Tag: long island

Build Your Bucket List

Covid-19 has delayed many dream vacations, family reunions, and road trips this year. But as we all navigate the space between things we can do, things we can’t do, and things we still want to do in the future, there’s an opportunity to reflect on the bucket list goals that are truly important to us.

Get your family together and ask yourselves these three questions. Your answers will help you build a better bucket list full of things you’ll enjoy doing today and look forward to doing safely someday soon.

  1. How disappointed are we?

Before Covid-19, you probably felt free to fill up your bucket list with anything you could responsibly budget for. But it’s possible that not all of those items were of equal importance to you. A trip to Paris that you and your spouse had been planning for years is probably dear to your heart. A spur-of-the-moment booking for a zipline trip, maybe not so much.

If you’re sifting through a bunch of returns, refunds, and cancellations right now, think about how you really feel about those disrupted plans. Are you disappointed? Indifferent? Relieved to be getting that money back? Is this a trip that should stay on the family bucket list? Or would you rather use those funds to add something even more special to a trip everyone really wants to take? Sure, ziplining could be fun. But an extra night at a five-star resort might be unforgettable.

  1. Why did we want to do this?

If you’re trying to sell your children on a substitute for Disney World … well, good luck. Keep that trip on the bucket list for next year.

But the motivations behind some of your other bucket list items might not be as clear-cut as riding roller coasters or visiting a favorite beach. Was this bucket list item a true dream destination, or was it just a pit stop on your way to somewhere else? Were you just looking for a reason to cash in some saved vacation days? Is this really an activity your children will enjoy? Are you forcing a trip – any trip – just because you want your whole family to do something together?

  1. What can we do instead?

Some of your answers might lead you to alternative fun closer to home. If the real purpose of a trip was golf, the money you’re saving on travel could buy you quite a few rounds at a nice course within driving distance. Buy a couple lessons while you’re at it and you might enjoy that dream round even more when you finally tee up.

You might not feel comfortable packing up the camper and heading to the Grand Canyon right now. But the U.S. National Parks system is more extensive than many people realize. There’s probably a scenic spot closer to home that you’ve never explored before.

Many families are also adapting to Covid-19 by focusing on new, short-term bucket list items. If you’re not going to travel this summer, you could take online classes and learn an instrument. Rescheduling your trip to Puerto Vallarta? Take family Spanish lessons so you’ll have an easier time getting around when you do go. Get serious about your exercise goals and develop a running or cycling regiment you can stick to. Set a family reading challenge. Could you learn to cook a new French meal every week? Basketball camp might be cancelled, but the hoop above your garage is still there. How high can your daughter increase her free throw percentage before the end of summer?

There are no perfect substitutes for all your bucket list items during Covid-19. But with a little flexibility and some creativity, your family can still have a fun and fulfilling summer.

And if you need one more activity to round out your week, schedule a family brainstorming session for trips that are staying on the bucket list. Let everyone share their ideas on how to make the trip you couldn’t take this year into an even better trip next year. Planning ahead will give everyone something to look forward to.

Is there anything we can do to help you make progress on your bucket list? Don’t hesitate to contact us up if you want revisit your $Lifeline or start budgeting for all the summers still ahead of you and your family.

 

 

How To Avoid Knee Jerk Reactions to Financial Events

As part of our Life-Centered Planning process, we’ve talked about how market volatility is a normal part of investing. We’ve also discussed how we’ve structured your investments to “weather the storm” and maintain a comfortable level of income for you and your family during turbulent times so you can avoid knee jerk reactions.

But we also understand that even folks who are armed with this knowledge can get nervous during a market dip. What’s important is that you know how to prevent that initial wave of negativity from leading you to rash decisions that could damage your nest egg much worse than a market correction.

Dr. Martin Seay is a specialist in positive psychology, which focuses on strategies that people can use to improve their sense of well-being. Dr. Seay’s ABCDE method can help you work through your reactions to distressing financial news and arrive at a positive outcome.

Let’s walk through an example of how to use this method to avoid making a bad, emotion-based financial decision.

A. Activating Event


Sometimes stress and anxiety can feel all-encompassing. Dr. Seay believes it’s important that we pinpoint the event that triggered our negative feelings.

So, while you might feel general anxiety about your finances, drill down a little deeper. Is your job secure? OK. Are you saving and investing according to your financial plan? Good.

Did you just read on social media that today’s market correction was “THE BIGGEST ONE-DAY DROP IN HISTORY!”

Ahh, there it is. Let’s move on to the next step.

B. Belief

Market volatility can rouse some of our worst instincts about investing. We might fall back on long-buried Beliefs like, “This game is rigged!” We might feel like we’ve entrusted our financial future to powers beyond our control.

As you work through this step, it’s important to ask yourself where your Beliefs come from. Have you been unsettled by widespread media coverage of major financial problems, like the 2008-2009 housing crisis? Have you had negative interactions with the finance industry in the past? Perhaps one of your parents distrusted the markets or made a poor investment that had a negative impact on your family.

Figuring out why you believe what you believe about the markets can help alert you before you fall back into bad financial habits.

C. Consequences

Panicked investors who can’t shake negative Beliefs about the markets often make poor decisions during downturns. They think they need to “get out fast” to avoid more negative Consequences, like further losses.

Ironically, cashing out your investments during a market correction usually leads to far more serious Consequences in the long run.

So how can you stay focused on the big picture?

D. Disputation

Start by using what you know to push back a little against what you Believe.

For example, we’ve discussed in our meetings that the historical, long-term trajectory of the financial markets has been to rise over time. And now, market averages such as the Dow Jones Industrial Average are near all-time highs. Therefore, when the market does have a temporary drop, we might say, “The Dow was down x hundreds of points today.” It sounds like a big number, but as a percentage, it may just be normal volatility.

We’ve also discussed that “market timing” strategies usually just don’t work. That’s why your portfolio is diversified, balanced, and strategically rebalanced as necessary. Decades of market history have shown that sticking to this type of investment strategy may be more effective – and stable – than trying to jump in and out of the market based on what’s happening in the news right now.

Today’s losses are really just a kind of “tax” that you’re paying on the wealth we’re helping you build for tomorrow.

E. Energized

It’s amazing how just reminding ourselves of what we know to be true can make us feel better about a negative situation. Hopefully at the end of this process, you feel a renewed sense of positivity about this present moment and your financial future.

But we understand that market volatility can be complicated. And as you’re nearing retirement, a downturn can be downright nerve-wracking.

So if you need help walking through your ABCDEs the next time the market corrects, make an appointment to meet with us. We’ll run through the important facts you need to know and decide what moves, if any, we need to make to keep you on track with your financial plan and avoid those costly knee jerk reactions.

We also have some really great resources available on our YouTube Page so head on over and check it out.

How Does Your Retirement Savings Compare?

“How am I doing?”

-Every Investor…..ever

Ever wonder how your retirement savings stack up against other people your age? That’s a big question that most people have when it comes to their money. One way we tend to look for answers is by comparing what we have to what our neighbors, friends, and family, have. Even though we know deep down that “the grass is always greener on the other side,” it can be hard to look away when our phones, computers, and TVs are practically forcing us to make these comparisons.

We understand the worry that you might not be keeping pace with your peers. But if you’re wondering about where your retirement savings “should be,” it’s important that you look at these numbers with the proper context.

The numbers.

According to Nerdwallet, here’s how average retirement savings break down by age:

Under 35

Average household retirement savings: $32,500

Median household retirement savings: $12,300

Ages 35 to 44

Average household retirement savings: $100,100

Median household retirement savings: $37,000

Ages 45 to 54

Average household retirement savings: $215,800

Median household retirement savings: $82,600

Ages 55 to 64

Average household retirement savings: $374,000

Median household retirement savings: $120,000

Ages 65 to 74

Average household retirement savings: $358,400

Median household retirement savings: $126,000

As you might have guessed, retirement savings tend to ramp up as we age. In part, this is because the older we get, the more real retirement becomes, and more prepared we want to be.

But as fiscally responsible people age, their debt level tends to drop as well. No more kids to support. No more student loan payments. Vehicles and houses get paid off. Credit cards get used less (unless you’re focused on accumulating points) and paid down. There’s only so much you can keep in a low-interest savings account before you want to put more of your money to work.

