So you want to know where the opportunity is…

Look around. It’s getting to be summer in Michigan and what is one thing we hate? Construction. Well, with President Obama’s new infrastructure spending, it’s hard to look at where the sector is and not see opportunity for growth.

What about technology? I see the biggest of the technology names with low prices. Courtesy of the panic sell off we have had. Thank you to everyone who has sold their whole portfolio and gotten out of the market.

Oh yeah – did anyone notice that energy is pretty low right now? I have a hard time believing that name brand companies that are down in price aren’t going to go back up. I don’t see us stopping the use of our natural gas or oil consumption anytime soon. And this thing called alternative energy is only starting.

There are opportunities all around us. It can be hard to see when your friend at work is complaining all the time, or when you don’t have a job. However, if you have an investment portfolio, or cash on the sidelines, there are opportunities all around us. Proper diversification is always important, and the stock market isn’t for everyone, but for those of us investors looking for growth, the opportunities are there. For a free financial review to look at opportunities that may fit into your portfolio, give me a call!

With many companies offering buyouts, many people are left wondering what option they should choose.  They think that the problems is whether or not the company is offering enough money, however, there is more to it than just the amount of money that is being offered.

Lately, I have seen clients come in with buyout papers that makes the client sign off on ERISA rights and pensions.  Everyday, individuals are signing off their rights to retirement and pension laws in order to receive a lump sum.  Clients see a lump sum of money and don’t consider the fact that the money will be taxed.  Often, this lump sum will throw a client into the highest marginal tax bracket possible. 

Clients are advised to seek out advice from an attorney or financial advisor when they receive their buyout offer letters, but a big percentage of individuals don’t do this.  Instead of seeking professional advice they make uninformed decisions.  These decisions usually have lasting negative consequences that the individuals didn’t bargain for.

So, if you or someone you know has been offered a buyout, seek professional advice.  The time and money you will spend could potentially end up saving you money in the future.  

Many clients of mine are often shocked to find out that at age 70 ½ they have to start taking what is known as an RMD, or Required Minimum Distribution, from their retirement accounts. And, even more to their shock and dismay is the fact that if you don’t take your RMD, you not only pay income taxes based on your tax bracket, but, you have a 50% penalty, which can often lead to 65-90% of your RMD amount going to Uncle Sam!

Think of it this way: You have saved thousands of dollars pre-tax – the government has never gotten any of this money. They want you to pay taxes. Based on your life expectancy and your December 31^st value of the prior year, they want you to take out so much per year, so that you can start paying taxes.

Guess what? I have good news from you! One good thing that came from the bear market of 2008 for retired investors…RMD’s are not mandatory for 2009. This means that you have a choice!

If you are currently 70 ½ or older, you get to choose whether to take your RMD this year. If you are similar to many of my retired clients, this choice to opt out can save you thousands of dollars in taxes and you can leave your money in your current retirement account and let it grow. 

Now, who said that everything about 2008 was bad news?

It can be stressful. Your employer decided to no longer offer you a 401(k) plan, your company got bought out, you lost your job, or you retired. It’s time to roll your 401(k) to an IRA, but there are so many choices. How do you decide what is best for you?

It’s probably time to find an advisor. Many times an employee will have a 401(k) but no relationship with an advisor. They add each paycheck to their 401(k) but receive no assistance as far as what to invest in. If you work for the auto industry, you probably get a 800 number for Fidelity. If you work for a small business maybe the advisor came in once during the set-up of the plan, but you’ve never seen them since. 

Rolling over your 401(k) is a big deal – tax consequences can be devastating if not done correctly. If you need to roll your 401(k), then my suggestion is this. Find an advisor who you can work with. You should feel comfortable asking questions now and in the future, they should review your whole financial situation so they can properly make recommendations, and everything should always be confidential.  All advisors aren’t alike, so you may have to interview several until you find one that you feel comfortable with. For a free financial consultation, please call my office.

What’s the difference? A lot!

