Should You Care What the Market Does Each Day

Should You Care What the Market Does Each Day?

A calm investor may realize better long-term returns than an overly concerned one.

 

Provided by Michael Fassi CLU, ChFC

 

Investors are people, and people are often impatient. No one likes to wait in line or wait longer than they have to for something, especially today when so much is just a click or two away.

 

This impatience also manifests itself in the equities markets. When the S&P 500, Dow, or Nasdaq take a tumble, some investors grow uneasy. Their impulse is to sell, get out, and get back in later. If they give into that impulse, they may effectively pay a price.1

Across the twenty years ending in 2015, the annual return of the S&P 500 averaged 9.85%. During this same period, the average retail investor realized a yearly return of just 5.19%. (These numbers come from Dalbar, a respected investment analytics firm.) Why the difference? It could partly stem from impatience.1

Some investors may be worrying too much – and acting on those worries to their detriment. An investor who glances at a portfolio once per quarter may end up making more progress toward his or her goals than one who anxiously pores over financial websites every day.1

 

Too many investors make quick, emotional moves when the market dips. Logic often goes out the window when this happens, along with long-term perspective.1,2

 

Some long-term investors focus on buying shares of respected companies. Warren Buffett does. He has famously said that an investor should buy shares of a firm to own a piece of it, not merely in hopes that its share price will rise.2

Certain companies are so strong, their brands so renowned, that their shares weather downturns better than shares of other firms. In a raging bull market, “all boats rise” and many types of shares may perform well. Buffett often tries to invest in companies whose shares may perform well in both up and down markets. In especially bullish times, his returns have sometimes lagged the market, but chasing the return is not his objective.2

In contrast with Buffett’s patient long-term approach, investors who care too much about day-to-day market behavior may practice market timing, which is as much hope as strategy.2

 

To make market timing work, an investor has to be right twice. Ideally, he or she sells high, takes profit, and buys back in at some point of capitulation – a moment when bears throw in the towel and the market rallies off a bottom. How many investors can pull this off? This is hard even for Wall Street professionals. Mostly, retail investors buy high and sell low. Picture a shopper only buying an item at a department store when the price rises, then returning it when it goes on sale – but only getting the sale price back.1

Investors who alter their strategy in response to the headlines may end up changing it again after further headlines. While they may feel on top of things by doing this, their returns may suffer from their emotional and impatient responses.1

Nobel Laureate economist Gene Fama, Jr. once commented: “Your money is like soap. The more you handle it, the less you’ll have.” Anyone who has invested some of their money in equities would do well to keep his gentle warning in mind, especially at times when markets grow turbulent.1

 

Mike Fassi, CLU, CHFC is a Representative with Centaurus Financial Inc. and may be reached at Fassi Financial, 970-416-0088 or mike@fassifinancialnetwork.com

 

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

  

Citations.

1 – thebalance.com/why-average-investors-earn-below-average-market-returns-2388519 [8/28/16]

2 – usatoday.com/story/money/personalfinance/2016/01/30/3-reasons-you-shouldnt-worry-stock-market-2016/79304046/ [11/9/16]

 

Posted in financial

Dow Closes Near Record High After Trump Victory

Dow Closes Near Record High After Trump Victory

U.S. and European indices rise, while Asian indices fall.

 

Michael Fassi CLU, ChFC presents:

 

A day after Donald Trump’s election win, Wall Street experienced a surprising upswing. It was feared the market would plunge on November 9 since many investors were anticipating Hillary Clinton to triumph in the presidential race. Quite the opposite happened.

As the trading day ended, the Dow Jones Industrial Average notched a close of 18,589.69, thanks to a 256.95 gain. The Nasdaq Composite rose 57.58 to a close of 5,251.07, while the S&P 500 settled at 2,163.26 after a 23.70 jump. Gold futures gained 0.29% to $1,278.20; light sweet crude futures rose 0.80% on the NYMEX to settle at $45.34. Meanwhile, bond prices fell and the yield on the 10-year Treasury rose to 2.08% Wednesday.1,2

The key European markets also seemed to be accepting the idea of a Trump presidency with relative calm. November 9 saw gains of 1.56% for Germany’s DAX index, 1.49% for France’s CAC-40, and 1.00% for the United Kingdom’s FTSE 100. The Stoxx Europe 600 advanced 1.46%.1

