Top Financial Fear Is Not The Threat Of Running Out Of Money

More working investors say their greatest financial worries are rising health-care costs, changes to Social Security and/or Medicare, and running out of money in retirement, shows a survey for Signator Investors.

Fifty-five percent of non-retired investors cited the financial risk of rising health-care costs in retirement as their greatest concern, a seven-point jump from last year’s survey.  Overall, 89 percent of this year’s respondents expressed some concern about rising health-care costs.

Changes to Social Security and/or Medicare was the second most-cited financial risk with 34 percent of respondents citing they were "very concerned,’" up slightly from 32 percent last year. Overall, 74 percent of respondents cited some level of concern about this risk.

Running out of money in retirement was cited as the third financial risk investors were concerned about. It increased slightly in 2013 with 28 percent of respondents saying they were ‘very concerned’ compared to 26 percent in 2012. Overall, 65 percent of respondents this year felt this issue was of concern.

This survey of 1,013 investors, 703 of whom were not retired, was conducted online by independent research firm Mathew Greenwald & Associates as a part of the John Hancock Investor Sentiment Index for Signator Investors Inc. Respondents were required to participate in their household’s financial decision-making process, have a household income of at least $75,000, and assets of $100,000.

Source:  Financial Advisor Magazine

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association.

Get a Head Start on College

It's five years before your child trots off to college. That may not seem like much time to maneuver your finances, but there's actually a lot you can do to better position yourself to pay for tuition, room and board, fees, and books.

But you have to do some homework—and make sure you involve your children in the planning process, as they will likely be responsible for at least some of the costs down the road. Before your child starts touring college campuses, make sure you research the financial-aid system and the costs of college and that you understand your loan options. Also, it's important to make sure you save adequately and invest properly during the remaining years between now and when your child sets off for college.

Here are four steps you can take before your child starts college.

1. Finesse financial aid.  With the cost of a college education increasing at a rate of 4.8% for the 2012–13 school year, it's more important than ever to understand the financial-aid process and how to potentially improve your eligibility.

In particular, the federal government program Free Application for Federal Student Aid (FAFSA), which is used by many families to apply for aid, has some factors that you may use to your advantage a few years before your child enters college.

FAFSA calculates your expected family contribution, or EFC, as the amount of money that the parents and student together should pay toward college expenses, based on the cost of attending a particular school. The higher the EFC, the less financial aid you can expect to receive, and vice versa. But keep in mind that it is up to the school to distribute financial aid for each student as it sees fit. Just because you receive a low EFC doesn’t mean that you will have to pay only that amount toward college.

Understand college costs.  It's important for families to understand the true college costs that they will face.  The average annual total for tuition, fees, and room and board for an in-state public four-year college was $17,860 for the 2012–13 tuition year. The average total for tuition, fees, and room and board for a private four-year college was $39,518 for the 2012–13 tuition year.

2. Get familiar with grants, scholarships, and loans.  Your financial-aid award may consist of a combination of grants and scholarships (money you don't have to pay back) and loans (which must be paid back). The largest piece of undergraduate aid (44%) comes from federal loans, consisting mainly of two loan types—Stafford loans (subsidized and unsubsidized) and PLUS loans. The average undergraduate aid per full-time equivalent student totaled $13,218 in the 2011–12 school, including $6,932 in grant aid from all sources, and $5,056 in federal loans.

Grants.  Federal Pell grants—up to a maximum of $5,645 for the 2013–14 academic year—are awarded based on financial need, as determined through the FAFSA. Colleges and universities award grants based on financial need, merit, or both. State grants vary in amount and are usually need-based awards. Private grants are based on a variety of factors, including background, associations, achievements, interests, and need.

Scholarships.  Awarded by the federal government, institutions, states, and private sources, scholarships may be based on different factors such as merit, need, diversity, interests, or cultural background, to name a few. It is a good idea to research the different types of grants and scholarships available to your child or loved one, to make sure you're utilizing any source of funds you don't have to pay back.

Student loans.  While your student may or may not qualify for grants or scholarships, there are a variety of loans available to help foot looming tuition bills.

Probably the most attractive loans are subsidized Stafford loans. These are federal government loans available to any student who meets the FAFSA eligibility requirement and who typically has an unmet financial need after Pell grants and other financial aid are factored in. Typically, they are offered at set amounts for each school year—from $3,500 for the first year up to $5,500 in the third year and beyond—with a lifetime limit of $23,000.

