Q: I am a single parent. I will soon be debt-free and then I can set aside a little money for my daughter's college. Should I put it in a savings account or are there better options? I will only have four years to save.
A: Four years is not a long time horizon; however, you still need to be willing to take on some investment risk in order to grow your money.
A savings account will earn very little income at these low interest rates and you will owe tax on that interest income. But a well-diversified portfolio in a 529 plan offers better upside potential. And your earnings would grow tax free, and withdrawals would be tax free when used for college expenses.
In addition to federal tax benefits, many states offer tax deductions for 529 plan contributions. But some of the states are considering reducing or eliminating the tax deduction as they grapple with mounting budget deficits. Investors need to be very careful in choosing their own state's 529 plan solely on the basis of a state tax deduction that may or may not be there in the future.
It's wise to shop around before you choose a 529 plan. One of the best sites to compare and contrast plans is http://www.savingforcollege.com/. It provides a 5-Cap rating for each state's 529 plans, based on such things as performance and risk. A 1-Cap rating is the worst and 5-Cap is the best.
That four-year time horizon makes your asset allocation challenging. It requires you to look more at the investment markets and be willing to make investment choices that might go against popular logic.
For example, you would naturally consider an age-based portfolio option or bonds and cash as your most conservative options. However, with interest rates at record lows and the possibility that they will rise over the next four years, you would be investing in bonds at exactly the wrong time, because bond prices fall when interest rates go up.
And an age-based portfolio for an 18-year-old would be weighted heavily in bonds and cash. Given the real possibility that interest rates will rise, you might need to put more of your 529 plan into stocks to avoid the interest-rate risk in bonds.
You could place it in stable value funds, but your returns would be meager over that time horizon. Stocks, given all the volatility, have produced the best long-term total returns, but it requires taking a bit of risk.
If your daughter goes to a four-year college, you could continue to invest inside the 529 plan while she attends college, so presumably your time horizon is longer than just the four years she has until she begins college. In addition, many kids take a gap year after high school to travel and save money for college, which may give you an additional year to grow your investments.
John Gugle, NAPFA -registered financial adviser
Alpha Financial Advisors, Charlotte
European stocks extend slide on growth doubts - The Canberra Times
European stocks declined for the fourth week in five as weaker-than-estimated manufacturing output in the US and China plus record unemployment in the euro area signaled that the global economy is slowing.
A gauge of construction and materials stocks tumbled after China's official Xinhua news agency said the country has no plan to begin large-scale stimulus of the economy. Bankia SA, the lender that Spain nationalized last month, plunged 35 per cent as it sought 19 billion euros ($24 billion) of state aid. Logica Plc surged 67 per cent as CGI Group Inc. agreed to buy the computer-services provider.
The Stoxx Europe 600 Index dropped 3.1 per cent to 235.09 this week as all 19 industry groups in the gauge slid more than 1 per cent. The benchmark measure has plunged 14 per cent from this year's high on March 16 amid mounting concern Greece will elect a government that refuses to cut spending and raise taxes, forcing the country to leave the euro. The selloff has left the gauge's valuation at 9.7 times estimated earnings, according to data compiled by Bloomberg.
“Investors are not only worried about Europe,” said Henrik Drusebjerg, a senior strategist at Nordea Bank AB in Copenhagen, where he helps oversee $US230 billion. “They're concerned world growth is abating. The fronts are being formed as the Greek election on June 17 is nearing and more and more rumors go round that Spanish banks will need a massive recapitalization.
US manufacturing slows
In the US, the Institute for Supply Management's factory index fell to 53.5 in May from 54.8 in April. The median forecast of 82 economists surveyed by Bloomberg News had predicted the gauge would drop to 53.8.
A measure of factory production in China, the world's second-largest economy, also slipped. The Chinese Purchasing Managers' Index retreated to 50.4 in May from 53.3 in April, the nation's statistics bureau and logistics federation said. That compared with the median estimate in a Bloomberg News survey of economists for a reading of 52. A reading above 50 indicates expansion.
A separate gauge of manufacturing output from HSBC Holdings Plc and Markit Economics showed a seventh straight contraction, the longest since the global financial crisis.
A gauge of manufacturing output for the 17-nation euro area contracted for a 10th month in May. London-based Markit Economics' PMI declined to 45.1 from 45.9 the previous month. The reading for May was the lowest since June 2009.
Record unemployment
The Stoxx 600 tumbled 1.9 per cent on June 1 as a report showed euro-area unemployment climbed to the highest on record as companies from Spain to Italy to cut jobs.