This did not apply for the important Asian markets, where the trading day ended hours before action on Wall Street began. The biggest loser among the indices was the Nikkei 225. The Japanese benchmark slid 5.36%. Lesser losses were incurred by Hong Kong’s Hang Seng (2.16%), India’s Sensex (1.23%), and China’s Shanghai Composite (0.62%).1

 

Why did Wall Street turn so bullish a day after the upset? Credit was quickly given to the victory speech Trump delivered very early Wednesday morning. In speaking to the Associated Press, Eric Weigard, senior portfolio manager at U.S. Bank’s Private Client Reserve, noted Trump’s “remarkably conciliatory posture,” which communicated a “presidential disposition, and gave a greater sense of calm.” Also, some institutional investors saw a buying opportunity: billionaire Carl Icahn told Bloomberg he was devoting about $1 billion to equities on Wednesday. “People are starting to realize that a Trump presidency is not the end of the world,” remarked Tom di Galoma, managing director of trading at Seaport Global Securities. Investors are hoping the optimism displayed on Wall Street Wednesday will be sustained.2

 

Mike Fassi, CLU, CHFC is a Representative with Centaurus Financial Inc. and may be reached at Fassi Financial, 970-416-0088 or mike@fassifinancialnetwork.com

 

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

 

Citations.

1 – markets.wsj.com/us [11/9/16]

2 – stltoday.com/business/local/u-s-stocks-rally-following-trump-victory-dow-closes-just/article_250baf34-2237-5cee-a725-c1f2d2dc0415.html [11/9/16]

 

 

Posted in financial

Perspectives for October, 2016

Michael Fassi CLU, ChFC presents:

SMART TIP:
Unplugging appliances when not in use can help reduce your monthly household energy costs.

 

WHO SAID IT?
“The real voyage of discovery consists not in seeking new lands but seeing with new eyes.”
[GET THE ANSWER]

 

TEST YOUR KNOWLEDGE:
Which of these retirement accounts does not require mandatory withdrawals after the account holder turns 70½?

 

A: Traditional IRA
B: Roth IRA
C: SEP IRA

D: SIMPLE IRA

 

[GET THE ANSWER]

October, 2016

Five Surprisingly Affordable Travel Destinations
You don’t have to be a millionaire to travel like one.
[CLICK TO READ]

 

Are Credit Card Rewards Points Really Worth it?
Finding a good program and keeping track of it all can be a hassle. Is it really worth all that extra effort?
[CLICK TO READ]

 

Will Self-Driving Cars Soon Become The Norm?
If so, how much should we trust the new technology?
[CLICK TO READ]

 

Recipe of the Month
Blood Orange Roasted Salmon
[CLICK TO READ]

Perspectives - Page Break

Five Surprisingly Affordable Travel Destinations

Thinking of traveling as summer ebbs into fall? Some good deals can be had stateside and abroad.

Flights to Costa Rica from Florida can be found for less than $150, and hotel rooms in the capital city of San Jose can run under $100 in this shoulder season. If you don’t mind a little rain, Mexico’s Puerto Vallarta beckons with lodging at top resorts for less than $150 per night, and round-trip airfares from 20 American cities averaging $387 in September.

Thinking about Eastern Europe? September flights from New York or Washington, D.C. to Sofia, Bulgaria can be had for less than $500, and this capital city, rich in monasteries, cathedrals, and UNESCO world heritage sites, offers deep accommodations discounts in late summer.

In Los Angeles, the June gloom is long gone with average daily highs in the low 80s and airfares into LAX well below $200. And, there’s always Las Vegas – as it cools off a bit in early fall, hotel prices remain reasonable and airfares often average less than $200, USA TODAY notes.1

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Perspectives - Page Break

Are Credit Card Rewards Points Really Worth It?

For many cardholders, perhaps not. To really make rewards work, a cardholder has to consistently pay off a monthly balance and recognize when rewards are available. For many credit card users, that is easier said than done.

According to a new survey from FINRA (the Financial Industry Regulatory Authority), 47% of credit card users pay down less than 100% of their monthly balances – so the interest accumulated by the outstanding balances may negate the financial benefits of the rewards. (As Bankrate notes, the average APR on a credit card was 16.05% this summer.)

Another survey, from the American Institute of CPAs, finds that just 15% of cardholders had ever paid any travel costs using rewards points. Consumers also frequently complain about the inconvenience of redeeming rewards, especially since most card issuers are putting the onus on the cardholder to keep track of them. Redemption of cash-back rewards tends to be less involved than redemption of travel rewards.

