, ,

Healthcare Forecast Breakfast

, ,

The Center’s health and wellness initiatives were recently recognized at a Healthcare Forecast Breakfast sponsored by the Birmingham Bloomfield Chamber of Commerce.

Center Operations Manager Gregg Bloomfield was one of three panelists leading the healthcare and wellness discussion.  Panel members provided insights on how health care reform and wellness and employee benefit programs are shaping business today. 

After the event, Gregg commented, “Small businesses have particular challenges and opportunities in the area of employee healthcare.   I was pleased to share with this audience the inspiring results of our in-house health and wellness program. 

The Center team leadership has worked very effectively with our community partners -- American Heart Association and Blue Care Network – to improve overall wellness at our workplace.”

Center team members and friends in attendance included:  Sandy Adams, Gerri Harmer, Marilynn Levin, Laurie Renchik, Kimberly Wyman and Troy Wyman.

,

2012 Cystinosis Fun Run/Walk

,

On May 6th we will hold the 6th Annual Cystinosis Fun Run/Walk in honor of our daughter, Kacy Wyman.  In the past we have had over 300 walkers and runners support the event and Kacy. We understand that there are many worthy causes and feel very fortunate that so many have chosen to support Kacy’s cause in the past – and appreciate you considering a financial contribution for our May 6th event. All proceeds benefit Cystinosis Research Network. CRN is an all-volunteer, non-profit 501(c)(3) organization. The CRN Federal Tax ID# is 04-3323789.

Thanks to 37 pills a day, eye drops 8-10 times per day and 7 liters of water Kacy’s condition is stable – but we need a cure. Your financial support is making a difference in Kacy’s life and all of the children enduring this rare disease called Cystinosis (Sis-ta-know-sis). Your support drives research and gives us hope that a cure will be found during Kacy’s lifetime.  Thank you again for considering.

With Love & Gratitude,
Tim & Jen Wyman

Checks should be made payable and sent to:
Cystinosis Research Network
c/o Center for Financial Planning, Inc.
40 Oak Hollow Street, Suite 125
Southfield, MI 48033

Tools of the Trade

Just as Luke Skywalker had his light saber and Emeril Lagasse his garlic (BAM!), the Investment Management business has…FI 360®?? 

Most investors have heard of Morningstar, which is a financial data provider that provides data on literally millions of different investments.  This is very widely used by the investment community for up-to-date data and financial analysis on a wide variety of investment instruments.  To a lesser degree, you may have even heard of Ibbotson Associates, recently acquired by Morningstar, which has data on portfolio construction and implementation.  

Most, however, even within our wealth management profession, have not heard of another tool we use called FI360®.  This company offers a full circle approach to investment fiduciary education and support. 

This software helps us with our fiduciary responsibility to monitor our investment managers on a regular basis and gives us a red flag if there is something to be concerned about. These are some of the factors FI360® reviews:

  • Manager Tenure – alerts us to recent leadership change
  • Composition of the portfolio – alerts us if the investment is taking a larger amount of risk in some aspect of the portfolio by greatly over- or underweighting something compared to other like investments
  • Expenses – alerts us to increased or higher than average expenses
  • 1, 3 and 5 year returns – alerts us if an investment is underperforming like investments over those periods of time. 

When looking at this information on a regular basis we can understand where we need to dig deeper to make sure the investment is in the best interest of our clients’ portfolios. It’s important to look often but not too often. Keeping an eye on short-term trends can obscure more meaningful long term data. For us, that means a semi-annual review of our recommended investments using FI360® analytics. 

Keeping on top of investments requires tools of the trade. We feel fortunate to have fi360 to get the job done and hope you find the proper tools to help you achieve investment success.  May the force be with you!

http://www.fi360.com/main/about.jsp

,

2012: Financial Planning Opportunities & Challenges

,

Client Presentation Now Available on Video!

The Center's informative library presentation "2012: Financial Planning and Investment Opportunities," given recently for clients and friends, is now available on demand as web-based video on YouTube. 

This presentation includes:

  • a brief look back at the investment environment in 2011
  • financial planning opportunities likely to be in the forefront for 2012
  • updates on state taxation of pension income
  • the investment outlook for 2012
  • advice for keeping emotions at bay when making investment decisions

All six YouTube videos are available on the Presentations page of The Center's website.

,

Logic & Taxes Don’t Mix

,

A question I get a lot at income tax time is, “Can I deduct investment management fees?” While this should be a straight forward answer…we are talking about the tax code where nothing is simple.  As a law professor of mine once said, never put logic and income taxes in the same sentence.  Your tax preparer is the best person to consult with on this issue – but in the meantime, here are some guidelines:

The first place to start when trying to determine if an investment management fee is deductible or not is to determine the type of account (Taxable, Traditional IRA, Roth IRA, 401k, etc.).

