Do you know the answer if your financial professional asks you what type of investor you are? While it may be challenging to classify yourself off the top of your head, knowing what type of investor you are might help you avoid making knee-jerk decisions that could cost you money.

Suppose you are a passive investor primarily interested in large-cap companies, but find yourself pursuing an active investment strategy focused on small-caps. In that case, staying invested may be tough when things get rocky. Having an investment strategy that matches your investing type may make it easier to stay the course over the long haul.

Here are three of the biggest investing dichotomies that may help you identify your investment style(s).

Active Versus Passive Investing

As the name implies, active investors take an active role in choosing, buying, and selling their investments—either placing trades themselves or investing in actively-managed funds. Actively-managed funds generally have a full staff of managers and researchers working on the fund’s return. Many active investors choose this strategy to “beat the market.”

Passive investing, or “buy and hold” investing, does not require research, and as a result, passive investment funds tend to have lower expense ratios than actively managed funds. Passive investing is ideal for those with a long time horizon—people just starting out in the investment world or those with a few decades of work before they retire.

Growth Versus Value Investing

The next main investment dichotomy involves the overall investment goal: growth or value. Growth investments may increase in value quickly, returning high earnings to investors. Value investments are perhaps a good deal. They may be industry leaders that, for whatever reason, are currently underpriced.

Many investors tend to wind up with a mix of growth and value investments. During economic booms, growth stocks may outpace their value companions, while value stocks might be a hedge against inflation and recession.

Small-Cap Versus Large-Cap

Investors decide whether to invest primarily in large or smaller companies. Companies with a market capitalization (the number of shares multiplied by the share price) of more than $10 billion are considered large-cap companies. Those with a market capitalization of under $2 billion are small-cap companies.¹ Mid-cap companies are those that fall somewhere in the middle.

Generally, large-cap companies are stable, slower-growing companies that may hold their value, while small-cap companies are smaller, riskier ones that might present an opportunity for rapid growth. To combine the two factors, small-cap companies tend to include more growth stocks, while large-cap companies include more value stocks.

By analyzing your risk tolerance, investing timeline, and willingness to invest actively, you may choose the investing style(s) that work for you. Regardless of the style, all investments may lose money.

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by WriterAccess.

LPL Tracking #1-05372579

Footnotes

¹ What is Large Cap? https://www.fidelity.com/insights/investing-ideas/glossary-large-cap

For more than 150 years, American college football has maintained its top-dog status in the U.S. sporting arena. On November 6, 1869—a mere four years after the end of the American Civil War—players from Rutgers and Princeton met on the field in New Brunswick, New York for the first intercollegiate football game.1 Eighty years later, after the end of World War Two, colleges began to award athletic scholarships to their football players to garner top talent.

Today, just about every major college football player receives a scholarship or stipend for tuition, room, board, and other expenses. In response to complaints about schools, video game producers, and other organizations profiting off players’ fame, the NCAA recently made sweeping changes to its group licensing rules that will allow college players to finally capitalize on their names and likenesses.

What College Players Should Consider

Not all financial aid packages are created equal. Before accepting a college’s offer, a student-athlete should consider factors like:

• Whether the aid package is contingent on maintaining a specific G.P.A.;
• Whether it provides tuition assistance based on the number of years attended, semesters attended, and/or credits taken (which can be important if playing sports will prevent you from completing your degree in four years);
• Whether it contains licensing restrictions in addition to those imposed by the NCAA; and
• Whether it can be modified in the event of injury or illness that prevents football play.

A generous offer may no longer seem so generous if it comes with a laundry list of contingencies that might not be met. By weighing the pros, cons, and restrictions of the various offers made, players can make the best possible choice for their circumstances.

Know Before You Go Pro

College athletes who plan to enter the NFL draft can be excited at the thought of hefty signing bonuses and annual salary contracts. However, these young athletes often overlook the relative brevity of their professional careers and the major bite that federal and state income taxes will take. Because football careers can often be cut short by injury, players who don’t have a “Plan B” career can benefit from setting aside funds now to provide a reliable stream of income in the future.

It’s important for anyone thinking of going pro to seek out the assistance of a financial professional. Not only can a professional advise on the most advantageous way to accept these funds (such as having a signing bonus paid out over multiple tax years), but they can also help direct investments and recommend products and services that will best preserve this newfound wealth.

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal advisor.

LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial.