A Consumer Financial Protection Bureau study notes that roughly two-thirds of rewards program participants get cash rewards, with about half of them identifying those cash rewards as the ones they consider most valuable.

The bottom line may be as simple as this: to get the most from rewards programs, look for a card offering cash rewards and an uncomplicated redemption procedure.2

2

Perspectives - Page Break

Will self-driving cars soon become the norm?

Imagine a busy highway with cars roaring along at 65mph, all of the drivers with their hands off the steering wheel. Will this be a milestone of automotive progress, or a recipe for chaos? Truthfully, it will depend on the drivers.

If a self-driving car becomes an effective personal assistant to a driver, and not a replacement for that driver’s critical thinking, then self-driving vehicles could become commonplace. Many new cars already offer some automated driving features, so the future is on its way whether auto buyers are ready or not.

Change is accelerating: in August, Ford Motor Co. CEO Mark Fields claimed that the automaker would roll out driverless cars without steering wheels, accelerator pedals, or brake pedals by 2021. This might seem scary, but it may promote safety. The National Highway Traffic Safety Administration says human error causes 90% of American traffic fatalities. Drivers must not be tempted to cede control because of the new conveniences. Some drivers do whatever their car’s GPS unit tells them to do and end up absolutely lost; in the same manner, relying uncritically on a car’s autopilot system may invite serious error.3

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Perspectives - Page Break

Recipe of the Month

Blood Orange Roasted Salmon

6 Boneless Salmon Filets (approx. 6 oz. each)

3 Blood Oranges

1 Medium Onion

2/3 cup Orange Juice

2 Tbsp Extra Virgin Olive Oil

2 Tbsp Lemon Juice

1 Tbsp Parsley (dried)

1 Tbsp Lemon Pepper

1 Tbsp Honey

1 tsp Garlic Powder

1 tsp Dill

Preheat oven to 410 degrees. ombine lemon pepper, garlic powder, parsley, and dill in a bowl and mix. Set aside. Combine lemon and orange juices, and honey, in a bowl. Whisk and set aside (refrigerate).

Slice your blood oranges and layer in the bottom of a large glass baking dish (approx. 9″ x 13″). Slice onions and layer over oranges. Sprinkle about 1/2 of your herb mixture over the top of the onions and oranges, and drizzle on a bit of olive oil. Place baking dish in the oven and roast until the onions are tender and lightly browned (approx. 20-25 minutes). Remove dish from oven and increase temperature to 435.

Carefully (don’t burn yourself!) place salmon filets in the center of the baking dish, spreading onions and oranges off to the edges. Sprinkle on the remainder of the herb mixture, then pour juice mixture evenly over all of it.

Bake for about 15 minutes in your preheated oven (until salmon is pinked and opaque all the way through). After baking, remove from oven and dispose of the roasted oranges, and, when serving filets, you may choose to garnish with fresh blood orange slices (and/or oasted onions). Enjoy!

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Perspectives - Page Break

Mike Fassi, CLU, CHFC is a Representative with Centaurus Financial Inc. and may be reached at Fassi Financial, 970-416-0088 or mike@fassifinancialnetwork.com

WHO SAID IT?
Marcel Proust

TEST YOUR KNOWLEDGE ANSWER:
B. Roth IRAs are the only IRAs for which Required Minimum Distributions are not required during the original owner’s lifetime. Baby boomers with non-Roth IRAs should be aware that mandatory withdrawals will be required from these accounts once they enter their seventies, with the withdrawals constituting taxable income. If you have a traditional IRA, you may want to consider converting it to a Roth IRA, for eventual freedom from RMDs and the ability to make withdrawals from the IRA when and how you prefer. SOURCE: irs.gov/retirement-plans/retirement-plans-faqs-regarding-iras-distributions-withdrawals [1/6/16]

Perspectives - Page Break 2

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty.

 

Citations.

1 – usatoday.com/picture-gallery/travel/destinations/2016/08/31/best-end-of-summer-destinations-for-budget-conscious-travelers/89669746/ [8/31/16]

2 – bankrate.com/finance/credit-cards/case-against-credit-card-rewards.aspx [8/10/16]

3 – tinyurl.com/zxyd56w [9/5/16]

Posted in financial

The TPP Controversy

The TPP Controversy

Will the Trans-Pacific Partnership ever be ratified? Should it be?   

