Our Thoughts

FJY News to Know #9

Here’s our FJY Take on the latest news from the past week, where we cover what’s happening in the industry and why it matters to you.

Oil Future Contracts Are On the Rise!  But Why?

Nigerian President Buhari is considering cutting crude oil output, sending a fairly strong signal from the OPEC member, which joined the organization in 1971.  Also in the mix affecting the price of crude oil is the U.S.-China trade deal.  Negotiations continue toward the March 1st deadline before additional tariffs kick in.  Another strong factor is U.S. production — which has risen considerably, especially oil shale.  The production of shale is set to skyrocket, despite its more expensive production costs.

Millennials Are Bucking To Become The Predominant Homeowner Group…

Millennials are intent on carrying the torch of the American dream of their parents and grandparents — by owning a home.  Millennials are beginning to surpass their Gen X predecessors in some markets in terms of homeowner and mortgage statistics.  However, they are delaying other life goals such as marriage and children.  Unmarried couples buying homes are on the rise, and this teamwork attitude makes homes that much more affordable.  However, by and large millennials are not putting the kind of down payments their older counterparts have done:  8.8% was their average down payment in the last quarter of 2018.  Also, millennials are shifting their search to listings in smaller markets — another tactic to compliment the affordability strategy.

Are You An Adult Returning To Education?  Time To Size Up The 529 Plan!

The 529 offers a variety of advantages for younger students as well as adults returning to higher education.  Parents may use leftover funds in a child’s 529 plan account, or adults can open their own 529 plan account to pay for qualified expenses. Residents of more than 30 states are eligible for a tax deduction or credit for 529 plan contributions — no matter how long the funds are held in the account.  The 529 account owner is able to name any U.S. citizen or resident alien as the beneficiary — regardless of age.  In fact, the owner and the beneficiary can even be the same person.  Also, room and board are considered qualified expenses, as long as the beneficiary is enrolled half-time and is pursuing a certificate or degree. Six states offer a tax deduction for contributions made by April for the prior year tax filing. If you cannot take advantage of this tax benefit for 2018, consider if it makes sense for 2019.

Bad Behavior — HR Execs Nailed in 401(k) Lawsuit

The U.S. District Court of Colorado slapped a $500K fine against Pioneer Natural Resources for violating the ERISA Act.  The 1974 law, which stands for the Employee Retirement Income Security Act, was created to protect employees and their 401(k) plans — making fiduciaries responsible for choosing investment plans that have reasonable fees and costs.  The lawsuit contends that Pioneer and its executives chose poorly performing funds for the 401(k)s, when stronger ones were available.  However, they got off fairly easy considering the value of the plans’ assets ($500M).  This case didn’t exist in a vacuum:  Citigroup was recently brought to trial for including biased Citigroup affiliates and subsidiaries into their plans.  Plans might benefit from bringing in outside help for review and analyses, in order to create more accountability.

We love writing about all things finance to help you learn more about how to achieve financial goals; both personally and with your business. Be sure to check out our blog page for an array of topics covering various aspects of finance, wealth management, and all things employer-sponsored retirement planning. FJY Financial specializes in Financial Planning, Investment Management, and Company Employee Retirement Plans, crafting the right strategy and plan for your specific needs. Contact us today to learn more!