Yearly Archives: 2018

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Successful Investors Keep Seatbelts Fastened

Successful Investors Keep Seatbelts FastenedLooking back two years, U.S. stocks have risen more than 30 percent. There have been occasional dips along the way, though the rise has been pretty much non-stop. The first week of February 2018 jolted investors back to reality, as stocks fell more than 10 percent in a short period of time. The numbers themselves sounded scary. The Dow Jones Industrial Average fell 1,800 points in a few days; it was easy to forget the drop was from record heights of 26,000. Since then, markets have recovered more than half of that unnerving slide.

Successful Investors Keep Seatbelts Fastened

It’s a challenge to remain calm during a substantial market decline for some investors. Once again, we have witnessed how important it is to block out “The sky is falling!” media warnings. Emotional reactions are likely to be detrimental for investors. The fact is volatility is a normal part of investing. It is always there. It’s interesting to note that we most often see the term “volatility” used when markets fall, and yet markets are “volatile” on the upswing, too, as we have seen for a good stretch of time.

Investors are well-advised to “stay in their seats with seatbelts fastened” when things get bumpy. Intra-year market declines are common, according to academic research by Dimensional Fund Advisors (DFA). Looking back to 1979, DFA found that about half the years experienced declines at some point of more than 10 percent. Despite those significant drops, calendar year returns finished positive 32 of 37 years.

The DFA study also determined that trying to avoid short-term losses through market timing is apt to hinder long-term performance. A substantial piece of long-term stock returns comes from just a handful of up days. An investor attempting to time the market is all too likely to be on the sidelines on strongly positive days. Through the period of 1990 to 2017, missing out on only the five best days cut returns by a full one-third.

As the markets jump and jolt, try to remain seated and relaxed. Better yet, get up and do something you enjoy. Go for a walk or out to a movie, and let the markets do what they will from day to day knowing that you have a long-term plan.

By |April 16th, 2018|Current Affairs, Investing|

New Tax Law Tempers Marriage Penalties

New tax law tempers marriage penalties.One unintended feature of U.S. income tax law is that the combined tax liability of a married couple may be higher than their combined tax burden if they had remained single. This is often referred to as the marriage penalty within the law. Congress’ new tax law tempers marriage penalties a bit.

“Marriage penalties and bonuses have a significant impact on the combined tax burden of couples,” wrote Amir El-Sibaie, an analyst with the Center for Federal Tax Policy at Tax Foundation. “Penalties affect couples at very high and very low incomes, and bonuses affect many middle-income couples with disparate incomes.”

Changes that would eliminate marriage penalties and bonuses would drastically impact the current distribution of taxes paid. This is politically difficult to accomplish. As a compromise, in the recently-passed Tax Cuts and Jobs Act, Congress opted to incrementally reduce the effects.

While our nation’s tax laws remain extremely complicated, a few simple changes should bring some relief to married couples and families in 2018.

As an example, most federal income tax brackets for joint filers will now be double those for singles, thereby eliminating or reducing the marriage penalty for many people. (Married couples in certain high-income brackets will continue to experience higher rates than singles in the same brackets, however.) The new law also doubled the child tax credit to $2,000, and all dependents ineligible for the child tax credit are eligible for a new $500 per-person family tax credit (source: The Wall Street Journal).

By |March 26th, 2018|Taxes|

AdvisoryHQ Named Perspective Financial Services a Top Advisor

AdvisoryHQ Named Perspective Financial Services a Top AdvisorWe’re pleased to announce that AdvisoryHQ named Perspective Financial Services a top advisor for a third year. Our firm was once again identified as one of the top advisors and financial planners in Phoenix and Scottsdale. The organization also rated us among the best in 2016 and 2017.

AdvisoryHQ uses a multi-step selection methodology for identifying, researching and generating its list of top ranked firms. Its review and ranking articles are always 100 percent independently researched and objectively written. Firms do not pay for their ranking, and most firms do not even realize they’re being reviewed and ranked by AdvisoryHQ until after their reviews have been published. (A detailed overview of AdvisoryHQ’s methodology process is below.)

The reviewers highlighted our online tools and comprehensive, well-defined approach to financial planning as some of the key benefits of our firm. They also emphasized our personal touch.

“The firm’s focus on collaboration and individualized attention can provide clients with significant planning advantages, making Perspective Financial Services one of the best financial advisors in Phoenix to consider partnering with this year,” the AdvisoyHQ reviewers wrote.

Perspective Financial Services a Top Advisor: Click here to read the full article and review at the AdvisoryHQ website.

 

A step-by-step overview of AdvisoryHQ’s methodology process.

  1. Using publicly available sources, AdvisoryHQ identifies a wide range of firms that are providing services in a designated area (city, state, or local geographic location).
  2. AdvisoryHQ’s review team then applies initial methodology filters to narrow down the list of identified firms/products. These filters include company strengths, trustworthiness, transparency, professional reputation, managed asset, ROI/ROA effectiveness, fees structure, what customers/clients are saying about the organization, and many more.
  3. After trimming down the initial list, AdvisoryHQ then conducts a deep-dive assessment of the remaining firms. The award criteria takes into account a range of factors, including experience level, level of customization, site quality, resources, features, range of provided services, innovation, value-added, and many more factors, to build up a broad picture of what each firm or product has to offer, before the final selection process occurs.
  4. Based on the results of performed assessment, AdvisoryHQ’s research and selection team then finalizes the list of entities that make it into its top rated publications, which are then published to the general public.
By |March 12th, 2018|Company News|

Understanding RMDs

Patrick Eng writes about the importance of understanding RMDs.When investors with retirement accounts turn 70 ½ years old, they should be aware of the required minimum distribution (RMD) rules regarding the type of retirement accounts they possess. Understanding RMDs will help you avoid high penalties from the IRS. Here are some things to keep in mind.

The IRS requires that account holders of traditional IRA, SEP IRA, Simple IRA and company-defined contribution plans [401(k), 403(b) and 457] withdraw a certain minimum amount from their accounts each year. (Roth IRAs do not have an RMD.) If you continue working past 70 ½ years, many defined contribution plans will allow you to put off taking the RMD until you retire; but for all non-Roth IRAs, you have to start taking RMDs by April 1 of the year following the year in which you turn 70 ½, even if you are still working.

This is an annual requirement until the account is drawn to zero or until the account holder dies, in which case the assets can be placed into an Inherited IRA for a beneficiary or distributed to heirs in another way. A penalty of 50 percent is levied by the IRS on the amount not withdrawn. For example, if your RMD is $10,000 and you do not make your withdrawal, you will owe the IRS $5,000 in penalties and must still take your required distribution.

The IRS does not allow tax-deferred accounts to grow indefinitely without having to pay taxes on the money. Investments in a tax-deferred retirement account have been sheltered from taxes since their initial contribution and throughout the accumulation and investment period. Thus, the IRS places a time limit on this tax deferral and mandates withdrawals through the RMD.

Most financial institutions have a process to help their clients take care of their RMDs, but ultimately the responsibility lies with the account holder. It can be an expensive oversight if not taken care of in a timely manner. If you are approaching the age for RMDs, talk with your advisor.

By |February 27th, 2018|Current Affairs, Retirement|