Financial Symmetry News & Views

Posts Tagged ‘financial planning’

The American Recovery and Reinvestment Act provides better education cost breaks to more taxpayers for 2009 and 2010. Computers, certain software and internet access can be covered by tax free 529 plan distributions as long as they are used by an eligible student while enrolled at an eligible institution.  The ARRA also replaces the Hope education credit with the American opportunity credit.  Key changes from the Hope include: books are now eligible expenses, an increase in the amount of credit available, and higher income limits for eligible taxpayers.  Click here to view more information on IRS.gov.

Chad Smith, CFP® was recently quoted on wsj.com. In the article, “Financial Advisers Look Local,” Shelly Banjo profiled several ways Financial Symmetry was reaching out to clients in the Triangle. Some of these initiatives included working with charitable organizations, educating younger couples, and providing information on the company’s blog.

Download pdf of article

Back in March, many investors were wrestling with the emotions of wanting to preserve whatever money they still had.  Generally, this thought process involved convincing themselves that cash or CD’s were safer investments than stocks.  Using a little hindsight, those decisions to move into “safer” investments, do not seem as appealing after a 50% increase in the S&P 500 index since then.  This type of behavior is a classic example of the typical mistakes that investors make at turning points within the markets.  In a recent Wall Street Journal article, “Playing it Safe Can Hurt Returns,” you can see examples of how impulsive moves to safe investments can negatively influence your investments.

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.

To be successful as an investor, you have to know which type of sources you can trust.  It’s also helpful, to not let recent past performance color your predictions of where the best future returns will arise.  In this article on Bloomberg.com, you see examples of how treacherous the consequences of relying on large brokerage house research can be.

” Anyone who did what Wall Street analysts advised last March has only losses after the biggest stock market rally in seven decades.

Citigroup Inc., Bank of America Corp. and more than a dozen other firms told clients to purchase European energy producers and U.S. drugmakers while selling banks and retailers, according to combined rankings compiled by Bloomberg. An investor who used $10,000 to buy companies in the highest-rated industries and bet on declines in the lowest since the advance began on March 9 lost everything and would owe as much as $6,000 to cover bearish trades, the data show… “

The lack of forward thinking by brokerage house research departments has been a constant theme in our research meetings over the years.  In fact, a central premise of our research process challenges us to explore the reasons why a source may be recommending a specific area of the market.  We attempt to evaluate the lens through which a source views the investing landscape.  This can help us understand whether they have a  motivation and/or bias that skews their opinion.  Digging deeper allows us to zero in on the “why”, which goes a long way in helping us identify opportunities for better returns.

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.

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.

“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.

Budgeting works best when it becomes a regular routine. It can be hard at first, but knowing where your money goes is a critical part of understanding your complete financial picture.  Along the way, you may discover ways to cut costs, save extra money in retirement accounts, or plan for a big purchase. Here are a few tips to think about when creating and managing your budget.

• Think about your purchases and how they relate to the budget you have set up.
• Establish broad categories and assign an estimate of your expected expenses.
• The more micro-managed your budget becomes, the harder it is to execute.
• Use broad categories like food, transportation, clothing, housing, and discretionary.

It is most important to stay consistent in the way you categorize things as this will enable you to make meaningful comparisons when looking at how you did this April compared to last April.  Each month will vary in amounts, so it is best to have an estimated amount, or target, in each category to begin your budget.  Keep in mind that you may need to make a few adjustments from month to month until you can get a better estimate. Once you have a functioning budget, take some time mid-month to sit down and review how your doing against the targets you set.

Reviewing your budget gives you a measurable period for the last half of the month so that you can decide where to cut back, which will help you stay within your budget.  It is also important to remember that most people cannot become a successful budgeter over night.  Spending patterns are a behavior and will take time to adjust.  Holding yourself accountable is a must when budgeting.  The purpose is to provide discipline with regards to spending, so it is best not to expect a walk in the park.

With all of your accounts, transactions and targets, it may be helpful to consider using some type of computer software to assist in tracking your budget. In the coming weeks, we will be discussing different online and computer software programs that can help you create and manage a budget while tracking your expenses.