How Not to be a Record Hoarder

Contributed by: Sandra Adams, CFP®, CeFT™

If you’re like me, this is the time of year to go through my files and piles of paperwork in preparation for income tax season.  Seeing the stacks of statements and paperwork I’ve collected makes me feel like I’m a prime candidate to be on an upcoming episode of “Hoarders,” because I never quite feel like I can get rid of things…I might need them someday.

Consult with your financial planner and your CPA for discarding any financial or income tax paperwork, and your attorney before parting with legal paperwork.  AND REMEMBER:  you should shred any paperwork with identifying names, addresses, dates of birth or account or Social Security numbers on them to avoid being a potential financial fraud victim.

To ease your mind as you purge your financial records, here are some document retention guidelines:

(CLICK HERE TO DOWNLOAD YOUR PDF COPY)

Bank Statements: Keep one year unless needed for tax records.

Cancelled Checks: Keep one year unless needed for tax records.

Charitable Contributions: Keep with applicable tax return.

Credit Purchase Receipts: Discard after purchase appears on credit card statement if not needed for warranties, merchandise returns or taxes.

Credit Card Statements: Discard after payment appears on credit card statement.

Employee Business Expense Records: Keep with applicable tax return.

Health Insurance Policies: Keep until policy expires, lapses or is replaced.

Home & Property Insurance: Keep until policy expires, lapses or is replaced.

Income Tax Return and Records: Permanently.

Investment Annual Statements and 1099's: Keep with applicable tax return.

Investment Sale and Purchase Confirmation Records: Dispose of sale confirmation records when the transactions are correctly reflected on the monthly statement. Keep purchase confirmation records 3-6 years after investment is sold as evidence of cost.

Life Insurance: Keep until there is no chance of reinstatement. Premium receipts may be discarded when notices reflect payment.

Medical Records: Permanently.

Medical Expense Records: Keep with applicable tax return if deducted on tax return.

Military Papers: Permanently (may be required for possible veteran's benefits).

Individual Retirement Account Records: Permanently.

Passports: Until expiration.

Pay Stubs: One year. Discard all but final, cumulative pay stubs for the year.

Personal Certificates (Birth/Death, Marriage/Divorce, Religious Ceremonies): Permanently.

Real Estate Documents: Keep three to six years after property has been disposed of and taxes have been paid.

Residential Records (Copies of purchase related documents, annual mortgage statements, receipts for improvements and copies of rental leases/receipts.): Indefinitely.

Retirement Plan Statements: Three to six years. Keep year end statements permanently.

Warranties and Receipts: Discard warranties when they are clearly expired. Use your judgment when discarding receipts.

Will, Trust, Durable Powers of Attorney: Keep current documents permanently.

If the hoarder in you is still too nervous to part with the paper, you do have some options:

• Electronically scan your important financial and legal papers and save them to a computer file; remember to back up your computer and save a copy of the list (on a disk or USB flash drive) in a safe place.

• Talk to your financial advisor, who may have an electronic document management system that is storing many of your documents (and backing them up) for you. 

Oh, and while you’re revving up your shredder and getting ready to make some confetti, here’s one more piece of paper to keep…this one.  Go ahead, press print.  Save this guide and you’ll save yourself the trouble of trying to remember it all next year. 

Sandra Adams, CFP® , CeFT™ is a Partner and Financial Planner at Center for Financial Planning, Inc.® Sandy specializes in Elder Care Financial Planning and is a frequent speaker on related topics. In addition to her frequent contributions to Money Centered, she is regularly quoted in national media publications such as The Wall Street Journal, Research Magazine and Journal of Financial Planning.

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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.

Be Prepared for Life’s Hurricanes

Contributed by: Sandra Adams, CFP®, CeFT™

I was attending a conference in Orlando recently when Hurricane Matthew was heading up the coast of Florida. To say that I was completely unprepared would be an understatement. I was so busy leading up to the conference that I was only vaguely aware of the weather/hurricane status. I packed so lightly for the conference that I brought only what I needed for the days that I would be in Orlando – so that I could bring a carry-on bag only, of course!  I even, for the first time ever, pre-paid my airport parking since I knew exactly when I was arriving and when I would return, so that I could be easy in and easy out.  Why am I telling you all of this in the context of a blog about planning, you might ask?