The numbers behind the numbers

If these figures seem a bit low to you, you’re not wrong. Most financial experts believe that, generally, Americans are not saving nearly enough for retirement.

Yes, having a couple hundred thousand in savings and investment accounts may sound like a lot of money. But people are also living longer and more active lives than ever before. That means your retirement assets are going to have to last longer than your parents’ and grandparents’ did.

And as pensions continue to dry up, the responsibility for preparing for retirement has shifted more and more to individuals. That’s going to be a challenge for anyone who’s significantly below these savings levels. And it’s going to be a BIG problem for the 43% of households headed by someone 35-44 who don’t have any retirement savings at all.

Is an “average” retirement good enough?

Let’s say you’re the average 65-year-old with just over $300,000 in the bank. How long is that $300,000 going to last? Is that nest egg going to provide the retirement you’ve been dreaming about and working for most of your life?

There’s no one-size-fits-all answer to those questions. We all have different passions, goals, healthcare needs, and lifestyle expectations. Some retirees might live quite happily at or even a little below the average level.

But what happens if your spouse has an accident and needs to see a specialist? What if your roof needs a major repair? Will an emergency stretch your “average” retirement too thin?

What happens if, five years into a twenty-year retirement, you start to feel bored and restless? What if you decide you need to see more of the world? What if you can’t let go of that passion project you’ve always wanted to develop into your own business? Will your nest egg provide for changes that will make your retirement more fulfilling?

How your money measures up.

Successful retirement planning balances the things that we can anticipate with the things we can’t. That’s why, as we work together, we’ll never hold up a graph comparing where your money is to where your peers are. We’re not interested in outside standards of “measuring up.” We’re interested in how your money measures up to what YOU want out of life, and what you’ll need to stay comfortable on rainy days.

Contact us to review your saving plan and spending levels. We can help you adjust as necessary to make sure that both are on track to hit the standard that matters most: yours.F

Source

https://www.nerdwallet.com/article/the-average-retirement-savings-by-age-and-why-you-need-more

Why We Love Money (And You Should, Too!)

WHY WE LOVE MONEY (AND YOU SHOULD, TOO!)

Mike Desepoli, Heritage

“Money can’t buy happiness but somehow it is better to cry in a BMW than on a bicycle.”
We often end up listening to the endless arguments upon whether to be materialistic or not. While spiritually we should not really become materialistic because world’s greatest joys are not hidden in materialistic items at the same time living in a practical world around people, you cannot help but be materialistic after all without money you cannot go anywhere (think about your cab driver).

Here is our take on whether to love money or not and to what extent?

MONEY BUYS YOU THINGS

Off course world’s greatest joys are hidden in the things that money cannot buy but think of the dress that you always wanted to buy, think of the vacation that is too expensive but you really wish to experience it, think of the joy which is beheld in a double crest cheesy pizza. These things are not possible without money; do you still believe that money cannot buy joy?

MONEY MOTIVATES

Won’t you be joyous to see your bank balance hitting the sky? Well, isn’t the whole point of finding a job, earning well, having a well-settled life somehow revolves around earning money too. It is true that job satisfaction is primary to be thought upon but don’t you think that often money motivates you to do more or to do better? Come on who would refuse to put some extra efforts for monetary benefits offered?

MONEY BRINGS PRESTIGE

Whether you agree or disagree, the society has agreed upon that fact that money brings in prestige. While respect has to be earned and there are no two ways about it but your lifestyle adds on to this respect as well. A king sized lifestyle gets a king sized treatment and what is a king without treasure? Are you getting our point?

THE DESIRES

We are humans and that is why our desires are unreasonably endless. However, have you ever noticed that each desire of yours stops at money? Whether you wish to learn a newer skill or pack your bags for travelling. Everything begins and ends with the amount that your bank balance reads. The unfulfilled desires bring anxiety and with no money in your hand, you are going to pile up in anxiety only.

UNDENIABLE FACTOR

No matter how much you hate minting money so matter how much denial do you possess for money the reality is that money forms an integral and undeniable element of life. Your stand in the society, your extracurricular activities, your lifestyle, your efficiency of work and so on is determined by money.

We agree that greed can dig your grave but, a complete denial of money is yet another form of digging your graves too. While it is vital to be contented with what you have, there is no harm in desiring for a little extra either.

GOT A PIECE OF ADVICE ON MONEY? WE WOULD LOVE TO GET YOUR FEEDBACKS IN COMMENTS

Do you love money too? Check out #AskTheAdvisor 41: 3 Things Successful Investors NEVER Do!

Backdoor IRA’s for High Income Earners

Backdoor IRA’s – The Dirty Little Secret

By this point in the year, most of us have filed our taxes and the 2016 tax year is behind us. Not many people have taxes on the mind and they will probably put off re-visiting the topic until next year, however; there is no time like the present to plan for how you can save on your future tax payments. If you are looking to pad your retirement savings, a backdoor IRA may be just the remedy for you.

What you need to know

Roth IRAs are a very popular and attractive investment vehicle for many reasons, and they are a great vehicle to facilitate a backdoor IRA.  The accounts are funded with after-tax dollars, withdrawals in retirement are tax-free, and any earnings in the account are tax-deferred.  Unlike the Traditional IRA, Roth IRAs are not subject to required minimum distributions during retirement, which makes them very appealing when it comes to tax planning.

Unlike with a Traditional IRA, there are income limits to opening a Roth IRA which has left many people earning high salaries believing it is not an option for them.  The law states that a single person with an annual adjusted gross income of $133,000 or more, and a married couple making more than $196,000 cannot directly fund a Roth IRA.  Despite this limitation, there have been no income limits placed on converting funds to a Roth IRA.  This allows for strategic planning to have more tax-free money available in retirement.  For high income earners, this is a fantastic planning tool.

How to do it

This work-around is called a “backdoor” approach.  Most high-income earners are most likely contributing the maximum allowances to their 401k plans. This means additional contributions can be made to a non-deductible Traditional IRA.  The backdoor approach would then have these investors turn around and move/convert those dollars to a Roth IRA.  Because the funds are coming from another retirement account, they are not considered to be a contribution.  The advantage to converting these funds is the tax-free growth that is provided in a Roth IRA. Deploying backdoor IRA’s is a little used strategy because it is widely unknown. Make sure to consult your finance and tax professionals before deploying this strategy.

For more information on this and other strategies for high earners, visit us here.

5 Cost Saving Tips for Business Owners

5 Cost Saving Tips for Business Owners

Every small business owner is concerned about retaining profit, and how to make their bottom line grow. One of the ways that small business owners are able to run their business in a profitable manner is by strategically apply cost-saving practices.

Here are five cost-saving tips for small business owners:
Seek Used Equipment

One of the big ways that businesses can save money is by purchasing used or refurbished.  When looking to replace electronics, such as a printer or copier, it is always smart to research refurbished options.  In most cases, these items have been repaired or had parts replaced, and typically come with some type of warranty.  When in the market for office furniture, there can be a huge price savings between new and used.

Teleconference

Meetings can be costly, and really add up quicker than you realize- especially when they aren’t local.  Rather than spend the extra money on travel and hotel-stay, opt for a teleconference.  Many different providers offer teleconferencing services- both for conference calls, as well as video.  This can be a great option to help save both money and time.

Reduce Paper Use

Not only is cutting down on paper use good for your company’s bottom line, but also for the environment.  A few ways to implement this includes: printing/copying double sided, reusing wasted paper for notes, and customizing margins to get the most printed on one page.

Pay Invoices Early

Many different vendors offer discounts to incentivize businesses to pay invoices early.  The most common offer would be a 2% discount off of the total when businesses pay in full within the first 10 days of the 30-day window.  This can provide a huge cost-savings to businesses.

Utilize Social Media for Advertising

In comparison to traditional advertising, such as television commercials and billboards- social media advertising can be just as effective and much more affordable.  The cost to run an ad can be significantly less expensive, and producing the ads is also relatively cheap.  It is also very popular to utilize social media for advertising without actually paying for promoted advertising space.  With time and effort, you can build a following organically to reach many current and prospective clients without actually spending any advertising dollars.

About the Author

Kristi Desepoli is an associate financial advisor at Heritage Financial Advisory Group. Heritage specializes in investment management and financial life planning for business owners, executives, and doctors.

