Financial Symmetry News & Views

Archive for ‘Take Charge of your Finances’

The next NAPFA Consumer Webinar Series is scheduled for September 4th, 2009 from 1:00pm until 2:00pm.  Here’s a preview of the upcoming series, Kids & Money :

“Kids & Money

1:00 pm – 2:00 pm ET

Instructor Linda Leitz, CDP, CFP, EA,

NAPFA Registered Financial Advisor and

Author of The Ultimate Parenting Map to Money Smart Kids

How can you raise your children to be money smart? Linda wrote the book on raising kids to be smarter about money and will share her thoughts on steps you can take today to get your kids on the right money track.”

Click here to read more and to register:  Kids & Money Webinar.

Click here to view the August 7th webinar video, Money 101: Knowing the Basics.

Need a new appliance? You may be able to find the best deals on large appliances during September and October.

Sometimes certain purchases can put a strain on your budget, like a new refrigerator, furniture or computer. While there is not a ‘best time to buy’ guide for everything, there are certain categories of goods and services that regularly go on sale during specific times of the year.

We found a list on Yahoo! that breaks down items like used cars, holiday airfare and mattresses. Keep ‘best time to buy’ sales in mind when planning ahead for a special purchase, whether it is a new purchase or a replacement, and look forward to save as much as 75% off original prices.

Click here to view When Is the Best Time to Buy…? on Yahoo!.

The following article is written by Financial Symmetry’s Will Holt, CPA.

For me, one of the neatest things about living in the Avent West community has been observing the transformation of homes through remodel, refurbishment and even reconstruction.  In fact, the same could be said about the entire city of Raleigh as it certainly looks a bit different today than when I first arrived in 1986.

Over the last decade or so, the federal government has enacted legislation designed to subsidize energy efficiency and conservation improvements.  The American Recovery and Reinvestment Act of 2009 signed into law by President Obama provides another opportunity for homeowners looking to “go green” while also saving on the monthly utilities.  So if you are thinking about tackling that home improvement project keep in mind that the government may cover a portion of the cost via qualifying tax credits.  Remember that a tax credit reduces your tax liability dollar-for-dollar.  There are two main credits available to homeowners and are summarized below directly from the U.S. Dept. of Energy’s website: home energy efficiency improvement tax credits and residential renewable energy tax credits.

Home Energy Efficiency Improvement Tax Credits

Consumers who purchase and install specific products, such as energy-efficient windows, insulation, doors, roofs, and heating and cooling equipment in existing homes can receive a tax credit for 30% of the cost, up to $1,500, for improvements “placed in service” starting January 1, 2009, through December 31, 2010. See EnergyStar.gov for a complete summary of energy efficiency tax credits available to consumers.

Residential Renewable Energy Tax Credits

Consumers who install solar energy systems (including solar water heating and solar electric systems), small wind systems, geothermal heat pumps, and residential fuel cell and microturbine systems can receive a 30% tax credit for systems placed in service before December 31, 2016; the previous tax credit cap no longer applies.

In addition to the products listed above, qualifying water heaters (non-solar) and stoves that burn biomass fuels are eligible for the $1,500 Home Energy Efficiency Improvement credit.

The state of North Carolina will also kick in a credit toward the Renewable Energy Credit. See the details at North Carolina Renewable Energy Tax Credit

There are many considerations when you plan a home improvement project.  As we all know, living in a fifty-year old ranch or split level requires attention to more than just detail.  When the decision has been made to spend thousands of dollars on new windows or HVAC we primarily want to make sure that we are getting a fair deal and that everything works properly.

However, Uncle Sam wants you to put energy efficiency at the top of your list as well.  So much so that he is willing to put some money back in your pocket.  Also, you’ll feel better about being green and we all get to see another transformation take place.

Financial Symmetry is dedicated to helping you get a handle of your financial picture.  We think it’s important to remember that investments should be evaluated on their merit, not personal emotions that can cloud your judgment and lead you to act in ways that are counterproductive to your financial success. Below are some examples of common emotions that can lead to poor decision making.

Feeling Left Out

The media can make it seem like everyone else is getting rich.  You can also hear tips from a friend, neighbor, relative, co-worker or even a stranger that can make you feel like you are the only one that is not making loads of money on a great new thing.

Greed

It’s an intense desire to acquire or possess.  Feeling that it is possible to get something for nothing is one of the strongest triggers for greed. There is an almost irresistible tendency for people to think they have “lucked out” and stumbled into an opportunity of a lifetime.  While this might be the case, most of the time it is not.

Desperation

It’s a state of hopelessness leading to rashness. This feeling can set in when people have made unfortunate financial mistakes or have just been impacted by a bad economy. Some people try to bounce back by assuming an unsafe amount of risk.  This approach rarely works as higher risk can lead to even greater losses.

Fear

It can immobilize people into stagnant patterns.  Fearful investors avoid getting involved in the market because it lacks certain security from losses.  However, the inability to accept some risk due to fear can greatly diminish your investment returns.