 

Provided by Michael Fassi CLU, ChFC

 

The Trans-Pacific Partnership is back in the news. A new wave of controversy surrounds this huge trade deal, which has been agreed to, in principle, by 12 nations, but not yet ratified. Its adherents say that it would boost U.S. economic growth. Its detractors say that it would destroy more U.S. manufacturing jobs and doesn’t go far enough to halt environmental abuse.1

Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam have all committed to joining the TPP. These 12 countries generate about 40% of the world’s economic growth and about a third of global commerce. At least six of these nations must ratify the TPP in order for it to operate, and two of those six nations must be Japan and the United States. Therein lies the obstacle. Lawmakers in both Japan and the U.S. will certainly debate the merits of the agreement on the way to a 2017 vote, and there is a real possibility the deal could be struck down.1

 

What does the TPP aim to achieve? It would lower taxes on imports and exports – and get rid of them altogether in some instances. It would require other nations to adopt U.S. copyright terms on intellectual property (life of the creator + 70 years), counterattacking the flow of bootleg copies of movies, TV shows, and music plaguing entertainment firms.1

While the TPP does seek to remedy issues involving worker rights, climate change, overfishing, and the illegal killing and sale of exotic animals, it also gives private companies the opportunity to sue foreign governments. A privately held firm based in one TPP nation could, potentially, sue a government of another TPP nation if it felt that nation’s environmental laws had hurt its profits or caused it financial losses.1

   

The Obama administration has championed the TPP for years. After President Obama leaves office, it may be that his successor will not support it at all.

Donald Trump has called it a “terrible deal” that would constitute a “death blow” for the U.S. manufacturing sector. Hillary Clinton – who at first supported the TPP when she was Secretary of State – no longer supports the pact.1

 

Detractors of NAFTA see NAFTA all over again in the TPP. Unions, including the AFL-CIO, see the deal siphoning away U.S. jobs overseas. Environmental groups, like the Sierra Club, say it isn’t green enough. Advocates for online freedom and global health care have voiced their disapproval with TPP regulations. There is strong opposition to the TPP in our Congress and in Japan’s legislature.1

 

What does China think of the TPP? It has stayed on the sidelines during the agreement’s evolution. China already has free trade pacts in place with most TPP member nations, so it doesn’t really need to become a TPP member.1

In fact, the TPP can be considered a retort to China’s own long-planned, multilateral trade deal, the Regional Comprehensive Economic Partnership (RCEP). If enacted, the RCEP would position China as the economic kingpin in a free trade alliance of many Asian nations. The U.S. has not been invited to join the RCEP.1,2

 

Is the TPP doomed? The odds of its passage in Congress may be lengthening. “Fast track” legislation intended to usher in that passage fell through earlier this year. Approval in the waning months of the Obama administration appears to be a longshot. This summer, Democrats nearly attached language opposing the TPP to their 2016 presidential campaign platform, and Republicans approved a platform statement opposing votes on major trade deals “in a Lame Duck Congress.” It appears it may be “now or never” for the TPP, and, after 2016, there is a real chance this long-envisioned trade pact may never get off the ground.3

     

Mike Fassi, CLU, CHFC  is a Representative with Centaurus Financial Inc. and may be reached at Fassi Financial, 970-416-0088 or  mike@fassifinancialnetwork.com.

 

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

Citations.

1 – kqed.org/lowdown/2016/07/29/the-trans-pacific-partnership-explained/ [7/29/16]

2 – bloomberg.com/view/articles/2016-07-29/the-tpp-isn-t-just-a-free-trade-deal [7/29/16]

3 – tinyurl.com/jb7nd55 [7/29/16]

 

Posted in financial

Should You Change Jobs or Stay the Course

Should You Change Jobs or Stay the Course?

Does sticking with the same firm actually hurt your financial potential?

 

Provided by Michael Fassi CLU, ChFC 

 

If you spend two years or less at a series of jobs, is that a problem? Shouldn’t your resume signal loyalty instead of transience?

Well, maybe it isn’t a problem. Maybe you are doing yourself a financial favor instead, especially in this decade. Maybe the conventional wisdom about “getting ahead” is flawed. The era of the organization man/woman is long gone, and how many people do you know who have spent a decade or longer working for one employer?

Remember 5% annual raises? Chances are, your most recent raise was on the order of 2-3%. While you are keeping up with consumer prices at that rate, you may not be making up for any financial steps you took backward as a result of the recession. Even the all-stars at your firm may be getting just a 5-6% yearly raise.

