Annuity or 529 Plan Financial Planning

Being in the financial industry for about a decade and a half now I have from time to time come across a number of these self proclaimed “gurus” who tout annuities as a vehicle for college tuition saving in lieu of a 529 plan. This concept is marketed to insurance agents as a sales tool to increase business with a flock of new clients and promises commissions beyond their wildest dreams. Now, let’s take a moment to look at this premise and the pros and cons. An annuity basically is a financial contract designed to accept and grow funds from an individual and pay out a series of payments at a later date. There are a variety of different annuity products out there depending on what your particular needs are that can be very accommodating, but in the interest of time we’ll look at the basic concepts and comparison of annuities, 529 plans and Education Savings Accounts.

Annuities grow on a tax deferred basis however there is a surrender charge, which is a ten percent fee if there is a withdrawal made early. Typically the surrender charge decreases each year over a specified number of years. There are “no surrender annuities” which allow you to withdraw your interest earnings or up to 15% per year without a penalty although any withdrawal from an annuity may be subject to taxes. At fifty nine and a half you may take withdrawals with out a ten percent surrender charge and those withdrawals are taxed as ordinary income. If you withdraw prior to fifty nine and a half, one worst case scenario could be over 40% of your earnings going back to the federal government.

A 529 college savings plan could allow for contributions over $300k depending on the plan however contributions are gifts, so the $13k annual gift limit should be observed. Qualified distributions can be taken without federal income tax or penalty for tuition, books, fees, supplies, room and board, etc…Withdrawals used for expenses other than qualified education costs may be subject to federal and state taxes plus a ten percent penalty. Anyone who plans to attend an eligible postsecondary educational institution can be the beneficiary of a 529 plan. Investments into a 529 savings plan enjoy tax deferred compounding and there are no limitations on the age or income of the owner or beneficiary.

Finally, Education Savings Accounts or ESA’s can be used to pay qualified education expenses for a student in an accredited primary, secondary or post secondary vocational school. 529 assets can only be used to cover qualified higher education expenses. You can contribute $2,000.00 per year in all ESA’s for one beneficiary, however ESA’s offer a wider choice of investments than a 529 plan. ESA and 529 assets are treated as the owners therefor these assets have minimal impact on federal financial aid if the parent is the owner. However, if the child is the owner, the assets are included in the federal financial aid calculation.

An annuity is not likely to be a strong choice for most parents however there’s a small percentage of parents out there that may want to give it a second glanse. Parents who will be over the age of fifty nine and a half by the time their child starts college and who also expect to be in a moderately low tax bracket during the college years may want to put some thought into it. Comparing apples to apples, a 529 plan or an ESA is most likely your best bet to prepare for your child’s educational costs rather than an annuity. If you have a child or grandchild who is planning to attend college, I would recommend you sit down with a qualified financial planner to determine which financial choice is best for you.

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Child Care Center Business Plan Template Financial Planning

If you are planning on seeking funding or investors for your daycare startup then a solid child care center business plan will be essential for proving the feasibility of your idea to them. There are also some other compelling reasons why you should take the time to prepare this important blueprint for business success. If you are going into business with a partner, a business plan will allow both of you to make sure that you are thinking along the same lines. And even if you are going it alone and have nobody to impress, a plan offers you a way of getting all your thoughts and research down on paper in one structured report.

A business plan allows you to see if your child care center is viable and helps you to set goals and benchmarks that you can later measure your progress against. Below we offer a child care center business plan template. The ideal way to put together a plan is to look at a few that have been done for other child care centers and then make adjustments to suit your unique situation. It can be an extensive report or something brief that fits onto one page.

What to Include in a Business Plan for a Child Care Center

1) Executive Summary

This is a summary of your daycare business plan and it should be written after the plan is complete. Detail the contents of your plan and declare some of the conclusions that you have made.

2) Company Mission

Put money aside for a minute and write a little about how you want to fit in with and impact your community in a positive way. Write about the importance of child care in society and your personal philosophies on early childhood development and daycare. What kind of image do your want to project?

3) Table of Contents and Introduction

Introduce the reader to your business plan and let them know what kind of daycare you have in mind. What is the basic concept? What services will you offer? What age groups will you care for?

Set out a contents page so that readers can easily navigate their way through the report.

4) Background

You should include some background on the child care industry to help readers to better understand the present state of the industry and how your business will fit into it. Personal backgrounds of yourself and other key players should also be included to let readers know who you are and what led you to the conclusion that you want to enter this industry. What skills, experience or attributes do you have that make you particularly well suited to setting up and managing a child care center? Attach any supporting documents such as your resume to the business plan as an appendix.

5) Objectives

Summarize your financial goals as well as any expansion plans that you have for the daycare over your first two or three years in business.

6) Startup Requirements and Financing

List out all anticipated startup costs and other hurdles that must be overcome before you open your doors to families. How you propose to finance the new business?

