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!

We live in a world where technology drives almost everything we do.  Unfortunately, having almost everything at our fingertips can also make you vulnerable to scams and fraud.  In 2018, banks reported approximately 25,000 cases of suspicious activity, an increase of 12% from 2017.  An immense portion of these cases target senior citizens. Financial abuse is not always easy to distinguish, especially towards elders. As a result, banks have increased their surveillance of potential scams and fraudulent activity. In May 2018, the Senior Safe Act was signed into law, which allows banks to report all suspicious activity without concerns of being sued as long as compliance requirements are met.

Emails, robocalls, and telemarketers are some of the many ways senior citizens have been financially targeted.  In many cases, phishing emails are sent out to individuals as if they were from a real institution.  As most of us are aware, these fake emails use almost the exact same logo and company information in attempt to scam innocent internet users.  Before clicking on any links, be sure to check all content and recipient data. Ask yourself: Do I typically get emails like this from (fill in the blank)?

Most of us receive endless robocalls and messages from telemarketers.  Many people ignore most calls if they don’t recognize the caller ID.  Typically, if something seems out of the ordinary, odds are that you are correct.  When in doubt hang up with the person who called you and call the company’s customer service number or the agent you usually work with to confirm if any action needs to be taken.

These callers and e-mails can sometimes be highly convincing and unfortunately many seniors have been tricked into giving away sensitive information including social security numbers and transferring money.  The pushier the message the more often it is a scam. Many banks have been reporting unusual account transactions such as foreign bank wiring.  In most cases, a typical consumer will not come in and request a large sum of cash to be sent overseas. This should immediately spark a red flag at a bank and should be reported to appropriate agencies.  Artificial intelligence has been used and is a hot topic for financial institutions to help spot suspicious transactions before they are authorized.

Although advances have been made, lawmakers, banks, and other financial institutions are continuing to look for more ways to combat increased senior citizen scams, fraud, and financial abuse.  While senior citizens are more vulnerable please remember anyone can be targeted and to be vigilant in protecting yourself financially.

Suggestions to protect yourself against hackers and fraudulent activity:

• Set up 2 factor identification for all financial and bank accounts. Allows users to sign in with their username and password, then entering a unique code from your phone/email
• Regularly review account balances and transactions. Any unfamiliar activity should be a red flag and reported immediately.
• Never click on links from emails unless it is secure and a verified account. Hackers send out “phishy” emails which resemble real companies.
• Create strong usernames and passwords. Many websites recommend having at least 8 characters including upper and lower case letters, symbols, and numbers. This makes it difficult for hackers to gain access to your accounts.
• Never give away your social security number to anyone over the phone or by email. In addition, ignore any unusual requests for bank wires. This immediately is a sign of a scam.

What to do if you may be a victim:

• Immediately report any suspicious activity to police if you feel you may be a victim of a cybercrime. Contact the institution where the activity took place and notify your credit card companies to help freeze your accounts. Any identity theft should also be reported to the FTC.

An overwhelming majority of those who seek and complete higher level education require the assistance of student loans. College graduates typically have a 6 month grace period after graduation day until they need to begin making payments. Thinking with the end in mind is a great way to have a clear goal to reduce the burden of student loans. Once a goal is set, a financial plan can be created to make sure you have a healthy financial future. These are several tips to help navigate the student loan payoff process:

1. Pay a higher amount than your minimum payment

By paying more than the minimum, you can pay off your debt faster. There are no penalties to paying higher payments and no benefit for keeping the loans around. The loans with the highest interest rates are best to eliminate first and will give you the most bang for your buck.

2. Paying off loan interest while the student is enrolled in college

All student loans carry a rate of interest over your principal balance. For unsubsidized loans, interest accrues as soon as the loan is taken out. One strategy for these is to begin paying off interest while still in school. Automatic monthly payments can be linked to a bank account to take advantage of paying interest before college graduation.

3. Have a reasonable budget

There are several cases in which finding an increase in income can be a challenge. Reducing and cutting back on unnecessary expenses is a great way to add more income. For example, reducing the amount of times you go out to eat in a week and saving more of your income instead of spending more.

4. Take advantage of tax credits

Loan servicing companies distribute 1098-E forms at tax time – make sure to report these! Depending on the interest you’ve paid over the prior year, you may be able to secure a credit as high as $2,500. A credit, unlike a deduction, is a dollar-for-dollar reduction in your tax liability.

5. Refinancing your student loans

Shop around and visit the various student loan refinancing companies. By refinancing a student loan, you can potentially secure a lower rate of interest, a preferred payback term, and more manageable monthly payments. An Income Repayment Plan (ICP) is a potential option to help reduce federal student loan payments. If student loan payments are causing financial burdens compared to your income, an ICP may provide additional aid by adjusting monthly payments based on your discretionary income.