February 23, 2017

Now is a great time to revisit your resolutions

How to help ensure  you keep your New Year's resolutions and/or reach your financial goals?   
Dan Ariely, Professor of Psychology and Behavioral Economics at Duke University, provides these suggestions: 
"One option is to make it into a public commitment and use the people around you to push yourself get into better behavior." 
"Another option is to frame the New Year’s Resolution as a thing to do for 6 weeks and give it your best for this shorter duration with the hope that a shorter commitment is more doable and that by the time you will end the six weeks that you will have a new habit."

Participate in professor Ariely's research on New Year's resolutions: http://www.surveygizmo.com/s3/3260941/New-Years-Resolutions

Tax time is the time to act on retirement savings!

It's time to feed your "Financial Freedom Fund." The federal government (under previous administrations... not sure how long this great deal will last....) offers a tax credit to help workers boost their retirement accounts.
"The Retirement Savings Contribution Credit, aka the Saver’s Credit, is a tax credit that may be applied to the first $2,000 of voluntary contributions that an eligible worker makes to a 401(k), 403(b) or similar employer-sponsored retirement plan, or to an IRA or myRA. The maximum credit is $1,000 for single filers or individuals and $2,000 for married couples," according to Steve Vernon at CBS Money Watch. Get the details at: http://www.cbsnews.com/news/dont-pass-up-free-retirement-money-from-uncle-sam/

Now is the time to plan for your financial security in later life!

February 21, 2017

Vehicle Smog Ratings & Idling

Did you know that your car has a “smog rating”? This number (1-10) reflects vehicle tailpipe emissions that contribute to local and regional air pollution.
A smog rating of 10 is the cleanest. You can find a vehicle’s smog rating on the window sticker of new cars or on fueleconomy.gov. Once you’ve decided on the type of car you want to purchase, you can compare models based on smog ratings and choose the cleanest model that fits your family’s needs. this website also has plenty of information on how to improve the fuel economy of your current vehicle and 10 Top misconceptions about Fuel Economy: http://fueleconomy.gov/feg/topten.jsp?action=Myths
Among the top myths: it's more fuel efficient to let your vehicle idle than to turn it off and on again. WRONG!  Don't idle! It wastes fuel and money and causes air pollution.

January 30, 2017

Investment Return and Rate of Return: What's the difference?

Every investor wants to earn money on their investments. FINRA explains:
"Investment return is the money you make or lose on an investment. Ideally, your return will be positive: your initial investment or principal will remain intact, and you'll end up with more money than you invested."
"Total return is a measure of your profit or capital appreciation before taxes and commissions or fees."
Rate of return = Total return ÷ Investment amount.
The other factor you have to take into account in evaluating your return is the number of years you own the investment. There's a big difference in realizing a return of 16.67 percent on an investment you own for just one year, or what's called an annual return, and realizing the same return on an investment you own for five years. Your annualized return over a five-year period is only 3.13 percent." For more info:
http://www.finra.org/investors/highlights/key-concepts-return-and-rate-return?utm_source=MM&utm_medium=email&utm_campaign=Investor%5FNews%5F012617%5FFINAL

Social Security is NOT going bankrupt!

Despite the scare tactics of some journalists, Social Security is not going bankrupt and benefits do not need to be cut in order to make the system viable for the next 75 years.

"Benefits cuts are unnecessary to preserve Social Security, even though the program's trust fund is on track to be drained by 2034, writes Max Richtman of the National Committee to Preserve Social Security and Medicare. Congress can make modest changes now to maintain benefits and keep the trust fund solvent through 2100 "without burdening working Americans," Richtman writes." Get details: http://www.cnbc.com/2017/01/24/social-security-can-survive-without-benefit-cuts.html

Should you retire with a mortgage?

More and more Americans are retiring with a mortgage. With low interest rates many financial advisers suggest it is better to have a mortgage and keep other funds invested. Some people delight in getting a tax deduction for mortgage interest. However, too many taxpayers who do not prepare their own taxes do not understand how little, if any, tax break they get on mortgage interest deduction. Before you make a decision, read what Nicholas Hopwood, president of Peak Wealth Management has to say about weighing the options: http://www.cnbc.com/2017/01/26/should-you-retire-with-a-mortgage-or-pay-it-off.html

January 22, 2017

How long will this bull market in stocks last?

The "bull market for stocks is 94 months old, making it the second-longest in modern history" according to Jason Zweig, writing in The Wall Street Journal, Jan. 21, 2017. In his weekly "Intelligent Investor" column Zweig explains the results of recent research showing that investors are affected by the optimism of other investors, often resulting in poor decisions. Investor optimism indices have increased recently. Zweig explains: "New research shows that the confidence of others can influence your decisions even more than your own experience can. At a time when stocks and bonds alike are expensive, investors need to be even more vigilant than usual against the risk of getting stampeded by other people’s emotions." (emphasis added). Now seems like a good time to reblance one's portfolio and if you need cash, do like I've been doing, sell your winners and lock in those gains. This bull market will NOT last forever.
"Confidence is contagious. But acting on it can be dangerous." (Zweig)

What to do BEFORE you get hit by an uninsured motorist



My assistant blogger had the unfortunate experience of being hit by an uninsured motorist. Learn from her experience.
It's not unusual to get in a fender bender in the winter, and most motorists know what to do if this happens. Exchange insurance information, document it, etc. But, what happens if you're hit by an uninsured motorist?
First be proactive. BEFORE you get hit by an uninsured motorist check and make sure your insurance covers this. Likely it does, even if you only have liability insurance. Check the coverage limits and make sure to add this protection if you don't already have it.
Our insurance, for example, had a $250 deductible with a $3500 maximum for uninsured motorist property damage. So, if we were driving a car worth more than $3500, it might be worth it to increase the maximum property damage amount.
*Note that our insurance had no deductible for bodily damage caused by an uninsured motorist. The maximum insurance would pay for bodily damage was $100k per person up to $300k per accident. To put it another way, bodily and property damage can have two different maximum pay out amounts and different deductibles as well. Check your coverage and make sure you're comfortable with the amounts covered and the deductible.
With an uninsured motorist, it's very important to document, document, document! Make sure to get the other driver's contact information, driver's license, and vehicle information, etc. use your cell phone to take photos of vehicles, license plate, their driver license. If the damages are more than your deductible, consider filing a claim with your insurance company, but only if the damage exceeds your deductible by a substantial amount. That’s up to you to decide, keeping in mind that insurance claims often result in higher premiums for years. Will the compensation from your insurance justify potentially higher rates for years to come?

Also, note that one should call the police even for a minor fender bender. Driving without insurance is illegal and most uninsured drivers risk having their car impounded after an accident. Assuming you're the one hit by an uninsured motorist, the more documentation you have the better for you and your insurance company.
It is possible and legal to settle without using insurance. However, a driver without car insurance is unlikely to have the money to pay for damages so make sure you're covered before you get in an accident!

January 21, 2017

Financial planning for special needs children



"Parents face many challenges when they must balance long-term planning for a special-needs child with their own retirement savings, experts say. Certified financial planner Mary Anne Ehlert says crucial factors for special-needs families include investment allocations, government benefits and estate plans." (Retirement Security Smartbrief). Morningstar contributor Mark Miller explains government assistance available to special-needs family members, how to use ABLE accounts, and how to balance retirement investing needs with ensuring long-term financial security for a special needs child. Read the details at: http://news.morningstar.com/articlenet/article.aspx?id=787787
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