Risk is a normal part of investing. If you didn’t take on any risk, you wouldn’t have the potential to achieve higher returns. But how much risk should you accept?

You don’t want to incur unnecessary risk. So, you’ll need to assess the amount of risk you’re comfortable taking and then determine if this risk level supports your ability to achieve your long-term goals.
Here are some of the key factors in determining your own capacity for investment risk:

• Personality – We all have different personalities. And your individual personality can certainly affect your comfort level with risk. If you enjoy taking chances or pushing yourself outside your comfort zone in other aspects of your life, you could be more likely to accept greater investment risk, too, because you know that greater risk means greater potential reward. Conversely, higher-risk investments also carry greater potential for volatility, including steep short-term declines.

• Time – Risk tolerance can change over time. When you are first starting out in your career, with decades to go until you retire, you may feel comfortable with a certain degree of investment risk, knowing you have time to potentially overcome the inevitable downturns in the financial markets. But as you near retirement, you might consider lowering your risk level and investing more conservatively, because once you do retire, you’ll likely have to start withdrawing money from your retirement accounts, which means you may need to liquidate some investments – and, ideally, you won’t want to have large fluctuations in value at that time. However, even during retirement, you may want your portfolio to include some growth-oriented investments to help keep you ahead of inflation.

• Type of goal – You might have different risk tolerances for different goals. For example, if you know you need a specific amount for a particular goal in two years – such as buying a new car or taking an overseas vacation – you may want to put away money in a low-risk, liquid vehicle. This type of investment might not have much growth potential, but for this goal, you are less interested in achieving a high rate of return than you are in being reasonably sure the money will be there when you need it. So, in this instance, you may have quite a low tolerance for risk. But for a long-term goal, such as a comfortable retirement, you may be prepared to take more risk in the hopes of greater returns, given the longer time horizon.

By understanding your risk tolerance and knowing how it can change over time and under different circumstances, you can be better prepared to face investment volatility. And there are certainly things you can do to mitigate risk. By owning a variety of investments – domestic and international stocks, bonds, mutual funds, government securities and so on – you can reduce the impact of market volatility on your portfolio. (Keep in mind, though, that diversification can’t prevent all losses or guarantee profits.)

In any case, the biggest risk of all is simply not investing. If you are going to achieve your financial goals, you need to invest for them. By understanding your own risk tolerance, and by making wise choices along the way, you can stick with an investment strategy that can work for you in the long run.

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This article was written by Edward Jones for use by your local Edward Jones Financial Advisors.
Diana Kovacs can be reached at 100 Premier Drive Ste B
Crestview, FL 32539
(850) 682-8844

Without insurance, you risk incurring thousands of dollars of expenses if you are injured or become seriously ill. And if you must pay for these costs out of pocket, you might have to dip into your IRA, 401(k) or other retirement accounts earlier than you had planned – which could result in a less desirable retirement lifestyle than you had envisioned.

What, then, are your options? It depends on your situation, but here are four possibilities:

• Employer retiree health benefits – If your former employer offers health coverage to retirees, it could well be your best choice, especially if the employer continues to pay a share of the premiums. However, fewer employers are offering continuing health coverage to former employees, and among those who do, they may use certain criteria – such as length of service and position within the company – to limit eligibility.
• Spouse’s plan – If you’re married and your spouse still has employer-provided insurance, you may be able to get coverage under this plan or continue this coverage if you have it already. If the employer subsidizes premiums for spouses, this plan could be an affordable choice – if not, though, it might be more expensive than other options.
• COBRA – The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows you to maintain your existing coverage with the same benefits and provider network. However, COBRA is typically only available for a specific time – usually 18 months – after you leave your employer, and coverage can be expensive. Your previous employer subsidized a portion of the premium as a benefit, but once you’ve retired, you’ll likely have to pay the entire premium, plus an additional charge.
• ACA Marketplace plan – Through the Affordable Care Act Marketplace, you can find a variety of plans from which to choose, possibly including ones that include your existing network. If you qualify for subsidies, the premiums for your coverage may be similar to employer-sponsored coverage; if not, though, they can be more expensive. For information on ACA Marketplace plans, visit www.healthcare.gov.