7) Business Structure and Legal Considerations

Will the child care center be a sole proprietorship, a partnership or a corporation? Include details on the daycare licensing process for the state in question as well as other local regulations that must be complied with such as zoning and building safety requirements. What insurance policies will be necessary to protect the business and its owners from property damage or liability claims?

8) Organization

How will your daycare be managed? Your daycare business plan should include information on the ownership structure (if there are other owners involved). Set out a plan for taking on and managing staff including hiring practices, necessary qualifications, wages and other policies. Outline job descriptions for each position and set out a clear hierarchy showing which managers are responsible for which employees.

9) Market Analysis

A good business plan will usually have an analysis of the local market. This is where you can present the findings of any market research that you have undertaken. Your market analysis should include information gained from surveys with prospective daycare clients in the area to find out more about them and about what they are looking for in a daycare service. You can include demographic data about your local market here and attempt to establish some typical customer profiles. Discuss your proposed location and why you think its location is strategically significant.

Look at a variety of niches within daycare such as infant care or after school care and decide on the niches that you will go after with your set up and your marketing. Give details on all local competitors and suggest ways that your daycare could offer unique services that differentiate it from these other market players. Look at their strengths and weaknesses and try to come up with the ideal service for your market that is an improvement on the services that are already available.

10) Marketing Plan

Put forward a marketing plan for gaining new customers. Outline a branding strategy, a pricing strategy and how you will consistently promote your daycare to local families. Try to identify precisely what advertising and marketing methods you would use to get leads and what sales approach you would use to turn prospective families into new clients. Write an online marketing plan discussing a proposed website for the child care center as well as a strategy for bringing targeted traffic to the site.

11) Financial Plan

Lastly, you should include some detailed financial forecasting. Estimate revenues and expenses over a period of two years and set these out in a spreadsheet. Profit or loss can then be projected based on these estimates. Put forward several different scenarios where for example costs are higher than expected or income is slower than expected. Identify the break even point or the point that the business becomes profitable.

A good child care business plan template along the lines of the one that we have outlined above will give you a clear direction of where you want to go, will help you to measure progress along the way and ultimately will help you to reach your personal and financial goals.

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Digital Media Players: What’s the Difference Between MP3, MP4 and MP5? Money

When you’re looking for a device that lets you play music and perhaps also watch videos while you’re on the go, the hardest thing is probably figuring out which one to buy. There are so many different digital media player models out there that it’s easy to get confused. Then there’s also the question of whether you want an MP3, MP4 or MP5 player. And what’s the difference between them anyway?

MP3 players have been around for several years now, so you have probably used one at some time, or played MP3 music files on your computer or cellphone. MP3 is a file format for audio files, which can also be played on media devices made for later file formats. Portable MP3 players are still very popular, and are available as standalone devices or incorporated in cellular phones, laptops and tablets, and even sunglasses, headsets, watches, pendants and many other items.

Like all media players, portable MP3 devices are available with various storage capacities. The smallest versions come with a memory chip, while there are models that let you store your entire music collection of, say, 30 gigabytes, on an internal hard drive. However, even a tiny 1GB player has room for 500 tracks, and some of your favorite photos as well.

MP4 is also a file format, properly named MPEG-4 Part 14, and is used for storing and playing videos. An MP4 player is thus a significant upgrade from the previous version as it can play not only audio files but also movies and video clips. In addition, most models will also play files in other formats such as AVI, WMA and WAV.

The LCD screen is usually larger than on an MP3 player, for the obvious reason that you need to be able to view videos comfortably. A lot of MP4 multimedia players sold these days also let you play games, listen to FM radio and read ebooks, as well as taking photos and shooting video with an onboard DV camera. Some also allow you to upload a variety of external apps for a truly multifunctional experience.

Now that you can also buy MP5 players you’re probably wondering what the extra features are and whether it’s worth getting one. One thing you should know is that there is no MP5 file format – it’s simply a trade name that is used by Chinese manufacturers to show that these are more advanced than MP4 players. You’ll also see some products sold as MP4/5 players – some of these are just MP4 devices with some extra bells and whistles, while others are actually “true” MP5 players.

The general definition of an MP5 media player is one that supports a wide range of video and audio file types. This means the user doesn’t need to convert the file to an easily playable format, the way he would with a previous-generation player if he want to play something recorded in RM, RMVB, Divx, 3GP, ASF, DAF, FLAC or APE, for instance. Since there is no official definition, it’s always a good idea to check the exact product specification before you buy, however. Many MP5s do pack in a lot of other extras such as enhanced sound quality, though, so you’ll probably be pleasantly surprised at how much you get for your money.

Whichever type of portable media player you go for, make sure you’ve considered your needs first. If you just want to be able to listen to music while you go jogging or work in the yard, a tiny MP3 player that clips onto your belt or hangs around your neck could be ideal. However, if you also like the idea of watching movies, reading or playing games while you’re on the train or just relaxing at home, you’ll need an MP4 or MP5 player. Remember that they all come with earphones, and that most can also be connected to external speakers, so they can truly be used in a variety of situations.

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