Attachment

This refers to a personal allegiance or loyalty to an investment without proper analysis.  This attachment can impair your ability to construct a well-diversified portfolio. Beware if you find yourself saying “I’ll never sell that because…

• My great grandfather bought that stock in 1912
• I worked a long time for this company and I owe them
• I have used this product for years

Investments should be evaluated on their merit.

Pride

Pride and investing are the equivalent of oil and water. This emotion can stop you from being able to admit when you are wrong and correct your mistake.  No one buys investments expecting them to under perform, however some of the time it is inevitable.  Capital Research Management, the research firm for the American Funds, states “We are very careful when making changes because we expect to be wrong 1/3 of the time.”  With an expectation of being wrong 1/3 of the time and an excellent performance record, it is clear that a certain amount of humble detachment is appropriate and necessary for successful investing.  It is also important to recognize when it is appropriate to seek assistance from experts

Fairness

This is something not easily measured. People like to feel as though they are being treated fairly and that desire extends to their investments. However, investments can be beneficial to you as an individual and seem like the treatment was not equal to all.  Investments are not a zero-sum game where someone has to be a winner and a loser.  People generally make mistakes when they are unwilling to accept the fact that the world is not fair.  Individuals should not base their decisions on forcing the issue of fairness when it is in conflict with what is best for them.

Supporting Viewpoint

We found an article on FiLife.com that also helps to explain emotional investing.  Tom Adams explains in  Emotional Investing Hurts Returns how  emotions can effect your investments.

Warren Buffett is lending his voice to a new cartoon series that aims to teach valuable financial lessons to kids through entertainment.  He recently spoke to CNBC about the project and his investment philosophy.  To watch his interview and the premiere of “Secret Millionaire’s Club,” click here: Secret Millionaire’s Club.

Article published on FiLife.com by Financial Symmetry’s Allison Berger, CFP ®.

Finding the motivation to save can be just as difficult as motivating yourself to diet and exercise. In both cases you know the outcome will be worthwhile — financial security and better health. However, taking the steps to get there is easier said than done.

If you have ever watched the show “The Biggest Loser,” you have probably heard the trainers say that being fit is not about dieting, but about making lifestyle changes that you can stick with over time. As the contestants participate in the challenge, their health gradually improves and their motivation to continue a healthy lifestyle typically increases. The hardest part is usually getting started.

The same is true with saving. While difficult at first, adopting a scheduled savings strategy and making budgeting part of your routine will increase your odds of achieving your financial goals. Identifying those goals is the first step to finding that motivation, so spend some time thinking about what you want your money to do for you. Maybe you are saving for a family vacation, your children’s education, retirement, or all of the above. Make a list prioritizing each goal and put time frames on them.

Next, work on identifying those triggers that keep you from saving money. Just as having chips and cookies in the house can derail your healthy lifestyle, so can mail order catalogs on your coffee table or even a clear view of your neighbor’s new BMW. Toss those catalogues in the recycle bin, put a limit on your Amazon or eBay habit, and start planning a savings strategy.

One of the best ways to stick to your financially fit goals is to make savings automatic. Hopefully you are already deferring money from every paycheck to your 401k. Think about increasing your deferral to put more toward your retirement goal. Then find other savings you can make automatic. Maybe you can set up a monthly transfer into your savings account, Roth IRA, or your child’s 529 plan. This strategy takes some of the work out of saving and automatically curbs spending, as your checking account appears less flush each month.

Lastly, remember that you are not alone. You probably have friends and neighbors who are also trying to stick to a financially fit lifestyle. Work together on finding low cost activities to do, and exchange tips and tricks along the way. You may also want to consider using a professional. A financial planner can help you develop a strategy specific to your needs in the same way a personal trainer can recommend the best exercises for your health and fitness goals. You can seek out a fee-only financial planner at napfa.org.

On July 27^th, people in the market for a new car can qualify for the “Cash for Clunkers” program otherwise known as the Car Allowance Rebate System (CARS).  This is an effort from the federal government designed in theory, to improve your vehicle fuel efficiency by giving out rebates of up to $4500 for your old “clunker” which can be put towards the purchase of a new car.  Naturally, there are multiple stipulations for you to qualify for this program.

1. Your trade-in vehicle must average 18 miles per gallon or less
2. The trade-in vehicle must be less than 25 years old
3. You must purchase a new vehicle that is $45,000 or less
4. There must be a 10 mpg improvement to receive the full $4500 credit otherwise you receive $3500
5. The trade-in must be drivable and have been owned and insured for one year

Although the program has received a lot of press, a limited amount of new purchases will qualify for the rebate.  SUV or truck owners looking to purchase a new car will be the group most likely to benefit.  That’s bad news to all the car owners who were thinking this deal would sweeten their upcoming vehicle purchase, even if their intent was to dump a 20 mpg car for a similar, much more fuel efficient 35 mpg car.  You can check your car’s average mpg at http://www.fueleconomy.gov/feg/findacar.htm.