Well, to me, it fits perfectly.  I see many clients that encounter “Hurricane” situations in their lives that they are completely unprepared for, especially when it comes to assisting older adult parents. Like the weather leading up to a hurricane, things can seem perfectly calm and sunny; moments later the storm hits and you are left completely unprepared for the chaos that comes next. For example, a simple unexpected fall and a broken hip for mom can bring months of “hurricane” aftermath if your family is unprepared.

What can you do to plan ahead so that any unexpected storms don’t find you unprepared?

• Have a family meeting with your older adult parent (facilitated by your financial planner or other professional, if that is helpful). During this meeting, discuss current and future challenges that your parent(s) may face, what alternatives they would consider as solutions to these challenges, and what resources they have to solve these challenges.

• As a result of the family meeting(s), have a written plan of action that includes all of the above, and, if needed, also includes what professional team members would need to be called upon (financial planner, elder law attorney, geriatric care manager, etc.).

• Make sure all estate planning documents are up-to-date and reflect your parents’ current wishes and situation. 

• Put a Family Care Plan in place so that everyone knows their role in advance (and family conflicts are avoided, as much as possible).

• Help your parent(s) complete the Personal Record Keeping Document and Letter of Last Instruction (and keep it up-to-date) so that all important information is in one place and handy and a moment’s notice in a crisis.

Going back to my recent hurricane situation, I happened to luck out. I was at a very secure hotel property during the oncoming storm, and while I got delayed an extra day due to the airport being shut down, the worst thing I had to endure was wearing some dirty clothes and dealing with some restless children at the hotel because Disney was also closed for the day. If you don’t help your aging parents plan, I can assure you the results won’t be as kind. The key is to start the conversation – it is not an easy one, but it is one of the most important conversations you may have in your lifetime!  Please contact me if I can be of help.

Sandra Adams, CFP® , CeFT™ is a Partner and Financial Planner at Center for Financial Planning, Inc.® Sandy specializes in Elder Care Financial Planning and is a frequent speaker on related topics. In addition to her frequent contributions to Money Centered, she is regularly quoted in national media publications such as The Wall Street Journal, Research Magazine and Journal of Financial Planning.

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The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. 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 Sandy Adams and not necessarily those of Raymond James. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

Will Social Security be Around When I Retire?

Contributed by: Matt Trujillo, CFP®

If you're retired or close to retiring, then you've probably got nothing to worry about—your Social Security benefits will likely be paid to you in the amount you've planned on (at least that's what most of the politicians say). But what about the rest of us?

Watching the news, listening to the radio, or reading the newspaper, you've probably come across story after story on the health of Social Security. Depending on the actuarial assumptions used and the political slant, Social Security has been described as everything from a program in need of some adjustments to one in crisis requiring immediate and drastic reform.

Obviously, the underlying assumptions used can affect one's perception of the solvency of Social Security, but it's clear some action needs to be taken. Even experts disagree, however, on the best remedy. So let's take a look at what we do know.

According to the Social Security Administration (SSA), over 64 million Americans currently collect some sort of Social Security retirement, disability, or death benefit. Social Security is a pay-as-you-go system, with today's workers paying the benefits for today's retirees.

How much do today's workers’ pay? Well, the first $118,500 (in 2016) of an individual's annual wages is subject to a Social Security payroll tax, with half being paid by the employee and half by the employer (self-employed individuals pay all of it). Payroll taxes collected are put into the Social Security trust funds and invested in securities guaranteed by the federal government. The funds are then used to pay out current benefits.

The amount of your retirement benefit is based on your average earnings over your working career. Higher lifetime earnings result in higher benefits, so if you have some years of no earnings or low earnings, your benefit amount may be lower than if you had worked steadily.

Your age at the time you start receiving benefits also affects your benefit amount. Currently, the full retirement age is in the process of rising to 67 in two-month increments, as shown in the following chart:

What Is Your Full Retirement Age?

