Jay Peroni, CFP, renowned financial advisor, public speaker, and author of The Faith-Based Millionaire, is an expert authority on the subject of FAITH-BASED INVESTING.
http://jayperoni.com/blog/ - Feb 8, 2013 7:37:40 PM - Dec 3, 2004 8:46:50 PM
Posted on January 6, 2013 in
You may be amused by the efforts of some of your friends and neighbors as they try to “chase the return” in the stock market. We all seem to know a day trader or two: someone constantly hunting for the next hot stock, endlessly refreshing browser windows for breaking news and tips from assorted gurus.
Is that the path to making money in stocks? Some people have made money that way, but others do not. Many people eventually tire of the stress involved, and come to regret the emotional decisions that a) invite financial losses, b) stifle the potential for long-term gains.
We all want a terrific return on investment (ROI), but risk management matters just as much in investing, perhaps more. That is why diversification is so important. There are two great reasons to invest across a range of asset classes, even when some are clearly outperforming others.
#1: You have the potential to capture gains in different market climates. If you allocate your invested assets across the breadth of asset classes, you will at least have some percentage of your portfolio assigned to the market’s best-performing sectors on any given trading day. If your portfolio is too heavily weighted in one asset class, or in one stock, its return is riding too heavily on its performance.
So is diversification just a synonym for playing not to lose? No. It isn’t about timidity, but wisdom. While thoughtful diversification doesn’t let you “put it all on black” when shares in a particular sector or asset class soar, it guards against the associated risk of doing so. This leads directly to reason number two…Posted on January 4, 2013 in Reducing Taxes
Giving to charity doesn’t make you a good person, but it sure helps. Charity should be the luxury of the blessed, and without the generosity of these big-hearted citizens, the world would be a wretched place.
According to TurboTax data, people with an average gross income (AGI) between $30,000 and $50,000 gave around $2,000 to charity last year. Those with an AGI between $50,000 and $100,000 gave a bit more than $2,600 on average, and those making $250,000 or more gave a whopping $28,110 on average. Where do you fall on this spectrum?
Choosing the Right Charity
Selecting the right charity for you should come from your heart first and foremost, but that doesn’t mean you should pull out your checkbook the second a commercial about tortured animals grabs your attention. If you have a soft spot for animals, children, the environment, teaching urban youth to read instead of just throwing a fistful of your income at them, do the research and make sure the non-profit you choose qualifies for tax deductions and is, in fact, what they say they are.
There are plenty of charities that are fake, which makes protecting your charitable finances essential. Sites like Lifelock.com on Crunchbase.com can help you navigate potentially murky waters of the faux non-profit world.Posted on December 16, 2012 in
10 Behaviors worth changing in 2013
Do bad money habits constrain your financial progress? Many people fall into the same financial behavior patterns year after year. If you sometimes succumb to these financial tendencies, the New Year is as good an occasion as any to alter your behavior.
#1: Lending money to family & friends. You may know someone who has lent a few thousand to a sister or brother, a few hundred to an old buddy, and so on. Generosity is a virtue, but personal loans can easily transform into personal financial losses for the lender. If you must loan money to a friend or family member, mention that you will charge interest and set a repayment plan with deadlines. Better yet, don’t do it at all. If your friends or relatives can’t learn to budget, why should you bail them out?
#2: Spending more than you make. Living beyond your means, living on margin, whatever you wish to call it, it is a path toward significant debt. Wealth is seldom made by buying possessions. Today’s flashy material items may become the garage sale junk of 2025. Yet, the trend continues: a 2012 Federal Reserve Survey of Consumer Finances calculated that just 52% of American households earn more money than they spend.
#3: Saving little or nothing. Good savers build emergency funds, have money to invest and compound, and leave the stress of living paycheck-to-paycheck behind. If you can’t put extra money away, there is another way to get some: a second job. Even working 15-20 hours more per week could make a big difference. The problem is far too common: a CreditDonkey.com survey of 1,105 households last fall found that 41% of respondents had less than $500 in savings. In another disturbing detail, 54% of the respondents had no savings strategy.
#4: Living without a budget. You may make enough money that you don’t feel you need to budget. In truth, few of us are really that wealthy. In calculating a budget, you may find opportunities for savings and detect wasteful spending.
#5: Frivolous spending. Advertisers can make us feel as if we have sudden needs; needs we must respond to, needs that can only be met via the purchase of a product. See their ploys for what they are. Think twice before spending impulsively.
#6: Not using cash often enough. No one can deny that the world runs on credit, but that doesn’t mean your household should. Pay with cash as often as your budget allows.