Quitting to find a better wage is on the rise. In 2015, 16% of U.S. workers indicated to CareerBuilder that they were ready for a change. This year, 21% want to make a move. CareerBuilder’s Rosemary Haefner believes one reason for that rising percentage is a lack of employer investment in employees. “Whether the lack of investment is in the form of a paycheck, learning opportunities or career advancement, it often comes down to whether the employee feels valued.”1

It’s also down to the improving economy. With unemployment in down to 5%, it’s clear that hiring is happening. While that may not mean that every industry is looking for new blood, some are definitely looking for an infusion of personnel. The talent-hungry tech sector has boosted its average salary 5.3% from 2015 levels in hopes of locating qualified applicants.1

Is now the time to make your move? Five percent unemployment is approaching “full employment,” a period where the economy is getting the most out of skilled and unskilled labor. Assuming things remain on their current course, we may not see many more months where as many as 200,000 jobs are created, even as people who have stopped looking for work are drawn back into the working world. That could make this an ideal time to look upward if you are hoping to find a better-paying or more challenging job.2,3

On the other hand, there are bad times to change jobs, and U.S. News & World Report noted some of those. If you’re overworked, having interpersonal issues at the office or just bored, you can overreact; restructuring your workday or work tasks may offer a solution. If a major life event, long vacation or house hunt is just ahead, a job change may not be ideal or smart. It may not be wise if you sense that the economy (or your industry) is in line for a downturn, or if you’ve been at your job for less than a year. Lastly, a job search that coincides with the holiday season may be more prolonged than you anticipate; HR officers and managers may be more available (and less stressed) when mid-January rolls around.4

If you love what you do and are good at it, you may see no reason to change jobs. Alternately, you might reason that you could excel and love your work even more in a new environment. Consider the above-mentioned factors (and others) if you are looking for greener grass.

 

Mike Fassi, CLU, CHFC  is a Representative with Centaurus Financial Inc. and may be reached at Fassi Financial, 970-416-0088 or  mike@fassifinancialnetwork.com.

 

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

 

Citations.

1 – cnbc.com/2016/05/05/8-good-reasons-to-say-take-this-job-and-shove-it.html [5/6/16]

2 – investopedia.com/terms/f/fullemployment.asp [2016]

3 – businessinsider.com/jobs-report-preview-april-2016-2016-5 [5/6/16]

4 – money.usnews.com/money/careers/slideshows/the-10-worst-times-to-switch-jobs [9/18/13]

 

 

 

Posted in More Articles

The Perfect Storm_Introduction – Mike Fassi

Posted in financial

Out-of-the-Box Ways to Pay for College

OUT-OF-THE-BOX WAYS TO PAY FOR COLLEGE

Many of these options go unrecognized.

 

Provided by Michael Fassi CLU, ChFC 

 

Today’s average student borrower takes out more than $25K in loans. Education debt has reached record levels in America – more than $1 trillion. In the face of those numbers, parents and students are looking for assorted ways to pay for college without incurring big liabilities.1

In addition to grants, loans, merit-based aid and your student holding down a job, there are other ways to reduce college cost – some little recognized.

First, how expensive will college be? Can you project the total cost of your student’s college education? Assuming five years in school (which is the average for today’s undergrads) and no change in majors along the way, can a financial aid officer give you a ballpark figure? If not, an online resource such as Alltuition.com may be able to estimate it for you.1,2

Presumably, you opened a 529 plan or some other form of college savings fund for your student years ago. If those funds aren’t enough, where can you find other resources to meet a projected shortfall?

What about outright gifts of cash? If you or relatives or friends have the money, that is an option. Will you suffer gift tax consequences as a result? No. If the money constituting that completed gift is used directly to pay tuition expenses at an educational institution, that gift is not taxable. It will not cut into your annual gift exclusion amount ($13,000 for 2012) or your lifetime unified credit (currently set at $5.12 million).3,4

One caveat, however: if you make any kind of tuition payment on behalf of your student, that will be characterized as untaxed income on the FAFSA (Free Application for Federal Student Aid). That could wipe out your student’s chances of getting any need-based financial aid. This is why some families elect to put off tuition gifts until a student’s senior year.4       

Can you reduce your taxable income to get your student more financial aid? You may be able to do so. If getting federal student aid is your objective, knocking down your taxable income (through moves big and little) might make a big difference.