You can begin receiving Social Security benefits before your full retirement age, as early as age 62. If you retire early, however, your Social Security benefit will be less than if you had waited until your full retirement age to begin receiving benefits. For example, if your full retirement age is 67, you'll receive about 30% less if you retire at age 62 than if you wait until age 67 to retire. This reduction is permanent—you won't be eligible for a benefit increase once you reach full retirement age.

Even those on opposite sides of the political spectrum can agree that demographic factors are exacerbating Social Security's problems—namely, life expectancy is increasing and the birth rate is decreasing. This means that over time, fewer workers will have to support more retirees.

According to the SSA, Social Security is already paying out more money than it takes in. By drawing on the Social Security trust fund, however, the SSA estimates that Social Security should be able to pay 100% of scheduled benefits until fund reserves are depleted in 2034. Once the trust fund reserves are depleted, payroll tax revenue alone should still be sufficient to pay about 77% of scheduled benefits. This means that in 2034, if no changes are made, beneficiaries may receive a benefit that is about 21% less than expected.

So the question still remains, with trouble looming on the horizon, how do we fix the system?  While no one can say for sure what will happen (and the political process is sure to be contentious), here are some solutions that have been proposed to help keep Social Security solvent for many years to come:

• Allow individuals to invest some of their current Social Security taxes in "personal retirement accounts"

• Raise the current payroll tax

• Raise the current ceiling on wages currently subject to the payroll tax

• Raise the full retirement age beyond age 67

• Reduce future benefits, especially for wealthy retirees

• Change the benefit formula that is used to calculate benefits

• Change how the annual cost-of-living adjustment for benefits is calculated

The financial outlook for Social Security depends on a number of demographic and economic assumptions that can change over time, so any action that might be taken and who might be affected are still unclear. No matter what the future holds for Social Security, your financial future is still in your hands. Focus on saving as much for retirement as possible, and consider various income scenarios when planning for retirement.

It's also important to understand your benefits, and what you can expect to receive from Social Security based on current law. You can find this information on your Social Security Statement, which you can access online at the Social Security website, socialsecurity.gov by signing up for a “my Social Security” account. Your statement contains a detailed record of your earnings and includes retirement, disability, and survivor's benefit estimates that are based on your actual earnings and projections of future earnings. For more details on how to sign up for an online account see our previous blog post for step by step instructions.

Matthew Trujillo, CFP®, is a Certified Financial Planner™ at Center for Financial Planning, Inc.® Matt currently assists Center planners and clients, and is a contributor to Money Centered.

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(Source: Fast Facts & Figures about Social Security, 2015)

(Source: 2015 OASDI Trustees Report)

This 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 Matthew Trujillo and are not necessarily those of RJFS or Raymond James. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor the third party website listed 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.

Diving into Raymond James: Conference Style

Contributed by: Lauren Adams, CFA®, MBA

In September, I was given the wonderful opportunity to attend the Raymond James Branch Professionals Foundations Conference, which an intensive hands-on educational experience for new employees of Raymond James-associated offices. Just as the weather was starting to cool in Michigan, I headed south to hot and humid Atlanta for the two-day training.

The roughly 30 attendees came from all over the United States, including as far as California and Washington. I’m proud to say that Michigan represented well with five of us attending from different Michigan offices (which also gave us a chance to ask each other where to find the “pop” during breaks and actually be understood… although I’m still puzzling over my new southern friends’ tendency to ask for a “Coke” and then proceed to select a Sprite or Dr. Pepper).

We started the conference with a deep dive into Client Center, which is Raymond James’s command center for managing client accounts, and new account processes, where we learned everything from how to monitor the opening, funding, and ongoing maintenance of accounts to the difference between IRAs and SAR SEP IRAs and UTMAs and UGMAs. All the while gaining a newfound appreciation for acronyms!

Day two started with a bang.... which, if you’re an operations nerd like me, that means an hour and a half session on compliance! Two senior compliance professionals presented to us about how to best prepare for a branch audit and learn about other compliance best practices. They quizzed us on the most common compliance issues (spoiler: the most common issues generally center on advertising) and gave us plenty of time for questions and answers.

