Thursday, December 24, 2015

Give Wisely

'Tis the season for giving. I'm sure your mailbox is brimming with catalogs and donation requests. In addition to Black Friday and Cyber Monday we now have Giving Tuesday. Americans have been known for their generosity thus creating the opportunity for fraud.

Here are a few tips to help you give wisely:

- Have a "giving strategy" the same way you have a spending plan and a saving plan. Calculate how much you'd like to spend in charitable giving annually and stick to that number. This way you won't be tempted by every appealing pitch that comes your way.

- Give intentionally - Know what causes are dear to your heart - the poor, the homeless, ill children, abandoned pets, the rain forest, human rights, etc. Give with your heart to support what rings true.
My favorite is Habitat for Humanity, "give a hand not a handout", requiring sweat equity and offering an interest free mortgage.

- Vet the charity - Go online to see how much money actually goes to the stated mission and how much is spent on fund raising and administration.
Use online sites like, or to;
1. confirm their 503(c) status,
2. review executive compensation, and
3. obtain financial records
This information will determine if those charities are worthy of your hard earned dollars.

- Personal fulfillment - Realize how giving makes you feel and acknowledge your ability to make a difference. Don't give out of obligation.

Years ago I had a very wealthy client who lived off her family trust. She diligently gave 10% annually to several charities "because that was what was expected". She had no idea what these charities supported!
I encouraged her to reevaluate her giving. She was an aspiring artist and chose to create a scholarship at a local art school. She gained tremendous satisfaction in supporting a struggling art student.

Be $ Smart - use your head to give with your heart.

Saturday, December 5, 2015

It's Harvest Time - for Tax Losses

2015 has been a volatile year for the stock market. With big dips in the spring and fall you have ridden the roller coaster of investing.

One area taking a huge hit this year was oil and gas. The energy sector was down more than 40% over 2014. Perhaps you have a few energy stocks that show losses - the current value is less than what you paid for them. Or maybe, a "hot tip" from a friend did not pan out well.

This would be the time to review your portfolio and sell any losers. You may write these losses off against any capital gains you've made during 2015, dollar for dollar.

For example - you bought an oil company stock three years back and now it's worth half that amount giving you a $5,000 loss.
Earlier this year you had a winner; you sold a bank stock that doubled going from $5,000 to $10,000 giving you a $5000 capital gain. If you sell the losing oil stock and capture the $5,000 loss you may offset the $5,000 capital gain with the $5,000 capital loss and owe no taxes on the capital gain.

Tax-loss harvesting is a strategy that enables investors to save on their tax return by selling losing securities and using the capital loss to offset their gains. You may take advantage of this strategy in your year-end tax planning.

BUT if you want to buy another oil company stock to replace the one you sold, you should not buy a stock that is "substantially identical” to the one you have sold. The IRS considers this a "wash sale" and will disallow the tax loss. You must replace that oil company stock with an energy company that is substantially different.

Say you realized no capital gains this year, then you may take $3000 of the capital loss against $3,000 of ordinary income. The remaining $2,000 may be carried forward and used against 2016 taxes.

Please call your tax adviser to determine if this strategy is right for you!

Be $ Smart - review your portfolio; sell losing stocks and reduce your taxable income.

Another Risk to Consider - Longevity

Earlier in the year we reviewed the various types of risk you might encounter when investing - inflation, market, credit, currency exchange, default, etc.; we won't review them at this point.

There is one risk that has become more important for up and coming generations than those in the past - the risk of longevity. Living too long - lasting longer than your money - has prompted many financial planners to project to 100+ when determining "if you have enough to retire".

85 is now considered old, not 60 or 70. With exercise, decent diet and medical advances we all can anticipate a long life. The question arises: can we afford to live a LONG life?

Four tips to finance your antiquity:

- Start early - savings compound over time giving you a jump start. This is probably the most important move to make.

- Save more - saving 10% - 15% of your income would cover your retirement provides a good beginning. If you can, increase that number.

- Be more aggressive in your investing - a combination of stocks and bonds will appreciate over time. Increase the stock portion. If you are very nervous and insist on conservative investments, you must save even more!

- Work longer - plan on retiring at 68, 70, 75. Today's seniors are healthy, vibrant and mobile continuing to earn income well into their future. Do you see yourself among them?

Be $ Smart - start NOW to make sure your money lasts as long as you do. Call me for additional ways to save.