The jobless rate rose to 11 per cent in April and March, the European Union's statistics office said. That was the highest since the data series started in 1995. The March figure was revised higher to 11 per cent from 10.9 per cent.
The US Labor Department's monthly payrolls release showed that employers added 69,000 in May, fewer than the most- pessimistic forecast in a Bloomberg News survey. Payrolls climbed a revised 77,000 in April, a smaller number than initially estimated. The report also showed that the jobless rate in the world's biggest economy increased to 8.2 per cent last month from 8.1 per cent.
"The data flow has been disappointing,” said Graham Bishop, an equity strategist at Exane BNP Paribas in London. “The relevant thing to look for now is the likelihood of a policy response, rather than the growth outlook, which we know is disappointing.”
National benchmark indexes retreated in every western- European market this week except Greece. Spain's IBEX 35 Index tumbled 7.3 per cent. The U.K.'s FTSE 100 Index slid 1.7 per cent, France's CAC 40 slipped 3.2 per cent and Germany's DAX Index slumped 4.6 per cent.
Saint-Gobain retreats
Cie. de Saint-Gobain SA plummeted 8.4 per cent, its biggest weekly retreat in 2012. FLSmidth & Co. A/S, the Danish supplier of mining equipment, declined 7 per cent. Acciona SA, the Spanish infrastructure developer, sank 9.9 per cent.
“The Chinese government's intention is very clear: it will not roll out another massive stimulus plan to seek high economic growth,” the Xinhua news agency said in the seventh paragraph of a Chinese-language article on economic policy on May 29. “The current efforts for stabilizing growth will not repeat the old way of three years ago.”
Bankia tumbled 33 per cent this week. Banco Popular Espanol SA retreated 12 per cent and Bankinter SA dropped 18 per cent after Standard & Poor's cut the credit ratings of both lenders and Bankia to junk on May 25, after the close of European markets. The rating company cited Spain's weakening economy.
Spain's lenders
Data showed a net 66 billion euros of capital left Spain in March. The country's economy Minister, Luis De Guindos, said the balance-of-payments figures, which showed an outflow of 97 billion euros in the first quarter, didn't reflect “capital flight,” and underlined how Spanish banks were struggling to roll over funding on money markets.
Bayerische Motoren Werke AG, the world's biggest maker of luxury cars, dropped 5.1 per cent and Daimler AG retreated 6.7 per cent as a gauge of automakers sank 4.7 per cent.
ThyssenKrupp AG, Germany's largest steelmaker, declined 9.2 per cent after Chief Executive Officer Heinrich Hiesinger said it would be unrealistic to expect the steelmaker's Americas unit to post an operating profit next fiscal year, Euro am Sonntag reported.
Logica jumped 67 per cent after Montreal-based CGI announced it had reached an agreement to buy the U.K. computer-services provider in a 1.7 billion-pound ($2.5 billion) cash transaction, offering a premium of 59.8 per cent to its closing price on May 30.
Stimulus money boosts Florida reef restoration - Palm Beach Post
The Associated Press
Updated: 12:36 p.m. Saturday, June 2, 2012
Posted: 10:51 a.m. Saturday, June 2, 2012
KEY LARGO, Fla. — Coral reef restoration along Florida's shores has been getting a boost from federal stimulus money.
The American Recovery and Restoration Act of 2009 provided $3.3 million to grow about 30,000 threatened staghorn and elkhorn coral colonies in underwater nurseries. About 10,000 of the fast-growing corals are being transplanted in eight areas along a 300-mile reef tract from Broward County to the Florida Keys, and in the U.S. Virgin Islands.
The goal of the transplants is to spawn tens of thousands more coral colonies.
"We're just giving them a jump start," said The Nature Conservancy's James Byrne, the marine biologist overseeing the three-year project.
"Now, if they can successfully reproduce, it will blow away anything we can do," he told The Miami Herald (http://hrld.us/JCwSEm).
The money was part of $167 million given to coastline restoration projects; the entire stimulus package totaled $831 billion. The funding, which created or supported 56 jobs, ends in December.
"Before, most coral restoration efforts focused on places with large (vessel) groundings," said Sean Morton, superintendent of the Florida Keys National Marine Sanctuary. "This is the first attempt to do it reef-wide and turn around a long-term trend of coral reef decline."
Scientists say staghorn and elkhorn coral populations have declined by about 90 percent throughout the Caribbean over the last 30 years. Many factors have contributed to the decline, including a die-off of algae-eating spiny sea urchins, disease caused by bleaching from rising water temperatures, ocean acidification, water pollution and hurricanes.
