CFS, Inc.Michael Butler, CFA® InstitutePresident/Financial Advisor3190 Whitney AvenueBuilding 6, Suite 2Hamden, CT 06518203-248-1972cfs@cooperfinservices.comwww.cooperfinservices.com

December 2018Hybrid Funds: Balanced, Lifestyle, or Target?

Reviewing Your Estate Plan

Should I consider requesting a deferment orforbearance for my federal student loans?

Are my student loans eligible for publicservice loan forgiveness?

CFS Advisory NewsletterPlanning Your Financial FutureWhat Happened to Your Money?

See disclaimer on final page

If you don't know whathappened to your moneyduring the past year, it'stime to find out.December and Januaryare the perfect months tolook back at what youearned, saved, andspent, as W-2s, account

statements, and other year-end financialsummaries roll in.

How much have you saved?If you resolved last year to save more or youset a specific financial goal (for example, saving15% of your income for retirement), did youaccomplish your objective? Start by taking alook at your account balances. How much didyou save for college or retirement? Were youable to increase your emergency fund? If youwere saving for a large purchase, did you saveas much as you expected?

How did your investments perform?Review any investment statements you'vereceived. How have your investmentsperformed in comparison to general marketconditions, against industry benchmarks, and inrelationship to your expectations and needs?Do you need to make any adjustments basedon your own circumstances, your tolerance forrisk, or because of market conditions?

Did you reduce debt?Tracking your spending is just as important astracking your savings, but it's hard to do whenyou're caught up in an endless cycle of payingdown your debt and then borrowing moremoney. Fortunately, end-of-year mortgagestatements, credit card statements, and vehiclefinancing statements will all spell out theamount of debt you still owe and how muchyou've really been able to pay off. You mayeven find that you're making more progressthan you think. Keep these paper or onlinestatements so you have an easy way to trackyour progress next year.

Where did your employment taxes go?If you're covered by Social Security, the W-2you receive from your employer by the end ofJanuary will show how much you paid into theSocial Security system via payroll (FICA) taxescollected. If you're self-employed, you reportand pay these taxes (called self-employmenttaxes) yourself. FICA taxes help fund futureSocial Security benefits, including retirement,disability, and survivor benefits, but manypeople have no idea what they can expect toreceive from Social Security in the future.

This year, get in the habit of checking yourSocial Security Statement annually to find outhow much you've been contributing to theSocial Security system and what future benefitsyou might expect, based on current law. Toaccess your Statement, sign up for a my SocialSecurity account at the Social SecurityAdministration website, socialsecurity.gov.

Did your finances improve?Once you've reviewed your account balancesand financial statements, your next step is tolook at your whole financial picture. Taking intoaccount your income, your savings andinvestments, and your debt load, did yourfinances improve over the course of the year? Ifnot, why not?

Next, it's time to think about the changes youwould like to make for next year. Start byconsidering the following questions:

• What are your greatest financial concerns?• Do you need help or advice in certain areas?• Are your financial goals the same as they

were last year?• Do you need to revise your budget now that

you've reviewed what you've earned, saved,and spent?

Use what you've learned about your finances toset your course for the new year ahead.Challenge yourself to save more and spendless so that you can make steady financialprogress.

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Hybrid Funds: Balanced, Lifestyle, or Target?Holding a mix of stocks and bonds isfundamental to building a portfolio that canpursue growth while potentially remaining morestable than a stock-only portfolio during marketdownturns. Many investors approach this goalby owning a mix of individual securities, a mixof funds, or both. However, some hybrid fundstry to follow the same strategy in a singleinvestment.

Although the goal of these funds is simplicity,they are not as simple as they may appear, anddifferent types of hybrid funds have verydifferent objectives.

Balanced fundsBalanced funds typically strive for a specificasset mix — for example, 60% stocks and 40%bonds — but the balance might vary within limitsspelled out in the prospectus. Theoretically, thestocks in the fund provide the potential for gainswhile the bonds may help reduce the effects ofmarket volatility.

Generally, balanced funds have threeobjectives: conserve principal, provide income,and pursue long-term growth. Of course, thereis no guarantee that a fund will meet itsobjectives. If you are investing in a balancedfund or considering whether to do so, youshould understand the fund's asset mix,objectives, and rebalancing guidelines as theasset mix changes due to market performance.Rebalancing is typically necessary to keep abalanced fund on track, but could create ataxable event for investors.

Lifestyle fundsLifestyle funds, also called target-risk funds,include a mix of assets designed to maintain aconsistent level of risk. These funds may belabeled with terms such as conservative,moderate, or aggressive. Because the targetedrisk level remains consistent over time, youmay want to shift assets from one lifestyle fundto another as you approach retirement or retire.A conservative lifestyle fund might be anappropriate holding throughout retirement.

