Perspectives Blog

Ahead of the trends – Washington update on retirement savings initiatives

Columbia Management Learning Center , | July 31, 2014

Various federal government initiatives, including tax reform, will impact the way Americans save for retirement. Trends to watch include enforcement, pension de-risking and participant empowerment measures. Staying current on changes can help you identify critical retirement savings decision points. Retirement security is the financial issue that is most disconcerting to Americans.* Likewise, the current administration

Capture five tax benefits with a 529 college savings plan

Columbia Management, Investment Team | March 21, 2014

…there are tax incentives available to help you pursue these substantial financial goals. In the case of college savings, 529 plans offer distinct tax advantages over other college savings vehicles. With a 529 plan, parents, relatives and friends can help fund a significant portion of a loved one’s future college expenses and at the same time enjoy many added benefits as a 529 plan account owner. It is important to note that, as the account owner…

Half-time report on the U.S. consumer

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | July 28, 2014

…off income and wages and also employment. But so far in this cycle income gains have lagged with real disposable personal income rising only 1.5% (the portion of income left over after taxes and inflation). Real disposable personal income (RDPI) gains averaged about 3% in the last recovery and about 5% in prior recoveries. The more miserly gains in income leave the consumer little scope to advance their discretionary spend, absent the debt channe…

Five college savings myths set straight

Columbia Management, Investment Team | August 6, 2014

…ou compare state plans. 4. Myth: I make too much money to open a 529 plan account. Truth: Unlike some retirement savings vehicles, where tax advantages are phased out at higher incomes, 529 college savings plans are available to anyone regardless of income level. Bonus tip: Age is not a factor either — the beneficiary of a 529 account can be a child or an adult. 5. Myth: A 529 plan could hurt my child’s chances for financial aid. Truth: Imp…

Interest rates in a highly indebted economy

Zach Pandl, Portfolio Manager and Strategist | October 13, 2014

…tly equal nominal GDP growth in this case. Exhibit 5: Stable debt-to-income ratio with lower rates and/or higher savings The dotted line, labeled “s > zero”, shows the same thing except with positive private sector savings. In this case, the debt stock could remain stable even with interest rates above nominal growth, because the private sector is running the equivalent of a budget surplus. Lately, our estimate of the private sector savings b…

Could a 529 plan help you pay less for college?

Columbia Management, Investment Team | May 22, 2014

College savings plans offer an important tool for managing the cost of higher education. Saving in advance could offer a significant cost savings compared to taking loans during college. Use our 529 Savings vs. Loans Calculator to run your own personalized estimate. Saving for college early on can greatly benefit you in the long run. By saving in an investment vehicle such as a 529 college savings plan, you may be able to avoid relying on loan…

Credit alternatives in government-backed debt

Columbia Management, Investment Team | June 23, 2014

…tion The Resolution Funding Corporation (or REFCORP), established in 1989, was created to finance the bailout of savings and loan associations during the S&L crisis of the 1980s and 1990s. S&Ls accept savings deposits and use the proceeds to offer mortgages, auto loans, and other personal loans to their members. During the crisis, nearly a third of the 3,234 S&L associations in the United States failed. REFCORP provided liquidity to S…