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Latest News

Spotting Credit Trouble July 23, 2021

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How Much are you Contributing to Your Retirement? May 28, 2021

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Getting a Head Start on College Savings May 3, 2021

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Rebalancing Your Portfolio April 12, 2021

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Pay Yourself First March 4, 2021

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Preparing For Tax Season February 4, 2021

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How Retirement Spending Changes with Time January 7, 2021

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Year-End Charitable Giving and You December 2, 2020

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The Secret to Moving the Needle on Your Credit November 17, 2020

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Lesser Known Provisions of the Secure Act November 3, 2020

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Featured

Spotting Credit Trouble

American households with credit card balances carry an average debt of $8,602.1

The wise use of credit is a critical skill in today’s world. Used unwisely, credit can rapidly turn from a useful tool to a crippling burden. There are a number of warning signs that you may be approaching credit problems:

  1. Have you used one credit card to pay off another?
  2. Have you used credit card advances to pay bills?
  3. Do you regularly use a charge card because you are short on cash?
  4. Do you charge items you might not buy if you were paying cash?
  5. Do you need to use your credit cards to buy groceries?
  6. Are you reluctant to open monthly statements from creditors?
  7. Do you regularly charge more each month than you pay off?
  8. Do you write checks today on funds to be deposited tomorrow?
  9. Do you apply for new credit cards so you can increase borrowing?
  10. Are you receiving late and over-limit credit card charges?

It is important to recognize the warning signs of potential credit problems. The more quickly corrective action is taken, the better. Procrastinating might result in financial difficulty down the road.

Sincerely,

Steve Lindquist


Steve Lindquist

Steve Lindquist
stevelindquist@peakfns.com
Financial Consultant
295 Los Altos Parkway, Suite 105
Sparks, NV 89436
(775) 789-3140

www.gbfinancial.org/


1 WalletHubTM (Evolution Finance, Inc.), 2019

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2020 FMG Suite.

How Much are you Contributing to Your Retirement?

Retirement plan documents laying on desk with glass jar full of money, calculator, pen and glasses on top of it

Do you know what the contribution limits are for your specific type of retirement account? Knowing these limits will help you make the maximum contributions without exceeding those limits and get penalized for over contributing.

Making the maximum contribution allows you to save as much money in your retirement account before you get to retirement age. Adding as much money as you’re allowed will help you save for retirement now so you can retire sooner and contribute to a more stable retirement strategy.

401k

In 2021, you can contribute $19,500 to your 401k. And the total contribution limit for you and your employer combined in 2021 is $58,000.

If you have both a traditional 401k and a Roth 401k, your total contributions can’t exceed the $19,500 limit.

But if you have a traditional 401k with another type of retirement account (like an IRA), the contributions you make to your secondary retirement account don’t count against your 401k limits.

IRA

If you have an IRA (whether Roth or traditional) your annual contribution limit is $6,000. This number was the same in 2020 as it is in 2021.

Other Types of Retirement Accounts

There are other types of retirement accounts you can have, like a 403(b) or a 457, but the limitations for the contributions made to these accounts are the same as a 401k. For a spousal IRA, each half of the couple can contribute $6,000, like for a regular IRA, but the funds will be in the same account.

Exceptions

There are also catch-up contributions you can make if you’re over 50 years old. These limits allow you to contribute an additional $6,500 to help you catch up from when you didn’t make retirement payments.

What happens if you go over the contribution limit?

If you find that you’ve gone over the contribution limit for your account, you can withdraw those contributions, but you should do it sooner rather than later. If you don’t take out your overcontributions, you’ll likely incur additional taxes for every year the excess money stays in your account.

It’s important to note that while these are the current limitations for each retirement account, these amounts can change each year. Keep up with the current limitations so you can always get the most out of your retirement account.

If you would like more information about the different types of retirement accounts or your overall retirement strategy, contact the office.

Sincerely,

Steve Lindquist


Steve Lindquist

Steve Lindquist
stevelindquist@peakfns.com
Financial Consultant
295 Los Altos Parkway, Suite 105
Sparks, NV 89436
(775) 789-3140

www.gbfinancial.org/


Distributions from traditional IRAs and employer sponsored retirement plans are taxed as ordinary income and, if taken prior to reaching age 59½, may be subject to an additional 10% IRS tax penalty. A Roth IRA offers tax free withdrawals on taxable contributions. To qualify for the tax-free and penalty-free withdrawal of earnings, a Roth IRA must be in place for at least five tax years, and the distribution must take place after age 59½ or due to death, disability, or a first time home purchase (up to a $10,000 lifetime maximum). Depending on state law, Roth IRA distributions may be subject to state taxes.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2020 FMG Suite.

