Financial Planning and Advice Blog for Syracuse

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Start Your New Year with a Financial Review

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By wpadmin December 30, 2014

As you plan for the year ahead, is an investment checkup leading your list of resolutions? Taking time for a detailed financial review -- including retirement planning, college savings, and your tax situation -- may help you progress toward your long-term goals. Consider the following items as part of your checkup:

Capitalize on tax reductions. If you plan to adjust your investment allocations, make sure you understand the tax consequences of your actions. Taxes on both long-term capital gains -- profits earned on investments held for more than one year -- and equity dividends are generally lower than rates on ordinary income (15% for many taxpayers, 20% for those in the highest tax bracket). Because of these tax reductions, you may now have greater incentive to hold your mutual funds for the long term and include equity funds that pay dividends within your portfolio.

School yourself in education incentives. Consider opening a 529 college savings plan account if education is part of your family's future. Contributions to a 529 plan compound tax-deferred, and withdrawals are tax free1 when the money is used for qualified higher-education expenses.

Remember three important letters -- IRA. You can boost your retirement planning efforts by making the maximum annual contribution of up to $5,500 to either a traditional or Roth IRA. Investors aged 50 and older get an added bonus: A $1,000 "catch up" contribution that can be made in addition to the annual maximum for a total investment of $6,500. Your money compounds tax-deferred until you begin withdrawals.

At that point, earnings withdrawn from a traditional IRA may be taxable, while those withdrawn from a Roth IRA may be tax free, subject to certain restrictions.2

There are other factors to consider -- such as your investment mix -- as you evaluate your progress toward your long-term goals. But this list can help you get started as you chart your financial course for the year ahead.

1. Withdrawals used for expenses other than qualified education expenses may be subject to a 10% additional tax on earnings, as well as federal and state income taxes. Prior to investing in a 529 plan investors should consider whether the investor's or designated beneficiary's home state offers any state tax or other benefits that are only available for investments in such state's qualified tuition program. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.

2. Withdrawals before age 59½ may be subject to ordinary income taxes and 10% additional tax.

Because of the possibility of human or mechanical error by S&P Capital IQ Financial Communications or its sources, neither S&P Capital IQ Financial Communications nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall S&P Capital IQ Financial Communications be liable for any indirect, special or consequential damages in connection with subscriber's or others' use of the content.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.

© 2013 S&P Capital IQ Financial Communications. All rights reserved.

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The Importance of Professional Advice

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By wpadmin December 3, 2014

In an endeavor as critical as managing your investments, it is prudent to handle some situations with the help of a competent professional advisor. Many individual investors simply do not have the time, patience, or persistence to deal effectively with their investments over the long term. Many investors have the motivation to put in the required time to fully address their investments at the outset, but become less motivated as time goes by.

In addition, there are some very common mistakes that individual investors make that a professional advisor can help to overcome, including:

  • Making ad hoc fear-based revisions at the first sign of market weakness
  • Omitting the process of drafting an investment policy statement
  • Emphasizing individual securities rather than the overall portfolio
  • Failing to reevaluate their financial situation at least annually and then revise their investment policy statement
  • Getting caught up in the hype of the market and lose investment focus
  • Chasing the latest investment fads

When to Seek Professional Advice There will be times when you can handle most of the management of your financial affairs. However, there will be other times when you should seek the help of an investment pro. The list below examines some of the situations when it makes the most sense to seek the help of a competent investment advisor.1. When confronted with complicated financial products and strategies

Most of us have heard of disability, liability umbrella, and long-term care insurance, but do we really know the basics, let alone what type of coverage to select? People with employment stock options or business owners with limited family partnerships can also benefit from the help of an advisor.

2. When getting married

Combining your money, and debt, with your spouse can pose significant challenges. These challenges range from deciding to file a joint tax return or single tax returns to taking advantage of all child-related tax benefits. Financial planning advisors and tax advisors may provide you with the best solutions.

3. When buying and selling a house

Although not their traditional work, financial advisors may provide some much needed insights into such issues as capital gains, down payment, mortgage alternatives, and home sale reinvestment options.

4. When buying or selling a business

The complexities of buying or selling a business can be quite significant if not downright grueling. A financial advisor can help with capital gains and proper wealth transfer.

5. When getting divorced

Simply dividing assets could be a cumbersome and very problematic issue. In addition, new financial plans such as wills and insurance policies will probably need to be revised.

6. When you inherit money

Although coming into a substantial amount of wealth is generally a good thing, people who have little experience managing money may run into challenges. An investment advisor can help you allocate your inheritance to ensure it lasts for a prolonged period of time.

7. When rolling over your 401(k)

Although this task is not especially difficult, many investors can get tripped up. A financial advisor can help ensure that your rollover is not taxed as an early withdrawal.

8. When saving for college

There are many p...

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