The truth is there’s no single “inflation rate.” The U.S. government publishes several, each built on different assumptions about who’s spending, what they’re buying, and how they adjust when prices shift. Understanding the differences could change the way you think about your own financial picture, because the only inflation rate that truly matters is the one you’re living with.

CPI: The Headline Number (and Its Lesser-Known Sibling)

The Consumer Price Index for All Urban Consumers (CPI-U) is probably the inflation number you hear most. It tracks how prices change for a basket of goods and services—everything from groceries to medical visits to rent—and it covers over 90 percent of the U.S. population.¹

But Social Security doesn’t use the CPI-U to calculate annual cost-of-living adjustments (COLAs). It uses the CPI-W—the Consumer Price Index for Urban Wage Earners and Clerical Workers. The CPI-W represents a narrower slice of the population, roughly 30 percent, and specifically covers households where at least one member works in an eligible wage-earning or clerical occupation. By definition, it excludes the spending patterns of retirees, the very people whose Social Security benefits it adjusts.^1,2

CPI-E: An Experimental Index for Older Americans

Recognizing this gap, the Bureau of Labor Statistics developed the R-CPI-E, an experimental price index for Americans 62 and older. The key difference is how it weights spending categories. Older Americans tend to devote a substantially larger share of their budgets to medical care—roughly 12 percent of total expenditures, compared to about 7 percent for the general urban population. Because healthcare costs have historically risen faster than most other categories, the CPI-E has generally tracked slightly higher than both the CPI-U and CPI-W.^2,3

The Senior Citizens League estimates that the CPI-E typically runs about two-tenths of a percentage point higher per year than the CPI-W. That may sound small, but over a 25-year retirement, it compounds. The organization estimated that a retiree who began receiving average benefits in 1984 would have collected roughly $13,700 more through 2011 if COLAs had been based on the CPI-E instead.⁴

$13,700more in COLA payments

1984–2011 · using CPI-E instead of CPI-W

This is a hypothetical example that compares the difference between CPI-Workers and CPI-Elderly. It’s an illustration created by the Senior Citizen League to estimate of the potential impact on long-term Social Security benefits. There is no guarantee that CPI-Elderly would continue to increase at a higher rate than CPI-workers.

It’s worth noting that the CPI-E remains experimental. The BLS has flagged several limitations: the sample size is relatively small, the areas and retail outlets priced are based on the general urban population rather than older Americans specifically, and senior-citizen discounts may not be fully captured. Any conclusions drawn from it should be treated as tentative, but it raises important questions about whether the current COLA formula reflects the real costs retirees face.³

PCE: The Federal Reserve’s Preferred Measure

While Congress looks at the CPI-W for Social Security, the Federal Reserve watches a different gauge altogether: the Personal Consumption Expenditures (PCE) Price Index. The Federal Open Market Committee has identified a 2 percent annual increase in the PCE as most consistent with its goals for maximum employment and price stability.⁵

Why PCE over CPI? The PCE covers a wider range of household spending and accounts for substitution behavior. If beef prices spike and consumers shift to chicken, the PCE reflects that change. The CPI, by contrast, tracks a more fixed basket. The PCE is produced by the Bureau of Economic Analysis and is published monthly as part of the Personal Income and Outlays report.⁶

There’s also Core PCE, which strips out food and energy prices to reduce month-to-month volatility. Federal Reserve policymakers routinely examine these “core” measures because large price swings in food or energy in one period don’t necessarily signal a lasting trend.⁵

Newer Tools on the Horizon

Official inflation data arrives with a lag—sometimes weeks after the period it covers. The Federal Reserve Bank of Cleveland addresses this with daily “nowcasts,” which estimate the current month’s inflation for both the CPI and PCE before the official numbers are published. Meanwhile, alternative trackers like Truflation aim to provide real-time inflation data drawn from a broader set of sources. These tools don’t replace official measures, but they offer additional perspective for those watching closely.⁷

What This Could Mean for You

Here’s what all of this comes back to: none of these indices measure your inflation. As the BLS itself acknowledges, the CPI reflects the experience of the average household; it “seldom mirrors a particular consumer’s experience.”¹

If you spend more on healthcare than the typical household, your personal rate of inflation may run higher than the headlines suggest. If your energy costs are low, it may run at a lower rate.

