In January, I had a couple of clients call to complain about capital gains they had earned in 2015. Most of my clients are happy that their holdings have gains, but these gains had a negative impact on my client’s Social Security checks. Because the gains pushed them into a higher tax bracket, their Social Security payment was reduced. Is this a bit of crying with a loaf of bread under each arm? Maybe.
With the recent market uncertainty due to Brexit, this may not be the case for 2016. I know, we are only ½ way through the year, but there is that silver lining.
If you sold into the panic of Brexit, you may have booked some capital losses that can offset any potential capital gains yet to be paid. It is often a good idea to do a thumb nail tax return in the middle of the year just to keep check of where you are moving from a tax standpoint.
Silver linings present themselves at odd times – take advantage of yours.

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Q: My father passed away and left me, his only child, a fully invested portfolio of over $15 million to take care of with the help of a few financial advisors. Some of the advisors have been handling my father’s money for over 10 years and look at me as if I am a dimwitted, spoiled child. I need help – how do I find an advisor that will help and respect me?
A: Sudden wealth can be overwhelming to the most knowledgeable of investors, let alone someone who has not had to make these decisions in the past. You should take as much time as you need to interview financial professionals until you are comfortable with someone. I suggest a Certified Financial Planner™ practitioner vs. someone who just calls themselves a financial advisor. As a CFP®, we have greater education and regulations to follow than those who do not have the CFP designation. I also suggest that you look for a fee-based, or fee only CFP®. There will be no question that your needs will be first in foremost in the relationship.

disclosures:http://www.hechteffect.net/?page_id=31

There is a new online investment firm for women only. The creator of the site names 3 keys reasons she started the site and I do not agree with her reasoning. Here are her points:
“Women are too scared of the stock market”.
I have a number of female clients that have no fear of investing in stocks. They ask thoughtful questions, invest in companies where they spend money, and pay attention to many factors that affect the stock market.
“Women don’t have enough confidence in themselves”.
The comment for this point is the women need to know everything about a company before investing in it and that they hesitate when investing. I thought that was called due diligence? Doing your homework is not a bad thing in my book.
“Women let their partners (often men) control their money”.
I have heard the opposite many times also. I do have a number of female clients that have little interest in their investments; this is not completely a gender issue.

I feel that these points marginalize women vs. providing more confidence. A woman centered investment firm is fine, but just do it for better reasons than those presented.

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It is that time of year again, hurricane season. Each year, we prepare by stock piling water and canned goods, flashlights and batteries. What about your important papers? A little bit of water can cause a lot of damage. If your important papers are not protected, it is very hard to get help. Here are a few tips from the Chief Financial Office for the State of Florida:
Managing home repairs while evacuated or without power is never easy, but taking a few steps ahead of the storm can make a world of difference. That’s why I encourage all Floridians to use this week to put together an insurance and financial packet that you keep in a safe place and can easily take with you should you need to leave your home in a hurry.
This packet should include documentation associated with property and health insurance policies as well as financial account information and contact information for banks and insurance companies. Having these documents put together ahead of time allows you to have ready access to all of the information necessary to file an insurance claim, whatever your situation may be.
If you have questions, or simply don’t know where to begin, we’ve created a simple, easy-to-use financial preparedness toolkit. This toolkit provides a single place to jot down and keep track of all of your insurance information. In the event that a storm directly affects you and your family, this toolkit can help you keep a list of adjuster contacts, as well as a log of any calls you’ve made to insurance companies or agents about claims you may have to file.
In the aftermath of a hurricane or other emergency, you shouldn’t have to worry about searching for account information or trying to remember the details of all your possessions. Luckily, emergency financial documents are among the easiest things to prepare, ensuring you have everything you need readily available.
To download a copy of the toolkit and to learn more about other resources we make available to help you become disaster ready, visit http://www.myfloridacfo.com/division/Consumers/Storm/

disclosures:http://www.hechteffect.net/?page_id=31

June is for brides, but maybe not. Many retired couples are choosing to shack up but not marry. I don’t have a problem with this – as a matter of fact, two years ago, I advised a couple to do just that – live together but not marry. Here are some reasons why:
You can share the wealth, sort of. You don’t have to completely mingle your finances, just share costs. Many couples set up a joint account to pay common expenses.
You will not have changes to your Social Security. Often, if there is a second marriage, Social Security benefits can change, generally not for the better.
Your adult children won’t have to worry about losing their inheritance. A spouse is generally the primary beneficiary (especially if there is not a will); we all know the blended families can sometimes create inheritance problems and bad feelings.
So move in together, but make sure that everyone important to you knows the ground rules you have put in place.

disclosures:http://www.hechteffect.net/?page_id=31

Lately, I have met with a number of people taking advantage of our second opinion appointment. I have never seen so many accounts that have statements of 65 pages or more.
The account consists of many individual stocks and a few mutual funds. Most of these holdings have $3000 or less per stock or fund. There is no difference between the holdings in retirement accounts vs. non-retirement accounts. I find this crazy. This shows, in my opinion, that there has been very little weight given to the client’s risk tolerance or investment needs.
Diversification can be a good thing; however, you can be too diversified.

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Q: I have been watching Apple for a number of years. Now that the stock is down so much, should I put all of my investments in AAPL?
A: While I feel that apple will be a solid company for many years to come, my answer is NO.
It does not matter how you feel about a company, you should never put all of your assets into one holding. Diversification is very important for successful, long term investing. I feel that no more than 10% of your investment dollars should be in any one holding.

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About a year ago, I received a call from a client – her voice was shaking – she told me that their family had decided they were going to liquidate all of their accounts and move everything into annuities. I asked if they planned to move their IRA and Roth IRA account also and she said yes. She said there was no point in me trying to talk to them about this as their minds were made up. I asked who was there with them and she hemmed and hawed. I asked if the insurance agent was there telling her what to say. She replied yes and promptly ended the call. I was heartsick for this 80 something couple, but what could I do?
I alerted the CPA and he went to visit them. After his visit, he told me he could no longer keep them as clients and he felt as I did that they were making a huge mistake.
Fast forward to this April, the CPA sees the wife at his door, crying for help. She had a box of unopened envelopes and so much other paper she did not know which end was up. They bottom line is: they ended up owing $80,000 in income tax, have a number of annuities with 10yr. surrender charges, and no longer have any liquid funds.
I and the CPA had tried to be advocates for this couple – their adult children did not.
Please pay attention to what is going on with your parents. An attorney has been brought in to try and help this couple. I hope it is not too late.

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