Also to be considered are unsubsidized Stafford loans and private education loans, which you may apply for regardless of financial need. With unsubsidized Stafford loans, the interest on the loan begins accruing immediately. However, the student may defer payments until six months after he or she leaves school.

Parent loans.  Parents may borrow for college through PLUS loans, which allow you to defer repayment until six months after the student leaves school, although the interest begins to accrue as soon as the loan is dispersed. Borrowing limits are high, so parents with good credit histories may borrow up to the full cost of the student's education, less any aid the student has received.

3. Revisit how you've invested your child's college savings.  As you prepare for college, take a good look at the investment portfolio within your college savings, and make sure it still makes sense. Given that you'll need to pay the tuition bill, your savings goals may have changed over time, especially as you have narrowed your choice of colleges. In fact, many people don't understand the need to reduce the proportion of their equity investments—and thus their risk—in their college savings portfolio as college approaches.

"As college gets closer, it’s important to review your investments and consider shifting to a less aggressive mix than perhaps seemed reasonable 10 years before college," says Keith Bernhardt, vice president of college planning at Fidelity Investments. "Big swings in savings due to market volatility can be disruptive to your plans, while going too conservative may not give you the opportunity to keep pace with tuition inflation."

The federal income-tax-free advantage granted to 529 college savings plans for qualified distributions can be significant. Distributions from 529 college savings plans can be used to pay for qualified higher education expenses (tuition, fees, books, supplies, and equipment required for enrollment at accredited institutions). In addition, the distribution may also be used toward room and board, so long as the beneficiary of the plan is attending the school at least half-time.

Also, it’s important to keep in mind that your education savings plan is just that—a savings plan. No matter how much you tweak the investments within your 529 plan, it all comes down to how much savings go into your plan. You may want to revisit your goals as your situation evolves. Look at the schools you and your child are considering, and make sure you’re saving enough to pay for them.

4. Research colleges together.  Some of the greatest missed opportunities begin by not having the right conversations between you and your child when you start planning for college. The Fidelity College Savings Indicator study found that 69% of families with older children (age 15+) who had these conversations took action to address how those issues would affect earning potential, job prospects, and future student loan debt.

Having conversations with your child about which school he or she would like to attend, the child’s interests, and what you are willing to contribute, are good starting points. Colleges and universities may be pretty strategic about awarding financial aid, so if it is determined that you do qualify for financial aid, you may be eligible for a better package if your child has a background or interests that match a particular school's criteria. Here's where doing college research several years out may be beneficial. If you know what studies, sports, arts groups, or extracurricular activities your college of choice deems attractive, your child may want to start engaging in those same studies and activities in high school in order to potentially garner a better financial-aid package.

Source:  Fidelity Investments

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association.

Social Security benefits to increase 1.5% in 2014

Monthly Social Security benefits will increase Jan. 1, thanks to a 1.5% cost-of-living adjustment, the Social Security Administration said Wednesday.

The 1.5% benefit hike affects more than 57 million retired and disabled workers as well as their spouses, dependents and survivors. The increase will also apply to supplemental security income benefits received by more than 8 million poor and disabled individuals, starting Dec. 31.

The increase will be slightly below last year's COLA of 1.7% and below the average of 2.7% since 1990.

Benefits won't be the only thing that increases next year. Although the payroll tax rate will remain the same, the amount of wages subject to those taxes will increase to $117,000 per year in 2014, up from this year's $113,700.

The average Social Security retirement benefit will increase to $1,294 per month next year as a result of the 1.5% COLA, up from this year's average of $1,275 per month, the SSA said.

For retired couples, the average benefit will increase to $2,111 per month next year, from $2,080 per month this year.

Retirees 65 and older will be relieved to know that while their Social Security benefits will increase slightly next year, their monthly Medicare premium won't.

Most people will continue to pay $104.90 per month for Part B coverage, which covers doctors' bills and out-patient services, the same as this year. Medicare Part A, which covers hospital bills, is free.

Source:  Mary Beth Franklin, Investment News

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association.

Equities are poised for a good couple of months

The Wharton School of the University of Pennsylvania professor Jeremy Siegel says the Dow could increase another 6% this year and at least 10% next year. The index has already moved up 25% so far this year, and he sees it between 16,000 and 17,000 by year end.

