MoneyAZ http://moneyaz.com Wed, 15 Feb 2012 16:00:09 +0000 en hourly 1 http://wordpress.org/?v=3.0 Gifting: a win-win proposition http://moneyaz.com/2012/02/gifting-a-win-win-proposition/ http://moneyaz.com/2012/02/gifting-a-win-win-proposition/#comments Wed, 15 Feb 2012 16:00:09 +0000 Perspective Financial Services http://moneyaz.com/?p=1957 Did you know that there’s a wealth-transfer technique you can use to reduce your taxable estate and keep more of your assets for your heirs? You can make annual gifts of up to $13,000 ($26,000 per married couple) to as many people as you wish without incurring federal gift taxes.

An example: A married ... Read More: Gifting: a win-win proposition]]> Did you know that there’s a wealth-transfer technique you can use to reduce your taxable estate and keep more of your assets for your heirs? You can make annual gifts of up to $13,000 ($26,000 per married couple) to as many people as you wish without incurring federal gift taxes.

An example: A married couple with three children could reduce their estate by $78,000 each year if $26,000 were given to each of their children.

Gifting can be used in a number of unique ways. You can use annual gifts to help build a college fund for a child, grandchild, relative or even a friend — by contributing to a 529 plan account, a Coverdell Education Savings Account, or a UGMA/UGTA account. In fact, 529 plans have special rules that allow you to make five years’ worth of contributions in one year without incurring any gift taxes — that’s $65,000 for individuals and $130,000 for married couples.

Gifts can also be used to build wealth for future generations, as well as help a child, relative or friend fund a down payment on a home, buy a car or start a business. Your financial advisor can help you determine how annual gifts might fit into your overall financial plan.

Portions of this article were provided through the Financial Planning Association, the membership organization for the financial planning community (through McGraw-Hill Financial Communications), and is brought to you by Perspective Financial Services, a local member of FPA.
]]> http://moneyaz.com/2012/02/gifting-a-win-win-proposition/feed/ 0 Investor Tips: Managing and Coping with Risk http://moneyaz.com/2012/02/investor-tips-managing-and-coping-with-risk/ http://moneyaz.com/2012/02/investor-tips-managing-and-coping-with-risk/#comments Wed, 08 Feb 2012 16:00:35 +0000 Perspective Financial Services http://moneyaz.com/?p=1949 If you’re an outdoor enthusiast, at some point or another you’ve probably contemplated what you might do should you encounter a bear or other wild animal. Wildlife experts typically recommend these tips: Stay calm and don’t run. Investors might do well to heed that advice when traversing the stock market, as well.

Plan ahead: ... Read More: Investor Tips: Managing and Coping with Risk]]> If you’re an outdoor enthusiast, at some point or another you’ve probably contemplated what you might do should you encounter a bear or other wild animal. Wildlife experts typically recommend these tips: Stay calm and don’t run. Investors might do well to heed that advice when traversing the stock market, as well.

Plan ahead: Rather than fret about which way the market is headed this week or even this month, do what 87 percent of millionaires do to reduce worries — be proactive and develop a plan (The Millionaire Mind, by Thomas J. Stanley). A sound financial plan can keep you focused on your long-term financial objectives and keep you from getting caught up in the doldrums of a short-term market downturn or the hype of the latest hot sector.

Hold on: A buy-and-hold investing strategy can help keep you from being distracted by short-term market performance. It can also potentially help reduce the risk of loss over time.

Maintain realistic expectations: Consider that since 1926, the average total annual return of the S&P 500 has been 9.9 percent (Standard & Poor’s, 2011). Maintaining realistic return expectations can make it easier to cope with short-term market downturns.

Make diversification your ally: Different types of investments lead the market at different times. By holding a well-diversified portfolio of stocks and bonds, for example, you may increase the possibility that those securities that increase in value could offset those that decrease.

Try dollar cost averaging: Think about adding to your investments on a monthly basis, as opposed to purchasing or selling securities based on anticipated market changes (called market timing). This disciplined strategy can take the emotion and guesswork out of investing. It might also save you money. By regularly investing in a mutual fund, for example, you buy fewer shares when prices are high and more shares when prices are low. Over the long term, the average cost that you pay for the shares may be less than the average price.