Getting a Head Start on College Savings

Jar filled with coins with sticker labeled College Fund

The U.S. Department of Agriculture estimates the cost of raising a child to the age of 17 for a middle-income family will be about $285,000.1 That’s roughly equivalent to the median value of a new home in the U.S.2

And if you’ve already traded that supercharged convertible dream for a minivan, you can expect your little one’s college education to cost nearly $527,000.3

But before you throw your hands up in the air and send junior out looking for a job, you might consider a few strategies to help you prepare for the cost of higher education.

First, take advantage of time. The time value of money is the concept that the money in your pocket today is worth more than the same amount will be worth tomorrow because it has more earning potential. If you put $100 a month toward your child’s college education, after 17 years’ time, you would have saved $20,400. But that same $100 a month would be worth over $32,000 if it had generated a hypothetical 5-percent annual rate of return.4 The bottom line is: the earlier you start, the more time you give your money the potential to grow.

Second, don’t panic. Every parent knows the feeling – one minute you’re holding a little miracle in your arms, the next you’re trying to figure out how to pay for braces, piano lessons, and summer camp. You may feel like saving for college is a pipe dream. But remember, many people get some sort of help in the form of financial aid and scholarships. Although it’s difficult to forecast how much help your student may get in aid and scholarships, these tools can provide a valuable supplement to what you have already saved.

Finally, weigh your choices. There are a number of federally and state-sponsored, tax-advantaged college savings programs available. Some offer prepaid tuition plans, and others offer tax-deferred savings.5 Many such plans are state sponsored, so the details will vary from one state to the next. A number of private colleges and universities now also offer prepaid tuition plans for their institutions. It pays to do your homework to find the vehicle that may work best for you.

As a parent, you teach your children to dream big and believe in their ability to overcome any obstacle. By investing wisely, you can help tackle the financial obstacles of funding their higher education – and smooth the way for them to pursue their dreams.

Sincerely,

Steve Lindquist


Steve Lindquist

Steve Lindquist
stevelindquist@peakfns.com
Financial Consultant
295 Los Altos Parkway, Suite 105
Sparks, NV 89436
(775) 789-3140

www.gbfinancial.org/


1. U.S. Department of Agriculture, 2020 (Most-recent data available)
2. The Washington Post, 2020
3. Wealth Management Systems, Inc., 2021 (Based on average tuition and fees for a 4-year degree at a private university, starting in 2039, and assuming a 5% annual increase)
4. The rate of return on investments will vary over time, particularly for longer-term investments. Investments that offer the potential for higher returns also carry a higher degree of risk. Actual results will fluctuate. Past performance does not guarantee future results.
5. The tax implications of education savings programs can vary significantly from state to state, and some plans may provide advantages and benefits exclusively for their residents. Please consult legal or tax professionals for specific information regarding your individual situation. Withdrawals from tax-advantaged education savings programs that are not used for education are subject to ordinary income taxes and may be subject to penalties.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2020 FMG Suite.

Rebalancing Your Portfolio

Person balancing on edge of cliff beside ocean

Everyone loves a winner. If an investment is successful, most people naturally want to stick with it. But is that the best approach?

It may sound counterintuitive, but it may be possible to have too much of a good thing. Over time, the performance of different investments can shift a portfolio’s intent – and its risk profile. It’s a phenomenon sometimes referred to as “risk creep,” and it happens when a portfolio has its risk profile shift over time.

When deciding how to allocate investments, many start by taking into account their time horizon, risk tolerance, and specific goals. Next, individual investments are selected that pursue the overall objective. If all the investments selected had the same return, that balance – that allocation – would remain steady for a period of time. But if the investments have varying returns, over time, the portfolio may bear little resemblance to its original allocation.

How Rebalancing Works

Rebalancing is the process of restoring a portfolio to its original risk profile.

There are two ways to rebalance a portfolio.

The first is to use new money. When adding money to a portfolio, allocate these new funds to those assets or asset classes that have fallen. For example, if bonds have fallen from 40% of a portfolio to 30%, consider purchasing enough bonds to return them to their original 40% allocation. Diversification is an investment principle designed to manage risk. However, diversification does not guarantee against a loss.

The second way of rebalancing is to sell enough of the “winners” to buy more underperforming assets. Ironically, this type of rebalancing actually forces you to buy low and sell high.

