The news may be too much, but there are financial matters to review, if you just set aside time

Many people react to the bombardment of news on the economy, the European debt issues, the presidential campaign and legislative gridlock by wanting to shut it all off! That is understandable, but not often the best solution

It is one matter to just not open investment statements; it is a wholly different matter to postpone addressing financial issues

So, while you may not want to review re-balancing of your investments to match your long-term allocation or hear about the dismal returns on bonds, there is more that you can still address

We have suggested a list at: finance health day your own financial planning focus

It is like a “mental health day” but for your personal finances.
After you look at the list, let me know what you think, what you decide to do,
and if we can help you or anyone you know accomplish what is needed now. Thank you,

Steven

Whole Life is not a great “Investment Alternative” – use the death benefit when age becomes a factor

Whole Life is a poor “investment alternative.” Consider what an insurance company may say, annotated with our comments:

1) Tax Deferred
Does not make up for fees and poorer returns. The mortality fees alone can bring the total fees up over 2%, which compares poorly to a stock index bought via an ETF, were the fees are below .1%
2) Attractive returns compared to bank alternatives
Yes, to a bank, but NOT to your own portfolio of stocks or funds
3) More than initial deposit guaranteed in early years
Only at first and at some cost
4) Strong dividend history
Dividends are only a part of the return on investments – whole life is far worse than a good variable life policy let alone stocks purchased directly or via mutual funds, over time
5) Death benefit (DB) income tax free
Always true of life insurance because it is subject to estate taxes
6) Returns very high if DB paid in early years
“so what?” This is intended to be a long-term purchase
7) Beneficiary can be changed easily without having to redo wills and trusts
Meaning that proper estate planning is not being done
8) Annuitization of other assets easier to do, which can lead to higher retirement income
“Easier” means you pay them to do it instead of doing it yourself, which means shifting the allocation of your own portfolio depending on cash needs

Same-sex marriages filing jointly with the IRS…

Kiplinger’s Tax Newsletter reports:

Same-sex couples are one step closer to joint filing of their federal returns. An Appeals Court scrapped a law barring them from being treated as married for purposes of federal law, even though they are legally married under state law. This part of the Defense of Marriage Act is unconstitutional (Gill v. OPM, 1st Cir.).
This decision will almost certainly be appealed to the Supreme Court, delaying any final resolution until next year. So until the High Court gives the nod, all same-sex couples remain barred from filing joint income tax returns with IRS.
In the interim, married same-sex couples should file protective refund claims with IRS on Form 1040-X if joint return status would save them tax. The Service will hold the protective claims in abeyance until there’s a final decision in the case.

Same-sex couples also can enroll in long-term-care insurance programs that states offer to their employees. A federal district court struck down a U.S. law
that disqualifies state-maintained long-term-care plans if married same-sex couples or domestic partners are covered (Dragovich v. Treasury Department, D.C. Calif.).

We will continue to track this…..

Simple words to encourage – to remind yourself or to pass on

Sometimes you know these lessons and sometimes you forget, or you wish you could pass them on to others

I thought the following list from a Morningstar article on a petite woman now flying 757s was a good summary to pass on:

Here are five lessons Ellen passed on to me that I believe every financial advisor can take away from her story:

1. Don’t let anyone tell you that you can’t do it!
2. Dreams are the beginning of your destiny.
3. Be willing to chip away at your goals for years–success doesn’t have to happen overnight.
4. Always be enthusiastic about your work.
5. Never quit. A lot of people say they want to be great at what they do, but only those with determination and perseverance to push through the difficult days will make it to their goal.

Hope this helps you are someone important to you

Summer of 2011 to do list: investing, estate plan, refinance, taxes and planning matters

For this summer, we have suggested financial matters for you to review:

1. Asset allocation and investments – taking all IRAs, 401(k)s and taxable accounts as a single portfolio, reviewing the allocation and checking to see if it is time to rebalance;
2. Interest rates, investing and inflation – rates are likely to stay low, inflation is likely to stay low as well (there is no wage component, in fact wages may be deflationary now, there is only commodity inflation), so that leaves looking at any investment that equals or beats the 10 year Treasury bond at a 3% yield: good municipal bonds, dividend paying stocks, or packaged stocks like Berkshire Hathaway or the Permanent Portfolio mutual fund;
3. Refinancing – rates are back down some, so that you can bring a 30 year loan down to a 4.5% 25 year loan, or 4.25% 20 year, or 3.75% 15 year fixed;
4. Home Equity Line of Credit – rates are still under 3% and no closing costs, so be sure to set one up so you have a fall back source of funds to cover the unexpected
5. Estate plan – reviewing your wills and trusts, and any letters to fiduciaries, to be certain that you account for such matters as the portable credit, which requires an election at the first death;
6. Tax planning – reviewing your information for 2011 against 2010 and checking your options to be you minimize your 2011 and 2012 taxes (e.g., max out 401(k), 402(b), ESPP plans, convert to Roth IRAs in low income years, etc.); and
7. In fact, you could do a Finance Health Day (you own financial planning focus) – please check out Finance health day….

Let me know if you have questions or comments, or if anyone you know wants to ask about any of this material. Also check out Time Saving Tips…

Coming soon…. credit card benefits with real value