On the FAFSA, family income matters more than family assets. Retirement account balances, net worth attributable to home values and small businesses – none of this matters, it doesn’t factor into the needs analysis. The FAFSA is used to determine the expected family contribution (EFC), which is the combination of funds that the parent(s) and student can make available for a school year. The gap between the EFC and the expected total education costs of the school year represents the level of financial need weighed in determining federal student aid.5

So the lower your EFC is, the greater your level of financial need will be – and the greater amount of federal student aid that may be available. This is why many parents and students elect to spend down their combined savings and assets set aside for college during the freshman year. With no assets left for the sophomore year (and by this same logic, subsequent academic years), eligibility for federal student aid is wide open. Of course, you may be also opening a door to potential long-term debt.

There are other ways to alter your tax picture to get your student some financial aid –aid not linked to lingering debt.

Have you heard of “tax scholarships”? No, not scholarships linked to a state tax credit (though those may be worth a look). These are de facto scholarships that you may be able to create for your student with the help of a CPA or financial advisor (and the IRS). If you can find or arrange new tax deductions this year, you can redirect that money toward your student’s college expenses. Savvy business owners and professionals often make this move.

What about untraditional scholarships? For example, CollegeNet.com currently offers a “weekly scholarship” running between $3,000-10,000. Collegians themselves decide which applicant deserves the funds. There are other such examples.1

Can you negotiate tuition? At first instinct, does that seem rude, uncouth? It may prove smart – and it is done. There are such things as tuition discounts (and grant programs) offered to those who negotiate, even those not eligible for need-based aid. If a university really wants your student, you may have some leverage.

Are you willing to go the JC route, or the online route? Going to a local junior college for the first two years of study toward a bachelor’s degree can save a student and family tuition, housing and travel and auto expenses, and maybe a little anxiety – if your student decides he or she wants to major in oceanography instead of marketing, you haven’t paid $10,000 or $20,000 a year to arrive at that conclusion.

Recognizing the costs of housing, commuting and parking permits, some colleges are offering parts of their curriculum online or in more accessible settings – for example, Virginia Tech offers introductory math courses through computer labs and the University of Minnesota’s new Rochester campus uses part of a local shopping mall to hold classes. While taking classes on a computer or at some obscure satellite campus may not give you the full university experience, it may help to reduce expenses.2

Need help with college planning? Talk with a financial professional well versed in the matter – sooner rather than later.

 

Mike Fassi, CLU, CHFC  is a Representative with Centaurus Financial Inc. and may be reached at Fassi Financial, 970-416-0088 or  mike@fassifinancialnetwork.com.

 

 

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

Citations.

1 – www.dailyfinance.com/2012/04/19/paying-for-college-two-websites-offer-outside-of-the-box-ideas/ [4/19/12]

2 – www.businessweek.com/printer/articles/70120-student-loans-debt-for-life [9/6/12]

3 – www.irs.gov/uac/In-2012,-Many-Tax-Benefits-Increase-Due-to-Inflation-Adjustments [10/20/11]

4 – www.education.com/reference/article/pay-college-saving-understand-gift-tax/ [9/6/12]

5 – thechoice.blogs.nytimes.com/2011/01/11/fafsaq-and-a/ [1/11/11]

 

Posted in college, financial

The Costco / American Express Breakup

The Costco / American Express Breakup

If you have a Costco AMEX card, you should be preparing for the transition to VISA.

 

Provided by Michael Fassi CLU, ChFC 

 

The longstanding, exclusive partnership between Costco and American Express is coming to an end. If you have a Costco AMEX card, what does this mean for you?

In May or June, you should get your new Costco VISA card. So if you make auto-payments to Costco, you should re-enter your credit card information (the new number, and any other changes) before June 20.1

June 20 is the deadline. Beginning that day, Costco will only accept VISA cards, cash, checks, debit and ATM cards, EBT cards, and Costco Cash cards as forms of payment.1

Citigroup is issuing the new Costco VISA card. The new card allows the cardholder to get 4% cash back on the first $7,000 in eligible gasoline purchases per year and 1% on eligible gasoline purchases thereafter. Cardholders will also receive 2% cash back on all other Costco and Costco.com purchases. Other perks include 3% cash back on restaurants and eligible travel purchases and 1% cash back on any other form of purchase.1

In comparison, the Costco AmEx card offered 3% cash back at gas stations nationwide (with a $4,000 annual ceiling on such rewards), and 2% cash back on eligible travel and dining purchases.1

