CUSO Financial Services, L.P.at Advantage FinancialPreston IveyFinancial Advisor110 Cybernetics WayYorktown, VA 23693757-886-3344757 814 5751 (Cell)pivey@1stadvantage.orghttps://1stadvantage.cusonet.com/

June 2019Managing Your Money in a Gig Economy

Financial Advice for Recent CollegeGraduates

What's the real return on your investments?

Inflation Variation, Eroding Purchasing Power

Time for a Mid-Year Investment Check

See disclaimer on final page

Many investors may beinclined to review theirportfolios only when marketshit a rough patch, but carefulplanning is essential in alleconomic climates. Sowhether the markets are upor down, periodically

reviewing your portfolio with your financialprofessional can be an excellent way to keepyour investments on track, and midway throughthe year is a good time for a checkup. Here arethree questions to consider.

1. How have my investments performedso far this year?Review a summary of your portfolio's totalreturn (minus all fees) and compare theperformance of each asset class against arelevant benchmark. For example, for stocks,you might compare performance against theS&P 500 (for domestic large caps), the Russell2000 (for small caps), or the Global Dow (forglobal stocks). For mutual funds, you might usethe Lipper indexes to see how your fundsperformed against a relevant benchmark. (Keepin mind that the performance of an unmanagedindex is not indicative of the performance of anyspecific security; you can't invest directly in anunmanaged index.)

Consider any possible causes of over- orunderperformance in each asset class. If anyresult was concentrated in a single asset classor investment, was that performance consistentwith the asset's typical behavior over time? Orwas recent performance an anomaly that bearswatching or taking action?

In addition, make sure you know the total feesyou are paying (e.g., mutual fund expenseratios, transaction fees), preferably as a dollaramount and not just as a percentage of assets.

2. Do I need to make adjustments?Review your financial goals (e.g., retirement,college, home purchase) and the marketoutlook for the remainder of the year todetermine whether your investment asset mixfor each goal continues to meet your timeframe, risk tolerance, and overall needs. Ofcourse, no one knows exactly what the markets

will do in the future, but by looking at currentconditions and projections for interest rates,inflation, and economic growth, you mightidentify factors that could influence the marketsin the months ahead. With this broaderperspective, you can update your investmentstrategy as needed.

Remember, even if you've chosen anappropriate asset allocation strategy for variousgoals, market forces may have altered your mixwithout any action on your part. For example,maybe your asset allocation preference is 60%stocks and 40% bonds, but now due toinvestment returns your portfolio is 75% stocksand 25% bonds.

To return your asset mix back to its originalallocation, you may want to rebalance yourinvestments. This can be done by sellinginvestments in the overrepresented classes andtransferring the proceeds to theunderrepresented asset classes, or simply bydirecting new contributions into asset classesthat have been outpaced by others until thetarget allocation is reached. Keep in mind thatrebalancing may result in commission costs, aswell as taxes if you sell investments for a profit.

Asset allocation does not guarantee a profit orprotect against loss; it is a method used to helpmanage investment risk.

3. Am I maximizing my tax savings?Taxes can take a bite out of your overallinvestment return. You can't control themarkets, but you can control the accounts youuse to save and invest, as well as the assetsyou hold in those accounts and the timing ofwhen you sell investments. Dividing assetsstrategically among taxable, tax-deferred, andtax-exempt accounts may help reduce theeffect of taxes on your overall portfolio.

In sum, by taking the time to periodically reviewyour portfolio in good economic times as wellas bad, you can feel confident knowing thatyour investing strategy is attuned to currentmarket conditions and your overall needs.

All investing involves risk, including the possibleloss of principal, and there can be no guaranteethat any investing strategy will be successful.

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Managing Your Money in a Gig EconomyAccording to the Bureau of Labor Statistics,16.5 million people rely on contingent oralternative work arrangements for theirincome.1 Often referred to as the "gigeconomy," these nontraditional or contingentwork arrangements include independentcontractors, on-call and temp agency workers,and those who sign up for on-demand laborthrough smartphone apps.

If you are a contingent worker, you need to payclose attention to your finances in order tomake up for any gaps in earnings that mayoccur between jobs. In addition, you'll have toplan ahead for health-care costs, taxes, andsaving for retirement, since you will have toshoulder these expenses on your own. Thefollowing are some tips for managing yourmoney in a gig economy.

Prepare for slower periods betweenjobsWhile establishing a cash reserve is an integralpart of any financial strategy, it is especiallyimportant for contingent workers. You'll want toset aside enough money to cover unexpectedexpenses and large bills that may come dueduring slower months between jobs. A goodstrategy is to make it a habit to deposit aportion of your income in your cash reserve.