A financial strategy that’s built around you may be better positioned to account for the inflation you actually experience, not just the one that makes the news. If you’d like to talk about how inflation fits into your bigger picture, don’t hesitate to reach out.

1. BLS.gov, September 2025.
2. BLS.gov, 2026.
3. BLS.gov, May 2026.
4. SeniorsLeague.org, 2026.
5. FederalReserve.gov, August 2025.
6. FRED.StLouisFed.org, April 2026.
7. ClevelandFed.org, May 2026.

Because this law introduced new concepts and ideas, it’s worth understanding which changes apply to you and when.

Some provisions will require action before they expire; others create new opportunities. Throughout this article, you’ll see labels noting whether a provision is permanent, temporary, or set to change on a specific date. As always, we encourage you to speak with your tax, legal, or accounting professional before making any adjustments based on these updates. The IRS is also expected to issue additional guidance on implementation as the year unfolds.¹

Individual Taxes

Tax Brackets. The current income tax rates have been made permanent: 12, 22, 24, 32, 35, and 37 percent. Without the new law, these rates were set to revert to higher levels (15, 25, 28, 33, and 39.6 percent in most brackets) when the 2017 Tax Cuts and Jobs Act (TCJA) expired. The sixth bracket remains unchanged at 35 percent.¹

Permanent

Standard Deduction. For 2026, the standard deduction increased to $16,100 for single filers and $32,200 for those filing jointly, a modest increase from prior levels.^1,2

Effective 2026

Bonus Deduction for Seniors. A $6,000 bonus deduction is available to taxpayers age 65 and older. This is in addition to the standard deduction available to all filers.¹

A few important details:

• The deduction begins to phase out at $75,000 in income for individuals and $150,000 for joint filers.¹
• It phases out completely for individuals earning above $175,000 and couples earning above $250,000.¹
• This deduction is temporary; it expires after 2028.¹

Expires After 2028

State and Local Tax (SALT) Deduction. The cap on deductible state and local taxes increases to $40,400 in 2026 and will rise by 1 percent annually through 2029. However, in 2030, the SALT cap reverts to $10,000, so this benefit has a built-in sunset.¹

Note: The cap applies to both single and married filers. The deduction begins to phase out for taxpayers with incomes above $505,000.¹

Temporary

Charitable Contributions. Taxpayers who take the standard deduction can now deduct up to $1,000 in charitable contributions (single filers) or $2,000 (married filing jointly) without needing to itemize. This is a meaningful change for the majority of filers who don’t itemize their deductions.¹

Permanent

Families & Children

Child Tax Credit. In 2026, the child tax credit is $2,200 per qualifying child. The credit also includes a cost-of-living adjustment (COLA), so the amount will increase with inflation in future years.¹

Permanent

Dependent Care. Starting in 2026, the dependent care flexible spending account (FSA) limit increases from $5,000 to $7,500 per year. The maximum percentage of qualified expenses eligible for the dependent care credit also rises, from 35 to 50 percent.¹

Effective 2026

“Trump” Account. A new savings vehicle provides a one-time $1,000 government contribution into an account for babies born between 2025 and 2028. Parents may contribute up to $5,000 per year. Withdrawals are not permitted before the child reaches age 18.¹

Expires After 2028

529 Expansion. 529 education savings accounts now cover a broader range of expenses. Non-tuition costs related to elementary or secondary school attendance are now eligible under the existing rules.¹

Beginning in 2026, the annual limit for tuition-related 529 expenses increases from $10,000 to $20,000.¹

Expanded coverage is immediate; increased cap takes effect in 2026. Remember, a 529 plan is a tax-advantaged education savings plan. Before choosing a plan, it’s important to consider not only the state tax treatment but also any associated fees and expenses. Availability of a state tax deduction will depend on your state of residence, as state tax laws and treatment may vary from federal tax laws. If you make nonqualified distributions, earnings will be subject to income tax and a 10% federal penalty tax.