#7: Gambling. Remember when people had to go to Atlantic City or Nevada to play blackjack or slots? Today, behemoth casinos are as common as major airports; most metro areas seem to have one or be within an hour’s drive of one. If you don’t like smoke and crowds, you can always play the lottery. There are many glamorous ways to lose money while having “fun”. The bottom line: losing money is not fun. All it takes is willpower to stop gambling. If an addiction has overruled your willpower, seek help.
#8: Inadequate financial literacy. Is the financial world boring? To many people, it is. TheWall Street Journal is not exactly Rolling Stone, The Economist is hardly light reading. You don’t have to start there, however: great, readable and even entertaining websites filled with useful financial information abound. Reading an article per day on these websites could help you greatly increase your financial understanding if you feel it is lacking.
#9: Not contributing to IRAs or workplace retirement plans. Even with all the complaints about 401(k)s and the low annual limits on traditional and Roth IRA contributions, these retirement savings vehicles offer you remarkable wealth-building opportunities. The earlier you contribute to them, the better; the more you contribute to them, the more compounding of those invested assets you may potentially realize.
#10: DIY retirement planning. Those who plan for retirement without the help of professionals leave themselves open to abrupt, emotional investing mistakes and tax and estate planning oversights. Another common tendency is to vastly underestimate the amount of money needed for the future. Few people have the time to amass the knowledge and skill set possessed by a financial services professional with years of experience. Instead of flirting with trial and error, see a professional for insight.
This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. Marketing Library.Net Inc. is not affiliated with any broker or brokerage firm that may be providing this information to you. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is not a solicitation or a recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.Posted on November 7, 2012 in
Bad Markets, Good Returns?
The markets are down over 2%. Between the results of the U.S. elections, focus on the Fiscal Cliff of 2013,and MORE trouble brewing in Europe, investors aren’t exactly in a buying mood.
As of 11:00am EST:
- The Dow is off 288 points
- NASDAQ is down 67 points
- The S&P 500 just broke below 1400 (down 30 points)
Things look bad for stock investors. Here we are on a day when the markets are crashing and we have 80% in cash along with two current stock holdings that are UP while the markets are down! Our system knew danger was ahead and thus we had a very high cash position.Posted on October 18, 2012 in
The power of the Wall St. Renegade System has been nothing short of amazing. Many happy subscribers who bought Aegerion Pharmaceuticals (AEGR), a latest stock that CRUSHED the market. The stock increased by over 50% in less than 2 weeks.
Posted on October 5, 2012 in
That said, stock market historians have repeatedly analyzed market behavior in presidential election years, and what stocks do when different parties hold the reins of power in Washington. They have noticed some interesting patterns through the years which may or may not prove true for 2012.
The Dow hasn’t done that well when the presidency has changed hands. A new research report from MFS Investment Management details the history of the blue chips in presidential election years from 1900-2008. It notes that the DJIA has on average lost 4.4% in election years in which the incumbent party in the White House loses. On the other hand, in years when the status quo was maintained, the Dow gained an average of 15.1%. Of course, much of these yearly gains and losses could also be chalked up to macroeconomic factors having nothing to do with a presidential race.
Too often, employees think of Health Savings Accounts (HSAs) as if they were simply deposit accounts. In reality, HSAs have much greater financial potential – and it shouldn’t be ignored.
With an HSA, you don’t have to “use it or lose it”. An HSA lets you set aside money each year for qualified medical expenses. Any money you don’t withdraw from your HSA annually is allowed to accumulate.
HSA funds can also be invested. So given investment gains, ongoing contributions to your account and tax-advantaged compounding, your savings for future health care expenses have the potential to grow impressively.
An HSA gives you a versatile automatic savings plan with striking tax breaks. The contributions to an HSA aren’t taxed by the IRS, since they are made with pre-tax dollars (as with a Roth IRA). Distributions usually aren’t taxed either, as long as they are used to pay for deductibles, co-payments and other qualified medical expenses. The IRS also refrains from taxing HSA earnings. This makes the HSA unique among retirement savings accounts.No public Twitter messages.
Copyright © 2013 Jay Peroni – Faith Based Investing
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Posted on July 21, 2012 in Legacy Planning
LOOKING AT THE NEW ESTATE TAX LAWS
What has happened since 2010 & what could happen in 2013.
With 2013 approaching, many families and their financial, tax and legal consultants are weighing major estate planning decisions. A short-term window of opportunity may be closing. The relatively low estate tax rates we have now may soon disappear, along with one of the largest federal tax breaks available in decades.