Seek expert advice: Meet with a qualified financial advisor regularly. In particular, you may want to get into the habit of beginning every year with a comprehensive portfolio review.

Portions of this article were provided through the Financial Planning Association, the membership organization for the financial planning community (through McGraw-Hill Financial Communications), and is brought to you by Perspective Financial Services, a local member of FPA.
]]> http://moneyaz.com/2012/02/investor-tips-managing-and-coping-with-risk/feed/ 0 February: 12 Financial Planning Steps for 12 months in 2012 http://moneyaz.com/2012/02/12-financial-planning-steps-for-12-months-in-2012-february/ http://moneyaz.com/2012/02/12-financial-planning-steps-for-12-months-in-2012-february/#comments Wed, 01 Feb 2012 16:00:47 +0000 Perspective Financial Services http://moneyaz.com/?p=1933 In February, resolve to spend a few hours organizing your personal files and documents.

There are several personal financial records you should keep indefinitely. These include property records (home purchase, significant improvements), pension records, and retirement distribution records. Save copies of any applications or documents where you have designated a beneficiary on your account ... Read More: February: 12 Financial Planning Steps for 12 months in 2012]]> In February, resolve to spend a few hours organizing your personal files and documents.

There are several personal financial records you should keep indefinitely. These include property records (home purchase, significant improvements), pension records, and retirement distribution records. Save copies of any applications or documents where you have designated a beneficiary on your account or insurance policy.

De-clutter by disposing of outdated financial statements or personal documents (be sure to shred the pages to help avoid identity theft). Generally, any tax return documents older than seven years can be purged.

Organize the remaining documents into expandable files and/or storage boxes, and make sure a family member or trusted advisor is aware of their location.

]]> http://moneyaz.com/2012/02/12-financial-planning-steps-for-12-months-in-2012-february/feed/ 0 The Growing Public Sector Pension Gap http://moneyaz.com/2012/01/the-growing-public-sector-pension-gap/ http://moneyaz.com/2012/01/the-growing-public-sector-pension-gap/#comments Wed, 25 Jan 2012 16:00:25 +0000 Perspective Financial Services http://moneyaz.com/?p=1942 Stories abound about the fireman who retires at age 45 with a six-figure pension, or the city manager who leaves after just five years’ service with full salary and health coverage for life. What doesn’t make headlines, however, is the growing number of public sector employees who have seen their retirement benefits erode in ... Read More: The Growing Public Sector Pension Gap]]> Stories abound about the fireman who retires at age 45 with a six-figure pension, or the city manager who leaves after just five years’ service with full salary and health coverage for life. What doesn’t make headlines, however, is the growing number of public sector employees who have seen their retirement benefits erode in the face of budget cutbacks and mounting public deficits.

States and cities across the country are taking steps to reduce pension costs by whittling away employees’ retirement entitlements. Even San Francisco recently saw voters approve a plan to scale back retirement benefits for city employees.

Although traditional pensions still dominate at all levels of state and local government, hybrid plans are emerging that combine a 401(k)-type component with a guaranteed benefit. In fact, 11 states now have primary retirement plans that include some defined contribution component.1

The upshot for public sector employees is that, increasingly, they are likely to need to augment their pensions with salary contributions to employer-sponsored plans or save on their own if they want to maintain their preretirement lifestyle. And since many states have “double dipping” laws in place that prevent public employees from collecting both Social Security and a state pension, the need to set aside their own funds for retirement is even more important.

How to Compensate

Several tax-advantaged retirement savings options exist that may be accessible to public sector employees. The most popular include:

  • 403(b) plans are generally available to employees of qualified public organizations such as schools, hospitals and certain nonprofit employers. Similar to 401(k) plans, 403(b) plans allow employees to contribute a portion of their salary on a pre-tax basis; and no tax is paid on contributions or earnings until it is withdrawn in retirement.2
  • 457 plans are available to state and local government employees and are somewhat similar to 403(b) plans. There is no penalty for early distributions from a 457 plan (however, taxes are due), although you generally cannot take in-service distributions unless you have an unforeseen emergency.
  • IRAs are available to both public and private sector employees. Like 403(b) and 457 plans, IRAs also offer tax-deductible contributions and tax deferral. However, IRAs have lower annual contribution limits and eligibility for favorable tax treatment may be subject to certain income limits.2

