below are some predictions / projections for 2020:

• Most Blockchain startup companies and processes will fail – As the technology is not even fully understood, let alone embraced and implemented in most industries, there will be a lot of fails and missed marks on a lot of new projects. Investors will need to be weary of this and extra cautious of investing.
• Financial Industry will continue to lead Implementation – After the safety and anonymity of crypto-currencies were implemented, the financial industry started to review and research possible implementations. It is easiest for the banking system and most beneficial to implement the security of blockchain technology to increase safety and speed of transactions. It is estimated that a staggering 77% of all Financial Institutions (In Developed Nations) will utilize Blockchain technology in at least a part of a process in 2020.
• National Crypto-Currencies will start popping up – Venezuela already has a crypto-currency backed by the mineral and oil reserves of the nation. Sub-Westernized countries like Russia are also considering their versions of crypto-currencies.
• Blockchain technology will grow exponentially in sectors where secure financial presence is a must. We will likely see large growth in sectors such as banking and financial services. The technology will be able to protect the anonymity of the transactions as well as the sensitive information involved.
• Legality / lawmaking will start to catch up and cover blockchain technologies and their hosts. This will have to be a stepping stone before the point above can be put into action: no legitimate company would incorporate an unregulated technology into providing a regulated service (i.e. financial advice, banking services, etc…).

Overall, we have a lot to look forward to in 2020 for this new technology, and even though it may not be market-ready for anything major or even noticeable yet, its time will come and 2020 will bring forth large steps toward a united and secure blockchain world.

Sources:

https://www.bbvaopenmind.com/en/economy/finance/ten-trends-of-blockchain-in-2020/

https://www.aithority.com/guest-authors/blockchain-technology-in-the-future-7-predictions-for-2020/

Parents and students who are currently completing the FAFSA and learning about financial aid may be kicking themselves for not having a better plan in place to pay for college. When it comes to college costs, a little planning can go a long way.

There are several useful ways to save money for your child’s college education, each of which has its pros and cons.

A. 529 Educational Savings Accounts

1. A plan operated by a state or educational institution, with tax advantages and potentially other incentives to make it easier to save for college and other post-secondary training, or for tuition in connection with enrollment or attendance at an elementary or secondary public, private, or religious school for a designated beneficiary, such as a child or grandchild.
2. Earnings are not subject to federal tax and generally not subject to state tax when used for the qualified education expenses of the designated beneficiary, such as tuition, fees, books, as well as room and board at an eligible education institution and tuition at elementary or secondary schools. Contributions to a 529 plan, however, are not deductible for Federal Tax Purposes or NJ tax but can be claimed in some states on their state tax returns.
3. As of 2018, the term “qualified higher education expense” includes up to $10,000 in annual expenses for tuition in connection with enrollment or attendance at an elementary or secondary public, private, or religious school.  A qualified, nontaxable distribution from a 529 plan includes the cost of the purchase of any computer technology, related equipment and/or related services such as Internet access. The technology, equipment or services qualify if they are used by the beneficiary of the plan and the beneficiary’s family during any of the years the beneficiary is enrolled at an eligible educational institution.
4. Anyone can set up a 529 account and name anyone as a beneficiary — a relative, a friend, even you. There are no income restrictions on you, as the contributor, or the beneficiary. There is also no limit to the number of plans you set up. Any beneficiary initially named on any 529 account, can always be changed to yourself or any other person.

B. ESA (or Coverdell Account)- Educational Savings Accounts

1. A Coverdell Education Savings Account is a tax-deferred trust account created by the U.S. government to assist families in funding educational expenses for beneficiaries 18 years old or younger. The age restriction may be waived for special needs beneficiaries. While more than one ESA can be set up for a single beneficiary, the total maximum contribution per year for any single beneficiary is $2,000.
2. The ESA allows families to increase investment earnings through tax-deferral as long as the funds are used for educational purposes.