Target-date fundsTarget-date funds contain a mix of assetsselected for a specific time horizon. The targetdate, usually included in the fund's name, is theapproximate date when an investor wouldwithdraw money for retirement or anotherpurpose, such as paying for college. Aninvestor expecting to retire in 2035, forexample, might choose a 2035 fund. As the

target date approaches, the fund typically shiftstoward a more conservative asset allocation tohelp conserve the value it may haveaccumulated. This transition is driven by aformula called the glide path, which determineshow the asset mix will change over time. Theglide path may end at the target date orcontinue to shift assets beyond the target date.

Funds with the same target date may vary notonly in their glide path but also in the underlyingasset allocation, investment holdings, turnoverrate, fees, and fund performance. Variationtends to be greater as funds near their targetdate. If you own a target-date fund and arenearing the target date, be sure you understandthe asset mix and whether the glide pathextends beyond the target date.

All in one?Traditional balanced funds typically contain amix of individual securities. Although thesefunds may be an appropriate core holding for adiversified portfolio, they are generally notintended to be an investor's only holding.However, some balanced funds and mostlifestyle and target-date funds include a mix ofother funds. These "funds of funds" are oftenintended to offer an all-in-one portfolioinvestment. You may still want to hold otherinvestments, but keep in mind that investingoutside of an all-in-one fund may change youroverall asset allocation. Asset allocation anddiversification are widely accepted methods tohelp manage investment risk; they do notguarantee a profit or protect against investmentloss.

Additional considerationsThe principal value of a target-date fund is notguaranteed before, on, or after the target date.There is no guarantee that you will be preparedfor retirement on the target date or that anyfund will meet its stated goals. The return andprincipal value of all funds fluctuate withchanges in market conditions. Shares, whensold, may be worth more or less than theiroriginal cost.

Mutual funds are sold by prospectus. Pleaseconsider the investment objectives, risks,charges, and expenses carefully beforeinvesting. The prospectus, which contains thisand other information about the investmentcompany, can be obtained from your financialprofessional. Be sure to read the prospectuscarefully before deciding whether to invest.

Although the goal of hybridfunds is simplicity, they are notas simple as they may appear,and different types of hybridfunds have very differentobjectives.

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Reviewing Your Estate PlanAn estate plan is a map that explains how youwant your personal and financial affairs to behandled in the event of your incapacity ordeath. Due to its importance and becausecircumstances change over time, you shouldperiodically review your estate plan and updateit as needed.

When should you review your estateplan?Reviewing your estate plan will alert you to anychanges that need to be addressed. Forexample, you may need to make changes toyour plan to ensure it meets all of your goals, orwhen an executor, trustee, or guardian can nolonger serve in that capacity. Although there'sno hard-and-fast rule about when you shouldreview your estate plan, you'll probably want todo a quick review each year, because changesin the economy and in the tax code often occuron a yearly basis. Every five years, do a morethorough review.

You should also review your estate planimmediately after a major life event or changein your circumstances. Events that shouldtrigger a review include:

• There has been a change in your maritalstatus (many states have laws that revokepart or all of your will if you marry or getdivorced) or that of your children orgrandchildren.

• There has been an addition to your familythrough birth, adoption, or marriage(stepchildren).

• Your spouse or a family member has died,has become ill, or is incapacitated.

• Your spouse, your parents, or another familymember has become dependent on you.

• There has been a substantial change in thevalue of your assets or in your plans for theiruse.

• You have received a sizable inheritance orgift.

• Your income level or requirements havechanged.

• You are retiring.• You have made (or are considering making) a

change to any part of your estate plan.

Some things to reviewHere are some things to consider while doing aperiodic review of your estate plan:

• Who are your family members and friends?What is your relationship with them? Whatare their circumstances in life? Do any havespecial needs?

• Do you have a valid will? Does it reflect yourcurrent goals and objectives about whoreceives what after you die? Is your choice ofan executor or a guardian for your minorchildren still appropriate?

• In the event you become incapacitated, doyou have a living will, durable power ofattorney for health care, or Do NotResuscitate order to manage medicaldecisions?

• In the event you become incapacitated, doyou have a living trust or durable power ofattorney to manage your property?

• What property do you own and how is it titled(e.g., outright or jointly with right ofsurvivorship)? Property owned jointly withright of survivorship passes automatically tothe surviving owner(s) at your death.

• Have you reviewed your beneficiarydesignations for your retirement plans and lifeinsurance policies? These types of propertypass automatically to the designatedbeneficiaries at your death.

• Do you have any trusts, living ortestamentary? Property held in trust passesto beneficiaries according to the terms of thetrust. There are up-front costs and oftenongoing expenses associated with thecreation and maintenance of trusts.

• Do you plan to make any lifetime gifts tofamily members or friends?

• Do you have any plans for charitable gifts orbequests?

• If you own or co-own a business, haveprovisions been made to transfer yourbusiness interest? Is there a buy-sellagreement with adequate funding? Wouldlifetime gifts be appropriate?

• Do you own sufficient life insurance to meetyour needs at death? Have those needs beenevaluated?