To find more information on these or other tax-advantaged retirement savings plans, see Publication 590 at http://www.irs.gov/

Sources: 1Journal of Pension Economics and Finance, “Behavioral Economics Perspectives on Public Sector Pension Plans,” April 2011; 2Withdrawals from 403(b) plans and IRAs prior to age 59½ may also be subject to a 10% early withdrawal penalty, in addition to ordinary tax on withdrawn amounts.
Portions of this article were provided through the Financial Planning Association, the membership organization for the financial planning community (through McGraw-Hill Financial Communications), and is brought to you by Perspective Financial Services, a local member of FPA.
]]> http://moneyaz.com/2012/01/the-growing-public-sector-pension-gap/feed/ 0 Monthly Financial Planning Resolutions http://moneyaz.com/2012/01/monthly-financial-planning-resolutions/ http://moneyaz.com/2012/01/monthly-financial-planning-resolutions/#comments Wed, 18 Jan 2012 16:00:46 +0000 Mike McCann, CFP®, AIF® http://moneyaz.com/?p=1928 The New Year is always a good time to think about your financial goals and objectives for the year ahead and beyond. But don’t feel as though you have to do everything at once. Instead of the annual ritual of overdoing New Year’s resolutions and making grandiose plans (then backsliding or giving up after a ... Read More: Monthly Financial Planning Resolutions]]> The New Year is always a good time to think about your financial goals and objectives for the year ahead and beyond. But don’t feel as though you have to do everything at once. Instead of the annual ritual of overdoing New Year’s resolutions and making grandiose plans (then backsliding or giving up after a few months), why not resolve to take a series of small steps throughout the year?

During the next 12 months on our blog, we will share 12 quick, easy things you can do to help you stay on track with your financial goals. Just one thing per month — 12 proactive tasks for 12 months in 2012.

In January, resolve to call your advisor if you’ve recently had or are planning any major life changes that may impact your investment planning.

Marriage, divorce, a career change, the birth of a child, returning to school, a new car purchase and many other life events can impact your finances – both in the short term and the long term. Take just a moment to contemplate recent changes or ones you see on the horizon, and let us know what’s new. With a brief review of your investment plan, we can help ensure you stay on track with your financial goals.

Here’s a preview for the year ahead. Don’t worry, we’ll provide you with more detail when the time comes.

In February, resolve to spend a few hours organizing your personal files and documents.

In March, resolve to talk to your children or grandchildren about the importance of saving and investing.

In April, resolve to review your life, home and auto insurance policies to ensure they meet your current needs.

In May, resolve to spend a few hours volunteering your time to a charitable organization.

In June, resolve to assess your need for disability insurance.

In July, resolve to create or update your will.

In August, resolve to call a family meeting to discuss your estate plan/will, and follow it up with a fun event like a dinner or outing.

In September, resolve to review and, if needed, update all beneficiary information for your accounts and policies.

In October, resolve to create a budget for holiday spending.

In November, resolve to call your financial and tax advisor to discuss any questions you may have about your 2012 income tax filing.

In December, resolve to review your financial plan to see if the goals you’ve set are still on track and important to you.

]]> http://moneyaz.com/2012/01/monthly-financial-planning-resolutions/feed/ 0 Better Business Bureau Names Top Scams of 2011 http://moneyaz.com/2012/01/better-business-bureau-names-top-scams-of-2011/ http://moneyaz.com/2012/01/better-business-bureau-names-top-scams-of-2011/#comments Thu, 12 Jan 2012 21:34:40 +0000 Perspective Financial Services http://moneyaz.com/?p=1921 Better Business Bureau investigates thousands of scams every year, from the latest gimmicks to schemes as old as the hills. This year, they have divided scams up into nine major categories (from jobs and dating to phishing and identity theft) and picked the top scam in each.