Permanent

New Deductions for Workers

No Tax on Tips. Workers who receive tips may deduct up to $25,000 in tip income. This deduction is available even if you take the standard deduction rather than itemizing.¹

The deduction phases out for individuals earning above $150,000 (or $300,000 for married filers filing jointly).¹

Expires After 2028

No Tax on Overtime. Single filers may deduct up to $12,500 in overtime pay, and married filers filing jointly may deduct up to $25,000. Like the tips deduction, this is available alongside the standard deduction.¹

The deduction phases out above the same income thresholds: $150,000 for individuals and $300,000 for married joint filers.¹

Expires After 2028

New Car Loan Interest. Between 2025 and 2028, taxpayers can deduct up to $10,000 in interest paid on a new car loan, but there are restrictions. The vehicle must be brand-new and assembled in the United States. The deduction phases out for individuals with gross income above $100,000 and married filers with income above $200,000.¹

Expires After 2028

Small Business & Investors

Qualified Business Income (QBI) Deduction. The 20 percent deduction on qualified business income for sole proprietorships, partnerships, and S corporations, originally set to expire with the TCJA, has now been made permanent. This is a significant benefit for small business owners and self-employed individuals.¹

Permanent

Expensing of Capital Investments. Businesses may expense 100 percent of qualifying capital investments (such as equipment and machinery) made on or after January 19, 2025. This restores a provision that had been phasing down under prior law and is particularly valuable for businesses thinking about factory upgrades or significant equipment purchases.¹

Some limitations may apply depending on the type of investment.¹

Permanent

1099-K Reporting Thresholds. For transactions on cash apps and digital payment platforms, the reporting threshold has been reset to $20,000 and 200 transactions.¹

Permanent

Estate & Gift Taxes

Increased Exemptions. For 2026, the estate and gift tax exemption increases to $15 million (individual) and $30 million (married), with inflation adjustments thereafter.¹

Permanent

A Note on Proactive Strategy. Since the 2017 Tax Cuts and Jobs Act, there has been ongoing concern that the estate and gift tax exemption would sunset to pre-2017 levels. The new law removes that uncertainty for now, but as with all tax legislation, future Congresses can revisit these rules.¹

A Few Things to Keep in Mind

Temporary provisions require attention. Several key deductions, including the senior bonus deduction, no tax on tips, overtime deductions, and the new car interest deduction, all expire after 2028. Think about them now.¹

Some provisions adjust annually for inflation. The standard deduction, child tax credit, and estate exemption are all indexed, so the exact dollar amounts will change year to year.¹

The IRS is still issuing guidance. The agency is expected to release implementation guidance throughout the year as it works through the details of the new law. We’ll keep you informed as that guidance becomes available.¹

Consider working with a tax, legal or accounting professional before making any changes to your tax strategy based on the OBBB. While this article provides a clear overview of the major provisions, your individual tax situation requires close, personalized attention.

1. Congress.gov, July 4, 2025.
2. IRS.gov, October 9, 2025.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

Granted value

Most federal grants, unlike loans, function as sources of funding. There are some exceptions, though. For example, if a student is awarded a grant but withdraws from the program in which they’re enrolled, they may be required to pay back all or a portion of that grant.²

Know your grants

The Department of Education offers multiple aid packages as part of the Federal Student Grant Program. The following three are granted most often, and each has different requirements for eligibility. The information below applies to the 2026-2027 academic year:

• Federal Pell Grants – With a maximum award of $7,395, Pell Grants are reserved for undergraduate students who have exceptional financial need and have not earned a bachelor’s, graduate, or professional degree yet.²
• Federal Supplemental Educational Opportunity Grants (FSEO) – FSEO Grants award a maximum of $4,000 to those who demonstrate exceptional need and have not yet earned a bachelor’s or graduate degree. FSEO Grants also give priority to Pell Grant recipients over other applicants.²
• Teacher Education Assistance for College and Higher Education (TEACH) Grants – TEACH Grants award a maximum of $4,000, and they’re reserved for students who are enrolled in teaching preparation programs and agree to teach for a minimum of 4 years at the elementary or secondary school level in a high-need field.²

FAFSA Required

No matter who you are or your financial situation, you may want to consider submitting a FAFSA. After all, the grants listed above do require recipients to have an application on file with the Department of Education. And who knows? The potential financial benefit that you could secure may surprise you.

1. NCAN.org, 2026
2. StudentAid.gov, 2026 The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

For most homeowners (and renters), a standard policy generally covers any legal liability that may result from their dog biting or harming another individual. Typically, this coverage is designed to extend to places outside the home (e.g., a walk in the park), but may not include what happens inside a car.²

However, this coverage is not unlimited. There is a cap to liability coverage (check your policy for the limits of your coverage), and your policy may limit such coverage to one bite.

Canine Considerations

Many insurers may either cancel the policy or add a canine exclusion after paying such a claim, which means that you will be responsible for all damages in the event of a second bite.

Some policies exclude certain dog breeds from the outset, so be sure to review your coverage to ensure that your dog is not among the excluded breeds.

Also, be aware of a business exclusion that may not pay on claims arising from a dog bite that occurs while you are conducting business in your place of residence.

Finally, it is important to let your insurer know if your dog bites someone or is declared dangerous under local law. Failure to inform them may affect liability coverage for subsequent injuries caused by your dog.

1. III.org, April 10, 2026
2. The information in this material is not intended as legal advice. Please consult legal or insurance professionals for specific information regarding your individual situation.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

Donating appreciated securities to a tax-qualified charity may allow you to manage your taxes and benefit the charity. If you have held the stock for more than a year, you may be able to deduct from your taxes the fair market value of the stock in the year that you donate. If the charity is tax-exempt, it may not face capital gains tax on the stock if it sells it in the future.¹

Keep in mind this article is for informational purposes only. It’s not a replacement for real-life advice. Make sure to consult your tax and legal professionals before modifying your gift-giving strategy.

There are several reasons to consider donating highly appreciated stock to a tax-exempt charity. For example, you may own company stock and have the opportunity to donate some shares. There also are potential tax benefits to consider if you donate appreciated securities that you have owned for at least one year.

If you sell shares of appreciated stock from a taxable account and subsequently donate the proceeds from the sale to charity, you may face capital gains tax on any gain you realize, which effectively trims the benefit of cash donation.¹

When is donating cash a choice to consider? If you provide the charity with a cash gift, there may be some limitations. Cash gifts are generally deductible up to 60% of adjusted gross income. A donor should also consider state taxes in addition to federal.²

If you donate shares of depreciated stock from a taxable account to a charity, you can only deduct their current value, not the value they had when you originally bought them.¹

Remember the tax rules for charitable donations. If you donate appreciated stock to a charity, you may want to review IRS Publication 526, Charitable Contributions. Double-check to see that the charity has non-profit status under federal tax law, and be sure to record the deduction on a Schedule A that you attach to your 1040.¹

If your contribution totals $250 or more, the donation must be recorded – that is, the charity needs to give you a written statement describing the donation and its value and whether it is providing you with goods or services in exchange for it.²

If your total deduction for all non-cash contributions in a tax year exceeds $500, then complete and attach Form 8283 (Noncash Charitable Contributions) to your 1040 when filing. If you donate more than $5,000 of property to a charity, you will need to provide a letter from a qualified appraiser to the charity (and, by extension, the IRS) stating the monetary value of the gift(s).²

Gifting cash or other assets to an organization is a wonderful opportunity. But keep in mind that tax rules are constantly being adjusted, and there’s a possibility that the current rules may change. Make certain to consult your tax and legal professionals before starting a new gifting strategy.