• Have you considered the impact of gift,estate, generation-skipping, and incometaxes, both federal and state?

This is just a brief overview of some ideas for aperiodic review of your estate plan. Eachperson's situation is unique. An estate planningattorney may be able to assist you with thisprocess.

An estate plan should bereviewed periodically,especially after a major lifeevent. Here are some ideasabout when to review yourestate plan and some thingsto review when you do.

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CFS, Inc.Michael Butler, CFA® InstitutePresident/Financial Advisor3190 Whitney AvenueBuilding 6, Suite 2Hamden, CT 06518203-248-1972cfs@cooperfinservices.comwww.cooperfinservices.com

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2019

IMPORTANT DISCLOSURES

Cooper Financial Services, Inc. doesnot provide investment, tax, or legaladvice. The information presentedhere is not specific to any individual'spersonal circumstances. Securitiesoffered through our affiliateBroker/Dealer, CFS Securities, Inc.,Member FINRA & SIPC.

To the extent that this materialconcerns tax matters, it is notintended or written to be used, andcannot be used, by a taxpayer for thepurpose of avoiding penalties thatmay be imposed by law. Eachtaxpayer should seek independentadvice from a tax professional basedon his or her individualcircumstances.

These materials are provided forgeneral information and educationalpurposes based upon publiclyavailable information from sourcesbelieved to be reliable—we cannotassure the accuracy or completenessof these materials. The information inthese materials may change at anytime and without notice.

Are my student loans eligible for public service loanforgiveness?If you are employed by agovernment or not-for-profitorganization, you may be ableto receive loan forgiveness

under the Public Service Loan Forgiveness(PSLF) Program. The PSLF, which began in2007, forgives the remaining balance on federalDirect Loans after you have made 120 monthlypayments under a qualifying repayment planwhile working full-time for a qualifyingemployer.

Qualifying employers for PSLF include:government organizations (e.g., federal, state,local), not-for-profit organizations that aretax-exempt under Section 501C(3) of theInternal Revenue Code, and other types ofnot-for-profit organizations that are nottax-exempt if their primary purpose is to providecertain types of qualifying public services.

If you plan on applying for PSLF in the future,you should complete and submit anEmployment Certification form annually orwhen you change employers. The U.S.Department of Education will use theinformation on the form to let you know if youare making qualifying PSLF payments.

You can apply for PSLF once you have made120 qualifying monthly payments towards yourloan (e.g., 10 years). Keep in mind that youmust be working for a qualifying employer bothat the time you submit the application and atthe time the remaining balance on your loan isforgiven.

Recently, PSLF made headlines due to the factthat many borrowers who thought they wereworking toward loan forgiveness under theprogram found out they were ineligible becausethey were in the wrong type of repayment plan.Many borrowers claimed they were told by theirloan servicer that they qualified for PSLF, whenin fact they did not. In 2018, Congress set aside$350 million to help fix this problem. TheConsolidated Appropriations Act provideslimited, additional conditions under whichborrowers may become eligible for loanforgiveness if some or all of the payments theymade on their federal Direct Loans were undera nonqualifying repayment plan for the PSLFProgram. For more information on PSLF, visitstudentaid.ed.gov.

Should I consider requesting a deferment orforbearance for my federal student loans?Did you take on a largeamount of debt to pay forcollege, and are you strugglingto pay it off? If so, you are not

alone. According to the Federal Reserve, 20%of individuals with outstanding student loanswere behind on their payments in 2017.1 Youmay want to consider requesting a deferment orforbearance if you are having difficulty keepingup with your federal student loan payments.

Provided certain eligibility requirements aremet, both a deferment and a forbearance allowyou to temporarily stop making payments ortemporarily reduce your monthly paymentamount for a specified time period. The keydifference between the two is that with adeferment, you may not have to pay back anyinterest that accrues on the loan during thedeferment period, depending on the type ofloan you have. During a forbearance, you areresponsible for paying any accrued interest onthe loan, regardless of the type of loan youhave.

In order to obtain a deferment or forbearance,you will need to submit a request to your loanservicer. Most deferments and forbearances

are granted for a specific time period (e.g., sixmonths), and you may need to reapplyperiodically to maintain your eligibility. Inaddition, there is usually a limit to the number oftimes they are granted over the course of yourloan. If you meet the eligibility requirements fora mandatory forbearance (e.g., National Guardduty), your lender is required to grant you aforbearance.

Whenever interest accrues on a loan during adeferment or forbearance, you can either paythe interest as it accrues, or it can be added tothe overall principal balance of the loan at theend of the deferment or forbearance period. It isimportant to remember that if you don't pay theinterest on your loans and allow it to accrue, thetotal amount you repay over the life of your loanwill be higher. As a result, you should weigh thepros and cons of requesting a deferment orforbearance and consider your repaymentoptions. For more information on your federalstudent loan repayment options, visitstudentaid.ed.gov.1 Federal Reserve, Report on the EconomicWell-Being of U.S. Households in 2017, May 2018

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