The year’s top financial scam centered on ... Read More: Better Business Bureau Names Top Scams of 2011]]> Better Business Bureau investigates thousands of scams every year, from the latest gimmicks to schemes as old as the hills. This year, they have divided scams up into nine major categories (from jobs and dating to phishing and identity theft) and picked the top scam in each.

The year’s top financial scam centered on mortgage relief programs. According to BBB, “In challenging economic times, many people are looking for help getting out of debt or hanging on to their home, and almost as many scammers appear to take advantage of desperate situations. Because the federal government announced or expanded several mortgage relief programs this year, all kinds of sound-alike websites have popped up to try to fool consumers into parting with their money. Some sound like a government agency, or even part of BBB or other nonprofit consumer organization. Most ask for an upfront fee to help you deal with your mortgage company or the government (services you could easily do yourself for free), and almost all leave you in more debt than when you started.”

Click here to read the full list of BBB’s Top Scams of 2011.

]]> http://moneyaz.com/2012/01/better-business-bureau-names-top-scams-of-2011/feed/ 0 Exploring Alternatives to Traditional Banking http://moneyaz.com/2011/12/exploring-alternatives-to-traditional-banking/ http://moneyaz.com/2011/12/exploring-alternatives-to-traditional-banking/#comments Tue, 27 Dec 2011 15:00:04 +0000 Jim Mailliard, CFP® http://moneyaz.com/?p=1914 During the last decade, online banking has become one of the fastest growing Internet activities.  Online banks, also called virtual or direct banks, have no physical network of branches. Proponents say the resulting lower cost structure allows online banks to offer reduced fees and more competitive rates.

Online bank customers can bank 24 hours a day, ... Read More: Exploring Alternatives to Traditional Banking]]> During the last decade, online banking has become one of the fastest growing Internet activities.  Online banks, also called virtual or direct banks, have no physical network of branches. Proponents say the resulting lower cost structure allows online banks to offer reduced fees and more competitive rates.

Online bank customers can bank 24 hours a day, 7 days a week from home or office via the Internet through secure websites, by phone or chat, or via mail using postage-paid envelopes.  Deposits can be made online using scanning applications provided by the bank.  Disadvantages of using an online bank include the inability to make cash deposits and waiting longer for physical items such as certified checks (these can take 7 to 10 days to arrive in the mail).

Another alternative to the traditional bank is a credit union.  These non-profit membership co-ops provide most of the services of a traditional bank. However, fans say credit unions deliver more personal customer service.  Being non-profit, credit unions may pass savings on to their members in the form of lower and fewer fees and more attractive rates, just as online banks can. Membership usually requires an affiliation of some sort through employment or other connection.  For example, one prominent credit union serves mainly current or former members of the military.  But, as Mark Huffman of ConsumerAffairs.com points out, “Over the years, these requirements have been loosened to the point that almost all consumers can find a credit union they can join.”

Keep in mind that switching banks can be complicated.  For example, direct deposits have to be rerouted to the new account.  Any automatic periodic bill payments also must be set up anew.  Some banks offer Switch Kit, a step-by-step guide (including forms, telephone numbers and other information) to walk consumers through the process of getting a new bank account up and running.

]]> http://moneyaz.com/2011/12/exploring-alternatives-to-traditional-banking/feed/ 0 Is it Time to Roll Over Your Retirement Accounts? http://moneyaz.com/2011/12/is-it-time-to-roll-over-your-retirement-accounts/ http://moneyaz.com/2011/12/is-it-time-to-roll-over-your-retirement-accounts/#comments Tue, 13 Dec 2011 16:00:54 +0000 Perspective Financial Services http://moneyaz.com/?p=1895 How many retirement accounts do you have? If you’ve changed jobs a few times throughout your career, you could have several accounts housed in different employers’ plans.

While it is certainly acceptable to leave money in an old plan, in some cases it may be a better idea to consolidate your assets. (If your ... Read More: Is it Time to Roll Over Your Retirement Accounts?]]> How many retirement accounts do you have? If you’ve changed jobs a few times throughout your career, you could have several accounts housed in different employers’ plans.

While it is certainly acceptable to leave money in an old plan, in some cases it may be a better idea to consolidate your assets. (If your account value is less than $5,000, your former employer can cash you out of the plan, making it imperative to have a back-up destination for those assets.) Having your retirement portfolio in one place can make it easier to track performance and make changes, which help ensure proper asset allocation of your portfolio.