"If you went snorkeling or diving anywhere in the Caribbean in the early '80s, you'd see corals everywhere," Byrne said. "Staghorn used to be the dominant one on the reef, providing almost all the habitat for small juvenile fish to go into. And elkhorn dominated the top of the reef, building big reef crests that waves break on."
In 2006, elkhorn and staghorn were the first corals to be put on the threatened list under the Endangered Species Act.
"Staghorn is a thinner branching colony that looks like the thin antlers of a young stag," said Erich Bartels, coral science manager at Mote Marine Laboratory. "Elkhorn looks like big moose antlers that go out in a big fan shape."
Both corals are important to Florida's ecosystem and economy, scientists say.
"This is restoring nature for people's sake. These habitats are nature's infrastructure," said Rob Brumbaugh, The Nature Conservancy's director of global marine restoration. "We're making fish. When you make fish, you make jobs. It's a good investment."
___
June 02, 2012 12:36 PM EDT
Copyright 2012, The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
World stocks mixed amid bargain-hunting vs caution - Yahoo Finance
BANGKOK (AP) -- Asian stocks eked out gains Thursday as traders hunted for bargains after sharp selling in recent days, but markets in Europe fell amid intensifying fears of a messy exit by Greece from the euro common currency.
Greece called a new round of elections for June 17 after coalition talks to form a government fell apart. The president said depositors were pulling hundreds of millions of euros out of banks, weakening the country's strained financial system.
The developments fueled fears that Greece would exit the euro currency and shake global markets. In elections earlier this month, Greek voters punished parties that supported tough austerity measures needed to secure international bailout money.
But analysts at Credit Agricole CIB in Hong Kong said the scheduling of new Greek elections suggested "a reduction in near-term uncertainties" that could lead to some relief for volatile markets.
Britain's FTSE 100 fell 0.4 percent to 5,380.72 in early trading. Germany's DAX fell 0.2 percent to 6,373.01 and France's CAC-40 lost 0.2 percent to 3,042.45.
U.S. stocks were set for a moderately higher opening, with Dow Jones industrial futures up 0.3 percent at 12,610. S&P 500 futures rose 0.4 percent to 1,327.
In Asia, stock markets enjoyed a slight rebound as investors went bargain-hunting, analysts said.
Japan's Nikkei 225 climbed 0.9 percent to close at 8,876.59 after the country posted better-than-expected growth figures for the first quarter. South Korea's Kospi added 0.3 percent to 1,845.24. Benchmarks in Taiwan, New Zealand and the Philippines also rose.
Australia's S&P/ASX 200 slipped 0.2 percent to 4,157.40, dragged down by financial stocks. Hong Kong's Hang Seng closed 0.3 percent down at 19,200.93.
Mainland Chinese shares bounced back from early losses, buoyed by calls from the country's central bank governor, Zhou Xiaochuan, for market reforms.
The benchmark Shanghai Composite Index rose 1.4 percent to 2,378.89. The Shenzhen Composite Index also gained 1.4 percent to 954.95. Shares in brokerages, financial and trading-related companies led the gains.
Positive news on the U.S. economy on Wednesday underpinned sentiment in Asia. Construction of homes in April rose 2.6 percent from March, and U.S. factory production increased 0.6 percent in April, helped by a gain in auto production.
Some Japanese stocks saw big gains amid news that the country's economy grew at an annualized 4.1 percent for the January-March quarter thanks to a rebound in consumer spending.
Sharp Corp. jumped 5.7 percent and Mazda Motor Corp. added 3.8 percent. Steel company JFE Holdings shot up 5.5 percent.
Benchmark oil for June delivery was up 52 cents to $93.33 per barrel in electronic trading on the New York Mercantile Exchange. On Wednesday, the contract fell by $1.17 to finish at a seven-month low of $92.81 per barrel in New York.
In currencies, the euro fell to $1.2715 from $1.2725 late Wednesday in New York. The dollar rose to 80.35 yen from 80.29 yen.
___
AP researcher Fu Ting contributed from Shanghai.
Money market fund assets rise to $2.572 trillion - Yahoo Finance
NEW YORK (AP) -- Total U.S. money market mutual fund assets rose by $7.87 billion to $2.572 trillion for the week that ended Wednesday, the Investment Company Institute said Thursday.
Assets of the nation's retail money market mutual funds fell by $4.27 billion to $887.46 billion, the Washington-based mutual fund trade group said. Assets of taxable money market funds in the retail category fell $2.93 billion to $701.97 billion. Tax-exempt retail fund assets fell $1.33 billion to $185.49 billion.
