January 11, 2024

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Good day.

Over the past few years, talking about money has started to inch closer to being okay, and even normal, for many of us. This is especially true among younger generations, who seem to take particular pride in being prudent about their money talks.

Can you guess what percentage of millennials say you should have an honest talk about your finances early on in a relationship? A. 28% B. 40% C. 45%

Here are the topics for today:

Is All Equity The New 60/40?
Investments to Make in Yourself This Year
Changes Coming to FAFSA in 2024

INVESTING

Is All Equity The New 60/40?

The 60/40 portfolio is a classicist investor's dream. It's supposed to strike the perfect balance between risk-on growth and risk-off stability that can withstand the test of time, even as you start to get some grays.

Sure, it had a bad year in 2022 (down about -16%), but who didn't? The 60/40 proved resilient yet again last year, posting a gain of around 17%.

Validated yet again after a strong rebound performance, it's safe to assume that the 60/40 is back, right?

In some ways, yes. But new data suggests an alternative.

A new paper, titled Beyond the Status Quo: A Critical Assessment of Lifecycle Investment Advice, unveiled a joint study among finance departments at several universities. Their findings? Going all-out on equity usually comes out as a win.
They ran a million simulations for the average American household and found that, if investors split their holdings between 50% domestic and 50% international stocks, the average outcome was a starting retirement balance of $1.07M, whereas those who followed the 60/40 would've had about $760,000, and target-date fund holders ended up with about $810,000.
Their research also found that, as a result, those in the all-equity simulation were less likely to deplete their retirement savings (8%) compared to the 60/40 group (16%).

Does this mean you should abandon fixed-income strategies?

Probably not entirely. Investing is a very personal thing, and the unique details of your financial situation combined with your goals should ultimately govern how you elect to divvy up your portfolio.
We all know that stocks hold way more upside than bonds — this is not new information, it's always been true, but this data sheds a revealing, matter-of-fact light on the reality.
As is with anything, there's a trade-off that comes with aiming for the best of both worlds. Investing is a cost-benefit analysis just as much as anything else is in life, and where you fall on the allocation spectrum is ultimately a personal decision.

💡 Top tip: An Origin financial planner can help you decide what kind of portfolio mix is best suited for your unique situation.

PLANNING

Investments to Make in Yourself This Year

"New year, new me", is the cringe-worthy old adage we're all probably tired of. We get it, waiting until the new year to start making changes is a little cliche, but the psychology behind it is solid.

For better or worse, humans are largely symbolic in nature, and a new number on the calendar can be a powerful mental driver for change.

In 2024, we want to help you kick off the year by making the right investments in yourself, and subsequently your finances. Put your cringing aside for a moment and humor us — promise these tips will be worth it.

Ways to invest in yourself this year

Prioritize your finances when it comes to self-care: Money is involved in almost every aspect of our modern lives. As a result, cultivating a healthy financial situation is at the foundation of creating a healthy, happy, and productive life for yourself in the big picture.
Pay yourself first: It sounds ironic, but "paying yourself" first is one of the most important moves you can make when investing in yourself. The idea here is to prioritize your saving, investing, and budgeting and set up some automatic transfers that streamline the process for you. The best investment you can make in yourself is to secure these essentials and the peace of mind that comes with them.
Eliminate bad debt: Sometimes debt can benefit you, like owning a home that appreciates. But debt that doesn't serve you can be a major drag on your budget and get in the way of your goals. This year, make it a priority to reduce any bad debts you might have to clear up room in your expenses and eliminate as many interest payments as possible.
Get organized: A home is worthless without a good foundation, and the same could be said about life as well. Without a sustainable structure beneath it all, any progress is liable to crumble beneath us at any given time. A good plan almost always precedes good actions, because starting with the end in mind makes achieving your goals exponentially easier.
Learn and build new skills: Consider taking classes or earning a degree in a field that interests you or that will improve your career prospects. Or develop new skills through training programs, workshops, or self-study. And if you work for a company that offers education reimbursement benefits, take advantage of it as it can offer your career a nice ROI boost. Employer-sponsored learning resources not only afford you more skills but also save you potentially thousands of dollars.

PLANNING

Changes Coming to FAFSA in 2024

The student loan system has been, shall we say, roiled in recent months. First Biden's forgiveness plan was struck down, repayments resumed soon thereafter and this time with more stipulations and accommodations, and now, even the FAFSA form is getting a revamp.

Due to these changes. the Federal Student Aid office needed a little more time to roll out the adapted form — FAFSA filing usually opens in October, but this time the updated form wasn't released until Dec 31st.

The re-configured form comes with some noteworthy changes that 2024-2025 aid applicants will want to be aware of.

Here are the biggest changes

A shorter, more streamlined form is at the top of the list of changes. According to FSA, depending on their specific situations, applicants may bypass up to 26 FAFSA questions. In certain cases, some individuals may only need to answer 18 questions, completing the process in less than 10 minutes.
The Pell Grant will also be expanded, with an estimated additional 610,000 students being new recipients this year, and 1.5M more receiving the maximum amount.
The 'multiple siblings in college discount' is also going away. In the former calculation method, the anticipated family contribution for households with multiple siblings concurrently attending college was determined by dividing it by the number of children pursuing higher education. The updated formula addresses and rectifies this specific provision.
Reduced 529 income: Previously, disbursements from 529 plans owned by a grandparent or a party other than the student or the parent were regarded as untaxed income for the student. This had the potential to substantially diminish the student's eligibility for financial aid. However, under the revised FAFSA system, such distributions are no longer considered as part of the student's income.

🌊 BY THE WAY

👩🏻‍❤️‍👨🏻 Answer: It's B., 40% of millennials said serious money talks should happen early on in the dating cycle. (CNBC)
💳 Be wary of that BNPL 'phantom debt' (NYT)
🏘️ America is short roughly 3 million homes (Axios)
👀 ICYMI: Financial Wellness — Starting 2024 Off Right (Origin)

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