Be sure to first compare the investment options of your old and new plans — and/or any IRA option you are considering — and their associated fees. Were you able to properly diversify your assets in your old plan?  If your investment choices were limited, you may want to move your money. Are the investment fees in your old plan higher or lower than in your new plan? If you were paying more for the investments in your old plan, it could help save you money to move your assets. Your investment advisor or financial planner can help you find the answers to these questions and decide if a rollover makes sense in your situation.

Initiating a rollover is easy. First, check your current plan rules to confirm that rollovers are permissible (the vast majority of workplace retirement plans accommodate rollovers). Next, simply contact the financial institution that will house your account. They will either have you fill out a form or have a representative help you through the process.

Be sure to understand the difference between a rollover and a distribution. A rollover allows you to transfer your money from one qualified retirement account to another without incurring any tax consequences. A “qualified” account can be either your new employer’s plan or a rollover IRA.

A distribution is essentially a withdrawal from your account. If you request a distribution, the account administrator is required by law to withhold 20 percent of your account balance to pay federal taxes. State taxes, if applicable, are also due. If you are under age 59½, you could be subject to an additional 10 percent federal early-withdrawal penalty. You can roll over assets from a distribution within 60 days of receipt and reclaim those tax withholdings. If you wait longer than 60 days, a rollover is not permissible.

Portions of this article were provided through the Financial Planning Association, the membership organization for the financial planning community (through McGraw-Hill Financial Communications), and is brought to you by Perspective Financial Services, a local member of FPA.
Required Attribution: Because of the possibility of human or mechanical error by McGraw-Hill Financial Communications or its sources, neither McGraw-Hill Financial Communications nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall McGraw-Hill Financial Communications be liable for any indirect, special or consequential damages in connection with subscriber’s or others’ use of the content. © 2011 McGraw-Hill Financial Communications. All rights reserved.
]]> http://moneyaz.com/2011/12/is-it-time-to-roll-over-your-retirement-accounts/feed/ 0 Leadership, Perseverance, Hope http://moneyaz.com/2011/12/leadership-perseverance-hope/ http://moneyaz.com/2011/12/leadership-perseverance-hope/#comments Tue, 06 Dec 2011 16:01:12 +0000 Mike McCann, CFP®, AIF® http://moneyaz.com/?p=1906 Last month, I attended the Schwab IMPACT conference for investment advisors in San Francisco. This invitation-only financial-industry conference brings together independent investment advisors with influential presenters, exhibitors and experts to learn about and collaborate on key issues and best practices. It was my extreme honor to speak on a panel about building and managing ... Read More: Leadership, Perseverance, Hope]]> Last month, I attended the Schwab IMPACT conference for investment advisors in San Francisco. This invitation-only financial-industry conference brings together independent investment advisors with influential presenters, exhibitors and experts to learn about and collaborate on key issues and best practices. It was my extreme honor to speak on a panel about building and managing an advisory business.

Photo Caption: Investment Advisor Mike McCann (left) with U.S. Navy Captain Mark Kelly at the Schwab IMPACT conference, November 2011

In addition to continuing education sessions, I had the pleasure of sitting in on inspiring keynote presentations by Tony Blair, former Prime Minister of the United Kingdom; Maria Bartiromo, anchor of CNBC’s Closing Bell and host/managing editor of the nationally syndicated Wall Street Journal Report; and Charles Schwab, founder and chairman of the Charles Schwab Corporation. Their insights on the economy, global events and the future were enlightening.

American hero, U.S. Navy Captain Mark Kelly also was a keynote speaker at IMPACT. Kelly served in the Persian Gulf and flew in dozens of missions during Operation Desert Storm. During his tenure with NASA, Kelly  was an astronaut on four space shuttle missions, including one as the leader of Discovery and another as the commander of the final flight aboard Endeavour in May of this year. He spoke, in part, about the importance of thinking individually and dangers of falling into a “group think” mentality. “None of us is as dumb as all of us,” Kelly said, quoting a popular NASA saying.