The Wharton professor, speaking on CNBC earlier this week, reminded investors that the final two months of the year “are usually pretty good months.” Plus, no major uncertainties hang over the markets, “at least in these two months coming up," he says.

“I think the economy is going to hold on here,” Siegel said. In 2014, he sees GDP improving to 3% or as high as 3.5%.

Siegel sees tailwinds for the Dow as fourth-quarter results are released. In addition, dividends have improved 10%-15% this year and are “rising strong.”

“This is a very favorable climate still for equities,” Siegel stressed.

Meanwhile, the Standard & Poor's 500 index was up more than 23% in 2013 through Friday.

Paul Krake of View from the Peak: Macro Strategies told CNBC over the weekend that the S&P could improve 15% over the next two months or so.

"Given the outlook for historically low funding rates, the S&P 500 looks some 15% undervalued, 20% from October lows," Krake said. He’s widened equity holdings in his absolute return portfolio from 50% to 80% based on this bullish outlook.

Low interest rates mean funding costs for companies are extremely low and helps produce robust returns, he says.

"The naysayers will come in and say global growth is stagnant, economic growth is anemic," Krake said. "The reality is that this is the first year since 1995 that we've had simultaneous growth in China, Europe, the U.S. and Japan. Yes, it's slow, but valuations aren't stretched."

He did add that the S&P was likely to experience a 10% to 15% correction once the Fed made a serious tapering announcement.

Source:  ThinkAdvisor

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association.

High Yield Bonds Poised To Outperform

Non-Investment Grade bonds are already up more than 6% so far in 2013 – a year when other types of bonds have stumbled – but that doesn’t preclude high yield from continuing to outperform. So says ING Investments in its latest fixed-income report:

"Despite not really weakening through the noise in Washington, the high yield market is biased to the upside given strong technicals and still-supportive fundamentals. Until more supply comes on line, the path of least resistance seems higher. We may get a year-end rally, but the looming debt-ceiling debate in early 2014 is likely to limit its magnitude and/or duration...

"Longer term, high yield appears well positioned to outperform most other fixed income assets. With investors more concerned about interest rate risk than credit risk, high yield spreads offer more-than-adequate compensation for likely credit losses and the ability to absorb at least a portion of any further rise in interest rates..."

In this range-bound, opportunist’s bond market that we seem to be in, Non-Investment Grade bonds can come close to another coupon-clipping year in the year ahead, without too much in the way of default risk.

"...Corporate profitability remains relatively robust, though profit growth has slowed sharply; combined with steady debt growth. Despite the sharp rally in the last two weeks, investment grade spreads remain attractive..."

Source:  Michael Aneiro, Barrons

AdvisorShares Peritus High Yield (HYLD) is a component of the D2 Capital Management Multi-Asset Income Portfolio.  It currently has a 7.8% yield (as of 24 October 2013).

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association.

Are you real estate diversified?

REITs can be a potent source of returns, and an excellent portfolio diversifier.

There’s a maxim that says when there is blood on the streets, buy property.

However, troubled times are not the only occasion to consider real estate. In fact, the housing market has really shone in recent years, and the stocks of real estate investment trusts (REITs) can enhance returns—while providing diversification benefits. Yet many investors are underexposed to this growing asset class.
REITs own investment-grade, income-producing real estate—including office buildings, apartments, shopping centers, and storage facilities. REITs are required to distribute at least 90% of their taxable income in the form of dividends, and dividend income has constituted nearly two-thirds of REITs’ total returns. This may be significant for several reasons. For instance, rental rates tend to rise during periods of increasing inflation, therefore REIT dividends tend to be protected from the detrimental effect of rising prices, unlike many bonds.

While most investors know about the risks and rewards of including stocks and bonds in their portfolio, in many cases the benefits of REITs may not be understood. The primary benefits of REITs include their low correlation and strong historical track record of performance relative to other assets. In particular, REITs can be beneficial for investors with multiple asset classes and a long-term investing window.

During the past 20 years, REITs have had a relatively low correlation with the broader stock market (0.56) and very little correlation with investment-grade bonds (0.13), both of which are typically viewed as core holdings in a diversified portfolio.  Correlation is an important factor in diversifying a portfolio because assets that are less than perfectly correlated may be able to partially mitigate the impact of market volatility over time.

