No Bank Guarantee The Challenge Source The College Board 2015 College costs are rising Four years of tuition and fees 2016 Public college in state 40 861 Private college 140711 ID: 782513
Download The PPT/PDF document "Not FDIC Insured May Lose Value" is the property of its rightful owner. Permission is granted to download and print the materials on this web site for personal, non-commercial use only, and to display it on your personal computer provided you do not modify the materials and that you retain all copyright notices contained in the materials. By downloading content from our website, you accept the terms of this agreement.
Slide1
Not FDIC Insured
May Lose Value
No Bank Guarantee
Slide2The Challenge
Slide3Source:
The College Board,
2015
College costs are rising
Four years of tuition and fees
2016
Public
college(in state)$40,861Private college$140,711
$
107,115
2034
$
368,870
Slide4College debt is also risingTotal education debt — including federal and private education loans — is expected to tally nearly $68 billion this year for graduates with a bachelor’s degree and their parents, a more than 10-fold increase since 1994
Almost 71% of bachelor’s degree recipients will graduate with a student loan
The average class of 2015 graduate with student-loan debt will have to pay back a little more than $35,000
Source:
Edvisors, May 2015.
Slide5College still offers life-long benefitsLinked to long-term social and physical wellness Higher income over lifetime, depending upon major selectedDecreased likelihood of unemployment
Source:
U.S. Department of Labor, 2015.
Slide6Help meet the challenge with a
529 plan
Slide7What is a 529 plan?A tax-advantaged way for families to save for collegeAvailable to investors nationwide
Proceeds can be used for any accredited college
Slide8Benefits of a 529 planAnyone — regardless of income — can contribute to the accountYou can change beneficiaries at any time
Control of the account will not shift to the child
as with traditional savings accounts
Favorable financial aid treatment
Slide9Benefits of a 529 planRollovers allowed once every 12 months or upon change of a beneficiaryInvestment changes allowed twice per calendar year
You have other options if the child does not
attend college
Slide10The tax-smart way to saveYou pay no federal income taxesOn your earnings while the account is invested
When you withdraw money to pay for college expenses
Contributions are made with after-tax dollars
Withdrawals of earnings not used to pay for qualified higher education expenses are subject to tax and a 10% penalty. State taxes may apply. Withdrawals for qualified higher education expenses subject to tax if the American Opportunity Credit Scholarship or Lifetime Learning Credit is claimed for same expenses. If withdrawing funds for qualified higher education expenses from both a 529 account and a Coverdell Education Savings Account, a portion of the earnings distribution may be subject to tax and penalty on amounts that exceed qualified higher education expenses. Read the offering statement for details.
Slide11The tax-smart way to saveGift tax benefits: Make five years’ worth of gifts without triggering the federal gift tax
Maximum for individuals: $70,000 for 2016
Maximum for married couples: $140,000
Slide12The tax-smart way to saveA 529 account can help decrease your taxable estate while you maintain control over assets
Married couples filing jointly may contribute up to $140,000 per beneficiary. Individuals may contribute up to $70,000. Contributions are generally treated as gifts to the beneficiary for federal gift tax purposes and are subject to annual federal gift tax exclusion amount
($14,000
for
2016). Contributor may elect to treat contribution in excess of that amount (up to $70,000 for 2016) as pro-rated over 5 years. Election is made by filing a federal gift tax return. While contributions are generally excludable from contributor’s gross estate, if electing contributor dies during 5-year period, amounts allocable to years after death are includible in contributor’s
gross estate. Consult your tax advisor for more information.
Ω
$140,000
Ω
$140,000
Ω
$140,000
Ω
$140,000
Ω
Grandparents
$700,000
Ω
$140,000
Slide13Slide14A wide range of investment choicesAge-based portfoliosGoal-based portfolios Individual fund options from Putnam and other firms
Putnam Absolute Return Funds
Slide15Age-based portfolios
Actively managed and adjusted over time, becoming more conservative as your child approaches college age
Asset allocations shown are target allocations. Actual allocations may vary.
The
age-based and goal-based options invest across four broad asset categories: short-term investments, fixed-income investments, U.S. equity investments, and non-U.S. equity investments. Within these categories, investments are spread over a range of asset allocation portfolios that concentrate on different asset classes or reflect different
styles.
Each age-based portfolio has a different target date, which is based on the year in which the beneficiary of an account was born. The principal value of the funds is not guaranteed at any time, including age-based portfolios closest to college age.