We then moved into sessions on how to quickly and efficiently conduct money movement, which is of critical importance for our clients, and reporting. I found the sessions on practice management and client reporting especially helpful, as it allows us to do everything from make sure account administration goes smoothly to conduct interesting analysis on our business. Our last session was on how to use social media to better understand our clients and connect with them on issues that are most important to them.

Since returning from the conference, I’ve already used what I’ve learned to run reports that allow me to better analyze the potential FDIC exposure of our clients and identify the different sweep options used by our managed accounts (both of these topics are especially relevant given new SEC money market reform rules). Also, I’m eager to tell our clients about the benefits of our secure document center called the Vault, which clients can access through their online Investor Access account and share documents back and forth with The Center team in a secure and organized way. I’m also jazzed about the ease of using eSignature, a convenient (and eco-friendly) way to electronically sign documents.

We ended our time together with a competitive game of Jeopardy to test what we’ve learned. The prize was your pick from a table of Raymond James swag. As good branch associates, we all learned the material quite well, so winning came down to who could raise their hands the fastest after the questions were asked. I even took to jumping in the air along with raising my hand, but sadly, another team was somehow quicker on the draw; my team came in second place. Next year, I hope to be able to attend the Raymond James Branch Professional Development Conference to learn more advanced concepts in technology, office procedures, and compliance… and for another chance at the Jeopardy Gold.

Lauren Adams, CFA®, MBA is Director of Client Services at Center for Financial Planning, Inc.®

Change is Coming: FAFSA Edition

Contributed by: Nick Defenthaler, CFP®

As like many Michiganders, fall is my favorite season. What’s not to love? College football, sweatshirt weather, Halloween festivities, the changing colors of leaves, and crock pot meals just to name a few. Fall is also the time where college students are in full gear with their first semester and getting back into the academic swing of things. This is also a time where parents often put pen to paper to determine how to help fund tuition for their kids, both with savings and the financial aid system.  As parents consider their options for financial aid, the first place to turn is typically the FAFSA (Free Application for Federal Student Aid) form, which is the main determining factor of how much financial aid a student will qualify for. In years past, the FAFSA was due in February each year and was completed with financial information based on the previous year. The logistics of the filing deadline made it very difficult for families to gather the necessary financial information to make sure they completed the form accurately and timely for the February deadline. Talk about a hassle. Good news – this is all changing starting this year. 

An Executive Order signed by President Obama in 2015 (made effective for October 2016) contained changes designed to streamline the process for the 2016-2017 school year. Now families can provide financial information based upon an earlier time frame, deemed the prior-prior-year. For example, a student who will enter college in the fall of 2017 will now furnish financial information from the 2015 tax return instead of the 2016 tax return. In addition, the FAFSA will now be made available in October of each year, rather than January 1st, giving parents more lead time to complete the form.

Here are some main takeaways from the change that could be relevant for your situation:

1. Easier Application Process: By using financial data from two years prior (PPY), applicants will be able to take advantage of the IRS Data Retrieval tool – an innovative tool where income tax data can be pulled directly from the IRS into the FAFSA form, saving time and improving accuracy. 

2. Start Earlier: Initial college financial aid decisions will be made based on an earlier time-frame – the tax year which begins in the middle of the student’s sophomore year of high school.

3. Finish Earlier: The final financial aid decision will also be made at an earlier date during college—the tax year which begins in the middle of the student’s sophomore year of college will determine aid for the senior year.

4. Extended Family Assets: Assets held in grandparent-owned 529 accounts that are often saved for the final year of college as a planning strategy may now be used a year earlier with no negative impact on the student’s future financial aid eligibility.

5. 2015 Deja vu: Because of the new rules with the FAFSA, the 2015 tax year will be used twice in calculating financial aid. The first usage will be for the 2016-2017 school year and once again for 2017-2018 due to the new prior-prior year arrangement.

If you have questions on filing the FAFSA or planning strategies around funding tuition with college savings, don’t hesitate to reach out to us!