If you have options for health insurance, you’ll want to take into account differences in coverage and cost. Check whether your desired health care providers are in-network and try to determine if your current medications and the benefits you rely on are covered. You may also want to consider a plan that allows you to open a health savings account (HSA), which offers potential tax benefits. To contribute to an HSA, you must be covered by a high deductible health plan (HDHP), so there’s that cost to consider, but if you’re in generally good health and you don’t expect to depend heavily on your health insurance until you’re eligible for Medicare, you might want to consider an HDHP.

One final note: Even when you do enroll in Medicare, you will still incur expenses for premiums, deductibles and co-pays, so you’ll want to budget for these costs in your overall financial strategy.

In the meantime, explore your health insurance options. The future is not ours to see – so you’ll want to be prepared for anything.

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Written by Edward Jones,
Member SIPC
Diana Kovacs can be reached at 100 Premier Drive Ste B
Crestview, FL 32539
(850) 682-8844

If you want to provide educational opportunities for your children or grandchildren, you may want to consider investing in a 529 plan. In recent years, this plan has gotten more flexible, and potentially more powerful, than ever.

A key benefit of a 529 plan is that earnings are generally tax free, provided the money is used for qualified educational expenses. As the owner of the plan, you can essentially name any beneficiary you want, and you’re free to change the beneficiary as needed. Contribution limits are quite high, so you can put away considerable sums in a 529 plan – and you may want to, because college costs have risen steadily over the years. In fact, for the 2021-22 academic year, the College Board reports that the average cost (tuition, fees, room and board) of a public, four-year college or university is more than $27,000 for in-state students and nearly $56,000 for students at private schools.

But 529 plans are no longer just for higher education. Over the past few years, the rules governing 529 plans have changed, so they can now be used for:

• K-12 tuition expenses (up to $10,000 per student, per year),
• Apprenticeship programs registered with the U.S. Department of Labor, and
• Student loans ($10,000 lifetime limit for student loan repayments per each 529 plan beneficiary and another $10,000 for each of the beneficiary’s siblings.)

And soon, a major change will affect the relationship between grandparent-owned 529 plans and the financial aid packages awarded to their grandchildren. Families applying for aid have not been required to report grandparent-owned 529 account assets on the Free Application for Federal Student Aid (FAFSA).

However, under previous rules, you had to report withdrawals from the grandparent-owned plans as untaxed student income, which could reduce aid eligibility by up to 50% of the amount of cash received.

But that’s changing for the 2024-25 FAFSA, which won’t require students to report cash support, including money taken from a grandparent-owned 529 plan. Instead, a student’s total income amount will be reported directly from federal income tax returns. This means that a grandparent-owned 529 plan won’t have any effect on need-based financial aid eligibility. This benefit to families is already here, because 2022 will be used as the base year for the 2024-25 FAFSA, so any withdrawals taken in 2022, and also going forward, won’t need to be reported as student income.

With this change, families will now have more options on using 529 plans without jeopardizing financial aid. You can generally withdraw any amount from the aggregate of all 529 plans for higher education costs, but only the qualified withdrawals – the ones used for typical education-related expenses – will be tax-free. The earnings portion of non-qualified withdrawals are taxable and could also incur a 10% penalty.

Given the new rules affecting a grandparent-owned 529 plan, you should consult with a financial professional to determine how this plan can work with other strategies to help meet educational expenses while, at the same time, not detracting from the progress you’d like to make on other important goals, such as a comfortable retirement.

In any case, consider looking into a 529 plan – it was already a great tool for education funding, and it can now offer your family even more options.

Written by Edward Jones,
Member SIPC
Diana Kovacs can be reached at 100 Premier Drive Ste B
Crestview, FL 32539
(850) 682-8844

As a business owner, you’re always busy, so it’s understandable if you’ve put off thinking about events that won’t occur until far in the future – such as your retirement, the sale or transfer of your business and the settling of your estate. Nonetheless, it’s a good idea to start planning now, while also recognizing the special challenges that women business owners face in these areas.