Make sure you maintain good creditEven a robust cash reserve might not be ableto weather a significant downturn incontingency work. That's why it's important forcontingent workers to have access to credit tohelp them get through leaner times. Make surethat you maintain a good history by avoidinglate payments on existing loans and paying offyour credit card balances whenever possible.

Come up with a budget...and stick to itBecause your income flow fluctuates, you'llneed to come up with a budget a bit differentlythan someone with a regular income. Your firststep should be to determine your monthlyexpenses. If it helps, you can break them downinto two types of expenses: fixed anddiscretionary. Fixed expenses are expensesthat will not change from month to month, suchas housing, transportation, and student loanpayments. Discretionary expenses areexpenses that are more of a "want" than a"need," such as dining out or going on avacation. Once you come up with a number,you should determine how much income youneed to keep up with all of your expenses.

For a contingent worker, it's especiallyimportant to stick to your budget and keep yourdiscretionary expenses under control. If you are

having trouble keeping on track with yourbudget, consider ways to cut back on spendingor find additional sources of income to make upfor any shortfalls.

Consider your health insurance optionsUnfortunately, as a contingent worker you don'thave access to an employer-sponsored healthplan. However, you do have health insuranceoptions. If you are a recent college graduateand still on your parents' health insurance plan,you usually can stay on until you turn 26. If youare no longer on your parents' plan, you may beeligible for a government-sponsored healthplan, or you can purchase your own planthrough the federal or state-based HealthInsurance Marketplace. For more information,visit healthcare.gov.

Plan ahead for taxesIn a traditional work arrangement, employerstypically withhold taxes from employees'paychecks. As a self-employed worker, you'llhave to plan ahead for federal and possiblystate taxes so you don't end up with a large billduring tax time. The IRS requires self-employedindividuals to make quarterly estimated incometax payments, so make sure you set enoughmoney aside each time you get paid to gotoward your tax payments. Becausecontingency income fluctuates from month tomonth, the IRS allows you to make unequalquarterly payments. In addition, you'll beresponsible for paying a self-employment tax,so you need to account for that as well. Formore information, visit the IRS website atirs.gov.

Don't forget about retirementWhile being self-employed has benefits, it alsocomes with tough challenges. In particular, alack of structured benefits, such as anemployer-sponsored retirement plan, can leadcontingency workers to end up sacrificing theirretirement savings. And even though anyonewith earned income can set up an IRA, thecontribution limits are relatively low — $6,000 in2019 ($7,000 if age 50 or older).

Fortunately, there are some options that mayallow you to make larger retirementcontributions. Consider contributing to a solo orindividual 401(k) plan (up to $56,000 in 2019,not counting catch-up contributions for thoseage 50 and over) or a SEP IRA (25% of yournet earnings, up to $56,000 in 2019).1 U.S. Bureau of Labor Statistics, Contingent andAlternative Arrangements Summary, June 2018

As a contingent worker, youmay be eligible for a numberof tax deductions (e.g.,start-up expenses, mileage),so be sure to keep goodrecords. If you have multiplegig jobs, consider using alog to keep track of yourincome and work expenses.

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Financial Advice for Recent College GraduatesYou've put in the hard work as a collegestudent and finally received your diploma. Nowyou're ready to head out on your own. Andthough you may not have given much thoughtto your financial future when you were incollege, you have new financial challenges andgoals to consider. Fortunately, there are somesimple steps you can take to start on the righttrack with your personal finances.

Set financial goalsSetting goals is an important part of life,especially when it comes to your finances. Andthough your financial goals will likely changeover time, you can always make adjustments inthe future. Start out by asking yourself somebasic questions about your financial goals, suchas whether they are short term (e.g., savingmoney to buy a car or rent an apartment) orlong term (e.g., paying off student loans orbuying your own home). Next, ask yourself howimportant it is to accomplish each goal anddetermine how much you would need to savefor each goal.

Understand the importance of having abudgetA budget is an important part of managing yourfinances. Knowing exactly how you arespending your money each month can set youon a path to pursue your financial goals. Startby listing your current monthly income. Next,add up all of your expenses. It may help todivide expenses into two categories: fixed (e.g.,housing, food, transportation, student loanpayments) and discretionary (e.g.,entertainment, vacations). Ideally, you shouldbe spending less than you earn. If not, youneed to review your expenses and look forways to cut down on your spending.

Remember that the most important part ofbudgeting is sticking to it, so you shouldmonitor your budget regularly and makechanges as needed. To help stay on track, tryto make budgeting a part of your daily routineand be sure to give yourself an occasionalreward (e.g., dinner at a restaurant instead ofcooking at home).

Establish an emergency fundAn emergency fund is money set aside toprotect yourself in the event of an unexpectedfinancial crisis, such as a job loss or medicalbills. Typically, you will want to have at leastthree to six months' worth of living expenses inyour cash reserve. Of course, the amount youshould save depends on your individualcircumstances (e.g., job stability, health status).