Nick Defenthaler, CFP® is a CERTIFIED FINANCIAL PLANNER™ at Center for Financial Planning, Inc.® Nick is a member of The Center’s financial planning department and also works closely with Center clients. In addition, Nick is a frequent contributor to the firm’s blogs.

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The information contained in this blog does not purport to be a complete description of the securities, markets, or developments referred to in this material. 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 Nick Defenthaler and not necessarily those of Raymond James. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional. Raymond James is not affiliated with FAFSA.

Third Quarter Investment Commentary

Contributed by: Angela Palacios, CFP®

After a very interesting first half of the year with early negative returns, followed by Brexit in June, markets performed well in July and then quieted down in the month of August. September brought with it a bit of increased fluctuation when investors thought the Federal Reserve Board may raise rates at the September meeting but calmed back down when that fear subsided. As of October 1st the S&P 500 gained over 7.8% this year including dividends with nearly half of that gain (3.85%) coming in the third quarter. The year-to-date story, however, has not been told primarily by the S&P 500 as we have gotten so used to over the past several years. 

Diversification Works Again

This year other asset classes have had the opportunity to shine as Emerging markets; commodities and high yield have topped S&P 500 returns. Diversification seems to once again be working after a long drought. The chart below shows performance of various asset classes by year with the best performer’s bars on the top of the stack and worst relative performers on the bottom. Notice the Green line (S&P 500) has been near the top of the list for the past three years but that hasn’t been the norm over the last 14 years. This year we have returned to the more normal pattern where the S&P doesn’t dominate.

Source: Blackrock

Rate Hike Kicked Down the Road

Not surprisingly the Federal Reserve opted not to raise interest rates last month. The dissention among the voting members, though, was surprising. Three members of the voting board voted for an interest rate increase going against Janet Yellen’s recommendations to hold course. This is the first noted dissention since 2014. The next meeting occurs in November just a few short days before the election. It is highly unlikely they will make waves that close to the election so it looks likely that if a rate increase occurs it will be at the December 13-14th meeting.

Election

I would be avoiding the elephant in the room if I didn’t mention the election. Jaclyn Jackson wrote a piece on political parties and their impact to your portfolio, I would encourage you to read this before making any rash investment decisions based on the election. The battle between Clinton and Trump is proving to fulfill every media fantasy. They both certainly make for excellent headlines. Trump will be doing his best to rally voters to change by making promises but also by making things seem worse in the economy than they likely are. While there is often some volatility leading into an election because of these negative headlines, usually after the decision has been made markets settle down and most often continue in a positive direction the remainder of the year.

Checkout Investment Pulse, by Angela Palacios, CFP®, a special summary of the Morningstar ETF conference she attended.

Harvesting tax loss may sound counter-intuitive but can go a long way to enhance net after-tax returns for investors. Find out some strategies to implement and common mistakes to avoid.

This month Nick Boguth, Investment Research Associate, gives us an introduction to cost basis methods and what we typically have our clients utilize.

Jaclyn Jackson, Investment Research Associate, explains to us how just like the right mix of ingredients for a tasty meal, we also need to know the asset allocation mix that makes our investment journey palatable.

If you have topics you would like us to cover in the future, please let us know! As always, we appreciate the opportunity to meet your financial planning and investment needs. Thank you!

Angela Palacios, CFP®
Director of Investments
Financial Advisor

Angela Palacios, CFP® is the Director of Investments at Center for Financial Planning, Inc.® Angela specializes in Investment and Macro economic research. She is a frequent contributor The Center blog.

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The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. 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 Angela Palacios and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. Investing in emerging markets can be riskier than investing in well-established foreign markets. Investing involves risk and investors may incur a profit or a loss. Investing always involves risk, including the loss of principal, and futures trading could present additional risk based on underlying commodities investments. Diversification does not ensure a profit or guarantee against a loss. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor's results will vary. Past performance does not guarantee future results.

Investor Basics: Cost Basis Accounting

Contributed by: Nicholas Boguth

Cost basis: one of the many things we at The Center monitor in order to serve our clients. Most of us know that cost basis is the original value of a security (usually the purchase price), but a lesser known fact is that there are many different accounting methods used to calculate tax liability when the decision is made to sell a security. The table below describes the different methods available.