 

 

6 Steps to Get Out of Debt

6 Steps to Get Out of Debt

Unfortunately there are no classes in high school or college that teach you how to pay off a loan or credit card, but there are plenty of companies out there willing to lend you the money you need for your next big purchase. Knowing that a portion of your hard earned money will be going towards digging yourself out of a hole instead of wealth preservation can be discouraging; but that doesn’t mean you can’t cover up that hole and walk away debt free.

Getting out of debt requires a plan and commitment. Here are six simple strategies to help you pay off any kind of debt:

Figure out how much you owe

Gather your statements, and log onto those accounts to see how much you owe for each account. Make a list of your accounts, the balances, and the interest rates being charged.

Rank your debts in order of size or interest rate

Next, you need to decide the order you want to pay off your debts. One strategy is the “snowball method.” This is where you start with your smallest debt, and work your way up to the bigger ones. The idea is that as you are able to check accounts off of your list as being paid off, you gain both a confidence and mental boost to keep on going. Another strategy would be to tackle the most expensive debt first. Find the account with the highest interest rate, and pay down that debt. Once that is paid, move onto the next highest interest rate, and so on. Doing this will ultimately have you paying less over the life of your loans.

Know how much you’re spending

It is important to know how much money you have coming in vs. how much money you have going out. After you have a good idea of the amount left over every month, it will be much easier to determine the amount you can comfortably devote to paying down your debt.

Allot cash for minimum payments

Although earlier we established what debt we would like to pay down first, we can’t forget that the rest of the accounts have the minimum payments that need to be made each month. It is important to take these minimum payments into account before allocating extra funds to the first debt on your list to pay off.

Automate your payments

Regardless of if you’re making a minimum payment or throwing extra money toward the debt to get it paid off, it’s always a good idea to make your payments automatic. It’s as simple as a few clicks online or a quick phone call to set up. Not only will you be sure not to miss a payment, but it’s a little bit easier to part ways with your money when you don’t have to manually make the payment every month.

Reduce your regular expenses

Many times we don’t know just how much we’re spending on certain things until it’s all laid out in a budget. Setting a limit to the amount of money you allocate to different categories on a monthly basis is a good way to free up extra cash to put towards your debt. It’s always a good idea to check back each month and see how you can improve your spending habits, and make any changes to better suit your needs. If you would like additional help on budgeting, you can find resources here.

About the Author

Kristi Desepoli is an associate financial advisor at Heritage Financial Advisory Group. Heritage specializes in investment management and financial planning for business owners, executives, and doctors.

Trump Tax Reform Plan

Trump Tax Reform Plan Released

 

Just days before the 100-day mark of the Trump administration, we were presented the outline of what is being called “the biggest tax cut” in US history. Trump’s tax reform calls for big cuts in federal taxes for businesses and a simplified basis for individuals.

But what exactly does this big news mean for investors?
  • Even a minor decrease in tax rates on businesses can have a big benefit on their bottom line. Rather than use the extra money for expansion or other projects, it is likely that companies would use those dollars to increase stock buy-back or raise their dividend. The end result: more wealth for shareholders.
  • With more favorable tax rates on corporations, foreign companies will be more inclined to increase business within the Unites States. More companies will begin production domestically rather than seeking international options, which in turn will drive U.S. economy upwards.
  • Personal tax rates are projected to become a whole lot more simplified changing the existing seven brackets down to three; 10%, 25% and 35%. Income ranges for these amounts have yet to be announced, however; the proposed rates would ease the tax burden on most Americans, freeing up dollars to be invested.
  • In addition to lower personal tax rates, Trump wants to double the standard deduction for individuals. This would look like a deduction of $24,000 for a married couple. Essentially this means that the first $24,000 earned is not taxed. This creates yet another tax savings for individuals, and more dollars in the pockets of tax-payers.
  • The proposed plan lowers the capital gains tax from 23.8% to 20%; eliminating the portion that is used to fund the Affordable Care Act. This reduction makes investing in the stock market much more attractive.

While companies begin to save money on taxes and drive their market share, it is going to force investors on the sidelines to take part in the market gains. Extra money in the consumers pocket due to having a smaller tax burden will also contribute to a market up rise; while having a smaller burden on the backend when it comes to capital gains.

About the Author

Kristi Desepoli is an associate financial advisor at Heritage Financial Advisory Group. Heritage specializes in investment management and financial planning for business owners and executives.

7 Reasons a Roth IRA May Be for You

7 Reasons a Roth IRA May Be a Good Idea for You

By Mike Desepoli, VP of Heritage

 

It’s almost the tax filing deadline. During April, many people take advantage of the opportunity to reduce taxes by funding a Traditional IRA. While that makes sense for some Americans, others may benefit by contributing to a Roth IRA that offers no immediate tax break, but has other tax advantages, such as tax-free growth potential and tax-free income during retirement. Some people may realize the greatest benefit by having both types of IRAs.

Unfortunately, IRS contribution rules limit investors, who are younger than age 50, to making contributions of just $5,500 to all IRA accounts during 2015 and 2016. If you’re age 50 or older, you can save $6,500. Before making a 2015 contribution, consider the advantages of Roth IRAs, including:

Tax-free growth potential.

You won’t get a tax break today, but any earnings in a Roth IRA growth tax-free.

Tax-free income.

Distributions taken from a Roth IRA are tax-free, too, as long as certain requirements are met*. That means the income from your Roth IRA is protected from future tax increases.

No required minimum distributions.

You can leave the money in your Roth IRA until your heirs inherit it. You can’t do that with a Traditional IRA. At age 70½, you must take required minimum distributions (RMDs) from Traditional IRAs. Generally, RMDs are taxable and, if an RMD is not taken when it should be, a hefty penalty is assessed.

Penalty-free early distributions.

You don’t have to be age 59½ to take a penalty-free distribution from a Roth IRA as long as the distributions are used for higher education costs, qualified home purchases, unreimbursed medical expenses, or specific other expenditures.

Improved tax diversification.

When a portfolio is ‘tax-diversified,’ it includes taxable, tax-deferred, and tax-free accounts. Different types of accounts offer different kinds of benefits. For example:

  • Taxable accounts offer immediate access to funds. Money that is saved or invested in taxable accounts – like brokerage or banks accounts – have already been taxed and can be spent at any time.
  • Tax-deferred accounts offer tax breaks today. For instance, contributions to 401(k) and 403(b) plan accounts are made with before-tax money so the contributions are not included in taxable income today. The downside is IRS penalties may be assessed if the money in these plans is distributed before retirement. (Another potential benefit of tax-deferred accounts is employer-matching contributions, which can help you accumulate retirement assets more quickly.)
  • Tax-free accounts offer a tax break in the future. For example, contributions to a Roth IRA are made with after-tax dollars but any earnings grow tax-free and distributions may be tax-free. Having tax-free income during retirement may help you stay in a lower tax bracket.
Open an account at any age.

Anyone, of any age, who has earned income, can open a Roth IRA. So, you can fund a Roth IRA for yourself any time. You can also fund one for a child or grandchild who works, and give him or her a head start on saving for retirement.

Contribute as long as you work.

While contributions to Traditional IRAs must stop at age 70½ (when RMDs begin), that is not the case with Roth IRAs. As a result, Roth IRAs provide legacy and estate planning advantages Traditional IRAs do not.

 

If you’re planning to open or fund an IRA before April 15 for yourself or someone you love, and you’re not certain whether a Traditional or Roth IRA is the right choice, talk with your financial professional. He or she can review your portfolio and help determine which may best suit your needs.

To find out if a Roth IRA is right for you, talk with a financial advisor today.

8 Tax Credits to Get More from Uncle Sam

8 Federal Tax Credits to Get More from Uncle Sam

By Jackie Waters, Guest Contributor from Hyper-Tidy.com

 

Every year, federal tax credits can change. Some get added, others are taken away, and changes may occur within the ones that have been around for ages. Tax credits are one way to maximize how much of your money you get to keep. In some cases, they feel a bit like a tax-free “bonus” to offset costs. However, most taxpayers only know about a few federal tax credits—and the majority of taxpayers don’t have a clear understanding of what those credits entail.

Tax credits and tax deductions are wildly different, but often confused. Deductions reduce your taxable income. The goal is to reduce your income as much as possible so you ideally fall within a lower tax bracket (and thus pay less in taxes). However, credits reduce taxes directly and aren’t tied to tax rates. Still, the actual value of each credit might be informed by your basic tax liability. There are also nonrefundable credits which can reduce your taxes to zero, but anything leftover is lost (in other words, you won’t be getting a check for the difference).