1. IRS.gov, 2026
2. IRS.gov, 2026 The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

Judge Burger’s case shows that even law-savvy individuals can make mistakes when it comes to writing their own legal documents. But giving executors the proper power is only one piece of the puzzle. How do you choose an executor? Can anyone do it? What makes an individual a good choice?

Many people choose a spouse, sibling, child, or close friend as executor. In most cases, the job is fairly straightforward. Still, you might give special consideration to someone who is well-organized and capable of handling financial matters. Someone who is respected by your heirs and a good communicator may also help make the process run smoothly.

Above all, an executor should be someone trustworthy since this person will have a legal responsibility to manage your money, pay your debts (including taxes), and distribute your assets to your beneficiaries as stated in your will.

If your estate is large or you anticipate a significant amount of court time for your executor, you might think of naming a bank, lawyer, or financial professional. These individuals will typically charge a fee, which would be paid by the estate. In some families, singling out one child or sibling as executor could be construed as favoritism, so naming an outside party may be a good alternative.

Whenever possible, choose an executor who lives near you. Court appearances, property issues, and even checking mail can be simplified by proximity. Also, some states place additional restrictions on executors who live out of state, so check the laws where you live.

Whomever you choose, discuss your decision with that person. Make sure the individual understands and accepts the obligation – and knows where you keep important records. Because the person may pre-decease you – or have a change of heart about executing your wishes – it’s always a good idea to name one or two alternative executors.

The period following the death of a loved one is a stressful time and can be confusing for family members. Choosing the right executor can help ensure that the distribution of your assets may be done efficiently and with as little upheaval as possible.

What Will?

Take a look at some famous people who left without having a will in place.

1. Jimi Hendrix
2. Bob Marley
3. Sonny Bono
4. Pablo Picasso
5. Michael Jackson
6. Howard Hughes
7. Abraham Lincoln

Source: LegalZoom.com, September 1, 2023

1. Washingtonpost.com, 2023 The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

Accept that the Parent-Child Dynamic Has Changed

Your child is always your child, and will need you as much as ever. However, parents need to understand that their role has transitioned from “supervisor” to “mentor.”

Make the Move Simple

Do not bring the moving van. Not only will it embarrass your child, but dorm rooms just aren’t that large. Bring only what’s appropriate.

Consider pre-ordering essentials (soap, bedding, shower caddy, etc.) for pick-up at a location by the school. This will save space whether your trip is by car or plane.

Don’t Leave “The Talk” to the Drop-off

While college represents a gateway to many wonderful experiences, parents will want to have a serious conversation about safety, responsible behavior, finances, and expectations about staying in touch.

Do not leave it for the drop-off. It is sure to sour the moment and may rush a conversation that deserves more time and mutual dialogue.

Time to Learn Financial Responsibility

Your child will need spending money. You may want to provide a debit card attached to an account that has a set sum for the full semester, or one that’s refreshed with monthly deposits. College is a perfect time to learn budgeting.

Take the Lead from Your Child

Let your child have the discretion to make decisions about what to bring. However important you think a dust skirt for the bed is, try to avoid fights. Let your child make a mistake. It’s the best way to learn.

Your child will likely send signals when it’s time for you to go. Listen to them. It’s time for him or her to begin connecting with new roommates. Expect that final “good-bye dinner” to be canceled since your child may prefer an impromptu introductory dinner with the new roommate.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

Living this long may have unexpected tax consequences. Here’s why.