This is important because the incorrect accounting method could lead to an unnecessary or unexpected amount of capital gains. Hypothetical example: you bought 50 shares of Tesla back in 2012 when it was $30, and another 50 shares in 2014 when it was $200. Now it is 10/5/16, and you went to sell 50 shares at its current price of $210. How much of your sale would be considered capital gains? Well, if your accounting method was FIFO, the answer would be $180 per share, whereas if your accounting method was minimum tax (The Center’s default option) then it would be $10 per share.

The outcomes between accounting methods can be drastically different, and each method has its place depending on your objective. Decision-making from client to client may vary which is where the help of a financial professional can come into play. Please read our Director of Investments, Angela Palacios’, CFP®, Investor Ph.D. blog for insight into more strategies that The Center practices in order to help minimize tax burden.

Nicholas Boguth is an Investment Research Associate at Center for Financial Planning, Inc.® and an Investment Representative with Raymond James Financial Services.

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The information contained in this blog does not purport to be a complete description of the securities, markets, or developments referred to in this material. 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 Nick Boguth and not necessarily those of Raymond James. This is a hypothetical example for illustration purpose only and does not represent an actual investment. This information is not intended as a solicitation or an offer to buy or sell any security referred to herein. Every investor's situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing involves risk and you may incur a profit or loss regardless of strategy selected.

Investor PhD: Harvesting Losses and Avoiding Gains

Contributed by: Angela Palacios, CFP®

This may sound counter-intuitive, but taking some measures to harvest tax losses on positions and avoiding unnecessary capital gains distributions this time of year can go a long way in improving your net (after tax) returns.

Make sure you are reviewing your portfolio throughout the year for tax losses to harvest.  Stock losses were at their peak during mid-February, but if you waited until this fall to think about tax loss harvesting you have most likely missed the boat as much of those losses have been recovered and moved on to higher highs. The end of the year is rarely the best time of the year to harvest tax losses. 

Harvesting losses doesn’t mean you are giving up on the position entirely. When you sell to harvest a loss you cannot have had a purchase into that security within the 30 days prior to and after the sale.  If you do you are violating the wash sale rule and the loss is disallowed by the IRS. Despite these restrictions, there are several ways you can carry out a successful loss harvesting strategy.

Loss harvesting strategies:

• Sell the position and hold cash for 30 days before re-purchasing the position. The downside here is that you are out of the investment and give up potential returns (or losses) during the 30 day window.

• Sell and immediately buy a position that is similar to maintain market exposure rather than sitting in cash for those 30 days. After the 30 day window is up you can sell the temporary holding and re-purchase that original investment.

• Purchase the position more than 30 days before you want to try to harvest a loss. Then after the 30 day time window is up you can sell the originally owned block of shares at the loss. Being able to specifically identify a tax lot of the security to sell will open this option up to you.

Common mistakes some people make when harvesting:

• Dividend reinvests count!!! So if you think you may employ this strategy and the position pays and reinvests a monthly dividend you may want to consider having that dividend pay to cash and just reinvest it yourself when appropriate or you will violate the wash sale rule.

• Purchasing a similar position and that position pays out a capital gain during the short time you own it.

• Creating a gain when selling the fund you moved to temporarily that wipes out any loss you harvest. Make the loss you harvest meaningful or be comfortable holding the temporary position longer.

• Buying the position in your IRA. This will violate the wash sale rule just like if you bought it in your taxable account. This is identified by social security numbers on your tax filing. So any accounts held under those same tax payer IDs are not allowed to purchase the security in that 30 day window of harvesting the losses.

Personal circumstances vary widely so it is critical to work with your tax professional and financial advisor to discuss more complicated strategies like this!

Angela Palacios, CFP® is the Director of Investments at Center for Financial Planning, Inc.® Angela specializes in Investment and Macro economic research. She is a frequent contributor The Center blog.

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The information contained in this blog does not purport to be a complete description of the securities, markets, or developments referred to in this material. 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 Angela Palacios and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.