Most tax credits are aimed at families and parents, and include:

  1. Child Tax Credit. For the 2016 tax year, you can claim up to $1,000 per child. This credit is designed to offset the costs related to caring for children.
  2. Child and Dependent Care Tax Credit. This credit is available on a case by case basis. If you paid someone to take care of your child or dependent who is under 13 years old, you likely qualify. However, this credit works more like a deduction (which is how they can get so confusing!).
  3. Adoption Tax Credit. Adopting a child can be expensive. Taxpayers can claim up to $13,460 for the 2016 tax year for each child. Adopted children must be under 18 years old, or over 18 if they have special needs.
  4. Credit for the Elderly and Disabled. If you’re over 65 years old, or if you’ve already retired and have a permanent disability with taxed disability income, you may be eligible for this credit. However, there are income limitations.
Home, Sweet Home (and other Credits)

The second most popular credit category is for homeowners. Buying a home is probably the most expensive purchase you’ll ever make, and Uncle Sam can help ease the burden. There are also special credits for employees, medical expenses and more:

  1. Home Energy Tax Credits. If you installed a green, renewable-energy item in your home, you can get a credit of up to 30 percent of total expenses. However, not all items qualify. Popular items include solar panels and geothermal heat pumps. Talk with your CPA about qualifying purchases.
  2. Earned Income Tax Credit. One of the most well-known credits, this one is for those who had low or moderate incomes in 2016. Also known as the EITC, it helps reduce taxes, and may even qualify you for a refund.
  3. Foreign Tax Credit. If you worked outside the United States, the FTC is designed to protect against double taxation. You don’t pay federal or state taxes for the money earned while you worked abroad, but you do still pay Medicare and Social Security taxes.
  4. Premium Tax Credit. If you have low or moderate income and bought health insurance via the Health Insurance Marketplace, you may qualify to have a credit paid to your insurance company to minimize monthly premium payments. Another option is to claim the full credit on your taxes.

These are just a few of the tax credits you may qualify for during the 2016 tax year. As you plan for next year’s taxes, pore over the qualifications to make sure you’re not overpaying or missing out on any credits (check out some software here that may help you). The sheer volume of tax credits available is another reminder of how critical a CPA can be when planning your financial future.

About Jackie Waters

Jackie Waters is a mother of four boys, and lives on a farm in Oregon. She is passionate about providing a healthy and happy home for her family, and aims to provide advice for others on how to do the same with her site Hyper-Tidy.com.

25 Ways to Save Hundreds on Your Holiday Shopping

Tips to Save Hundreds on Your Holiday Shopping

 

You’re not alone. A recent study found that 39% of Americans feel pressured to spend more than they can afford during the holiday season.

That’s no wonder, with the average U.S. adult planning to drop $830 on Christmas gifts this year, and 30% of people planning to spend upwards of $1,000, according to a November poll.

To help you make the most of every gift-giving dollar, we’ve asked shopping experts for their smartest strategies. We will explore how to score deals and outsmart retailers at their own tricks. Here are many ways to save during this years shopping season.

1. Track the items you want

One of the easiest ways to save is to avoid impulse buys. Start by making a gift list, then comparison-shop . You can also use price tracking tools to see the highest and lowest prices an item is currently selling for. That way you know whether to whip out the card now or wait till closer to Christmas.

 

2. Set up price alerts

Want something that’s still too pricey for your budget? Use the web to set up email alerts that will notify you when the price drops.

3. Ask for a price match

Once you know the lowest price an item is selling for, ask your local merchant to match it. Most stores will price-match with their direct competitors. You can even compare prices while you’re out shopping by using mobile apps like Price Grabber or Shop Savvy.

4. Shop from a cash-back site

Plenty of websites will give you cash back for shopping at certain retailers as long as you enter the shop’s site through them first. You’ll typically get between 1% and 5% of the purchase back, though sometimes retailers will run specials that bump that figure up to 20%.

You may have access to a similar deal through your credit cards. Discover’s Discover Deals program, for example, includes several retailers who offer between 5% and 15% cash back when you click through Discover’s site to the retailer. As with the sites above, these offers are on top of your usual credit card rewards.

5. Subscribe to store emails

It can be well worth the spam to sign up. Major retailers offer special loyalty coupons and early sale access to frequent customers. Just keep in mind that come-ons for 40% off clothing or housewares could cause you to ramp up spending even as you hunt for bargains. Avoid the temptation by keeping these emails in a separate folder that you check only when you actually need something.

 

Fragile Markets

Fragile Markets

Heritage Financial Weekly – December 12, 2016

 

Dad: “Fra-gee-lay” …it must be Italian!

Mom: I think that says “fragile,” honey.

Dad: Oh, yeah.

 

This holiday season, investors’ enthusiasm for U.S. stocks has rivaled old man Parker’s passion for his major-award leg lamp in ‘A Christmas Story.’ Last week, three major U.S. indices hit all-time highs.

Consumer Sentiment on the Rise good for stocks?

Barron’s reported consumer confidence is helping make this the most wonderful time of the year for U.S. stock markets. The University of Michigan’s Index of Consumer Sentiment rose to 98 in December, reflecting a surge in consumer confidence. It was the highest reading since January 2015 and is closing in on the highest level since 2004. Surveys of Consumers chief economist, Richard Curtin, wrote:

 

“The most important implication of the increase in optimism is that it has raised expectations for the performance of the economy. President-elect Trump must provide early evidence of positive economic growth as well as act to keep positive consumer expectations aligned with performance. Either too slow growth or too high expectations represent barriers to maintaining high levels of consumer confidence.”

 

In his December Investment Outlook, Bill Gross cautioned while many aspects of Trump’s agenda – tax cuts, deregulation, fiscal stimulus – are good for stocks over the near term, investors should keep an eye on the longer term, as protectionist policies could restrict trade and, together with a strong dollar, could lead to more fragile markets.

 

European stocks also moved higher last week as a result of the European Central Bank (ECB) announcing a taper. Quantitative easing will continue through 2017, but ECB purchases will fall each month beginning in April.

A Look At The Numbers

Data as of 12/9/16 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor’s 500 (Domestic Stocks) 3.1% 4.6% 5.4% 7.7% 12.5% 4.8%
Dow Jones Global ex-U.S. 2.7 2.0 2.1 -2.8 2.7 -1.1
10-year Treasury Note (Yield Only) 2.5 NA 2.2 2.9 2.1 4.5
Gold (per ounce) -0.8 9.5 7.6 -2.0 -7.4 6.4
Bloomberg Commodity Index 1.3 12.2 11.2 -11.2 -9.2 -6.3
DJ Equity All REIT Total Return Index 3.8 7.7 10.8 12.1 12.6 4.8

S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.

 

Divorced? you may want to investigate spousal benefits.

If you weren’t the top wage earner in your marriage, or your job was raising the children, then Social Security’s spousal benefit could prove advantageous. As a result, it provides the lower earning spouse with 50 percent of the higher earning spouse’s benefit at full retirement age, even if you’re no longer married.

 

“Social Security operates with a philosophy that a divorced person may deserve a personal benefit, having been the long-term partner and helpmate of a member of the workforce. The benefit is similar, in fact, to the spousal benefit that is available to a person who is still married.”

 

What Does it all Mean?

To qualify, you do have to answer ‘yes’ to a significant list of requirements:

 

  • Married for at least 10 years
  • You are unmarried now
  • Age 62 or older
  • Your ex-spouse is entitled to Social Security benefits
  • The benefit you qualify to receive based on your work, is less than the benefit your ex-spouse qualifies to receive because of several factors. There are other factors that could affect your application for spousal benefits, including whether your ex-spouse has begun taking benefits. If you would like to learn more, contact your financial professional .
Weekly Focus – Think About It

“My mission in life is not merely to survive, but to thrive; and to do so with some passion, some compassion, some humor, and some style.”

–Maya Angelou, American poet

5 Signs Your Spending Too Much in Retirement

Signs You’re Spending Too much In Retirement

 

How can you tell that you’re spending more than your savings will support? If any of these five signs describe you, it’s time to make some changes.

You don’t know how much you should be spending.

