News & Insights

5 Year-End Tax Planning Tips for 2017

by Chris Jaccard, CFP®, CFA on 12/1/2017

Here are a some tax-planning techniques and strategies you can still consider in the last few weeks of the year:

1. Watch out for large mutual fund distributions this year

Many mutual funds have realized large gains and typically distribute those gains in November and December.  Don’t buy a mutual fund in your brokerage account right before it makes a 10%, 20%, or 30% (of NAV) distribution – it just turns part of your purchase into a taxable event!  Look for widely published estimates, and if expected to be large, make sure you buy shares after a fund’s ex-dividend date.

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posted in BlogPersonal Finance

Stock Returns – The Uncommon Average

by Jim Freeman, CFP® on 11/10/2017

The US stock market has delivered an average annual return of around 10% since 1926 (as measured by the S&P 500 Index through 2016). But short-term results may vary, and in any given period stock returns can be positive, negative, or flat. When setting expectations, it’s helpful to see the range of outcomes experienced by investors historically. For example, how often have the stock market’s annual returns actually aligned with its long-term average?

Exhibit 1 shows calendar year returns for the S&P 500 Index since 1926. The shaded band marks the historical average of 10%, plus or minus 2 percentage points. The S&P 500 had a return within this range in only six of the past 91 calendar years. In most years the index’s return was outside of the range, often above or below by a wide margin, with no obvious pattern. For investors, this data highlights the importance of looking beyond average returns and being aware of the range of potential outcomes.

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posted in BlogInvestments

Embracing Retirement by Making the Right Housing Decisions

by Ellen Li, MSBA, CFP® on 9/22/2017

As a busy financial advisor and  mother, I like to balance myself with the practice of yoga. To me, yoga is more than just the practice of body movement, it’s  also an exercise of mental discipline.  Recently one of my favorite instructors used “embrace change” as our mantra and it really resonated  with me both  professionally and personally.

At Financial Alternatives, we recently helped two clients make new housing choices in their retirement years — one client remodeled their house and redesigned the living space on the first floor to make living there safer and more comfortable. The second client decided to move to an assisted living facility. In both cases, it was a transition, a new change that our clients embraced with courage and wisdom.  Stories such as these show the importance of making the right housing decisions  during your retirement years. These decisions could  have a tremendous effect on you  both financially and emotionally.

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posted in BlogGeneralPersonal Finance

5 Steps to Take After the Equifax Breach

by Chris Jaccard, CFP®, CFA on 9/14/2017

Background

Now that some of the dust has settled on one of the worst cyber security breaches in history, we think everyone should go through the 5 steps listed below.  Why everyone?  Because there is no way to be certain if you have been affected by the Equifax breach or not.  I entered false info to test Equifax’s verification site including a last name of “test” and a SSN of “123456” only to find that it positively identified me as a person impacted by the breach.  [9/16/17 Update: Equifax’s Chief Information Officer and Chief Security Officer are “retiring” and their internal investigation continues.]

Also, please make sure everyone in your family has taken these steps including your spouse, kids in college, domestic partner, and perhaps even minor children.

Step 1: Review Your Credit Report

Use the Annual Credit Report site to review your credit report from at least one of the three listed credit reporting agencies (“CRAs”).  By law, you are allowed one copy every 12 months, so we suggest you request a report from one of the three CRAs every 4 months.  Check for rogue activity or inaccuracies, and contact the CRAs to address the issue.

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posted in BlogGeneralPersonal Finance

Thank Vanguard for Lower Investment Costs. What Makes Them Different?

by Jim Freeman, CFP® on 9/5/2017

Most investors do not know this but The Vanguard Group is radically different from all other investment firms. What makes them different is that they are owned by the funds they manage – a unique arrangement that eliminates conflicting loyalties.

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posted in BlogGeneral

Thoughts on S&P’s decision to exclude non-voting stock from indexes

by Chris Jaccard, CFP®, CFA on 8/3/2017

This week the company that maintains the S&P 500 index announced that they will start excluding companies from their indexes that issue multiple classes of shares.  So newer issues of stock from companies like Snap Inc. (SNAP) – that do not have voting rights – will not be included in many popular indexes.  This follows similar statements from FTSE Russell and MSCI earlier in the year.

These announcements highlight a couple of key reminders for investors.  First, there is a significant human element even with indexes that claim to be strictly rule-based.  Second, although index providers and professionals agree that corporate governance matters, there is no consensus on how to encourage better practices while still maintaining indexes that represent public companies.

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posted in BlogInvestments

New Medi-Cal Recovery Laws; another Reason Why Proper Estate Planning is Needed

by Ellen Li, MSBA, CFP® on 5/24/2017

Long –term care in nursing homes, assisted living facilities, and home care can be very expensive. If you don’t have substantial assets or a good long term care insurance policy, the cost of care may deplete your assets over time.

What happens then?

If you qualify for Medi-Cal, (California’s version of Medicaid), it will pay for the cost of care, subject to recovery (repayment) from the estate when the recipient dies. In the past, the aggressive recovery program  put an inordinate burden on the heirs and survivors who were sometimes  forced to sell the family home to pay the estate claim or forced to sign a “voluntary lien” which accrued at 7% annual interest.

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posted in BlogGeneralPersonal Finance

5 Tips on when to file your tax return (and when to expect the information you need)

by Chris Jaccard, CFP®, CFA on 2/28/2017

Depending on your sources of income and the types of investments you have, it may be a good idea to wait to submit your tax return until close to the April filing deadline.  Based on our experience, here are some thoughts on the timing of your preparation and when you can expect to get all the information you need.

1. Potentially File Early

If you have a relatively simple tax return and only have wage (W-2), contract work/rent (1099-MISC), or social security (SSA-1099) income, you should have everything you need to file your taxes by mid-February.  Basic 1099-INT or 1099-DIV forms should be available by early February.  Also note that the IRS does not require banks or investment custodians to send some 1099s if the amount to be reported is less than $10.00, so you don’t need to hold out for “de minimus” information like this.

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posted in BlogPersonal Finance

Prediction Season

by Jim Freeman, CFP® on 12/16/2016

stockpredictionIn one of our newsletters from October, we included an article entitled, “Presidential Elections and the Stock Market”. The conclusion of the article was:

Trying to make investment decisions based upon the outcome of presidential elections is unlikely to result in reliable excess returns for investors. At best, any positive outcome based on such a strategy will likely be the result of random luck. At worst, it can lead to costly mistakes. Accordingly, there is a strong case for investors to rely on patience and portfolio structure, rather than trying to outguess the market, in order to pursue investment returns.

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posted in BlogInvestments

Scam Watch: Protect Yourself From Phishing Schemes

by Thao Truong on 11/4/2016

It has recently come to our attention that the clients of some of our colleagues have reported a jump in the number of phishing attempts on their investment accounts. Although we haven’t heard this from any of our clients recently, we understand that becoming a cyber-security victim can be very painful and costly.

We continually upgrade our systems and procedures to help prevent and detect unauthorized access, but hackers are getting smarter and bolder. Because security is a shared responsibility, we think our clients and others need to know what a phishing attack looks like and what steps they can take to defend themselves.

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posted in BlogGeneralPersonal Finance

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Posts are general in nature and do not constitute the rendering of legal, investment, accounting or other professional advice.