As with any other investment, there are risks associated with REITs that must be taken into account. In addition to the market risks inherent with any investing vehicle, REITs are sensitive to a downturn in the real estate market—particularly commercial property. Changes in real estate values or economic conditions can have a positive or negative effect on issuers in the real estate industry. REITs may also be sensitive to interest rate risk as lending rates can impact costs, and thus, the performance of the REIT.

Nevertheless, REITs may be an effective way to diversify your portfolio. Yet many investors remain underexposed to this asset category. Our analysis shows that having an appropriate allocation to REITs in a multi-asset class portfolio can help improve a portfolio’s risk-adjusted returns over time.

In real estate, it may be all about the location. In terms of your portfolio, location matters as well: your asset location. REITs, as an asset class, can be a potent source of returns as well as an excellent portfolio diversifier.

Source:  Steven Buller, CFA; Sam Wald, CFA; and Andy Rubin, CFA, Fidelity Investments

Vanguard REIT Index ETF (VNQ) and iShares Mortgage Real Estate ETF (REM) are components of the the D2 Capital Management Multi-Asset Income Portfolio.  Current yields in those two funds are 3.90% and 15.56% respectively (as of 25 October 2013).

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association.

For near-term boost, go with high-yield fixed income

With most signs pointing toward several more months of uninterrupted quantitative easing, it isn't too late to jump tactically into the high-yield bond market for a near-term portfolio boost.

High-yield bond funds, up more than 5.6% from the start of the year, are clearly the hottest area of fixed income, and the near-term outlook is for more upside.

The key is to remain flexible in approaching any new high-yield exposure in this market, keeping a close watch on the Federal Reserve's plans to reduce the $85 billion-a-month bond purchasing program.

“If you think tapering is off the table until sometime in 2014, and if you think that companies are going to continue to have strong financial results, which we are seeing with earnings, you have to expect a positive impact on high-yield bonds,” said Todd Rosenbluth, an analyst at S&P Capital IQ.

The Washington donnybrook over the federal budget and the debt ceiling has effectively pushed tapering out until March at the earliest.

In fact, the weak September employment report — combined with the negative impact of the 16-day partial government shutdown — already is sparking speculation that tapering could be delayed until the summer months or later.

“If we continue to get employment reports showing just 150,000 jobs created, that idea of tapering starting in four or five months might become another 12 months,” said Thomas Meyer, chief executive of Meyer Capital Group.

He and other financial advisers see the record-level quantitative easing, with no firm end in sight, as more rocket fuel for risk assets, including high-yield bonds.

Source:  Jeff Benjamin, Investment News

AdvisorShares Peritus High Yield (HYLD) is a component of the D2 Capital Management Multi-Asset Income Portfolio.  It currently has a 7.8% yield (as of 24 October 2013).

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association.

Muni Bond Funds Look Attractive Compared to Treasuries

After the U.S. shutdown scare, municipal bonds fell behind the rally in Treasuries. As a result, the widening yield ratio could now signal a buying opportunity for muni bond funds.

Municipalities saw an increase in borrowing, which drove local bonds to the cheapest in almost two months against Treasuries, with yields on 10-year munis reaching about 111 percent of that on federal debt securities this week, reports Brian Chappatta for Bloomberg.

The $3.7 trillion muni market has generated a 0.1% return this month, compared to 0.6% for Treasuries.

“Given the elevated muni-Treasury yield ratios and a large increase in supply, this presents itself as an opportunity for the municipal investor,” Gary Pollack, head of fixed income for the Deutsche Bank unit, said in the article.

Source:  Tom Lydon and Max Chen, ETF Trends

The D2 Capital Management Tax Free Income Portfolio yields 3.36% (as of 24 October 2013) and the tax-equivalent yield is 4.689% (28% Federal Tax Bracket).  MarketVectors High Yield Muni Fund (HYD) is a component of the D2 Capital Management Multi-Asset Income Portfolio and HYD currently yields 5.73% for a 7.95% tax-equivalent yield (28% tax bracket).

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association.

Three Lessons Learned

One of the biggest concerns of investors is market volatility. Whether the concerns are on the political front or the impact of volatile markets on their investments and retirement savings, investors need to stick with investment strategies long enough to see the benefits—even through the inevitable market fluctuations. 