He is married to Congresswoman Gabrielle Giffords, who was the target of an assassination attempt in January 2011. Regarding Giffords’ surprise return to Congress in August 2011, Kelly asked, “Have you ever packed for your wife for a trip? This is the most risky thing I’ve ever done.”

Kelly’s overall message of leadership, perseverance and hope was both humbling and uplifting. He believes America must continue to be a leading presence in the world, sharing our values of freedom, family, community and self-reliance for the betterment of all humankind.


]]> http://moneyaz.com/2011/12/leadership-perseverance-hope/feed/ 0 How Closely Correlated Is Your Portfolio? http://moneyaz.com/2011/11/how-closely-correlated-is-your-portfolio/ http://moneyaz.com/2011/11/how-closely-correlated-is-your-portfolio/#comments Tue, 29 Nov 2011 16:00:50 +0000 Perspective Financial Services http://moneyaz.com/?p=1884 Investors hear a lot about the benefits of asset allocation, that is, spreading your assets among different types of investments to help reduce risk. But less discussed is an equally important measurement: correlation, which is a way to measure how closely related two types of investments are. In theory, you could be invested in ... Read More: How Closely Correlated Is Your Portfolio?]]> Investors hear a lot about the benefits of asset allocation, that is, spreading your assets among different types of investments to help reduce risk. But less discussed is an equally important measurement: correlation, which is a way to measure how closely related two types of investments are. In theory, you could be invested in multiple securities of differing types and classes, but if they are all closely correlated, your portfolio may not be as diverse as you think — and that could open you up to more risk than you intended.

Correlation is expressed as a number between 1.00 and -1.00:

  • 1.00 indicates an absolute positive correlation (that is, the assets under comparison always move together in the same direction).
  • 0 correlation indicates there is no relationship between the assets.
  • -1.00 indicates an absolute negative correlation (the assets always move together in opposite directions of each other).

Generally, most experts consider a correlation value between 0 and 0.50 as a weak correlation, while a value of 0.50 and higher is progressively stronger. The farther from a 1.00 correlation two investments are, the more diversification you may realize.

If you’d like to determine the correlation of your portfolio, the easiest way may be to contact your financial professional. You can also search the Web for an investment correlation calculator — a number of brokerage firms and other financial sites have tools, but few are free to use.

The Markets March in Unison

One important consideration for investors to keep in mind is that the financial markets are increasingly marching in unison, making correlating your investments increasingly difficult. A variety of factors are causing this trend, including:

  • Globalized economies: The growth of global trade and the proliferation of worldwide investment firms mean that the fortunes of both large corporations and the investors who own their stock are tied together as never before.
  • Reliance on U.S. dollars: Many foreign governments and global financial institutions rely on U.S. dollars as a reserve currency to pay debts or to influence exchange rates. Given this situation, the health of the U.S. economy and the actions of the Federal Reserve reverberate globally, as do events in Europe and beyond.

What Investors Can Do

If climbing correlations concern you, consider strategies that may help you balance risk and return, including:

  • Combining stocks with other types of assets. Adding exposure to bonds, real estate and commodities may help you to balance returns over the long term.
  • Considering investments that generate income. Dividend-paying stocks, bonds and REITs are popular with investors searching for income. When stock returns are uncertain, dividends may provide something in the way of a return (though dividends are not guaranteed).

Remember that alternative investments and commodities are risky, too. REITs are subject to the ups and downs of the real estate market, and the volatility of gold during the past 10 years is close to that of stocks. The returns of these investments do not always track the U.S. stock market.1

1Source: Standard & Poor’s. Returns are for the 10-year period ending December 31, 2010. Volatility is measured by standard deviation.
Portions of this article were provided through the Financial Planning Association, the membership organization for the financial planning community (through McGraw-Hill Financial Communications), and is brought to you by Perspective Financial Services, a local member of FPA.
Required Attribution: Because of the possibility of human or mechanical error by McGraw-Hill Financial Communications or its sources, neither McGraw-Hill Financial Communications nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall McGraw-Hill Financial Communications be liable for any indirect, special or consequential damages in connection with subscriber’s or others’ use of the content. © 2011 McGraw-Hill Financial Communications. All rights reserved.

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