All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

1 https://www.collegesportsscholarships.com/history-ncaa-football.htm

Sources

Whether you make tennis one of your leisure activities during retirement or just enjoy watching the sport, you may not realize that the same strategies used in a tennis match may also translate into retirement. Prepare yourself for peak performance during the game of retirement by trying some of these retirement tips.

1. Singles or Doubles

Before starting any tennis match, you must determine whether you plan to play the game alone or with a partner. Do your retirement goals only apply to you or also a spouse or significant other? If you plan to have a partner for retirement, do they have their own retirement savings, or do you both need to live off the same savings? Even if you are currently single but plan to share your future retirement with someone, it is crucial to factor that into your retirement equation.1

2. You Must Hold a Serve for a Break To Count

Making an excellent investment may feel like you are winning the game, but that victory might be short-lived if you follow it with a bad investment. Continuing to make well-researched and wise decisions is one way to work towards making confident investments.

3. Always Go for the Aces

Just as in tennis, going for a quick gain might help you win your retirement goals. If your employer offers a 401(k) plan with a sizable percentage for its employer match, investing your money in that way may help it grow quicker.2 By simply investing in the employee program on each paycheck, you may get closer to your savings goals.

4. Diversity May Salvage Unforced Errors

Even the greatest tennis players may experience unforced errors in their careers, and even savvy investors make mistakes. By diversifying your retirement portfolio, you may offset these bad decisions.1 With this strategy, your entire retirement does not end up in jeopardy because of a single bad decision.

5. Choose the Correct Court

While skills play a crucial role in tennis and investing, so does the court you choose to play on. Identifying where to invest your savings for retirement is essential for the diversification of your portfolio. After assessing your current financial situation and retirement goals, a financial professional might help you consider different places to invest.

6. Always Have a Strategy

Those serious about tennis know that developing a strategy is the key to winning a match. Many components are involved in a solid tennis strategy, and many are in a well-developed retirement plan. Tennis players research their opponents and practice their serve, forehand, and backhand before stepping onto the court. Before retirement, you should be sure to do research on your future financial needs and put in place insurance plans, withdrawal strategies, and estate plans.1

Just like great tennis players have coaches, great investors seek out the services of financial professionals to help them work towards retiring with confidence. Prepare for your retirement like a pro by using these six tips to develop your retirement plan.

Footnotes

18 Essential Tips for Retirement Saving, Investopedia, https://www.investopedia.com/articles/investing/111714/8-essential-tips-retirement-saving.asp

2Top 10 Retirement Tips For 2022, Forbes, https://www.forbes.com/advisor/retirement/top-10-retirement-tips/

Important Disclosures

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by WriterAccess.

LPL Tracking #1-05268284

Those that choose to invest in the education of a family member, friend or acquaintance are investing not only in that individual’s future, but also the future of society. It is an act of generosity, forward-thinking, and love. However, this type of investment can be more complicated than initially thought. Which plan should you choose and how do you decide? Here are some key details about 529 plans and other education savings options to help you decide which plan is appropriate for you and your loved ones.

529 Plan

People invest in a 529 plan for several reasons. Many states offer tax benefits that will continue as the balance of the account grows and the funds are distributed toward education expenses. State-run 529 plans allow you to invest in mutual funds and your earnings can grow tax-deferred. There are two kinds of 529 plans:

1. College Savings Plan
2. Prepaid Tuition Plan

The college savings plan is the more popular of the two. Contributions to this plan grow tax-free and then when you distribute the funds, they are tax-free as long as it is toward an eligible educational expense.

Depending on what state you live in, you may be afforded a tax deduction or credit for your contributions.

The 529 plan is most beneficial if you begin saving for it early, otherwise you may want to consider a different type of instrument.

There are a few disadvantages that you should be aware of:

• If the contributions are used for anything other than eligible educational expenses you may have to pay a penalty.
• Plans have a limit of only one beneficiary at a time, so if you have multiple children whose education you want to help fund, you may need multiple plans.
• There is no federal tax deduction or credit for your contributions.

Uniform Transfers to Minors (UTMA) and Uniform Gifts to Minors (UGMA)

UTMA and UGMA are custodial accounts that allow an individual to contribute or transfer funds to a minor without having to establish a trust. Both accounts are created under the name of the child but managed by a parent or guardian until the minor reaches the age where the assets can be passed to them (the age varies with state).