If you don’t have a budget, you’re probably spending too much. The Center for Retirement Research at Boston College found that 53% of households risk falling more than 10% short of their retirement goal. Another 40% of retirees may run out of money for basic needs. Other statistics show that more than two-thirds of Americans don’t use a budget.

“A budget acts as a roadmap for overall spending during a given week, month or year. A lot of times we are unaware of how much money we spend in any given month.A budget really is an accountability tool to make sure we are living within our means,” says Mark Hebner.

If you don’t follow a disciplined spending plan, start today.

You’re spending more than 6% of your savings per year.

How much you should spend post-retirement depends on many factors. Retirement experts say that depleting more than 4% to 6% of your savings annually is ill-advised. If you have $750,000 saved, a 5% withdrawal rate would give you $37,500 per year plus Social Security benefits. If you want to be safer, go with the traditional guideline of 4%.

You’re paying too much to service your debts.

Recent data from the Bureau of Labor Statistics found that the average retiree is spending 31% of his or her income on a house payment. That works out to about $13,833 per year, assuming an average income of $44,713. (And that’s just the house payment.)

Experts advise no more than a 36% debt-to-income ratio. Debt hurts you in two ways. First, the interest drives up the cost of the item. Second, you’re using money that could remain invested to service the debt. The more money that remains invested, the more your accounts will continue to grow. This is even more important now that you’re no longer bringing home a salary.

You’re displaying evidence of a “cut loose” mindset.

You spent decades working more than full time, supporting a family, paying into Social Security and delaying the fun things that come with making a comfortable salary. Now you’ve reached retirement and it’s time to do all those things you’ve always dreamed of doing.

That’s true, but not all at once. Rewarding yourself in the first year by purchasing a Corvette, going on an around-the-world vacation and purchasing a summer home will give you very few years of comfortable living. Spread those purchases over time if they fit into the budget.

“Financial planning in general is focused on the long game. Retirees should not only view the investment process as long term, but they should also make the most of their savings in retirement. Spending down all of your savings in the first few years of retirement is a recipe for complete disaster,” says Hebner.

You aren’t supporting your excess spending with a side job.

If you didn’t save enough for retirement – or you discover that your desire for adventure is costing more than your budget can support – working to support your spending can fill in the gap. Even a part time job that brings in $15,000 per year allows you to spend a lot more than the confines of your retirement budget may allow. Don’t fall into the trap of spending without a plan to augment your retirement income if you find yourself falling short.

The Bottom Line

It’s true that your thinking should change from amassing money to using it once you retire. But you need to create a transition plan. Your money may have to last 30 years or more – you probably hope you need it that long. Just keep in mind that over time, as your healthcare requirements rise, you may naturally spend more. Be sure you leave yourself enough of a cushion.

4 Qualities to Look for When Hiring a Financial Advisor

4 Important Qualities When Hiring A Financial Advisor

Honesty

When it comes to choosing someone to help handle your finances, it can be somewhat terrifying. Providing insights into your funds, investments and needs requires the right professional.. While any professional will identify himself or herself as trustworthy and honest, here is something to consider…are they making guarantees? While financial advisors are skilled professionals with a background in this industry, no financial advisor can guarantee results. If you’re being guaranteed returns, chances are this individual is not being honest and forthcoming.

 

Knowledge

Your potential financial advisor should be able to provide evidence to you that they are knowledgeable about the financial areas you need managed. Don’t misread this into thinking your advisor should speak over your head with corporate lingo you don’t understand. Your advisor should be able to explain the topics being discussed in a graspable, educated way. After all, Albert Einstein once said, “You do not really understand something unless you can explain it to your grandmother.” If your advisor is knowledgeable of the ins and outs of his or her trade, they should be able to articulate these insights in clear, logical ways.

Experience

This is a tough one. Not every financial advisor has been in practice for multiple decades, nor do they need to have been. Any advisor resting on their past laurels is not guaranteed to be a perfect fit for you as the regulations and industries of finance change regularly and last year’s success does not infer an assumed return this year. By the same token, you should strive to find a financial advisor who can identify and discuss how they’ve been able to successfully advise other clients with similar needs in order to provide additional assurance that your circumstances fit well within their wheelhouse. Ask for specific situations (not requiring identities of current or past clients, though) and what research and factors informed the advisor’s actions that helped create success.

Availability

Your finances, along with your financial circumstances, are always evolving and changing, just like the numerous markets associated with them. You need a financial advisor who is available to you based on your needs. For many, you may only need to communicate with your financial advisor quarterly. However, when preparing for a major financial decision, you will likely need more frequent communication. Speak to your potential advisor about their availability. What good is having a financial advisor if they are never available to give you advice when you need it?

Retirement Strategies: 4 Things You Can Control

4 Things You Can Control In Retirement

Retirement is supposed to be an exciting new chapter in our lives. We’d like to think we can live well within our means once we stop working. But when we hear that most Americans will never be able to retire, our alarm bells go off – even when the rational side of our brain tells us to stay calm, that things will work out.

It doesn’t help to realize how much of the situation is completely out of our hands: Ordinary individuals can’t change the direction of interest rates or stock prices. All the same, we have more control over how our retirement will play out than many people think, even as it’s about to start. Four decisions you can make yourself can have a huge impact on how comfortable you will be in this next chapter of your life. They have nothing to do with the stock market or the economy.

Timing for Retirement Success

Knowing where you stand financially, then using those data as a starting point, will help you figure out when to trigger each of these four events. Timing is everything.

When to quit working

Work out the math, or consult a fiduciary financial advisor who specializes in retirement income planning, to determine when or if you can stop working. Work doesn’t have to be a grind if you do something you truly enjoy. It doesn’t need to be full time either. The longer you can bring in outside income, the longer you can leave your own savings alone to grow. Deciding to work an extra two or three years can add as much as 30% to your total income once you do stop working.

When to start tapping your nest egg

It’s bit like trying to land an airplane at just the right spot on the runway. Most retirees don’t know precisely when to start withdrawing from their savings and investments. The Wall Street Journal reported in 2005 that many start withdrawing at the age of 62. For most people, that’s too early. Many experts now use age 95 for financial forecasting purposes. It all depends on how much you have saved and what types of outside income sources you have. Even at age 65, most people probably have another 30 [years] to support themselves after they stop working.

When to start taking Social Security to get maximum benefits

Understanding how Social Security works before you’re eligible to start taking is important. Right now, the earliest age you can start taking Social Security is 62. However, full retirement age is usually 66. Every year you can hold off on taking benefits between the ages of 62 and 70 increases your monthly check. The Social Security Administration’s website explains how retirement ages work. If you have complicated financial family relationships – or you’ve lost a spouse or have remarried – it can be worthwhile to get some solid advice. A qualified fee-based fiduciary advisor can run “what if” scenarios using sophisticated software. That can help pinpoint the optimal time to start taking your benefits.

 

 

Investment & Wealth Management

Best Tips to Negotiate a Home Purchase

Best Tips to For the First Time Home Buyer

Buying a home has always been the biggest and most consequential financial move that most people make in their lives. The 2016 environment can make it especially challenging, leaving little margin for error. The biggest mistake prospective homebuyers can make is to embark on a pursuit of their dream home without having a well-conceived plan in place. Every buyer and seller seek the best possible terms for their deal, but how do we get there? Negotiating a home purchase is often like a chess match. It requires a clear view of the playing board as you plan your next several moves in advance.

Understanding the Market as a Buyer

Negotiating a home purchase must start with the understanding that sellers want the highest price and buyers want the best possible deal. The final outcome will fall somewhere in between.. However, at any given time, one party is going to have the upper hand in the negotiation. This of course is dependent on the market conditions. In a buyer’s market, when there is greater supply than demand, the buyer can negotiate from a position of strength. In a seller’s market, where there is less supply than demand, the seller has the upper hand. Having a clear understanding of the local market conditions is vital going into a transaction.

Evaluate assets and liabilities

One of the most important things is to make sure you don’t get in over your head. The last thing you want is to purcahse a house that is well above your means. So it is critically important to do an asessment of your current assets and liabilities.

So you don’t owe too much money and your payments are up to date. But how do you spend your money? Do you have piles of money left over every month, or are you on a shoestring budget?

A first-time homebuyer should have a good idea of what is owed and what is coming in.