An investment review will look at your investments, asset allocation (risk levels), and performance. A financial plan will take into consideration your whole financial picture, which includes budgeting, debt reduction planning, tax assessment, and your investments.  

Financial planning will look at your goals and risk tolerance and tell you what you should be doing with ALL your money – not just your investments dollars.  If you think about it, it makes sense. If you don’t know whether you should put extra money towards your mortgage or into your IRA, then how do you know you are doing the best thing for your long term finances? Paying  the minimum on your credit card can take 30-40 years to pay off your balance, which means if you don’t have a debt consolidation plan in place, then how will you ever get out of debt?

Planning is the key to building and retaining wealth. No matter what stage you are in life, financial planning is essential. A great advisor takes the time involved in financial planning and incorporates full planning into their practice, so their clients know where they are heading. To set up a free consultation to discuss financial planning offered through my broker dealer, LPL Financial, please call my office.

With the economy the way it is, it can be easy to feel as if your financial life is out of control. With the market at lows and the unemployment rate near 10%, it is hard to feel as if anything is in your control.

That’s the bad news. The good news is this: There are certain things that are in your control. You control if you stick to your budget. You control if you add more debt or reduce your debt right now. Still working?  You control whether or not you continuing to add to your investments.

Think about it. If you stay living within your means and don’t increase your debt, you are taking control of your financial situation. If you look at your debts and implement a debt reduction plan, you are taking a huge step towards financial freedom. If you buy investments when they are the lowest they have been in over a decade, you are not only getting a phenomenal deal on companies that are severely underpriced, but you are doing something for your financial future.

It’s easy to forget the long term in these times. It’s hard to do the right thing and take responsibility. If you would like a free consultation on your current financial plan, which includes budgeting, a debt reduction plan and investment advice, please call my office.

If you don’t like writing checks to Uncle Sam while you are alive, you might not want to be doing it after your death, either.

Upon death, there are different taxes that wealthy individuals need to worry about.  After they add up all your assets – properties, retirement accounts, brokerage and bank accounts, personal property, and don’t forget about your life insurance death benefits to name just a few – your estate gets assessed so the IRS can decide if you owe estate and gift taxes.  Estate taxes and gift taxes can both be as high as 45%! Thinking of adding your grand or great-grandchildren to your beneficiary list? Well you may want to see if you would be hit with generation skipping taxes as well.  This doesn’t include any income taxes your heirs may have to pay based on the type of asset you bequeath to them.

With proper estate planning, you can structure your assets so that you can either reduce or eliminate the amount of estate and/or gift taxes that you may owe.  A proper estate planning team incorporates a financial advisor, estate planning attorney, and a CPA that is versatile in estate taxes. 

If you would like a free consultation to look at your current estate planning needs, please call my office.  Your beneficiaries will thank you!

Getting a good fixed rate is like searching for a needle in a haystack. With the market volatility, many investors are seeking a fixed investment that won’t fluctuate downward. However, getting a competitive rate is easier said than done.

Investors fleeing to safety are locking their money in CD’s at 1- 2% rates.  When you factor the increase in the cost of living (inflation) and taxes, the 1-2% rate can quickly become negative earnings. Although your bank statement will show only earnings, that isn’t your true bottom line.

Let’s be generous and say that you are earning 2.5%. If inflation is at 3.5% and you are in a 15% tax bracket (higher brackets result in more negative earnings), then your earnings would be this: 2.5% - 3.5% = -1% - 0.38% (2.5% x 15% taxes) = -1.38%. In reality, even though your statement is positive, you LOST 1.38%.

If investing in a fixed rate is your goal, then a fixed annuity may be right for you. Investment grade (highly rated) insurance companies that offer fixed annuities are still yielding 3.5-5%, and are backed by insurance companies. Fixed annuities also give you tax deferral, which means that your interest can grow tax deferred. 

If you would like more information on how to obtain a safe, fixed rate, please call my office at 810-714-5566.

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