UTMA and UGMA contributions are made with after-tax dollars and follow the gifting rules of up to $17,000 annually (for 2023) without being subject to a gift tax ($34,000 for married couples). The first $1,250 earnings from any of the accounts may be tax-free. The next $1,250 of any earnings in excess of the exempt portion may be taxed at the child’s tax rate. Anything thereafter is taxed at the parent’s tax rate. i

Difference Between a UTMA and UGMA

An UTMA allows nearly all types of assets as gifts and transfers including:

• Securities (stocks bonds, and mutual funds)
• Bank deposits
• Insurance policies
• Real estate

Whereas an UGMA is limited to just bank deposits, securities, and insurance policies. The UTMA is considered more of an expansion of the UGMA, and most states have adopted the UTMA rules.

A disadvantage of a UTMA and UGMA account is that they are reported as the child’s asset reducing federal aid eligibility at a larger percentage than the 529 plan which is a parental asset.

Roth IRA

Traditionally Roth IRA accounts are used as retirement savings instruments, but they can also be used for educational purposes. No tax deduction occurs initially, so your account can experience tax-deferred growth. Earnings withdrawals will be taxed except for the following circumstances:

• The account has been open for at least five years
• Account owner is age 59 ½ or older
• Death of the account owner
• Disability
• First-time homeowner

However, for qualified educational expenses, the additional 10% penalty could be waived. ii Original contributions to a Roth IRA account are allowed to be withdrawn tax-free at any point, because the taxes on it have already been paid.

A disadvantage of a Roth IRA is that you are limited to $6,500 for the year in 2023 ($7,500 if you are 50 or older), and you cannot withdraw any earnings earlier than the eligibility requirements, or you will have to pay taxes and a 10% penalty.

Permanent Life Insurance

For some individuals, permanent life insurance might be a suitable option due to the tax-deferred savings structure. When your child is preparing to enroll in college, you can take a loan out against the cash balance.

Every dollar put toward premiums goes to both the death benefit and a separate cash-value account. The money in the cash-value account will grow tax-deferred, with the potential to generate a three percent to six percent return.

Unlike a 529 plan, life insurance can offer more flexibility. If your child decides not to attend college, you won’t experience the tax burden and penalties of a 529 plan. Another benefit is that life insurance is not included in financial aid calculations.

A disadvantage of permanent life insurance is the costly upfront and recurring fees. It takes a long time for your money to grow enough to exceed the amount paid in premiums, so if you are considering using this method, you have to start when the children are very young.

Coverdell Education Savings Account (ESA)

An ESA is a tax-deferred account that helps families fund educational expenses. Beneficiaries are required to be under the age of 18 at the creation of the account. However, the age restriction may be waived for special needs beneficiaries. The contribution limit is $2,000 per beneficiary annually, though multiple accounts may be set up for a single beneficiary.

ESA funds have to be used by the time the student reaches 30-years old, although the funds may also be used to cover educational expenses for kids between grades K-12 depending on the eligibility of the school.

ESA funds can be used to cover tuition and other qualifying expenses like books, fees, supplies, room and board. iii

Disadvantages are that contributors must earn less than $110,000 per year. Contributions are also not tax-deductible and no contributions are allowed once the child turns 18. iv

If investing in the future of a loved one is something you want to explore, consider consulting a financial professional to help you work through your options and determine which is appropriate for you and your financial goals.

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

Prior to investing in a 529 Plan investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such

state’s qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Non-qualified withdrawals may result in federal income tax and a 10% federal tax penalty on earnings. Please consult with your tax advisor before investing.

The Roth IRA offers tax deferral on any earnings in the account. Withdrawals from the account may be tax free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This article is prepared LPL Marketing Solutions

Footnotes:

i UGMA & UTMA Custodial Account Basics Overview (2023 Update) (20somethingfinance.com)
ii UGMA & UTMA Custodial Account Basics Overview (2023 Update) (20somethingfinance.com)
iii Coverdell Education Savings Account (ESA): How They Work (investopedia.com)
iv Coverdell ESA vs 529 College Savings Plan – Differences & Comparison (moneycrashers.com)

LPL Tracking # 1-05363434

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In the realm of estate planning, the ripple effects of our oversights often linger long after we’re gone, impacting the lives of those we leave behind. It’s the uniqueness of this area of planning that makes it paramount to get things right. Yet, many often trip up. Here’s a closer look at the six most common estate planning mistakes and how you can work towards sidestepping them.