Meanwhile, assets of institutional money market funds rose $12.13 billion to $1.685 trillion. Among institutional funds, taxable money market fund assets rose $12.73 billion to $1.599 trillion; assets of tax-exempt funds fell $600 million to $86.37 billion.
The seven-day average yield on money market mutual funds was 0.03 percent in the week that ended Tuesday, unchanged from the previous week, said Money Fund Report, a service of iMoneyNet Inc. in Westborough, Mass.
The 30-day average yield was also unchanged from last week at 0.03 percent. The seven-day compounded yield was flat at 0.03 percent. The 30-day compounded yield was unchanged at 0.03 percent, Money Fund Report said.
The average maturity of portfolios held by money market mutual funds fell to 45 day from 46 days in the previous week.
The online service Bankrate.com said its survey of 100 leading commercial banks, savings and loan associations and savings banks in the nation's 10 largest markets showed the annual percentage yield available on money market accounts was unchanged from last week at 0.13 percent.
The North Palm Beach, Fla.-based unit of Bankrate Inc. said the annual percentage yield available on interest-bearing checking accounts was unchanged from the week before at 0.06 percent.
Bankrate.com said the annual percentage yield on six-month certificates of deposit was also unchanged at 21 percent from the previous week. The yield on one-year CDs was unchanged at 0.33 percent. It fell to 0.52 from 0.53 percent on two-and-a-half-year CDs. It was flat at 1.12 percent on five-year CDs.
Money and passports: Is George Zimmerman's plight racial? - HULIQ.com
Shouts of injustice may calm some down now that Travyon Martin’s shooter George Zimmerman has to report to jail in the next two days.
A judge has given Zimmerman 48 hours to surrender. The judge also revoked Zimmerman's $150,000 bond.
Zimmerman failed to report $200,000 raised and stored inside his PayPal account. He and his wife discussed the evasion during jail phone calls. The two used a special code to deceive listeners and discuss the funds.
A Florida judge ruled that Zimmerman’s deceit merits revocation of his bond. Furthermore, Zimmerman’s second passport was discovered.
Some argue that his $200,000 should not be included as personal finances because that money goes to his attorneys. Others say that Zimmerman’s lie, or attempted cover-up, really harms Zimmerman’s chances at trial. They asked how can a jury believe a man who hasn’t been honest with the courts?
Others have defended Zimmerman’s two passports, explaining that he likely lost the first and ordered a second. Still, wisdom, based in logic and the law not race, dictates that if Zimmerman’s second passport was needed because he lost the first, then an honest man would have reported recovering the first lost passport.
Zimmerman’s last name, particularly European, and Trayvon’s first name, particularly African American, have set off a string of events that have pit race and parties against each other.
Many older members of the African American community believe George Zimmerman wasn’t charged with murder immediately because his victim was black. A number of African Americans and lawyers for Trayvon Martin have stated over and over that had Martin been the shooter, Martin would be in jail.
Those on the opposite end of the race spectrum, those who believe Zimmerman is a white victim, are also prominent debaters in the Trayvon Martin shooting. Many argue that Zimmerman’s hope rests with Republicans and gun lobbyists who believe in Stand Your Ground and the right to bear arms in this country as long as the owner has a legal right (permit) to carry the weapon.
Others point to an African American President who has made only one comment on the Trayvon Martin shooting. Weeks after the murder and about a week after Trayvon Martin’s death saturated cable news, President Obama told the world that if he had a son, his son would look like Trayvon. These “others’ argue that Zimmerman’s become part of a federal “witch hunt”--a sly reference to Department of Justice Deputy Eric Holder, also African American.
Communities, black, white and other, have all cried “Justice for Trayvon” thus shunning any and all notions that they’ve gathered in Trayvon’s Martin name to race bait. For many, Zimmerman’s trial is about justice, not race.
Zimmerman shot an unarmed African American 17-year-old. His lawyers will argue self-defense. The 17-year-old had THC in his system. Zimmerman had been on a prescription drug that warns of upset to the psyche, particularly with moods that cater anxiety and aggression.
What his trial and the what the law mean to George Zimmerman isn’t clear. Past behaviors, inc luding a scuffle with police that merited a mug shot and criminal record suggest that Zimmerman has had problems with authority in his past. Lying about his finances has cast an old light on Zimmerman. A light that suggests Zimmerman owns a certain disrespect and casual disregard for the American Justice System
passport cover photo credit: Wikipedia
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