Consider three lessons learned from the old world of investing:

• Understand your emotions lest they betray you.
• Don't let fear drive you to cash...or lead you to time the market.
• Keep a long-term perspective.

 

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association.

After the Minimalist Debt Ceiling Deal

By:  Russ Koesterich, CFA, is the Chief Investment Strategist for BlackRock and iShares Chief Global Investment Strategist.

Last week, investors cheered that Washington managed to eke out a deal at the 11th hour. But despite any headlines to the contrary, the debt ceiling deal wasn’t all good news. Here’s a quick look at the good and bad news and its implications for investors.

The Good News

One less major market risk. Last week’s last-minute debt ceiling deal was a positive for markets. It prevented the worst case outcome and removed a significant systemic risk.

The Federal Reserve will err on the side of caution. And while the economy will slow a bit as a result of the recent drama in Washington, the Fed will recognize this and likely keep rates lower for longer. In addition, due to the soft housing market, the Fed will likely be more conservative in allowing rates to rise, focusing its tapering efforts first on Treasuries rather than on Mortgage-Backed Securities.

The Bad News

The short-term deal solves nothing. While the deal did temporarily extend the debt ceiling and end the government shutdown, it didn’t solve the country’s long-term issues and the economy is still struggling. The market will face the same issues again in early 2014, at which point not much will have changed.

By most political metrics, such as voting records, both the House and the Senate are more polarized than they have been in at least a century. Given how far apart the two parties are philosophically, the type of short-term deal that was struck last week may become a template for what to expect over the next year, and potentially for the next three, if the political status quo holds after the 2014 mid-term elections.

And while the United States isn’t in danger of a recession, slower growth isn’t consistent with the continuous rise in US valuations. US stocks are now trading at roughly 2.5x book value, a 15% increase from the end of 2012.

So what does this mean for investors?

I expect that continued Fed accommodation will help support stocks, which look reasonable on a global basis, over the next six to 12 months. However, last week’s rally seems aggressive for a few reasons: All Congress could fashion was a temporary solution, economic growth remains soft and the Fed will likely start to taper at some point in the next six months or so.

In addition, though US stocks still look reasonable compared to their historic valuations, they are looking fully valued relative to an environment of 2% growth. Though I continue to see good bargains outside the United States, there are fewer bargains in the US market.

As such, I continue to advocate that investors consider raising their allocations to international equities, and within the US market, the energy and technology sectors appear to be more reasonably priced. Finally, given that I expect the Fed to implement a more conservative taper, I’m now advocating that investors overweight mortgage-backed securities (MBS) relative to other fixed income instruments.

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association.

Tax Tips For The Last Quarter Of 2013

Tax time may not be right around the corner, but the last quarter of the year is here, so it’s time to get in gear to maximize the potential for tax deductions as the year draws to a close.

If you plan your finances carefully and take a look ahead at your income and the tax code for the 2013 year, you could position yourself for some savings come April 15. None of these tips are any substitute for a conversation with a reputable tax lawyer, but it may help make the most of your income and reduce what you owe.

Plan your charitable donations now

If charitable giving is part of your tax plan, don’t wait until the busy month of December to start making end-of-year contributions or at least making decisions about amounts to allocate and to whom. Put together a list now of reputable charities to which you would like to donate, and budget appropriately.

Increase retirement account contributions

Another way to lower your taxable income is to pay more into your retirement plan if you’re not already maxed out. Ratchet up your 401(k) or IRA contributions to save on taxes owed and boost your retirement security at the same time. Most people under 50 years of age can contribute up to $17,500 (or $5,500 more over age 50) annually, so crunch the numbers and see if this is right for you.

Spend down flexible spending accounts

If you’re in a pre-tax flexible spending program through your employer, check your balance and spend the amount down between now and the end of the year, if possible. Some eligible expenses may include eyewear, medical devices, and even co-payments and deductibles.