1. Not making a plan at all.

The Mistake: The adage, “failing to plan is planning to fail” rings especially true here. Without an estate plan, you risk leaving your heirs in a state of confusion, potentially leading to disputes and court battles.

How to Mitigate: Begin with the basics. Draft a will, designate beneficiaries, and ensure you have named an executor. Even a simple estate plan is better than none.

2. Keeping silent about your plan.

The Mistake: Not discussing your wishes with your beneficiaries often leads to confusion or misunderstandings after you’re gone.

How to Mitigate: Transparency is key. Discuss your estate plan with your loved ones. Make sure your beneficiaries and executor understand your wishes and the reasons behind them.

3. Overlooking your broader legacy.

The Mistake: Many mistakenly believe that estate planning is solely about distributing wealth.

How to Mitigate: Think about intangibles. Maybe there’s a charity close to your heart you want to support, or perhaps family heirlooms that carry emotional value. Ensure these are accounted for in your plan.

4. Failing to list all assets.

The Mistake: If you don’t list all your assets, some might get overlooked, leading to potential loss or disputes.

How to Mitigate: Keep a comprehensive, updated list of all your assets, both tangible (like property) and intangible (like stocks or bonds). Make it easily accessible to your executor.

5. Ignoring online assets.

The Mistake: In today’s digital age, overlooking online assets is a glaring oversight. From digital currencies to social media accounts, these assets can hold both monetary and sentimental value.

How to Mitigate: Catalog all your online accounts, from email to online banking, and ensure your executor has the means to access them, whether that’s through a list of passwords or digital estate planning tools.

6. Thinking only of the afterlife.

The Mistake: Many believe estate planning only kicks into gear after death. However, what happens if you become incapacitated?

How to Mitigate: Plan for scenarios where you might be alive but unable to make decisions. Tools like living wills, health care proxies, and durable powers of attorney can help ensure your wishes are honored even if you’re not in a position to voice them.

Estate planning is a dynamic process that demands foresight, attention to detail, and regular updates. By being aware of common pitfalls and working to avoid them, you can work towards creating an estate plan that truly reflects your wishes with potentially less stress for both you and your loved ones. Remember, a little proactivity today may prevent a lot of heartaches tomorrow.

Important Disclosures

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This information is not intended to be a substitute for individualized legal advice. Please consult your legal advisor regarding your specific situation.

This article was prepared by FMeX.

LPL Tracking #483838-01

Let’s face it–in today’s world, health insurance is a necessity. In fact, most U.S. citizens and legal residents must have qualifying health insurance or face a penalty tax. Yet the cost of medical care is soaring higher every year, and it’s becoming increasingly difficult (and in some cases, impossible) to pay medical costs out of pocket. Whether you already have health insurance or want to get it, here’s some basic information to help you understand it.

Not part of a group? You may have to go it alone

You may have group health insurance or be able to buy it through your employer. Group insurance is most commonly offered through employers. It is also offered through some civic groups and other organizations (e.g., auto clubs, chambers of commerce). A single policy covers the medical expenses of a group of people. All eligible members of the group can be covered by a group policy regardless of age or physical condition. The premium for group insurance is calculated based on characteristics of the group as a whole, such as average age and degree of occupational hazard. It’s generally less expensive than individual insurance.

If you can’t join a group, consider buying individual insurance. Unlike group insurance, individual insurance is purchased directly from an insurance company or agent. When you apply, you are evaluated in terms of how much risk you present to the insurance company. Your risk potential will determine whether you qualify for insurance and how much it will cost, depending on state laws. You must pay the full premiums yourself.

If you have to go it alone, you can shop for health insurance coverage through state-based Affordable Insurance Marketplaces. You can compare health plans according to price and quality, and ultimately purchase an affordable plan that best meets your health insurance needs.

Know what’s out there

The cost and range of protection that your health insurance provides will depend on your insurance provider and the particular policy you purchase. You may have comprehensive health insurance that involves several types of coverage, or basic coverage that includes hospital, surgical, and physicians’ expenses. In addition, major medical coverage is necessary in the event of a catastrophic accident or illness. Many plans also cover prescriptions, mental health services, and other health-related activities (e.g., health-club memberships).

When it comes to health insurance, HMO, PPO, and POS are more than just letters. You need to know the types of health plans available so that you can make an informed decision. You can obtain health insurance through traditional insurers like Blue Cross/Blue Shield, health maintenance organizations (HMOs), preferred provider organizations (PPOs), point of service (POS) plans, and exclusive provider organizations (EPOs).