Essentially, you’ll have four key issues to consider:

• Building assets – While you’re working, you’ll want to build as many financial assets as possible. This is especially important in case your career is interrupted by the need to provide care for children or parents. And there’s also the matter of longevity: On average, a 65-year-old woman can anticipate living about 20 more years – almost three years longer than a 65-year-old man, according to the Centers for Disease Control and Prevention. Furthermore, the average age of widowhood is just 59, according to the U.S. Census Bureau. Given these concerns, you’ll want to contribute as much as you can afford to a retirement account, such as an “owner-only” 401(k), a SEP-IRA or a SIMPLE IRA. A financial professional can help you choose an appropriate plan.
• Planning an exit strategy – How you transition from your business can affect your estate plans, in terms of the assets you leave behind and which family members are connected to your exit strategy. To illustrate: You could choose to pass your business to an adult child or other close relative, but if you have no family members willing to take on this responsibility, you could transfer ownership through an employee buyout, if you have employees, or you could sell the business outright to a third party. Whichever route you choose will need to be integrated into your overall retirement and estate plans.
• Caregiving – As mentioned above, you might take some time off work to care for your children or aging parents. In fact, two of every three caregivers in the United States are women, according to the CDC. Being a caregiver can incur emotional and financial costs. To help avoid entangling your finances with those of the family members to whom you’re providing care, you may want to consider creating a durable financial power of attorney, a legal document that gives you the authority to make financial decisions on behalf of someone who may be incapable of making them on their own. You’ll want to address the possible need for this document well before it needs to be activated.
• Creating estate-planning documents – You will need to work with a legal professional to create estate-planning arrangements such as a will and a living trust, relevant business-planning documents, powers of attorney and health care directives. If your situation is complex enough, you also may need to bring in a trust company to manage the assets placed in a trust and oversee the eventual transfer of these assets to beneficiaries.

A lot goes into preparing for retirement, developing estate plans and keeping them current. So, start early and get the help you need from experienced professionals. The more thorough your planning, the more control you’ll have over your future.

Written by Edward Jones, Member SIPC/Diana Kovacs can be reached at 100 Premier Drive, Suite B, Crestview, FL 32539 (850)682-8844

Many expenses in life are unpredictable. But there are two things you know you’ll have to pay for: medical bills and retirement. You’ll probably need to take a variety of steps to meet these costs, but one financial instrument that can help is a health savings account (HSA).
If you’re not familiar with an HSA, here are the basics:

Eligibility – If you are enrolled in a qualified high-deductible health plan (HDHP), you can generally contribute to an HSA. While HSAs are typically offered through employers, you can still open one if your employer doesn’t provide it, or if you’re self-employed, although you must have HDHP coverage. You also can’t be enrolled in another health insurance plan, other than those permitted, such as dental, vision, long-term care and disability insurance, and you can’t be enrolled in Medicare. Also, you can’t be claimed as a dependent on another person’s tax return.

Contribution limits – In 2022, you can put in up to $3,650 to an HSA if you have single coverage, or $7,300 for family coverage. And if you’re 55 or older, you can put in an extra $1,000 per year.

Tax benefits – An HSA has triple tax advantages: Your contributions are made with pre-tax dollars, so they can reduce your taxable income for the year; your earnings grow tax-free; and your withdrawals are tax-free, provided the money is used for qualified medical expenses. (Withdrawals taken before age 65 that aren’t used for qualified medical expenses are taxable and subject to a 20% penalty; once you reach 65, the penalty no longer applies, although withdrawals are still taxable.)

In addition to its providing tax benefits, an HSA can help you in other ways. Perhaps most significantly, your HSA can be an additional financial resource for your retirement. That’s because the money in your HSA can be carried over from year to year – you aren’t obligated to “use it or lose it.” So, the money not spent on annual medical expenses can continue to grow tax-deferred. Plus, an HSA is “portable” – it moves with you when you leave a job.

Furthermore, unlike a 401(k) or a traditional IRA, an HSA does not require you to begin taking withdrawals once you reach 72 – you can leave your account untouched for essentially as long as you’d like. And while you may need to use your HSA funds to meet your medical expenses in retirement – which can be considerable, even with Medicare – you can use what you don’t spend on medical costs for your other needs without penalty, once you reach age 65. (As mentioned above, any HSA withdrawals not used for qualified medical costs are taxable.)

Here’s one other point to keep in mind: Your HSA likely contains investment options, along with a cash account. If you put all your funds in the cash account, as many people do, you might be depriving yourself of the growth opportunities provided by the investment options. On the other hand, of course, these investments generally carry more risk. One possible way to benefit from both parts of your HSA is to keep enough cash to cover your health insurance’s out-of-pocket maximum and invest the rest.
As you can see, an HSA can help you in numerous ways. If you have access to one, consider taking advantage of it.

Written by Edward Jones, Member SIPC/Diana Kovacs can be reached at 100 Premier Drive, Suite B, Crestview, FL 32539 (850)682-8844