President Barack Obama joined Twitter Monday and he already has more followers than you, but is he a better investor and saver?
The Obamas' latest financial disclosures, released late last week, provide a peek into the first couple's personal finances last year. It's not an exact accounting—broad ranges are given for Obama's investment portfolio and real estate holdings. (His net worth is between $1.9 million and $6.9 million.) But financial advisors see plenty of room for improvement.
For one, the Obamas are paying a 5.625 rate on a 30-year mortgage with Northern Trust for their Chicago home, worth between $500,000 and $1 million.
"The first thing President Obama should do is refinance his mortgage into a 15-year fixed-rate mortgage with a 3 percent interest rate," said Tom Balcom, a certified financial planner and founder of 1650 Wealth Management near Fort Lauderdale, Florida.
Mortgage rates are still near record lows. Even a 30-year refinanced loan, which has an average rate of 3.92 percent according to Bankrate, could save the Obamas thousands of dollars a year in interest.
When it comes to college savings, their daughters Sasha and Malia have a huge head start. Obama has between $200,000 and $400,000 stashed away in four 529 college savings plans. That's at least nine times more than the average 529 plan balance of $20,474, which won't even cover the average tuition for an out-of-state student at a public four-year college.
These college savings plans allow balances to grow tax-free like an IRA. Investors can avoid taxes completely if they use the 529 money to pay for qualified higher education expenses, which include tuition, fees, books, room and board.
The Obamas also likely received state tax breaks for their 529 plan investments. They are invested in Illinois' Bright Directions 529 plan. Contributions to one of the state's 529 plans of up to $10,000 per year by an individual, and up to $20,000 per year by a married couple filing jointly, are deductible from Illinois taxable income.
Obama dumped the Pimco Total Return Fund—as many other investors have—in two of the 529 plans, after the firm's star manager Bill Gross left for Janus last fall. He replaced it with the MainStay Total Return Bond Fund.