Before agreeing to participate in this program, you’ll want to check your car’s trade-in value to verify that it will not be higher than the CARS program can offer you.  Participating in the clunker program means you forfeit any amount over the $4500 as the car is required to be scrapped.  You can go to ww.kbb.com to get an idea of your car’s current trade-in value.

Despite the restrictions, there’s no doubt the program has generated a healthy buzz about new car sales, which should help an industry that took a punch in the gut during the latest recession.  The government rebate also motivates car companies to add extra incentives. Chrysler has already jumped the gun by offering to match the CARS rebate towards the purchase of a new Chrysler, Dodge or Jeep vehicle.

Be aware that you’ll need to make a decision fairly quickly as the program will end on November 1, 2009 or when the $1 billion budget allotted to the program runs out.

For more info:  http://www.cars.gov/

“The NAPFA Webinar Series is a great resource to learn more about the basics behind financial planning from independent, knowledgeable, objective people in our industry.  And best of all, they’re FREE!”  – Chad Smith, CFP®, Financial Symmetry, Inc.

NAPFA has launched a new Consumer Webinar Series aimed at educating consumers on financial planning topics.  This free program is designed to inform the public on money basics while also covering more in-depth personal finance topics.  The year-long  series will consist of monthly, 1-hour live sessions that are available through the NAPFA website.  Past sessions will also be archived for later viewing.  To register for an upcoming session and to learn more about the program, go to NAPFA Webinar Session RSVP.

The first Webinar will broadcast on August 7th, 2009, from 1:00 pm – 2:00 pm ET.
Here’s a preview of the session from NAPFA, “Money 101: Knowing the Basics.”

“Instructor John Henry McDonald, CFP®, CLU, ChFC®, NAPFA-Registered Financial Advisor, and “The Finance Guy” on News Channel 8 in Austin, TX

What is money and what do you need to do right now to ensure you are saving some of it while reducing your debt? John Henry will provide some insights on understanding money basics while giving you a head start on managing the money you do have better.”

Check back often for more upcoming webinar sessions and for our advisors’ feedback on past sessions.  Please feel free to contact our NAPFA members, Chad Smith, CFP® and Allison Berger, CFP® for more information or to schedule a complimentary 45-minute consultation.

“This is one of the many great services NAPFA provides.  Not only are they on the forefront of consumer advocacy for financial education, but they also provide great resources for learning more about the financial planning industry.” – Allison Berger, CFP®, Financial Symmetry, Inc.

Natalie Choate, a respected resource on retirement plans/IRA rules and writer for MorningstarAdvisor.com, recently addressed some financial planning issues that Same-Sex couples face.  Natalie is a lawyer in Boston, MA who speaks regularly across the country on the specifics of many estate planning and retirement plan issues.  We were lucky enough to see her speak here in Raleigh during the FPA of the Triangle Symposium in September 2007.

Natalie breaks down the specific estate distribution of a 401k and a pension plan for a hypothetical same-sex couple.  Her findings are a reminder of how important it is to keep retirement plan beneficiary designations current!

Question: “John,” age 54, and “Jim,” age 58, were married to each other under Massachusetts law. Their marriage is not recognized under federal law. Jim died, leaving a 401(k) plan and a money purchase pension plan, both maintained by his employer, Acme Widget Co. Jim had named John as designated beneficiary of the pension plan, but Jim never filed any beneficiary designation form for the 401(k) plan. The 401(k) plan provides that, if no beneficiary is named, the benefits shall be paid to the employee’s “surviving spouse, if any, otherwise to the employee’s estate.” Elsewhere, the plan provides that the interpretation and administration of the plan shall be governed by Massachusetts law “to the extent not pre-empted by ERISA.” I assume this means the 401(k) benefits must be paid to Jim’s estate, since under federal laws such as ERISA same-sex marriage is not recognized. John is the sole beneficiary of the estate, under Jim’s will, which has been admitted to probate in Massachusetts. What are John’s rights with respect to the pension plan? The 401(k) plan?

See Natalie’s answer on MorningstarAdvisor.com.

Tired of paper statements? While we cannot eliminate all paper statements regarding your investment accounts, Pershing LLC, the custodian of our clients’ brokerage accounts, has a new electronic statement program ready for new enrollment.

Make the switch from paper statements to electronic statements at Pershing, and Pershing will donate $1.00 to the Arbor Day National Foundation of Nebraska City, Nebraska. Between July 1^st and December 31^st, 2009, each $1.00 donation from new electronic statement requests will go toward the purchase and planting of new trees in our national parks. Pershing has pledged a total of $275,000 toward the tree project, which will plant 275,000 trees across our national parks, focusing on parks recently damaged by wild fires.

If you are interested in taking advantage of this great cause, log on to NetXInvestor.com to update your preferences. Please feel free to contact us with any questions or if you need assistance.

Investment News recently featured Pershing’s effort to reduce their environmental impact in their June 12^th issue. Click here to view the article, Pershing Plants Trees by Evan Cooper.