#2 – Asset Allocation – Ask a Fee Only Financial Planner

In this podcast (below), I will answer the question: What general types of investments should I consider?  I will discuss stocks, bonds, ETFs, mutual funds, gold, commodities, real estate, REITs, and more.

The blog that addresses this question can be found at: 1 Asset Allocation – Investment Strategy

You can find our other podcasts at: Ask a Fee Only Financial Planner podcast and on iTunes

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14 4% Withdrawal Rule for Retirement Planning

In this blog, I’m going to discuss the benefits and limitation of the 4% withdrawal rule.

The rule of guideline came out in the 1990s. It states that if a retiree withdrew 4% of their initial retirement savings per year, their savings would last them for 30 years. The withdrawals would increase over time to adjust for inflation.

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#1 – 4 Things to Consider Before Investing – Ask a Fee Only Financial Planner

This is our first podcast answering questions that we receive.  The first question I’ll address is: What should I consider before investing?

The blog that addresses this question can be found at: 12 Four things to consider before investing

You can find our other podcasts at: Ask a Fee Only Financial Planner podcast and on iTunes

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13 2015 Market Update

There are some obstacles for stocks to continue to go up in 2015, but there is optimism that the bull market will continue. With no election coming up soon and a tendency for stocks to do well in the third year of a presidential term, there is additional optimism about 2015.

The Federal Reserve is likely to begin raising interest rates in 2015. This will add to volatility, slow down growth, and reduce the value of bond funds.

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12 Four things to consider before investing

This is a first in a series I am doing in conjunction with a podcast and video channel.  The series is focused on answering questions that we receive.  The first question I’ll address is: What should I consider before investing?

First – make sure they have a prudent reserve.  It is recommended that people have liquid assets to cover about 3-6 months of living expenses.  They should be invested in very short term non-volatile holdings such as money market or a short term bond fund.  The idea is to have money available if something was to happen so you are not caught in a difficult situation and need to rely on high interest credit cards or borrowing from your mother-in-law.

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11 Initial Public Offerings (IPOs)

An Initial Public Offering (IPO) is the first time a company sells its stock to the public on a stock exchange. Besides being the first chance to own a cutting edge company, it can be exciting because there can be large price swings IPOs generate and can involve leading-edge companies. They can also be profitable for the issuing companies, investment banks and skilled traders. Long-term investors may not fare as well.

IPOs are often issued by smaller, younger companies seeking the capital to expand, but can also be done by large privately owned companies looking to become publicly traded.

In an IPO, the issuer obtains the assistance of an underwriting firm, which helps it determine what type of security to issue (common or preferred), the best offering price and the time to bring it to market.

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10 Social Security – Double Dip

File and Suspend
If you are at your full retirement age (FRA), you can continue to work and suspend your benefit so your current spouse can collect a spouse’s benefit and you and earn delayed retirement credits (DRCs) which increase your Social Security benefit. The voluntary suspension is only for the months beginning after the month the request is made. A current spouse cannot claim a benefit on the worker’s record until the worker has applied.

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9 72T – Penalty Free Early Withdrawals from IRA

An Internal Revenue Service (IRS) rule that allows for penalty-free withdrawals from an Individual Retirement Account (IRA). The rule requires that, in order for the IRA owner to take penalty-free early withdrawals, he or she must take at least five “substantially equal periodic payments” (SEPPs). The amount depends on the IRA owner’s life expectancy calculated with various IRS-approved methods.

There are three ways that you can determine the amount of the distribution from your IRA, and all three are based upon the balance of the IRA account and your age. The first method is the simplest, known as the Required Minimum Distribution method.

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8 Tax Advantage of Employing a Child

Employing a child can be effective way to shelter income from taxes.  The child’s earnings can be put into a Roth IRA, IRA or company tax deferred plan.

Payments to the child must be reasonable in relation to the services rendered.  In addition, payments must made to the child – not held for the child.  Employment of a child is also affected by child labor law regulations. Although there are strict laws that detail appropriate jobs and hours based on age, children working for a parent generally fall under an exception to these laws.

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7 Alternative Investment – Gold and REITs

What else besides stocks and bonds should I be investing in?  In this blog I will be discussing investing in alternative investments – gold and real estate in particular.

Alternative investments provide a non-correlated investment that help protect an investors assets and improve return in the long run.  Alternative investments include:

  • Precions metals (gold, silver, platnum, …)
  • Real estate
  • MLPs, energy and income investing
  • Other commodities (oil, gas, agricultural products, and other hard assets)
  • Advisor solutions for due diligence, asset allocation and manager selection
  • Preferred stock

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6 Fiduciary Responsibility

PBS Frontline had a special a month ago about investing and retirement.  They focused on fiduciary responsibility and fees related to investing.

The 52-minute video can be seen at: http://www.pbs.org/wgbh/pages/frontline/retirement-gamble/

They state that America is facing a retirement crisis. One in three Americans has no retirement savings at all. One in two reports that they can’t save enough. On top of that, we are living longer, and health care costs, as we all know, are increasing.

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5 Married Same-Sex Couples Gain Equal Tax Benefits

Two months after the Supreme Court struck down the Defense of Marriage Act, the Treasury Department ruled that legally married same-sex couples will be treated as married for federal tax purposes.

The decision has a host of implications, even for couples who now live in states that don’t recognize same-sex marriage.

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4 Early Retirement Possible

I spent the holiday break with my wife’s family in Caborca, Mexico. Their homes and possessions are pretty simple, but they have nice celebrations and full lives. The median annual household income in the US is about $29,000, in Mexico it is about $4,500. Costs for food, electricity, water, and clothing are very similar in both countries. As we look at spending plans and retirement planning it made me think that there is a lot of room for choices.

Early retirement can seem impossible, even retiring at 65 or 70 may not seem practial. If it is a priority, this can be a reality for diligent savers. One well-known example is the man behind MrMoneyMustache.com, who retired with his wife at age 30 after just nine years of working. They did this on two normal salaries. They are very careful with their spending and feel that they are living full lives.

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3 Fraud

We received a request over email from a client who wanted money wired to a bank for the purchase of furniture.  We filled out the Schwab paperwork and email them to her (at the email her correct email address).  She signed and returned the form but Schwab requires that we also call to verify bank wires.  Schwab also let us know that the signature did not match the signature on file and they needed to speak with her.  I called her and left a message and also emailed her saying that Schwab and we needed to speak with her.

Soon after a woman with a slight accent called saying she was our client and that we should go ahead with the wire.  Our client called later and verified that she was unaware of this wire request.  Someone had hacked into her email and was forwarding all emails from us and Schwab to another address.

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