C. Custodial Brokerage/Investment Accounts

1. UGMA and UTMA accounts are considered the granddaddy of college savings accounts. The UGMA (Uniform Gift to Minors Act) and UTMA (Uniform Transfer to Minors Act) are nothing more than custodial accounts, which are used to hold and protect assets for minors until they reach the age of majority in their state. These accounts typically allow stock, bond, and mutual fund investments, but not higher-risk investments like stock options or buying on margin. Because the assets are considered the property of the minor, a certain amount of the investment income will go untaxed while an equal amount is taxed at the child’s tax rate, instead of the parents’ (or custodian’s) rate.
2. The Potential Disadvantages:
   1. The same tax benefit that makes custodial accounts attractive can also make them unattractive. After the first amount of money in income is sheltered from higher taxes, excess income is taxed at the parents’ marginal tax bracket. This effect would not occur in a 529 plan or a Coverdell ESA.
   2. The account format also requires a custodian to hand over control of the assets to the child anywhere from age 18 to 21, depending on the state. While parents who have a good relationship with their child might be able to coerce those assets into actually being spent on college, a strained relationship may present a problem.
3. Tax Benefits: Every child under 19 years old (or 24 for full-time students) who files as part of their parents’ tax return is allowed a certain amount of “unearned income” at a reduced tax rate.
4. Eligible Expenses:   A custodian can initiate a withdrawal for the benefit of the child as long as the expenses are for legitimate needs. Any expense that is for the benefit of the child, such as precollege educational expenses, may be paid from the custodial account, at the custodian’s discretion. Unlike other college savings accounts, however, these expenses are not limited to education and can be used for anything related to the child. Likewise, upon becoming a legal adult, the child can use the money without limitations.
5. Impact on Federal Financial Aid Eligibility:  Custodial accounts are considered an asset of the child and are counted against financial aid. Approximately 20 percent of these assets will be expected to be used toward funding a student’s education in any given year.
6. Contribution Rules: There are no contribution limits. However, someone setting aside money in one of these accounts needs to be aware of how larger gifts affect their annual gift tax and lifetime estate tax exclusions. Consulting a financial adviser is helpful.
7. Unused Funds: Any unused money must be distributed by the time the child reaches the age of majority or the maximum age allowed for custodial accounts in their state. For classic UGMA accounts, this generally occurs at the age of 18. For the newer UTMA accounts, this age is usually 21, but may be as late as age 25. Unlike Section 529 plans and Coverdell ESA’s, there’s no ability to transfer the account to another child or change beneficiaries.

As another Summer comes to a conclusion, all you will hear from TV pundits and news articles is the next recession is impending. It seems a recession is always just around the corner! The Nostradamus of recession predictions is the Inverted Yield Curve which was achieved last week and just in time for Back to School shopping. The yield curve inverts when the 2-year U.S. Treasury bond yield is greater than the 10-year U.S. Treasury bond yield. While many factors do indicate a recession is looming (US-China trade relations, political uncertainty, lack of stimulus from 2018 tax cuts, etc.), several indicate the fear is overblown. The job market remains strong, reduced interest rates by the Federal Reserve and strong corporate balance sheets. The good news is this fear is a constant in the market whether it’s August 2019, August 2017 or August 2008. To achieve sizeable investment returns requires a degree of risk. So, sit back, relax, enjoy the last week or two of Summer and practice the following (whether a recession is looming or not):

1. Proper Emergency Fund – 3 months minimum but 12-24 months is not out of the question for some. Understanding how you will react during a recession is not an enjoyable exercise and better to prepare for the worst especially if worried about ongoing employment.
2. Access to Credit – much easier to obtain a Home Equity Line of Credit (HELOC) when employed and home values are high. Not only does it provide liquidity but allows you to reduce the amount of emergency funds needed.
3. Continued Employment – if work is steady and not worried about staff reduction or cutback in hours then riding out a market downturn is less impactful especially if more than 5 years till retirement.
4. Reduce Expenses – no time like the present to understand what the household needs each month to run properly. If cuts need to be made, have a list ready of the first expenses to go (e.g. cable bill, travel, and eating out).
5. Investments – never stop dollar cost averaging into retirement accounts and other investments. That is the key to long-term success and a much less stressful path. If investment risk is correct in an up market it should not change in a down market unless you want to be aggressive and reallocate into more equities especially in retirement is more than 10 years away.

The average recession lasts 1.5 years and 3 out of 4 economists are predicting another one by 2021 so make sure to follow the above advice sooner than later. It’s always best to pack the life jackets before leaving the shore!