A good way to establish an emergency fund isto earmark a portion of your paycheck each payperiod to help achieve your goal.

Manage your debt situation properlyWhether it's debt from student loans or creditcards, you'll want to avoid the pitfalls thatsometimes accompany borrowing. To manageyour debt situation properly, keep track of yourloan balances and interest rates and develop aplan to manage your payments and avoid latefees. If you need help paying off your studentloans, consider the following tips:

• Find out if your employer offers some type ofstudent debt assistance

• Contact your lender about your repaymentoptions

• Consider whether loan consolidation orrefinancing is available

Maintain good creditHaving good credit will impact so many differentaspects of your financial situation, fromobtaining a loan to gaining employment. Youcan establish and maintain a good credit historyby avoiding late payments on existing loansand paying down any debt you may have. Inaddition, you should monitor your credit reporton a regular basis for possible errors or signs offraud/identity theft.

Determine your insurance needsInsurance might not be the first thing thatcomes to mind when you think about yourfinances. However, having the right amount ofinsurance is an important part of any financialstrategy. Your specific insurance needs willdepend on your circumstances. For example, ifyou rent an apartment, you'll need rentersinsurance to protect yourself against loss ordamage to your personal property. If you own acar, you should have appropriate coverage forthat as well. You may also want to evaluateyour need for other types of insurance, such asdisability and life.

As for health insurance, you have a couple ofoptions. You can usually stay on your parents'insurance until you turn 26. In addition, youmay have access to health insurance throughyour employer or a government-sponsoredhealth plan, or you can purchase your own planthrough the federal or state-based HealthInsurance Marketplace. For more information,visit healthcare.gov.

Page 3 of 4, see disclaimer on final page

CUSO Financial Services,L.P.at Advantage FinancialPreston IveyFinancial Advisor110 Cybernetics WayYorktown, VA 23693757-886-3344757 814 5751 (Cell)pivey@1stadvantage.orghttps://1stadvantage.cusonet.com/

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2019

Non-deposit investment productsand services are offered throughCUSO Financial Services, L.P.("CFS"), a registered broker-dealerMember FINRA/SIPC and SECRegistered Investment Advisor.Products offered through CFS: arenot NCUA/NCUSIF or otherwisefederally insured, are notguarantees or obligations of thecredit union, and may involveinvestment risk includingpossible loss of principal.Investment Representatives areregistered through CFS. The CreditUnion has contracted with CFS tomake non-deposit investmentproducts and services available tocredit union members.

Inflation Variation, Eroding Purchasing PowerInflation averaged 2.5% for the 30-year period from 1989 to 2018. Although the recent trend isbelow the long-term average, even moderate inflation can reduce purchasing power and cut intothe real return on your investments.

Annual rate of inflation, based on change in the Consumer Price Index

Source: U.S. Bureau of Labor Statistics, 2019 (December year-over-year change in CPI-U)

What's the real return on your investments?As an investor, you probablypay attention to nominalreturn, which is the percentageincrease or decrease in thevalue of an investment over a

given period of time, usually expressed as anannual return. However, to estimate actualincome or growth potential in order to targetfinancial goals — for example, a certain level ofretirement income — it's important to considerthe effects of taxes and inflation. The remainingincrease or decrease is your real return.

Let's say you want to purchase a bank-issuedcertificate of deposit (CD) because you like thelower risk and fixed interest rate that a CD canoffer. Rates on CDs have risen, and you mightfind a two- or three-year CD that offers as muchas 3% interest. That could be appealing, but ifyou're taxed at the 22% federal income tax rate,roughly 0.66% will be gobbled up by federalincome tax on the interest.

That still leaves an interest rate of 2.34%, butyou should consider the purchasing power ofthe interest. Annual inflation was about 2% from2016 to 2018, and the 30-year average was2.5%.1 After factoring in the effect of inflation,the real return on your CD investment could

approach zero and may turn negative if inflationrises. If so, you might lose purchasing powernot only on the interest but also on theprincipal.

This hypothetical example doesn't represent theperformance of any specific investment, but itillustrates the importance of understandingwhat you're actually earning after taxes andinflation. In some cases, the lower risk offeredby an investment may be appealing enoughthat you're willing to accept a low real return.However, pursuing long-term goals such asretirement generally requires having someinvestments with the potential for higherreturns, even if they carry a higher degree ofrisk.

The FDIC insures CDs and bank savingsaccounts, which generally provide a fixed rateof return, up to $250,000 per depositor, perinsured institution. All investments are subjectto risk, including the possible loss of principal.When sold, investments may be worth more orless than their original cost.1 U.S. Bureau of Labor Statistics, 2019 (Decemberyear-over-year change in CPI-U)

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