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As a reminder, all transactions processed on Saturday, December 30, 2017 will have an effective date of Tuesday, January 2, 2018. Thank you.
 
 


 
life-planning
The financial decisions you make now could pay off in the future

With a growing family and career, now is the time when you will likely be looking for a new home and beginning to save for your children's college education.

When you’re looking for a house, it's easy to get wrapped up in the details of the house instead of looking at the big picture. Going into the purchasing process with a clear head will help you save time and money while finding the home that suits you. Get together with your family members and discuss everyone's priorities for the new house. It's important to distinguish between what you need and what you want in order to make a smart purchase. Your needs are basic necessities in a house, such as these:

  • A price in your budget
  • Enough bedrooms and bathrooms
  • Good school district
  • Short commuting distance from work
  • Fenced backyard for dogs and children

Other home amenities are enjoyable and may bring value to the home, but they aren't necessary. Here are some examples:

  • Pool
  • Fireplace
  • Specific finishing touches
  • Walk-in closet
  • Recreation room

Defining these mortgages and investment accounts and keeping them in mind when you hunt for houses will help you make better financial decisions.

You know what you get with the fixed-rate mortgage. You will lock in an interest rate that will never change during the term of your mortgage. If you’re borrowing during times of low interest rates, this is a valuable perk because you’ll pay less money in interest. An adjustable-rate mortgage (ARM) offers attractive features for some borrowers. The interest rate for these mortgages will adjust frequently over the life of the loan, possibly monthly or yearly, depending on how the mortgage is structured. It’s important for you to determine that you can afford larger monthly payments if your mortgage adjusts upward.
Funding an education is an important goal that requires a lot of planning. Long-term saving for college and other education expenses is a two-horse race to the finish line these days. Prior to 2013, state-sponsored 529 plans (named after a section of the Internal Revenue Code) were the best college savings choice for families because of their investment options and tax advantages. But the American Taxpayer Relief Act enhanced the Coverdell Education Savings Account as a viable tax-free savings option that can be used on educational expenses as early as kindergarten. Depending on your goals, you could benefit more from either a 529 or Coverdell account.

NOT A DEPOSIT, NOT FDIC – INSURED, NOT GUARANTEED BY THE BANK, MAY GO DOWN IN VALUE.

Most states offer their own 529 plans, but you don’t necessarily need to live in a particular state to invest in its plan. Often the 529 plan in your state of residency offers the most tax advantages, but take some time to research the differences. The most popular 529 option structures the plan as a savings account that offers different investment portfolios. Some portfolios are age-based, meaning early on you’ll invest aggressively in growth-based securities such as U.S. and international stocks and then the portfolio automatically reallocates to more conservative investments as the child approaches college age. 

NOT A DEPOSIT, NOT FDIC – INSURED, NOT GUARANTEED BY THE BANK, MAY GO DOWN IN VALUE.

Coverdell Savings are gaining popularity because they offer many of the same tax advantages as 529s and the accounts can be used for any qualifying expenses between kindergarten and college, including tuition, books or computers. Coverdell Savings were in limbo until tax laws in 2013 solidified their benefits to participants. They rely on investments in stocks, bonds and mutual funds to help families save more money for education expenses.

NOT A DEPOSIT, NOT FDIC – INSURED, NOT GUARANTEED BY THE BANK, MAY GO DOWN IN VALUE.

While saving for college and managing house expenses, it's also important to prepare for retirement by creating a healthy nest egg that will provide support. Participating in employer-sponsored 401(K) plans is an ideal way to begin saving for retirement. Each plan is different, but many employers offer matching contributions up to a certain percentage, meaning your employer is putting the same amount of money into your plan as you are each paycheck. That's free money that benefits you in the long run. Separate from a 401(K), many people open an Individual Retirement Account because they typically provide more investing flexibility than a 401(K). With an IRA, account holders can select specific stocks and bonds that appeal to them and change those holdings on a regular basis. IRAs are offered as Roth or Traditional options, and both provide different tax advantages that a tax professional can explain in detail to help you make the right choice. 

As you encounter these challenging financial questions, you can rely on the experts at Savings Bank of Danbury to provide valuable advice and guidance to help you make the best decisions for your family.

NOT A DEPOSIT, NOT FDIC – INSURED, NOT GUARANTEED BY THE BANK, MAY GO DOWN IN VALUE.