Newborn
4
8
12
18
Stocks
Bonds
Cash
85%
15%
60%
14%
26%
Slide16Goal-based portfolios
Balanced
Allocations shown are target allocations; actual allocations may vary. See the offering statement for details.
Actively managed and keep the same allocation mix, regardless
of the child
’
s age
Aggressive growth
Growth
Balanced Option
Growth Option
Aggressive Growth Option
Putnam 529 GAA Growth Portfolio
Putnam 529 Balanced Portfolio
Putnam 529 Money Market Portfolio
Invests in the Putnam 529 GAA Growth Portfolio and Putnam 529 All Equity Portfolio
Invests in the Putnam 529 GAA All Equity Portfolio
Stocks
Bonds
Cash
100%
85%
15%
34%
6%
60%
Slide17Individual investment options
Stocks
Bonds
Cash
Putnam Equity Income Fund Option
Putnam International Capital Opportunities Fund Option
Putnam Voyager Fund Option
Putnam Small Cap Value Fund Option
MFS Institutional International Equity Fund Option
Principal
MidCap
Fund Option
SSgA
S&P 500
®
Index Fund Option
Putnam High Yield Trust Option
Putnam Income Fund Option
Federated U.S. Government Securities Fund: 2
–
5 years Option
Capital preservation money market: Putnam Money Market Fund Option*
Build your own portfolio with a range of choices
*
Although a money market fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in a money market fund. Money market funds are not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other governmental agency.
The plan involves investment risk, including the loss of principal.
Slide18Absolute Return FundsPutnam 529 for America is the only 529 account to offer a suite of absolute return funds as an investment option
The funds target positive 3-year returns of 1%, 3%, 5%,
or 7% above the return on T-bills and with lower relative volatility
Absolute return investing can
be an ally in helping to navigate today’s market volatility
Chart does not represent the performance of Putnam Absolute Return Funds. Actual performance can be found on putnam.com.
The
funds’ strategies are designed to be largely independent of market direction, and the funds are not intended to outperform stocks and bonds during strong market rallies. There is no guarantee that the funds will meet their objectives.
+7%
+5%
+3%
+1%
®
®
®
®
Slide19Putnam Absolute Return Funds
Putnam
Absolute Return 100 Fund
®
option
Putnam
Absolute Return 300 Fund® option
Putnam
Absolute Return 500 Fund
®
option
Putnam
Absolute Return 700 Fund
®
option
For investors considering short-term securities. Invests in bonds and cash instruments.
For investors considering a bond fund. Invests in bonds and cash instruments.
For investors considering a balanced fund. Can invest in bonds, stocks, or alternative asset classes.
For investors considering a stock fund. Can invest in bonds, stocks, or alternative asset classes.
Consider these risks before
investing:
Our
allocation of assets among permitted asset categories may hurt performance. The prices of stocks and bonds in the funds’ portfolio may fall or fail to rise over extended periods of time for a variety of reasons, including both general financial market conditions and factors related to a specific issuer or industry. Our active trading strategy may lose money or not earn a return sufficient to cover associated trading and other costs. Our use of leverage obtained through derivatives increases these risks by increasing investment exposure. Bond investments are subject to interest-rate risk (the risk of bond prices falling if interest rates rise) and credit risk (the risk of an issuer defaulting on interest or principal payments). Interest-rate risk is greater for longer-term bonds, and credit risk is greater for below-investment-grade bonds. Unlike bonds, funds that invest in bonds have ongoing fees and expenses. Lower-rated bonds may offer higher yields in return for more risk. Funds that invest in government securities are not guaranteed. Mortgage-backed securities are subject to prepayment risk. International investing involves certain risks, such as currency fluctuations, economic instability, and political developments. Additional risks may be associated with emerging-market securities, including illiquidity and volatility. Our use of derivatives may increase these risks by increasing investment exposure (which may be considered leverage) or, in the case of many over-the-counter instruments, because of the potential inability to terminate or sell derivatives positions and the potential failure of the other party to the instrument to meet its obligations. The funds may not achieve their goal, and they are not intended to be a complete investment program. The funds’ effort to produce lower-volatility returns may not be successful and may make it more difficult at times for the fund to achieve their targeted return. In addition, under certain market conditions, the funds may accept greater volatility than would typically be the case, in order to seek their targeted return
.