Many older life insurance policies mature at a specific age. If the insured individual attains that age, the policy’s cash value may be paid out to the policy owner in lieu of a death benefit payment.³

Tracking Taxes

This payout may be taxed as ordinary income on the amount that exceeds the policy owner’s cost basis (or the sum of after-tax premiums). The after-tax amount would then become part of the policy owner’s estate and may be subject to further taxation upon the policy owner’s death.^4,5

If a policy is owned by an irrevocable trust, the trust is responsible for any tax owed, though the proceeds would not become part of the insured’s estate if the insured had no incidents of ownership.^5,6

Managing the Taxable Risk

This taxable risk may be mitigated through a maturity extension rider, which allows the policy to continue until the death of the insured. Many newer life policies come with a higher maturity age (like 120) or an indefinite period.⁷

1. OurWorldinData.com, March 2026
2. Macrotrends.net.org, 2026
3. Several factors will affect the cost and availability of life insurance, including age, health, and the type and amount of insurance purchased. Life insurance policies have expenses, including mortality and other charges. If a policy is surrendered prematurely, the policyholder may also pay surrender charges and have income tax implications. You should consider determining whether you are insurable before implementing a strategy involving life insurance. Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.
4. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation.
5. IRS.gov, 2026
6. Using a trust involves a complex set of tax rules and regulations. Before moving forward with a trust, consider working with a professional who is familiar with the rules and regulations.
7. SEC.gov, 2026

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

1. Understand the Master Policy

Since the ownership of all common areas is shared with other condo owners, the association of owners typically purchases insurance coverage (a master policy) for the common areas, e.g., hallways, exterior walls, etc. The condo association’s policy will outline what is covered and what is not.

2. Three Types of Coverage

There are three basic types of coverage under a master policy.

• Primary buildings and common areas
• Your unit and any items within your unit, other than personal belongings
• Building, unit, and any fixtures

The individual coverage you may consider depends upon the scope of coverage of the master policy. Start by determining what is and isn’t covered under the master policy – this can influence the coverage you may need.

3. Know the Master Policy Deductible

Generally, an association’s master policy has a deductible that is charged pro-rata among unit owners in the event of a claim. Determining that obligation is important because while it may never materialize, it could represent a meaningful financial commitment.

4. Consider Additional Coverage

Similar to any homeowner, you will need to make decisions about other coverage options, such as cash value or replacement coverage, adding personal liability coverage, and whether flood insurance may be appropriate.

1. Several factors will affect the cost of condo insurance, including the insurance coverage provided by the homeowners association. You should consider the amount of your deductible and level of coverage before purchasing a condo insurance policy. Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

As a young investor, you have a powerful ally on your side: time. The earlier you start saving, the more opportunity your investments have to increase in value.

The power of compounding. Many people underestimate it, so it is worth illustrating. Let’s take a look at the long-term performance of an investment account using a hypothetical 5 percent rate of return.

How does it work?

A simplified example goes like this: If you were to start with a $1,000 principal in an account that earns 5 percent interest per year, and contribute $1,000 a year to the account, you would end up with $69,671 after thirty years, with $16,511 earned in compound interest from $30,000 in contributions. That compounding continues, even if you stop making deposits.¹

The 30-Year Snowball Effect

$1,000/year · 5% annual return · No starting balance

When it comes to building wealth, most people focus on how much they can save and the kinds of returns they can earn. While those are important, there is a third factor that is often much more powerful: Time.

The math of compound interest rewards those who start early, even if they save less in total than someone who starts later. To illustrate this, let’s look at two hypothetical investors:¹

The Early Starter

Contributes $10,000 a year for just 10 years, then stops entirely.

Total Contributed$100,000

Ending Balance$850,608

The Late Starter

Waits 10 years, then contributes $10,000 a year for 30 years straight.

Total Contributed$300,000

Ending Balance$888,298

Investor Balance Over Time

Hypothetical 6% annual rate of return

As you can see from the trajectories, Investor 2 spends their entire career playing “catch-up.” Even though their total balance eventually edges out Investor 1 by a small margin at age 62 ($888,298 vs $850,608), the “efficiency” of their money is far lower. Investor 1 essentially bought themselves a 30-year head start, proving that in the world of compounding, a small amount of money plus a long time is often superior to a large amount of money plus a short time.

¹ This is a hypothetical example used for illustrative purposes only. It is not representative of any specific investment or combination of investments.