Sell off losing stocks

If you have stocks that are worth less than what you paid for them, and you don’t want to hang onto them, you can sell them and take a capital loss on your tax return. While selling the stocks in order to be able to declare the loss on your tax return might only make up for a small percentage of the loss, you can claim up to $3,000 annually. Naturally, there is additional paperwork involved, but if you’ve been looking for a reason to let go of some losers, now could be a good time. '

Go green

There is still time left to upgrade to energy-efficient appliances and reap up to a $500 tax credit. This credit was set to expire in 2011, but was extended through the end of this year. If you haven’t taken the credit before, some items which may be eligible include water heaters, furnaces, heat pumps, central air conditioners, boilers, and even building Insulation, windows, and a new roof. In a qualifying furnace, circulating fans installed may also count, as well as other renewable or alternative technologies such as biomass burners of stoves that use qualified biomass fuel.

Other credits have been extended as well. Purchases of plug-in electric drive vehicles, combined heat and power systems, onsite renewable energy systems including ground-source heat pumps, and fuel cells and microturbines are scheduled to be extended until Dec. 31, 2016.

Have a plan and know the rules

This is not a comprehensive list of tax deductions or credits, so spend some time at IRS.gov to learn more about qualifying expenses and eligible purchases, contributions, and gifts. Do a quick run-through of your income and expected deductions to determine what you'll owe, and if there are sound ways to act now and reduce your tax burden.

In general, there is some good news about changes to the tax bracket structure this year. The standard deduction will increase slightly with inflation, and tax brackets have changed. Wolters-Kluwer, CCH announced last month that the changes are expected to result in an increase in savings for many. The firm said couples filing jointly with an income of around $100,000 could expect to pay around $145 less in taxes, while a anyone making around $50,000 and filing as single could expect a savings of about $72.

Source:  Shirley Pulawski, Investopedia

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association.

REIT ETFs Have Tailwinds

Exchange traded funds offering exposure to Real Estate Investment Trusts (REITs) were prime beneficiaries of the Federal Reserve’s easy money, ultra-low interest rate policies.

That proved to be a double-edged sword for some REIT ETFs as REIT equities were repudiated on speculation the Fed would move to trim its $85 billion in monthly bond purchases.  Fortunately for income investors that have embraced REIT ETFs, tapering has not arrived yet and the nomination of Janet Yellen to lead the Fed next year could provide for further upside for income-generating asset classes and sectors

S&P Capital IQ sees opportunity with ETFs that feature exposure to multi-family REITS.

“According to data tabulated by the U.S. Census Bureau, the national homeownership rate, on a seasonally adjusted basis, fell to 65.1% in the second quarter of 2013. This represents the lowest level since the fourth quarter of 1995, and is well below the 69.2% reported for the first quarter of 2005. We think there are several possible explanations,” said the research firm in a note.

“First, many previous homeowners may still be reluctant to re-enter the market after suffering losses from the de-valuation of their homes during the recession. Second, the ‘echo boomer’ population, children of the ‘baby boomers’, is now moving into the housing market. Typically, young adults have a much higher propensity to rent. Finally, the economic recovery is adding to jobs and, we believe, contributing to the level of new household formations and demand for all types of housing.”

S&P Capital IQ has an overweight rating on the Vanguard REIT ETF (VNQ). Residential REITs comprised 16.1% of VNQ’s weight as of the end of the third quarter.   Presently, VNQ has a dividend yield of 3.9%.

Source:  Tom Lydon, ETF Trends

Vanguard REIT (VNQ) is a component of the D2 Capital Management Multi-Asset Income Portfolio.

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association.

An ETF Play for Your Retirement Income Portfolio

Retirees who are managing their portfolios should not chase after returns. Instead, most exchange traded fund investors saving for retirement should include strategic allocations and find opportunities in alternative income investments.

For instance, Michael Fabian, a managing partner at FMD Capital Management, suggests taking a look at preferred stocks.

Specifically, the iShares U.S. Preferred Stock ETF (PFF) provides investors with exposure to preferred stocks, which provide a specified dividend paid before common stock holders and take precedence over common stocks in case the company goes under. PFF shows a 5.66% 12-month yield.

“Alongside the view that the equity markets will avoid a major calamity in 2013, we find that many individual issue preferred stocks have worked off their excess premiums to par value, and are now resting at relatively attractive valuations when compared with earnings multiples of high dividend stocks,” Fabian said.

More over, PFF has a lower beta to the S&P 500 Index and offers a higher dividend yield than the average stock on the index.

Source:  Tom Lydon, ETF Trends

iShares U.S. Preferred Stock (PFF) is a component of the D2 Capital Management Multi-Asset Income Portfolio.

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association.