The Economy Will Survive this Presidential Election

The Economy Will Survive This Presidential Election

 

Americans see a threat in the election that doesn’t exist — except in the headlines

The Election. Many Americans are concerned about how the presidential election will turn out. But nowadays people’s gloom about the post-election economy and the financial markets is being unduly influenced by headlines.

Six of every 10 Americans say the outcome of the presidential election represents the biggest threat to the U.S. economy over the next six months. This according to a recent BankRate.com survey.

Moreover, this was the majority view regardless of major political party affiliation — Republican, Democrat, or Independent. It was shared by most of every demographic group studied. No matter the age, gender, income level, ethnicity, or level of education. Indeed, the number of people fixated on the election as the economy’s biggest threat was five times greater than the second-biggest concern, terrorism.

Truth is, people are sorely misjudging the short-term threat that any presidential election presents.

 

Markets and Economies

Markets and economies do not implode around elections. Yes, the presidential election brings plenty of uncertainty to the market. But whatever troubles you see looming won’t be coming to roost in the next six months. In all likelihood, it will take six months just to have an idea of the economic impact the election could have in the long term.

Do yourself a favor: resist the temptation to get so caught up in the round-the-clock news cycle that it blurs rational thought.

You hear about the election 24-7 but yet the unanswered questions about what’s going to change. The president can’t change everything overnight. Once that realization comes to light, the uncertainty and anxiety people feel today will greatly dissipate.

It’s not that people should adopt “Don’t Worry, Be Happy” as their theme song, it’s just that fears about the election blowing up the economy in the short run are misplaced. Acting on those fears as an investor would be a significant mistake.

For as much credit or blame as we want to give any president for the economic conditions during their tenure, there’s only so much the commander-in-chief actually controls.

The Role of the Federal Reserve

For example, plenty of people believe that the market and economy will suffer when the Federal Reserve raises interest rates. This is now widely expected to happen shortly after the election, regardless of which candidate wins.

If a rate hike makes the stock market stall, it’s not really related to the new occupant at 1600 Pennsylvania Avenue. Neither is either candidate likely to be able to talk the Fed governors out of a hike (if they even would want to).

Another relevant, recent example involves Brexit. Brexit was the vote in Great Britain to leave the European Union. While the move itself has direct links to the British economy, it upset the market only for a matter of hours before it was shrugged off. We will see if the real economic consequences will be settled in the months or even years to come.

But the real reason for investors to avoid acting on nerves is that the timing is off. “There is some validity to the idea that there is a threat to the economy, but it is more in the post-election year. This essentially means the time frame that people are worried about is wrong.

In post-election years — regardless of which party wins — there is a sell-off after the inaugural ball. A lot of it has to do with the way whoever comes into office is going to try to push through their most difficult and unsavory policy initiatives. I have to admit that I feel the same kind of nervousness as everyone else. But, if the election is going to lead to trouble for the economy, it’s going to be further out.

The President’s Effect

No president can put the brakes on the market, nor wants to. Whoever wins in November inherits a market that has a long bull rally and the potential to keep going. If only because Wall Street tends to climb a proverbial wall of worry.

Moreover, no winning candidate in this year’s election is going to trigger any sort of market euphoria. The market’s long-term trends typically are unaffected by which party holds the White House. Post-election years tend to be a bit worse when a Republican has been elected. That trend is seen reversing in mid term years.

You can understand why everyone is worried about it, but you have to hope people act rationally. All of the talk and all of the news  don’t have people acting on anything right now. That would be how the election becomes a real problem, and not just a worry.

 

Investment & Wealth Management

10 Best Cities for Retirement

10 Best Cities for Retirement

Prescott, Arizona

If you love the outdoors and a vibrant cultural scene, one of the cities you should consider retiring in is Prescott, Arizona. Located in the north of Arizona, this old mining town experiences a cooler summer than southern Arizona. As a result, this helps you steer clear of sweltering summer temperatures. A booming economy, rich history, and low housing prices make this city a real contender for retirement.

Venice, Florida

Venice is a small retirement community found on the Gulf of Mexico in Florida. Named after Venice, Italy, this community has many canals and rivers that run through it and has been designed with architectural influence from Italian renaissance. Calm traffic and low prices mean peaceful retirement and it’s particularly well suited to slightly older retirees. Parks, beaches, golf, tennis, and proximity to the beach will keep you busy, and proximity to nearby Sarasota will mean you have everything you need.

Augustine, Florida

The historic community of St. Augustine, Florida, is a perfect retirement location for history buffs. The local economy is driven by tourism. Consequently, if you’re keen to volunteer and stay an active part of your community, this might be the city for you. On the north east coast of Florida, this city experiences cooler temperatures than other options in the state.

Beaufort, South Carolina

The quaint, charming southern community of Beaufort, South Carolina, is a prime retirement spot. This old river town offers plenty of golfing and fishing during the mild winters and hot summers. The military installations in the city solidify the economy and diversify the population. Also, Beaufort is home to a growing retirement community. There are lots of families here as well

Myrtle Beach, South Carolina

Whatever you are looking for in your retirement locale, from downtown living to a planned community, Myrtle Beach has what you need. Some of the highlights are the Grand Stand. Also knows for a huge stretch of pristine sandy beach, trendy shopping and restaurants. A low cost of living, great theater, excellent medical care, and enough golf courses to keep things exciting are just a few reasons to visit. Due to all these reasons, how could you not love your retirement life in sunny Myrtle Beach.

Abilene, Texas

If you’re looking for an affordable retirement, head to Abilene, Texas. With cost of living over 10% below national average, this old railroad shipping town has a growing retirement community within the city. Year round warm weather and excellent recreational and social opportunities for senior citizens of Abilene will keep you entertained and in good company all year round.

Austin, Texas

This big city offers plenty of activities to keep the retiree busy and engaged. Home to the University of Texas, this cultural hub boasts a terrific economy, warm weather, plenty of volunteering opportunities, open air art markets, galleries, museums, performing art theatres, low crime, and it’s the live music capital of the world. With so much going on, this city would be best suited for energetic retirees who aren’t looking for too much peace and quiet!

Boise, Idaho

Boise, Idaho makes one of the great retirement destination cities for active adults. Into biking? This city was rated one of the best cities to live and ride. Love the outdoors? The mountains are at your doorstep, and the river offers whitewater adventures for the daredevil retirees out there. In downtown Boise, there are many shopping, eating, and cultural opportunities. Consequently, walking paths and low crime rates mean that you will feel confident stepping out into this great retirement city.

Palm Springs, California

Located in the Coachella Valley, Palm Springs is one of world’s most famous retirement cities. The breath taking landscape and rich culture draw people from all around the globe to retire here. Active retirees can enjoy the golf scene and the nearby Joshua Tree Park, and everyone can enjoy the 350 days of sunshine a year. Most of all, summers here are so hot you’ll have to retreat to the air conditioned indoors!

Salt Lake City, Utah

Nestled into the Wasatch Mountains of Utah and next to the Great Salt Lake, the beautiful Salt Lake City is a picturesque place to retire. Perfect for the active adult, you can enjoy golf and winter sports galore. Clean air, booming economy, and plenty of volunteering opportunities. Also, an above average doctor per capita rate make this city a prime retirement spot! Salt Lake experiences cold winters and hot, dry summers, so skip this city for retirement if you can’t take the cold!

 

Fore more on the best retirement cities, follow us on twitter! http://www.twitter.com/itsheritage

 

 

NEW! #AskTheAdvisor Video Blog

#AskTheAdvisor YouTube Blog

Hey Guys,

Coming to you with some exciting news today about our YouTube. Many of you know by now that we are constantly striving to produce relevant and insightful content for our clients, readers, and social media followers. We put a lot of time and effort into our content, so we genuinely hope you enjoy it.

In an effort to take our communication to the next level, we have launched a new video blog (or vlog for you social media savvy readers) called #AskTheAdvisor. In this series, we will take weekly questions from viewers and answer them on video. We are excited for this new medium of communication, and we hope it is well received. As a result, we hope to increase the viewership of our channel.

Subcribe on YouTube

We will periodically link the videos to this blog, but we would really appreciate if you can head on over to your YouTube page https://www.youtube.com/channel/UCc-McW8yAtsrqXrn74ISTKA and subscribe to our channel so you never miss an update! This will allow us to continue to provide insightful content as the markets and economies dictate.

