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Dorion-Gray Capital Management® Weekly Commentary October 3, 2016

| October 03, 2016
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Market Commentary


U.S. stocks rose Friday; the S&P financial sector had its best day in two months; and the three major indexes enjoyed a third week of gains. Circulating rumors predicting Deutsche Bank will obtain a better deal from the U.S. Department of Justice regarding charges the bank sold toxic mortgage bonds appear to have contributed a positive impact. For the week, the Dow rose 0.26 percent to close at 18,308.15. The S&P gained 0.20 percent to finish at 2,168.27, and the NASDAQ climbed 0.12 percent to end the week at 5,312.00.
One Percenter – It took at least $465,626 of adjusted gross income during tax year 2014 (i.e., the most recent year that tax data has been collected) to rank in the top 1 percent of wage earners (source: Internal Revenue Service, BTN Research).
Need to Change This  The top marginal corporate tax rate in the United States is the third highest out of 188 countries. Only the United Arab Emirates and Puerto Rico have a higher top marginal corporate tax rate (source: Tax Foundation, BTN Research).
We Will See - Federal Open Market Committee (FOMC) data that was released following its Sept. 21 meeting indicates the Federal Reserve expects its target rate for short-term interest rates will be 1.5 percentage points higher by Dec. 31, 2018, i.e., suggesting six separate increases one-quarter of a percentage point each (source: FOMC, BTN Research).

WEEKLY FOCUS - Parent, Child Assets and College Funding

If you have college-bound children or grandchildren, your financial planning should probably include an evaluation of the amount of aid they may qualify for before determining which avenues for funding the rest best fit your family’s situation. 
To begin, it’s helpful to know what assets impact a student’s eligibility for financial aid. Under the Free Application for Federal Student Aid (FAFSA) guidelines, the following parental assets don’t affect these calculations: equity in a primary home, qualified retirement accounts, qualified and nonqualified annuities, pension plans and cash value in life insurance. 
Parental assets that will count include: stocks, mutual funds and certificates of deposit not in a qualified retirement account; savings accounts; property equity that is not a primary residence; 529 college plans and Coverdell Education Savings Accounts. Custodial trusts in the child’s name, such as UGMA or UTMA accounts, are considered the child’s assets. 
This is important because the FAFSA weights the student’s own financial resources heavier than their parents’ wealth. The federal formula currently assesses relevant parental capital at a maximum of 5.64 percent and the child’s assets at 20 percent. This means the amount of need-based aid drops by the combined percentages of the parents’ and child’s financial worth.
Two-hundred-and-sixty private colleges and universities, including highly selective Ivy League schools, require an additional financial aid application, the CSS/Financial Aid PROFILE®. The PROFILE involves a deeper survey of family finances, uses a different formula for determining eligibility and assesses parental assets at 5 percent and children’s assets at 25 percent. Supplemental questions and the exact formula used may vary from school to school. For example, some schools ignore the family home’s equity, while others include its full value. Since this could significantly affect aid eligibility, it may be wise to ask potential schools how they handle home equity.
College planning can be daunting and complicated. We can help you look for practical tactics for sending your student to college while avoiding burdensome loans or lost retirement funds. 

The Dorion-Gray Team

Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. a Registered Investment Advisory Firm. Dorion-Gray Retirement Planning is a trade name of Dorion-Gray Financial Services, Inc. located at 2602 IL Route 176, Crystal Lake, IL  60014.  Dorion-Gray and the Securities America companies are separate, unaffiliated entities. 

Diversification seeks to reduce the volatility of a portfolio by investing in a variety of asset classes.  Neither asset allocation nor diversification guarantee against market loss or greater or more consistent returns.

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