This changeover is projected to affect about 10% of AmEx cardholders. Indeed, there are some people who signed up for their first AmEx card just because of the Costco-AmEx relationship.1

Will this changeover have any effect on credit scores? Citibank will not be reviewing credit reports pursuant to the account transfers, so the answer should be “no.” Costco AmEx cardholders can maintain their current line of credit.1

Will Costco AmEx cardholders have to pay down account balances by June 20? No. American Express says that Costco AmEx cardholders may still carry a balance after that date.1

 

Michael Fassi, CLU, CHFC  is a Representative with Centaurus Financial Inc. and may be reached at Fassi Financial, 970-416-0088 or  mike@fassifinancialnetwork.com.

 

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

    

Citations.

1 – marketwatch.com/story/5-things-to-know-about-the-costco-and-amex-breakup-2016-02-11 [4/5/16]

 

Posted in financial

Taking Taxes Into Account When Saving & Investing

Taking Taxes Into Account When Saving & Investing

It isn’t always top of mind, but it should be.

 

Provided by Michael Fassi CLU, ChFC  

 

How many of us save and invest with an eye on tax implications? Not that many of us, according to a recent survey from Russell Investments (the global asset manager overseeing the Russell 2000). In the opening quarter of 2014, Russell polled financial services professionals and asked them how many of their clients had inquired about tax-sensitive investment strategies. Just 35% of the polled financial professionals reported clients wanting information about them, and just 18% said their clients proactively wanted to discuss the matter.1

Good financial professionals aren’t shy about bringing this up, of course. In the Russell survey, 75% of respondents said that they made tax-managed investments available to their clients.1

When is the ideal time to address tax matters? The end of a year can prompt many investors to think about tax issues. Investors’ biggest concerns may include any sudden changes to tax law. Congress often saves such changes for the eleventh hour. Sometimes they present opportunities, other times unwelcome surprises.

The problem is that your time frame can be pretty short once December rolls around. You can’t always pull off that year-end charitable donation, gift of appreciated securities, or extra retirement plan contribution; sometimes your financial situation or sheer logistics get in the way. It is better to think about these things in July or January, or simply year-round. 

While thinking about the tax implications of your investments year-round may seem like a chore, it may save you some money. Your financial services professional can help you stay aware of the tax ramifications of certain financial moves.

Think about taxes as you contribute to your retirement accounts. Do you contribute to a qualified retirement plan at work? In doing so, you can lower your taxable income (and your yearly tax liability). Why? Those contributions are made with pre-tax dollars. In 2014, you can contribute up to $17,500 to a 401(k) or 403(b) account or the federal government’s Thrift Savings Plan. If you are 50 or older this year, you can put in up to $23,000 into these accounts. The same is true for most 457 plans. This can reduce your taxable income and lower your tax bill.2,4

Think about where you want to live when you retire. Certain states have high personal income tax rates affecting wealthy households, and others don’t levy state income tax at all. If you are wealthy and want to retire in a state with higher rates, a Roth IRA may start to look pretty good versus a traditional IRA. Withdrawals from a Roth IRA aren’t taxed (assuming the Roth IRA owner follows IRS rules), because contributions to a Roth are made with after-tax dollars. Distributions you take from a traditional IRA in retirement will be taxed.2

What capital gains tax rate will you face on a particular investment? In 2013, the long-term capital gains tax rate became 20% for high earners, up from 15%. On top of that, the Affordable Care Act Surtax of 3.8% effectively took the long-term capital gains tax rate to 23.8% for investors earning more than $200,000.2,3

Greater capital gains taxes can actually be levied in some cases. Take the case of real estate depreciation. If you sell real property that you have depreciated, part of your gain will be taxed at 25%. The long-term capital gains tax rate for collectibles is 28%. Own any qualified small business stock? If you have owned it for over five years, you typically can exclude 50% of any gains from income, but the other 50% will be taxed at 28%. Lastly, if you sell an asset you’ve held for less than a year, the money you realize from that sale will be taxed at the short-term rate (i.e., regular income), which could be as high as 39.6%.2,3

Are you deducting all you can? The mortgage interest deduction is not always noticed by taxpayers. If a home loan exceeds $1.1 million, interest above that amount may not qualify for a deduction. Itemizing can be a pain, but may bring you more tax savings than you anticipate.2

A tax-sensitive investing approach is always specific to the individual. Therefore, any strategy needs to start with an in-depth discussion with your tax or financial professional.