Third Quarter Investment Pulse

Contributed by: Angela Palacios, CFP®

Special conference edition! September brought not only the beginning of school and cool evenings but also the Morningstar ETF conference. Jaclyn Jackson and I were able to take a few days away to attend some enlightening sessions full of hearty debate, idea sharing, and new information during the first week of September. Some of my key takeaways follow!

Key takeaways from the Morningstar ETF conference:

• The Sustainable investing (ESG or socially responsible preferences) space has grown rapidly in the past 5 years. 80% of companies in the S&P 500 published sustainability reports in 2015 verses only 20% in 2011. Sustainability reports discuss a variety of issues for the firm including pollution mitigation, water use, and best practices for attracting a diverse workforce. Institutions, women and younger investors have been driving this demand. To learn more click here.

• There is more than meets the eye when performing due diligence on index holdings and exchange traded investment options. A low expense ratio isn’t the bottom line of costs associated with an investment. Stocks that make up the index and how an index is built and changes over time can greatly impact unseen costs. Also the experience of the people trading the portfolio can have a large impact. 

• Liz Ann Sonders, Chief Investment Strategist at Charles Schwab, shared her views on Central Bank Policies, recession probability, sluggish growth, and interest rates. She feels the risk of recession remains low. She also sees higher interest rates as a positive more than a negative. Savers are better for the economy then the spenders, according to Ms. Sonders, so it is time to give them a chance!

• Behavioral investing rounded out the sessions. Sarah Newcomb Ph.D., Behavioral Economist, rolled out Morningstar’s new tool kit on behavioral investing. In rocky markets we have a tendency to want to do something. Anything to make us feel better. Much like a soccer goalie during penalty kicks, the best thing they can do is to stay in the middle and do nothing, rather than try to anticipate and move in the wrong direction. Fans don’t like this though; they would rather see the goalie do something. In investing the best thing to do during turbulent markets is often to do nothing, but that goes against our own nature. Bottom line, we need to make a plan during calm times to prevent ourselves from making bad decisions in the moment.

Stay tuned all this week for more investment, market, and quarter three updates!

Angela Palacios, CFP® is the Director of Investments at Center for Financial Planning, Inc.® Angela specializes in Investment and Macro economic research. She is a frequent contributor The Center blog.

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The information contained in this blog does not purport to be a complete description of the securities, markets, or developments referred to in this material. 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 Angela Palacios and not necessarily those of Raymond James. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. Investing involves risk and investors may incur a profit or a loss. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor's results will vary. Past performance does not guarantee future results.

Simplifying Your Retirement Plans

Co-Contributed by: Matthew E. Chope, CFP® and Gerri Harmer

If you’re like most, you have multiple retirement plans from previous employers. These may be hard to track and lead to piles of paper statements. Recent rulings make it easier to consolidate accounts and potentially save on fees.

Recent changes in rulings now allow most retirement plans to be “rolled over” to other qualified plans that previously were not allowed including Simple IRAs and 401ks. One exception is you must hold your Simple IRA for two years before funds can be moved in or out of the account without paying tax penalties.  Pictured is a chart showing permissible roll over types.

Things to consider before acting:

• Compare investment offerings and fees for each account to find the best choice to roll into. These are usually located on your statement or in the prospectus. You can also call the phone number on your statement to inquire.

• Consider consulting a financial advisor to get the best overall financial picture.

• Funds must be withdrawn and redeposited within 60 days to avoid paying tax penalties.

If you have questions on how to get started, or want to talk with a professional on what your rollover options our, please reach out to your CERTIFIED FINANCIAL PLANNER™ here at The Center.  

Matthew E. Chope, CFP ® is a Partner and Financial Planner at Center for Financial Planning, Inc.® Matt has been quoted in various investment professional newspapers and magazines. He is active in the community and his profession and helps local corporations and nonprofits in the areas of strategic planning and money and business management decisions.

Gerri Harmer is a Client Service Manager at Center for Financial Planning, Inc.®

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The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete. Be sure to consider all of your available options and the applicable fees and features of each option before moving your retirement assets. Tax matters should be discussed with an appropriate tax professional.