For
the 500 Fund and 700 Fund these risks also apply
: REITs involve the risks of real estate investing, including declining property values. Commodities involve the risks of changes in market, political, regulatory, and natural conditions. Additional risks are listed in the funds’ prospectus. You can lose money by investing in the funds.
Slide20Slide21$500 monthly contributions at a hypothetical 6% annual growth rate
5 years
10 years
18 years
$163,477
Hypothetical
taxable
account value
$193,677
Hypothetical
529
account value
$81,940
$75,007
$34,885
$33,446
Your savings accumulate faster because account
is not taxed
This example assumes contributions of $500 per month, a hypothetical 6% nominal rate of return compounded monthly with an effective return of 6.17%, and a 28% tax bracket for the taxable account.
Performance shown is for illustrative purposes and is not related to an actual investment. Regular investing does not ensure a profit or protect against loss in a declining market. Capital gains, exemptions, deductions, and local taxes are not reflected. Certain returns in a taxable account are subject to capital gains tax, which is generally a lower rate than ordinary income tax rates and would make the investment return for the taxable investment more favorable than reflected on the chart. Investors should consider their personal investment horizon and income tax brackets, both current and anticipated, when making an investment decision. These may further impact the results of the comparison.
Slide22The Smith family waits 10 years
to start saving, contributing
$1,219
every month
Total contribution
$117,024
The Jones family starts saving today, contributing
$340
every month
Total contribution
$73,440
Start early, contribute often
This chart is for illustrative purposes only and is not intended to be representative of past or future performance.
The Jones family saves $340 monthly for 18 years. The Smith family saves $1,219 monthly for 8 years. Assumes a hypothetical 8% annual return compounded monthly.
Earnings
$89,714
Account value
$163,154
after 18 years
Earnings
$46,130
Account value
$163,154
after 8 years
Slide23The Jones grandfather makes an initial contribution of
$14,000
Total
contribution
$62,816
The Jones parents contribute
$226
every month
Let the whole family contribute
This chart is for illustrative purposes only and is not intended to be representative of past or future performance.
The Jones grandfather makes a lump-sum contribution of $14,000 today. The Jones parents contribute $226 each month.
Assumes a hypothetical 8% annual return compounded monthly.
Earnings
$104,491
Account value
$167,307
after 18 years
Slide24Slide25A gift of $70,000 in
2016
would constitute five
years’
worth of gifts. Additional gifts made for the same beneficiary in the same five-year period would be subject to federal gift taxes. Election is made by filing a federal gift tax return. If the electing contributor dies during the 5-year period, amounts allocable to year after death are inducible in the contributor’s gross estate.* Contribution limit as of 1/1/16. Subject to periodic review.How much can you contribute?No minimum investmentContributions can occur until the account value reaches $370,000
*Contribute five years’
worth of gifts in a single year
Slide26Many ways to contributeInvest a lump sumEstablish a dollar cost averaging programEstablish a systematic investment program
from your bank
Encourage contributions with gift certificates
Systematic investing and dollar cost averaging do not assure a profit or protect against loss in a declining market. You should consider your ability to continue investing during periods of low prices.
Slide27Withdrawals are easyYou tell us how tomake out the checkMail the completed form
to Putnam Investments
Withdrawals of earnings not used to pay for qualified higher education expenses are subject to tax and a 10% penalty. State taxes may apply.
Slide28Contact [insert broker name]
Call 1-877-PUTNAM529
Visit putnam.com/529
Slide29Putnam 529 for America is sponsored by the State of Nevada, acting through the Trustees of the College Savings Plans of Nevada and the Nevada College Savings Trust Fund. Anyone may invest in the plan and use the proceeds to attend school in any state.
Before investing, consider whether your state's plan or that of your beneficiary offers state tax and other benefits not available through Putnam 529 for America.
If you withdraw money for something other than qualified higher education expenses, you will owe federal income tax and may face a 10% federal tax penalty on earnings. Consult your tax advisor.
You should carefully consider the investment objectives, risks, charges, and expenses of the plan before investing. Ask your financial representative or call Putnam at 1-877-PUTNAM529 for an offering statement and/or fund prospectus
containing this and other information for Putnam 529 for America, and read it carefully before investing.Putnam Retail Management, principal underwriter and distributorPutnam Investment Management, investment manager
Slide30Not FDIC Insured
May Lose Value
No Bank Guarantee
Delete
“
They are the faces of the future
”