 

Michael Fassi, CLU, CHFC  is a Representative with Centaurus Financial Inc. and may be reached at Fassi Financial, 970-416-0088 or  mike@fassifinancialnetwork.com.

 

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

Citations.

1 – russell.com/us/newsroom/press-releases/2014/russell-survey-advisors-say-tax-aware-investment-strategies-not-top-of-mind.page? [4/29/14]

2 – foxbusiness.com/personal-finance/2014/08/07/investments-and-tax-planning-go-hand-in-hand/ [8/7/14]

3 – bankrate.com/finance/money-guides/capital-gains-tax-rates-1.aspx [3/27/14]

4 – irs.gov/uac/IRS-Announces-2014-Pension-Plan-Limitations;-Taxpayers-May-Contribute-up-to-$17,500-to-their-401%28k%29-plans-in-2014 [11/4/13]

 

 

Posted in financial, taxes

UGMA and UTMA Accounts

UGMA & UTMA Accounts

Vehicles designed to help you amass college savings & make gifts to minors.

 

Provided by Michael Fassi CLU, ChFC  

 

If you want to save for college, you may wish to consider a UGMA or UTMA account. These custodial accounts are typically created by parents and other relatives who want to gift minors without having to set up a trust.

Many parents and grandparents create UGMA or UTMA accounts as college savings vehicles. You can invest for a child’s education while transferring income-producing assets to that child (and their presumably lower tax bracket).

UGMAs were created by the Uniform Gifts to Minors Act (UGMA), which allows a donor to irrevocably gift cash and securities to a child or teenager. The parallel Uniform Transfers to Minors Act (UTMA) created the UTMA, which extends the UGMA parameters: a UTMA lets minors receive gifts of art, real estate, patents, and other non-securities assets.1,2,3

UGMA & UTMA accounts address a minor concern. You may be thinking, “Well, I know outright gifts to a minor aren’t subject to federal tax, so why set up a UGMA or UTMA? Why don’t I just gift the money or securities outright?”

Do you really want to do that?

 You probably want some control. Most likely, you don’t want your teenager buying and selling securities – and neither do brokerages. And in many states, minors are not allowed right of contract, and therefore cannot own stocks, bonds, life insurance, or other such assets. You might also want to see that any cash you gift is not spent frivolously. If these concerns speak to you, UGMA and UTMA accounts are worth a look.1

You can use these accounts to gift up to $14,000 in money or property to a minor in 2016. Because the gift is irrevocable, you are the custodian of the asset(s) and the minor is the owner. In colloquial terms, these UGMA or UTMA accounts are “trust funds,” yet they are not trusts that would require the involvement of an attorney. While the minor owns the cash or property within the UGMA or UTMA account as soon as the asset transfer occurs, the custodian manages that cash or property until the child reaches the vesting age (the age at which the trust term expires).1,3

As custodian, you are not the only one who can make irrevocable transfers of cash or property into the account; parents, grandparents, relatives, and friends may all do so. A sizable college fund may be built with a UGMA or UTMA account, whether the assets are held in cash or invested. When the account owner reaches “maturity,” he or she may spend that money for college.1,3

Is there a potential downside of UGMA or UTMA accounts? Yes. To repeat, you are the custodian, the minor is the owner. When that minor becomes a legal adult, the account terminates and the account owner gets to spend the funds as he or she wishes. It’s a free country… and it is possible that today’s college fund will become tomorrow’s Corvette. So you do want the owner and the custodian on the “same page” when it comes to the intent of the account, and on good terms as well.1

Another potential issue to consider: if you are custodian of one of these accounts and you pass away before the account terminates, the assets within the UGMA or UTMA account will be considered part of your taxable estate.1

An underpublicized option worth exploring. UGMA and UTMA accounts may give your family the potential to create a nice pool of money for college while lowering your income taxes in the process.

 

Michael Fassi, CLU, CHFC  is a Representative with Centaurus Financial Inc. and may be reached at Fassi Financial, 970-416-0088 or mike@fassifinancialnetwork.com.

 

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

    

Citations.

1 – finaid.org/savings/ugma.phtml [1/18/16]

2 – finance.zacks.com/difference-between-529-custodial-account-1404.html [1/18/16]

3 – merrilledge.com/college-savings/custodial#tab2 [1/18/16]

Posted in financial