Thanks for all your continued support, and keep an eye our for our latest episodes.

Best,

MD

What Does The BREXIT Mean To You?

What Does the Brexit Mean to You?

And What Does it Mean for Britain

Voters in the United Kingdom chose to Brexit from the European Union (EU) late Thursday, June 23. The “Brexiters” (those who voted in favor of leaving the EU) were victorious, snatching 52 percent of the vote and setting Britain on a historic path to be the first country ever to do so.
Stock markets reacted swiftly to the news. Asian exchanges, which were open as the results came in, fell sharply with Japan’s Nikkei 225 Average down as much as 8 percent and China’s Shanghai Composite lower by 1.3 percent. European markets opened the morning off as well. German and French stocks are down 6.8 percent and 8.5 percent, respectively. Financial companies and banks, especially those in Europe, have been the hardest hit with some down as much as 25 percent. Furthermore, our domestic stock markets pointed to a Friday morning open down more than 2.5 percent.

The bank of England, the central bank for Britain, has promised 250 billion pound sterling to ease the markets. This will help create liquidity for the embattled currency. This had a somewhat calming effect and helped bring many off their intraday lows. However, global equities are still trading sharply lower than their previous close as is the British pound. The pound sterling was off as much as 11 percent yesterday before rebounding to close down 6 percent.

How will the Markets React?

In the short-term, we expect volatility to spike as investors reassess the global markets. Britain is already experiencing political fallout with the Prime Minister, David Cameron, announcing his resignation. However, he will stay in office for a few more months to ensure a smooth transition. The vote is historic and U.K. politicians have every intention of honoring the vote. However, while going through with the “Brexit,” the U.K. is still technically part of the EU and must abide by its rules and regulations until the separation is finalized.

In the intermediate-term, much work is ahead in Britain. Trade agreements, treaties, and many regulations must be renegotiated and reworked. The U.K. economy and markets should experience significant volatility. The government will seek to reestablish its global relationships and put the country on the best possible path going forward.

Long-term, the future of the EU is much more in doubt than it was two days ago. Whether the British know it or not, they are being watched very closely by other members of the EU to see how they weather the coming months and years. If they are successful in their separation, they could be paving the way for other countries to leave as well.

We are watching the markets closely and will continue to do so, providing updates as it relates to U.K.’s economic future and what this means for investors in general. Although events such as these are impossible to time, we continue to stand by the benefits of a comprehensive wealth plan as well as the process we follow in volatile situations such as these.

Lou Desepoli in Financial Advisor Magazine

Financial Advisor Magazine: A Potential New Client Base

April 4, 2016

Financial Advisor Magazine May Issue: Entrepreneurial firms are alive and well in the United States, although the kinds of people who start them are changing. That’s because more and more “grayhairs” are passing up the golf course or sitting in front of the tube all day in favor of starting a new business. Their efforts are pushing up the number of start-ups.

And in the process of beginning a business, many of these entrepreneurs—often people starting second careers or people not born in the United States—will need help, and this is a new opportunity for the advisory industry.

Those are the assertions of William Hortz, the president and dean of the Tampa, Fla.-based Institute for Innovation Development, which studies entrepreneurial activities.

“The U.S. population is aging, and so are start-ups,” Hortz says. “The biggest gains have been among older entrepreneurs, with 55- to 64-year-olds making up 26% of the enterprises.”

Parents Do It Better Than The Kids

The Kansas City, Mo.-based Kauffman Foundation studies entrepreneurial activities. In its “Kauffman Index Start-Up Activity National Trends” report on start-up activity, it recently found that the rate of entrepreneurship among older people is growing faster than it is in other age groups.

“The aging of the U.S. population combined with the increasing rate of entrepreneurs among individuals aged 55-64 have shifted this group from making up 14.8% of new entrepreneurs in the 1997 index to 25.8% of all new entrepreneurs in the 2015 index,” says the report. (See Sidebar 1, “Who Owns a Business or Is Starting One?”)

“We’ve really been seeing this trend in the 55-64 age group over the last decade,” says E.J. Reedy, a senior fellow with the Kauffman Foundation.

Kauffman officials also say would-be entrepreneurs are taking the risks of starting a new business not out of need but because they see an opportunity.

Reedy adds that the 55-64 group has the highest percentage of “opportunity” entrepreneurship. That means a person is more likely to start a business not because he or she is in need of money or a job but because of a perceived opportunity for a successful new business.

Entrepreneurship Makes a Comeback

These aging boomers, along with immigrants—the Kauffman report said immigrants are more likely than the native born to start a business—are improving the entrepreneurial climate of the nation, according to the foundation.

The 2015 index registered its biggest increase of start-ups in the last two decades. (See chart above.) “People are following opportunities more,” Reedy says. “They are slightly less risk averse. During the height of the last recession, the run-up was more in people forced into entrepreneurship.”

But young people are less and less a part of this comeback.

Where Are Los Ninos?

Why isn’t the younger generation showing the same entrepreneurial bent? Hortz says many potential young entrepreneurs are still trying to establish themselves. They “have been hampered by student debt and an inability to get resources for businesses.”

By contrast, members of the older generation are much more likely not to have these problems, he says. They are also more likely to look for a financial professional to help them start a second career.

“Advisors can help their clients becoming entrepreneurs by guiding clients to prepare mentally and give them ongoing coaching and encouragement,” Hortz says. They should also work with them to find potential clientele so the business can succeed, he adds.

Do You Want This Business?

The advisor who wants this business must be prepared to offer numerous services, he says. One is to help the entrepreneur make needed professional alliances as well as help find the client base that will enable a start-up to survive and prosper.

Almost all aspiring business creators have had a common problem, he adds. “Even some of the most successful
entrepreneurs initially faced problems in finding capital.” Here, he notes, is an opportunity for the advisor to develop a strong relationship with a start-up, a relationship that could last for many years.

But there is something much more important, money professionals say, than helping a new business owner find capital or make professional connections or even locate the right potential clientele. The most important thing is basic: to find out if the client is serious. Does he or she understand the myriad challenges and dangers of starting a business?

The answer to those questions, advisors say, can determine whether the client is rushing into a new, happy life or headlong into financial and personal disaster.

Advisor As Devil’s Advocate

Indeed, those working with these up-and-comers say advisors should play the role of devil’s advocate. They should ensure that the client understands the challenges of starting a business, since many will fail within a few years. (See sidebar, “A High Rate of Failure.”)

They must remember that they are putting a large amount of their assets, assets that probably made them independent, at risk. “It makes more sense to use non-qualified money,” warns Ken Sutherland, an advisor in Raleigh-Durham, N.C. “And if you take too much qualified money, you will trigger a big tax bill.”

A better tax strategy for starting a business, he adds, is using a smaller part of qualified money, avoiding a high tax rate, and finding part of the seed money in a home equity loan, which can be deductible.

“You must first ask the client if he is ready for this. Does he realize what this is about? Is he ready to do this? What does he hope to accomplish?” Sutherland says. He adds that the client must have a passion for starting a business.

Love That Job

Kauffman Foundation researchers agree about the passion element. The foundation has found that there are many common reasons people take risks and start a business. Sometimes it is because they love being their own bosses and starting a project from scratch. Others enjoy working in small teams. Other common motivations are that they want to solve a problem they faced or that they saw potential customers for a certain product or service.

Still, the client should consider all the financial ramifications. “What if the business fails? This is a very important question that you must ask,” says Lou Desepoli, an advisor in Port Jefferson, N.Y.

The tax implications of a start-up can also be a big headache, Desepoli warns. They include a higher income tax rate if one takes a big chunk from a qualified retirement account. It can also mean lower Social Security payments if one has started collecting an income from a new business.

for the rest of this article visit Financial Advisor Magazine online at http://www.fa-mag.com/news/a-potential-new-client-base-26015.html?section=47&page=2

Mike Desepoli in Money Magazine

Mike Desepoli in Money Magazine

Heritage Financial Advisory Group’s Director of Portfolio Management, Mike Desepoli, is in Money Magazine this month in the article “The Death of Cool Equities”. The article was written by Taylor Tepper, and discusses some of the recent trends in the equity market.

The article speaks about how in a fickle stock market, betting on what’s trendy has suddenly become risky business. Give it a read for some great investing ideas. Click the link below to read the article and let us know what you think!