Investment management fees paid in taxable accounts (such as single, joint or living trust accounts) are a tax deductible expense and reported as a miscellaneous itemized deduction on Schedule A of Form 1040.  That’s the easy part – but not the whole story. There is more to the story because not everyone can actually benefit from miscellaneous itemized deductions.  In order to benefit from your miscellaneous itemized deductions, in aggregate they must exceed 2% of your Adjusted Gross Income. As an example, if you have Adjusted Gross Income of $75,000, then the first $1,500 of miscellaneous itemized deductions are not deductible – only the balance can be deducted.  To further confuse the issue, if you are subject to the Alternative Minimum Tax some or all of these deductions could be disallowed as a tax preference.

For accounts such as Traditional IRA’s, ROTH IRA’s, and 401k’s, my interpretation of the tax code is that investment management fees paid by assets in the account are not deductible nor are they considered taxable income. In summary: not deductible (but you don’t pay income on the fee either). That said, some will argue that the fee is deductible, just as it is for taxable accounts discussed above. Lastly, some tax professionals will suggest that the fee is deductible if paid with money outside of the IRA. For example, some tax professionals will suggest that fees attributed to IRA type funds be paid via a separate check making them deductible.

As you can see, there are some gray areas on this topic.  What can you do?

  • Be sure to share the fact that you paid investment management fees with your tax preparer
  • Break the fees out by account type (taxable versus other types)

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.  Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James.  Please note, changes in tax laws or regulations may occur at any time and could substantially impact your situation.  While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS we are not qualified to render advice on tax or legal matters.

There's Still Time to Contribute to an IRA for 2011

There's still time to make a regular IRA contribution for 2011! You have until your tax return due date (not including extensions) to contribute up to $5,000 for 2011 ($6,000 if you were age 50 by December 31, 2011).

For most taxpayers, the contribution deadline for 2011 is April 17, 2011. Normally, your federal tax return must be filed by April 15. However, the IRS has extended the deadline to April 17 this year because April 15 is a Sunday, and April 16 is a holiday in Washington D.C. (Emancipation Day).

You can contribute to a traditional IRA, a Roth IRA, or both, as long as your total contributions don't exceed the annual limit. You may also be able to contribute to an IRA for your spouse for 2011, even if your spouse didn't have any 2011 income.

,

Marilyn’s Book Review - The Little Book of Economics

,

As the story goes, ask two economists or five what the future will bring and what is going on and you get as many answers.  Finally, there is a clear, well-written book that is concise and up-to-date giving us some insight as to why this situation exists.  More importantly, the book explains the basics of economics in a readable manner, discusses the booms and busts of the past 20 years and, in particular, the most recent downturn.  The author discusses how economic concepts and institutions affect our lives.  There are few charts and graphs, just logically written explanations infused with story examples and some humor. So, what is the book?

The Little Book of Economics:  How the Economy Works in the Real World written by Greg Ip, an educated economist and journalist.  He is the U.S. editor for The Economists and has written for the Wall Street Journal and the New York Times. This 250-page book is available at bookstores, through Amazon and can be downloaded to your Kindle or iPad.

As one reviewer said, “Finally, an economics book that is neither dull nor inscrutable and won’t put you to sleep. This little gem can turn all of us into sophisticated and educated citizens”.  I agree. 

Opinions are those of the author and not necessarily those of Raymond James.  This is not meant as an endorsement of the listed material by Raymond James.

The Gambler

While I’m not a big country music fan, one of the few country songs I can sing along to is “The Gambler” by Kenny Rogers.  While Kenny certainly knew how to make money, he also had a pretty good idea of how to keep it:  “You gotta know when to hold ‘em, know when to fold ‘em, know when to walk away and know when to run.”  There’s a valuable lesson for investors in those lyrics. 

When investing most people (and professionals too), spend a lot of time deciding which investments to buy and little time understanding when to sell.  Having a security selection process and understanding what you own and why you own it is important to the investment process, as you can read about here, but it may be even more important to successful investing to have a proper sell discipline.  

Part of your process, even before buying a security, should be to outline reasons you would hold the investment even, perhaps, through periods of underperformance and also to establish factors that would cause you to sell it in the future.  At The Center for Financial Planning, Inc. some of our potential sell reasons include: 

  • Key personnel departure
  • Attainment of your price target
  • Increased correlation to other investments; and so on.

Having these points in mind makes it easier and much less emotional when thinking about selling a position.  

While it is usually best to buy and hold over longer periods of time, it is a good idea to play devil’s advocate with your portfolio.  Have you heard of the endowment effect?  Simply put the endowment effect states that once you own something you start to place a higher value on it than others would.  A way to potentially mitigate the endowment effect is to ask yourself, “If I were to build a portfolio today would this security be part of it?”  If the answer is “no” then it may be time to sell the investment and purchase something with greater growth potential from this point forward. 

Knowing when to hold ‘em and fold ‘em doesn’t come easily. But with some thought, you can successfully time when you buy and when you sell, because you never want to have to walk away … or worse yet … have to run!

James Montier.  Little Book of Behavioral Investing.  2010

The information contained in this report does not purport to be a complete description of the developments referred to in this material.  Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.  Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment.  Investing involves risk and you may incur a profit or loss regardless or strategy selected.  Consult a Financial Advisor before implementing any investment strategy.  Links are being provided for information purposes only.  Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors.  Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members.

Live YOUR Plan™

Newsletter Signup