Articles

Greetings and happy New Year from Lifelong College Savings!

As we move into 2012, many of us reflect on the previous year, and make resolutions for the upcoming year. To kick-off 2012, following is a recap of 2011 and financial tips to start the year with a financial bang.

RECAP
Although there has been a certain level of volatility in the market, the S&P 500’s index value dropped fractionally for 2011 (falling from 1257.64 on 12/31/10 to 1257.60 on Friday 12/30/11) and the total return gain of the index was +2.1% for the entire year (i.e., including the impact of reinvested dividends).

If you take a look at a long-term average, the S&P 500 stock index has gained an average of +9.3% per year (total return) over the last 50 years (i.e., the years 1962-2011).

To put things in perspective, no single calendar year actually gained 9.3% in the last half century. The closest that any year came to the 9.3% historical average was in 1993 when the stock index gained +10.1% for the year (source: BTN Research).

The overall lesson is that year after year, the market does not adhere to a specific return model. The only consistent attribute of the market is the volatility. With proper financial management, volatility and risk can be minimized.

For more information on portfolio management, please contact Lifelong College Savings at (503) 747-6534 . Investors cannot invest directly in indexes. The performance of any index is not indicative of the performance of any investment and does not take into account the effects of inflation and the fees and expenses associated with investing.

STEPS TO A HEALTHY FINANCIAL START IN 2012

Lifelong WealthAt LLWM, we believe it’s important to apply well being to all silos of life. Financial, physical and spiritual health are endeavors that require discipline, dedication and hard work.

Many of us spend countless hours in a gym or outdoors knowing the results of our efforts will only be accomplished through a combination of good nutrition and smart choices made every day. This same mentality should be applied to financial goals. Make small changes and smart decisions today and see positive payoffs in the future. Following are tips for getting “financially fit” by decreasing debt and protecting your assets in the New Year.

This list is by no means exhaustive of all remedies, so be creative and put emphasis and time into creating your personal plan of action. Work on your life goals, and do not forget Lifelong College Savings is here to help in assisting you accomplish those goals, no matter what they may be.

If you are facing unmanageable credit card balances, try utilizing these strategies:

• Pay higher interest cards first. Analyze which cards have the highest interest rates; make higher payments towards those cards.
• Always pay more than the minimum payment. This ensures some of the payment is applied to the principle balance, not just interest.
• Consolidate your debt. There are many programs .that allow a simplified method in paying debt and lowering the total interest paid.
• Call your creditor. The credit card company may work with you to lower your payment or even lower your monthly interest on your card. Renegotiating debt is free and only takes a moment.
• Refinance your debts. Lower your car, home, and other external payments by refinancing. This will leave additional cash to pay towards your credit card debt.
• Borrow against your existing investments. If you have life insurance with an existing cash value, you can borrow from yourself by pulling this value out of your policy. If you have an existing 401(k), you can typically borrow up to $50,000 of its existing value. *Be very careful with this method, as there are often penalties and taxes applied.

Another element of financial wellbeing is protecting your current position. Here are some things to think about in 2012:

• Insure the high-risk areas of your life. When looking at your current situation, put emphasis on making sure you have an insurance policy in play for specific areas of your life. These should include: Health insurance, home insurance, life insurance, renters insurance, car insurance, and long term care.
• Increase your deductibles, if you have trouble paying your insurance premiums. Since insurance is critical in protecting our financial wellbeing, remember you always have the option to pay lower premiums by implementing higher deductibles. This means no excuses for not having your safety net.
• Analyze the insurance options that may be available through your employer. Often times employers offer benefit packages that could be worth re-evaluating. If your employer offers long-term disability insurance, make sure to take advantage of this offer. Why? Need to elaborate.
• Insure wisely. Make sure you are not wasting money on insuring areas of your life that do not necessarily need to be insured. Be smart and strategic about the policies you are paying for.

We hope this news letter gives you a jumpstart to implementing small changes to your current financial position in attempt to brighten your position further in 2012.