Hunt for fallen angels carefully

At first blush, the fact that Chipotle continues to sport an above-average P/E—after losing about a third of its value—may be a sign that investors still think it’s special. It also means, however, that the stock remains frothy.

And now investors are beginning to wonder if the stock deserves to trade even at these levels. “We question why Chipotle of today should be valued like Chipotle of yesterday,” notes Deutsche Bank analyst Karen Short. While management has put into place safeguards to prevent another E. coli scare, “there is tremendous uncertainty on how well they will be received,” she says.

Even before the health crisis, Chipotle was earning less per location than Shake Shack. Shake Shack forecasts profits will grow at a faster rate over the next five years, compared to Chipotle. The chain suffered as big a drop in consumer perception as General Motors did in 2014 when it had to recall millions of faulty ignition switches, according to the YouGov Brand Index.

Another stock getting no love from the investment community is twitter. Following a brief one-month honeymoon after going public in late 2013, the micro-blogging site lost three-quarters of its value. Yes, Twitter boasts 305 million monthly active users, but today that trails Facebook (1.6 billion) and Instagram (400 million). Can you say #fail?

What should investors expect?

For starters, Twitter is finally on the verge of turning an actual profit. That is a big step for a social media stock. Advertising revenue in the U.S. and internationally grew by almost 50% compared with a year ago. More companies are advertising on the platform than ever before. “We see Twitter as an opportunity in the making,” says Mike Desepoli of Heritage Financial Advisory Group in Port Jefferson, N.Y.

The full article is on the web at Money Magazine.

http://time.com/money/4254583/death-of-cool-equities/

Brussels Bombing

Prayers for Brussels

My heart is breaking for the injured and dead and their families of the Brussels Bombing this morning. Two separate bombing incidents took place, one at a subway station and the other at the airport.

It is fairly obvious that this is an act of terror as Isis has already claimed responsibility for the attack. This will only add more fuel to the fire of the anti immigration movement. Europe has a massive migration problem on their hands, and you can’t help but blame their open border policies for this tragedy.

The president is in Cuba and will likely not have much to say. He usually doesn’t when it comes to Islamic Terror. He will condemn but stop way short of naming the enemy, even though the whole world knows who the enemy is.

So far the markets appear to be taking the news in stride.

Daily News: Mike Desepoli

How to know what you’re really paying your financial advisor

Mike Desepoli, Daily News Contributor

March 1, 2016

Looking for a financial advisor? Wondering how you’ll pay him or her — and just how much?

There are three types of advisers you can work with. The first will charge you commission; the second, a management fee on the assets handled; and the third, a hybrid of the first two approaches. But all might also charge you hidden fees.

When you’re working with a financial adviser — regardless of what type of adviser they are — it is important to understand not only how they’re being compensated, but what are the fees that aren’t so transparent.

Many advisers themselves don’t understand all the hidden fees and expenses associated with asset management.

So how can you be sure what you are paying?

Ask!

Any adviser with a transparent business model will be happy to explain all costs incurred in any investment program. After all, shouldn’t you know exactly what you are paying for?

Some good questions to ask include:

How will you get paid for investments you recommend?

Will you be paid commissions on investments or other products you sell?

Do you receive payments from mutual funds or investment companies you recommend?

Aside from what I pay you, what other costs will I incur?

It is extremely important for investors to do their homework when choosing a financial adviser. Advisers should be able to directly answer your questions and have detailed, documented proof of fees and fiduciary standards.

One of the most important responsibilities of an adviser is to ensure that fees are both reasonable, and clearly communicated to the client.

If your adviser isn’t holding up their end of the bargain, it may be time to shop around.

Take control of how your investments are being managed and the expenses that you’re paying. It is your right to have access to transparent information about your account.

About Mike Desepoli

As a financial advisor and accredited investment fiduciary for Heritage Financial Advisory Group, Mike Desepoli serves as a wealth management resource to business owners and executives, assisting them in making proactive, personal financial decisions. Mike’s vision is to help clients live for today, as well as plan for tomorrow. He believes in making the complicated simple, by educating his clients so they can feel more confident about the decisions they make regarding their financial health.

To view more of Mike’s work for The Daily News, you can visit them on the web at http://www.nydailynews.com/authors?author=Mike-Desepoli

 

4th Quarter GDP

4th Quarter GDP

4th quarter GDP was reported this morning, coming in at 1%.This number was higher than the expectation of 0.7%, but it is still not a very impressive number for an economy that is projected to grow (according to the white house) at 2.5 – 3% for the full year. A majority of the increase in GDP was due to an increase in inventories on the balance sheet. That means consumers essentially consumed less goods in the 4th quarter That is not a great sign for retail. Whether or not this number is an indication that the economy is slowing remains to be seen. This continues a lackluster streak for the current administration of sub 3% annual growth.

Does the Stock Market Overreact?

Does the Stock Market Overreact?

In short……you bet it does! Professors, philosophers, psychologists, academics…..you name it, have all done studies on behavioral finance to determine if the market overreacts, and why. If one thing is certain, it’s that psychology affects investor behavior. Classic economic theory assumes all people make rational decisions all the time and always act in ways that optimize their benefits. Well, wouldn’t that be nice if it were true? Unfortunately it couldn’t be more inaccurate. Behavioral Finance recognizes people don’t always act in rational ways, and it tries to explain how irrational behavior affects the stock market.

Markets tend to overreact to unexpected and dramatic news and events, with investors giving too much weight to new information. As a result, stock markets often are buffeted by bouts of optimism and bouts of pessimism, which push stock prices higher or lower than they deserve to be.

According to Howard Marks, “in order to be successful, an investor has to understand not just finance, accounting, and economics, but also psychology.” We couldn’t agree more.

When markets become volatile, it’s a good idea to remember your long term goals. Stay disciplined, and don’t let other people’s mood swings (or the market’s mood swings) affect your financial destiny. Like Benjamin Graham said, “in the end, how your investments behave is much less important than how you behave.”

How Do You Define Wealth

What does Wealth mean to you?

When I think about wealth, a lot of things come to mind. I think about a time in my golden years where I hope to be at peace. My hope is that I am proud with all I have done and accomplished in my life. I picture a day where I can say with certainty that I provided for my family. Through the years hopefully I made the world a better place along the way. I hope to look back with happiness over what I have done, and not with regret about what I have failed to do.

You may notice, that I just gave you my meaning of the word “wealth”, and not once did I mention money. That’s because at our firm, wealth is so much more than money. Wealth can be sending a grandchild to college, or donating to your favorite charity. It can be taking that vacation that you always wanted, or buying that dream vacation home. Wealth to us is anything that money can’t buy and death can’t take away.

What I love about my job as an advisor, is that I am responsible for so much more than generating investment returns. We offer much more than just advice, we help people live out their lives to the fullest. Our mission is to help our clients use wealth as a tool to pursue their goal of a work optional lifestyle. We look at money as much more than an object, a tool to get what you want out of life. When careful planning and smart decision making collide, its amazing what you can accomplish.

Stay Disciplined With Your Portfolio

Stay Disciplined With Your Investment Approach

One of the most challenging aspects of investing is not what many may think. Digging through the multitude of options available to put your money to work can be a daunting task. However, keeping your cool when things move in the wrong direction can make or break your portfolio returns.

Sometimes stock prices move based on economic facts, other times they move based on a perceived notion, or in anticipation of an event. If we know one thing, markets DO NOT like fear and uncertainty…..and given the levels of those prevalent in the market today, it’s no wonder we are seeing the market go haywire. This can easily weigh on an investors emotions. Watching your portfolio plunge into a sea of red is by no means easy to stomach, but it happens. Making sure you take the right steps when it happens, will make sure you don’t turn short term pain into long term damage.

So what should you do With your portfolio?

For one, it is always advisable to work with a professional. You wouldn’t try to build a house by yourself…..you hire a builder. So why should you treat your portfolio any differently? Secondly, beware of taking financial advice from the mass media. The media speaks to a very large and diverse audience, and their recommendations may not be suitable for you. They do not know your goals, risk tolerance, and time horizon…..so how would they know what is best for your portfolio?

The more you stay focused on your long term goals, the better off you will be. Keep your eye on the ball!

If you want to talk with us about ways to stay more disciplined with your portfolio strategy, click Contact and we will get back to you shortly.