Category Archives: investing

It is harvesting time – or is it?

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The end of the year is the time when we all look at our tax picture to see what can be done to lower what we might owe. Harvesting capital gains, especially when we know the tax rates for capital gains most likely will be higher next year, is one approach. But think twice before you sell.

One question to ask is: “Can you afford to shrink your capital, and therefore future wealth?” The answer is to harvest your gain up to a point. Look at any investment losses you may have + $3000 of ordinary income over that loss amount.

By using this approach, you can reduce your current tax bill but not at the expense of your future.

 

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

You have a question – I have an opinion.

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Q: We hear so much about the “fiscal cliff”, what changes should an investor make to avoid this financial meltdown?

A: If an investor already has a reasonable investment strategy that reflects their risk tolerance and time horizon, you probably should not make any changes, nothing dramatic anyway.

My opinion: You should have regular reviews with your Certified Financial Planner® and share your concerns. For non-retirement accounts, I feel that tax-free investments need to play a bigger part of the portfolio. For retirement accounts, I am looking at mutual funds that have a lot of consumer staples, in other words, companies that we will all spend money with no matter what the circumstances are.

 

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

Happy Thanksgiving

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Last Friday we participated in a retreat where we were asked where our families came from and what lessons did we learn. Many of us are first generation Americans with families hailing from all over Europe and many different religions.

In my family, I am 3rd generation American on my Father’s side and 1st generation on my Mother’s side. My Father’s family is from Germany, my Mother’s from Russia. Both sides left their respective countries due to religious persecution and both families became self-employed when they came to North America. My Father’s family immigrated to Tennessee and my Mother’s came to the U.S. by way of Canada when she was in elementary school. For both sides of my family, to be an American was the ultimate dream.

What I learned from them is that no matter what your religion or country of origin – we are Americans. Having a strong sense of heritage is important but first and foremost, we are Americans. As Americans, we work hard and we do not expect anything to be given to us but we do give back to our community. Love of family and country and the freedom to pursue our dreams is what we have to be thankful for. Happy Thanksgiving to you & yours.

 

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

It’s all over now.

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The election of 2012 is over. Whether or not you are happy with the outcome, this is what we have for the next four years. I woke up a 1:45, turned on the TV, and listened to President Obama’s speech. The tone was one of conciliation. The electorate had a 1% difference and the House & Senate remain the same. We can hope for compromise and a move to the center.

With that being said, what is important to me is your retirement, your kid’s college funds, and your general investments. We need to make sure that your portfolios can ebb and flow with the changes due to come. My biggest concerns lie with the changes to our tax system. I do not know how much things will change; I do feel strongly that the increase will be significant. We can deal with those changes. Your portfolio and your investing needs are managed and re-balanced for your comfort and success.

Keep this in mind; if you are in your late 50’s – early 60’s you have at least another 30+ years to live. That is almost 8 more Presidential elections in your lifetime. Take a breath and know that the partnership we have formed to manage your investments will prevail.

 

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

To pay cash or not? That is the question.

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Q: I work part time, my home is free and clear and I would like to downsize. If I sold the home today I could get $360,000. I would like to spend no more than $160,000 on a smaller home, should I pay cash for the next home?

A: Having a mortgage free home is the desire of many retirees. If you spend $160,000 on the new home that will leave you with a nice nest egg from the sale of your current home. If you were to need more cash, you can always look into a reverse mortgage after age 62 on your new home. I say – pay cash!

 

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

We have been in their shoes

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As Floridians, we have lived through many hurricanes. I think that we are generally better prepared than those who are now suffering in the Northeast. Hurricane Sandy has devastated many people and now is the time for us to offer our prayers and help.

Please review this link and help as you can. I searched many sites to find one that I felt would provide the most help to those in need. May G-d bless them and you.

http://www.foodbanknyc.org

 

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

Strategies to lower your tax bill

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Unless Congress acts, your tax bill will be higher next year. Top income tax rates will go from 35% to 39.6%. On top of that, a piece of the health-care reform law goes into effect: For higher-income taxpayers, the provision means an additional 3.8% Medicare tax on investment income that most people are not aware of yet. That brings the highest marginal tax rate to about 43.4% before state and local taxes, if they apply to you. So what can you do?

One solution available to most of us is our retirement accounts. Many employees are only funding their 401k accounts to the company match. If you increase that by just 3%, you will lower your tax bill but make little or no difference in your spendable income.

Another solution is to take advantage of the tax rates we are under now and look into converting part of your Traditional IRA to a Roth IRA. You will pay tax on the amount that you convert but it will be at today’s lower tax rate vs. next years’ increased rates. Converting part of your Traditional IRA to a Roth may also help with tax management in the future. When calculating your Required Minimum Distribution, the Roth balances are not included.

A comprehensive review of your retirement accounts, cash flow, and taxes should be done annually. Contact your Certified Financial Planner Professional® today.

 

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

You always spend more on vacation

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A major component that I look at when putting together a retirement plan is how my clients are living their life. I like to know not only what their fixed expenses are, but also what they spend on vacations, charitable gifting, personal care, pets, kids, and all of the little things that make up our lives. Retiring is like a long vacation, and you always spend more on vacation. So how do you prepare?

We like to start 2-3 years before you plan to retire by looking at the total expense figure plus tax and inflation. While inflation has been downplayed by the government over the last few years, I never ignore it. We like to take this budget and review it annually just as we do with the investment mix to make sure you are not falling off the track. Budgets are just as important in retirement as they are prior to retirement. You should not be surprised if you blow your budget in the first year of retirement. Most clients do.

By scheduling regular review and update appointments, we can keep close track of not only your investment portfolio but how well you are doing with your retirement budget. Knowledge is power. Knowing where your cash is going will give you the freedom to occasionally blow the budget in retirement.

 

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

Your question – my answer

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Q: We own 2 pieces of property which can sell for about $200,000. Our only income is Social Security. When we sell the property, is it a good idea to put all of the money in an annuity that will pay us monthly?

A: You are asking about an Immediate Annuity. It will pay a fixed income over your lifetime and that of your Spouse, and/or for a certain period of time. It can be a nice choice because you will receive a fixed income every month. This choice is an irrevocable decision as once that tap is turned on, you cannot turn it off. You may want to call to get a few quotes using a portion of the funds vs. all of the funds from the property sales.

 

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

This Saturday hear myself & Denise Kovach on our program “On the Money”!

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We will  be discussing . . .
• I Have Been Phished – Now What Do I Do?
• Make Me a Signer – Not an Owner:
What to Tell Your Parents When They Want to Add You to Their Accounts & Why.
• Email Question: I work full time and have a 401k as well as an IRA. What will I have to pay tax on when I retire?

Call in your
questions at
407-290-0058 OR
1-800-328-5858

Listen for details about
our upcoming workshops:
Countdown to Retirement
Saturday, November 3, 2012 – 11 a.m.–1 p.m.
Social Security:
Maximize Your Benefits
Thursday, January 24, 2013 – 6:45 p.m.-8:00 p.m.

Tune in for
“On The Money”
Every Saturday
on WDBO at 9:00 a.m.

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your computer by
clicking the link above
at 9:00 a.m. on Saturday
to hear “On The Money”

WDBO offers a variety of information radio talk programs on a variety of topics. For nearly 20 years, Certified Financial Group has been the selected host for the 9:00 a.m. Saturday time slot to discuss topics pertinent to the financial world.

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