Periodically rebalancing your portfolio to match your desired risk tolerance is a sound practice regardless of the market conditions. One approach is to set a specific time each year to schedule an appointment to review your portfolio and determine if adjustments are appropriate.

Shifting Allocation

Over time, market conditions can change the risk profile of an investment portfolio. For example, imagine that on January 1, 2010, an investor created a portfolio containing a mix of 50% bonds and 50% stocks. By January 1, 2020, if the portfolio were left untouched, the mix would have changed to 33% bonds and 67% stocks.

Sincerely,

Steve Lindquist


Steve Lindquist

Steve Lindquist
stevelindquist@peakfns.com
Financial Consultant
295 Los Altos Parkway, Suite 105
Sparks, NV 89436
(775) 789-3140

www.gbfinancial.org/


Sources: DQYDJ.com, 2020 | TreasuryDirect.gov, 2020. For the period January 1, 2010, to January 1, 2020. Stocks are represented by the S&P 500 Composite index (total return), an unmanaged index that is generally considered representative of the U.S. stock market. Bonds are represented by data obtained by the U.S. Department of the Treasury. Index performance is not indicative of the past performance of a particular investment. Past performance does not guarantee future results. Individuals cannot invest directly in an index. When sold, an investment’s shares may be worth more or less than their original cost. Bonds that are redeemed prior to maturity may be worth more or less than their original stated value. The rate of return on investments will vary over time, particularly for longer-term investments. Investments that offer the potential for high returns also carry a high degree of risk. Actual returns will fluctuate. The types of securities and strategies illustrated may not be suitable for everyone.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2020 FMG Suite.

Pay Yourself First

Mother sitting with daughter showing her a piggy bank

Each month, you settle down to pay bills. You pay your mortgage lender. You pay the electric company. You pay the trash collector. But do you pay yourself? One of the most-basic tenets of sound investing involves the simple habit of “paying yourself first” – in other words, making your first payment of each month a deposit into your savings account.

The saving patterns of Americans vary widely. And too often, short-term economic trends can interrupt long-term savings programs. For example, the U.S. Personal Savings Rate jumped from 3.5% to nearly 8% in May 2008 during the housing and banking crisis. It then rose and fell sporadically as the economic environment appeared to stabilize.1 It peaked in December 2012 at 12%.1 As of 2019, the average rate has ranged between approximately 8% to 9%.1

The Genius of Pay Yourself First

Anyone who’s ever managed their own finances knows that saving can be a challenge. There seems to be an endless stream of expenses that demand a piece of each month’s paycheck. Herein lies the genius of paying yourself first: you get the cream at the top of the bucket, and not the leftovers at the bottom.

The trick is to prioritize. Make it a point to put your future first. At first, saving may mean a small lifestyle change. But most individuals want to see their net worth increase steadily. For them, finding ways to save becomes more of a long-term commitment than a short-term challenge.

Tax time can provide an excellent opportunity. You have a chance to give your household budget a thorough checkup. In taking control of your money, you may find you are able to devote more of it to the pursuit of your financial goals.

Putting Your Money To Work

What will you do with the money you save?

If retirement is your priority, consider taking advantage of tax-advantaged investments. Employer-sponsored retirement plans, such as 401(k)s, can be a great way to save because the money comes out of your paycheck before you even see it. Also, as an added incentive, some employers offer to match a percentage of your contributions.2

For money you may want to access before retirement, consider placing the funds in a separate account. When the balance hits your target, you may want to move the money into investments that offer the potential for higher returns. Of course, this may mean exposing your money to more volatility, so you’ll want to choose vehicles that fit your risk tolerance, time horizon, and long-term goals.

In the pursuit of growing wealth, sound habits can be your most valuable asset. Develop the habit of “paying yourself first” today. The sooner you begin, the more potential your savings may have to grow.

Sincerely,

Steve Lindquist


Steve Lindquist

Steve Lindquist
stevelindquist@peakfns.com
Financial Consultant
295 Los Altos Parkway, Suite 105
Sparks, NV 89436
(775) 789-3140

www.gbfinancial.org/


  1. Federal Reserve Bank of St. Louis, 2019
  2. Under the SECURE Act, in most circumstances, you must begin taking required minimum distributions from your 401(k) or other defined contribution plan in the year you turn 72. Withdrawals from your 401(k) or other defined contribution plans are taxed as ordinary income, and if taken before age 59½, may be subject to a 10% federal income tax penalty.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2020 FMG Suite.