Estate taxes are at 80-year lows. At the end of 2010, Congress reset the estate, gift and generation-skipping tax (GST) rates at 35% and raised the lifetime federal gift, estate and GST tax exemptions to $5,120,000 until January 1, 2013. Some Capitol Hill legislators want to see these rates retained, even made permanent. Two other scenarios may be more likely.
In the first scenario, the Bush-era tax cuts expire at the end of 2012 and it becomes 2001 all over again: the lifetime estate and gift tax exemptions fall to $1 million and estate taxes are reset to 55% (60% for some households).
In the second scenario, Congress makes good on President Obama’s request to turn the clock back to 2009: estate taxes reset to a top rate of 45% with a $3.5 million personal exemption. (The lifetime gift tax exemption would still fall to $1 million.)
The current $5.12 million personal exemption is portable between spouses. This represents a major tax break for wealthy families – an opportunity to transfer significantly greater amounts of wealth without triggering transfer taxes.
Currently, executors have an option to transfer an unused portion of a deceased spouse’s $5.12 million lifetime unified gift/estate/GST exemption to a surviving spouse. So with this new portability, a married couple can potentially transfer up to $10.24 million of assets without incurring any federal estate tax. In 2013, this portability is scheduled to disappear.
Portability is not automatic. When the first spouse passes away, the executor of his or her estate must file a federal estate tax return even if no estate tax is owed. That move formally notifies the IRS that you are transferring the unused or partially used personal exemption to the surviving spouse. This estate tax return is due nine months after the death of the first spouse, with a six-month extension permissible.
If some planning needs to be done to bring the value of your taxable estate under $5.12 million (or $10.24 million), your executor could make donations to qualified charities or non-profits on your behalf to lower the taxable value of your estate, although your heirs would consequently be left with less.Posted on July 20, 2012 in
Challenges for singles who are retiring
Most retirement planning literature portrays a retirement transition in the context of a couple or a family – but what about those who retire alone? What particular challenges do they face, and how must their preparation for retirement differ?
Retiring alone presents unique challenges. Singles who retire may lack a spousal and familial support network other retirees count on. If a lone retiree faces sizable medical bills, he or she can’t draw on the financial resources of a spouse. Unmarried, childless retirees also lack adult sons and daughters who might be able to offer them financial help or serve as executors of their estates one day.
Singles must plan ahead for them. The earlier, the better: if you anticipate a solo retirement, it might be very wise to plan for it decades in advance.
A basic financial truth can’t be dismissed: single retirees will need to amass savings comparable to those of a retired couple.
Why? It is because many retirement costs are fixed. Hospitals, universities, banks, pharmacies, mechanics and home improvement specialists do not offer discounts to single parents or lone retirees. Usually, a couple can absorb these costs more effectively than an individual.
Some steps to consider. Those looking at the possibility of a solo retirement may want to think about these factors…
The need to save early & consistently.Sometimes young singles are bad with credit, or spend whole paychecks without regard to putting anything away. You are different, right? Think about increasing your savings rate. It is possible: look at how much parents save for their kids’ tuition, food, clothing and child care, in the face of economic pressures that may exceed your own.
The possibility of building wealth through real estate.Astute real estate investment may provide a single individual with a place to live, a steady income stream and the equity to pad retirement savings.
The possible need for long-term care coverage.According to NPR, only about 8 million of 313 million Americans have any long-term care insurance. The average private room accommodation in a nursing home is currently $87,000 a year. The 2012 Long-Term Care Insurance Price Index of the American Association for Long-Term Care Insurance (AALTCI) estimates that a single 55-year-old would pay an average of $1,720 a year for LTCI with an immediate value of $170,000 and a value of $354,000 at age 80 – a purchase that may very well be worth it given trends in American longevity. Many people investigate buying LTCI as they turn 50; you may want to take a look at it in your forties.1
The value of a social circle. “Family” has many different definitions today – and increasingly, single retirees are creating family-like bonds by moving in with one another, and saving household expenses as well. This can be good for the soul, and some solo retirees with few or no living relatives go so far as to assign power of attorney to a close friend in case of emergency.
What if you are divorcing without kids? A divorce earlier in life is often more bearable financially than a divorce later in life. In the financial aftermath of divorce, the key is whether the settlement reached is truly equitable. Not equal – equitable. While assets may be divided equally, the lesser-earning spouse may be left with less income and less potential to accumulate wealth in the future. (This is often the case if one spouse has helped the other build a business or a professional practice.) An equitable settlement considers and addresses these factors, especially in view of retirement savings needs.
These are all crucial factors to think about if you find yourself thinking that you may retire alone. Contemplate them, and consider planning accordingly. Give us a call at 866-594-9919 if you’d like to take a look at your planning options or have a question about retirement!
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