• Traditional insurers: These plans usually allow you flexibility regarding choice of doctors and other health-care providers. Some policies reimburse you for covered expenses, while others make payments directly to medical providers. You will pay a deductible and a percentage of each bill, known as coinsurance.
• HMOs: Health maintenance organizations cover only medical treatment provided by physicians and facilities within their networks. You must choose a primary care physician, who will either approve or deny any requests to see a specialist. You usually pay a fixed monthly fee for health-care coverage, as well as small co-payments (e.g., $10 for each office visit and prescription).
• PPOs: Preferred provider organizations do not require members to seek care from PPO physicians and hospitals, but there is usually strong financial incentive to do so (in terms of percentage of reimbursement). You usually pay a fixed monthly fee for health-care coverage, as well as small co-payments (e.g., $10 for each office visit and prescription).
• POSs: Point of service plans combine characteristics of the HMO and PPO. You must choose a primary care physician to be responsible for all of your referrals within the POS network. Although you can choose to go outside the network with this type of plan, your health care will be covered at a lower level.
• EPOs: Exclusive provider organizations are basically PPOs with one important difference: EPOs provide no coverage for non-network care.

Read your contract

You should have a basic understanding of what your policy does and does not cover. This may help you prevent an unexpected medical bill from arriving in your mailbox, because you’ll know ahead of time, for instance, whether or not liposuction is covered. You must read your policy carefully, particularly the section on limitations and exclusions. The specifics will vary from policy to policy. In general, though, most policies will at least mention the following:

• Pre-existing conditions: An illness or injury that began or occurred before you obtained coverage under the policy. The Affordable Care Act eliminated the ability of a health insurance policy or plan covering essential health conditions to deny coverage for pre-existing conditions. However, pre-existing conditions may be imposed for other than essential health benefits.
• Nonduplication of benefits: Benefits will not be paid for amounts reimbursed by other insurance companies.

Your health insurance policy should also address the following issues:

• Deductible: The amount that you must pay before insurance coverage begins (usually an annual figure
• Coinsurance: The portion of each medical bill for which you are responsible
• Co-payment: The fixed fee that you pay for each doctor visit or prescription
• Family coverage: Many group plans allow you to cover your spouse and dependents for an increased premium
• Out-of-pocket maximum: This provision is designed to limit your liability for medical expenses in the calendar year; you won’t have to make coinsurance payments in excess of this figure
• Benefit ceiling: The maximum lifetime payout under the insurance policy, usually at least $1 million

This article was prepared by Broadridge.

LPL Tracking #1-05070800

For members of the “Sandwich Generation”—those currently in their 40s and 50s who are caring for children and their parents who are over 65-years old—estate planning may seem like a low priority. After all, when you’re juggling multiple caregiving responsibilities daily, sitting down to draft a will is easy to put off.

But estate planning can be crucial to protecting your assets and providing for your children or other loved ones after you are gone. Here are some tips for Sandwich Generation members to begin their estate planning process.

Tip 1. Choose a Will or Trust

There are key differences between a will and a trust, and there is no one-size-fits-all answer for every situation.

A will disposes of your assets directly by naming beneficiaries. Once a will passes through probate, these assets may transfer to the beneficiaries through a court-supervised process.

A trust takes ownership of your assets during your lifetime and might distribute income to you throughout your life. A trust may distribute the assets to your beneficiaries after your death or might use them to provide a source of income for your heirs.

Trust assets belong to the trust and not to you. Certain types of trusts may be helpful when managing your income and assets if you later require long-term care under Medicaid. And for members of the Sandwich Generation, helping a parent establish a trust might allow them to qualify for Medicaid-based care without having to sell off their assets first. You may want to work with a financial professional if you’re considering this option.

Tip 2. Name Guardians

Your estate plan should include naming guardians for any minor or disabled children. If you pass away without naming guardians and your child’s other parent is unavailable, a court may decide who your children should live with and who should get your assets to pay for their care.

By having guardians identified in writing, you clarify your intentions about your child’s future after you are gone.

Tip 3. Plan for Long-Term Care

With the annual cost of long-term care increasing each year, it may be challenging to save as much as you may need to fund years of this care. Long-term care insurance might help cover these costs by providing additional coverage on top of a traditional health insurance policy or Medicare.

While most long-term care policies have coverage limits, it is worth investigating whether they may be a way for your parents to preserve assets or a way for you to improve your retirement readiness.

Tip 4. Give Gifts

If your parents or adult children are struggling financially, you may be able to help by making a tax-free cash gift to them. The annual gift tax exclusion allows you (and your spouse) to give up to $16,000 per person, tax-free.1 This means that you and your spouse may gift each of your children or parents $32,000 per year ($16,000 from each of you) without either side owing any tax on this amount.

If any gift recipients receive Medicaid, Supplemental Security Income (SSI), or other forms of aid with asset limits, giving gifts might negatively affect their benefits. Talk to a financial professional about other alternatives you may have to assist, such as possibly paying for medical expenses directly.

Footnote

1 Estate and Gift Taxes 2021-2022: What’s New This Year and What You Need to Know, The Wall Street Journal, https://www.wsj.com/articles/estate-and-gift-taxes-what-to-know-2021-2022-11646426764

Important Disclosures

This material was created for educational and informational purposes only and is not intended as tax, legal, or insurance advice. If you are seeking advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial.

All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by WriterAccess.

LPL Tracking #1-05280580

What does the term “financial freedom” mean to you? For some, it means freedom from a particular workplace or industry. For others, it means the opportunity for an early retirement or the ability to start a long-desired business. Consider these three strategies that may help investors pursue financial independence on this Independence Day.

Start Early

The power of compounding might be significant—the more you invest sooner, the longer there is for the compounding effect to help. In general, having more time invested in the market helps manage day-to-day volatility and possibly major recessions. If your retirement is not for another 20 or 30 years, a recession may be good news for your investments, as it may allow you to invest funds in long-term assets at historically-low prices.

Accurately Assess Your Risk Tolerance

Suppose your investments lose 40% of their value; what might you do? Are you content to let them ride (after researching the stability of the underlying assets), or would you be tempted to go to cash for a while?

Everyone’s risk tolerance is different. It is crucial not to invest beyond your tolerance. For some, this means an aggressive portfolio that includes mostly stocks. For others, this may mean bonds, Treasurys, and other assets. There is no wrong answer, but forcing yourself to invest more than you are comfortable with or in assets you are not comfortable with could set you up to make unwise knee-jerk decisions the next time there is market volatility.

Build Your Desired Portfolio

Many investors subscribe to the “lazy” portfolio method—a set-it-and-forget-it mix of index funds or exchange-traded funds (ETFs) that follow a particular index. For example, many ETFs and index funds follow the major market indices, including the Dow Jones, the NASDAQ, the S&P 500, and the Russell

2000. By investing in these broader funds, you might diversify your portfolio without the effort of researching, picking, and following individual stocks.

There are several advantages to the lazy portfolio approach, including:

● Instant diversification

● Relatively low fees

● Simplicity

Though you need to monitor your investments regularly, you do not need to research particular stocks or companies in-depth to feel confident about the investments. The major market indices automatically rebalance—for example, if a company underperforms and no longer has the market cap requirements for the S&P 500, it is cycled off the list and replaced with a new company.

Your financial professional works with you to evaluate your risk tolerance and then can help you choose a basket of assets for your portfolio.

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments. All indexes are unmanaged and cannot be invested into directly.

An investment in Exchange Traded Funds (ETF), structured as a mutual fund or unit investment trust, involves the risk of losing money and should be considered as part of an overall program, not a complete investment program. An investment in ETFs involves additional risks such as not diversified, price volatility, competitive industry pressure, international political and economic developments, possible trading halts, and index tracking errors.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

Rebalancing a portfolio may cause investors to incur tax liabilities and/or transaction costs and does not assure a profit or protect against a loss.

Dow Jones Industrial Average (DJIA): A price-weighted average of 30 blue-chip stocks that are generally the leaders in their industry.

The NASDAQ-100 is composed of the 100 largest domestic and international non-financial securities listed on The Nasdaq Stock Market. The Index reflects companies across major industry groups including computer hardware and software, telecommunications, retail/wholesale trade and biotechnology, but does not contain securities of financial companies.

S&P 500 Index: The Standard & Poor’s (S&P) 500 Index tracks the performance of 500 widely held, large-capitalization US stocks.

The Russell 2000 Index is an unmanaged index generally representative of the 2,000 smallest companies in the Russell Index, which represents approximately 10% of the total market capitalization of the Russell 3000 Index.

This article was prepared by WriterAccess.

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