Coping With Your Spouse’s Retirement January 6, 2009

Coping With Your Spouse’s Retirement

http://ping.fm/KJGZV

Watch out for Covert Capital Gains! January 1, 2009

Hey all you smart mutual fund investors, listen up! Check your accounts on line now, or call your broker or investment company,to see if your fund issued any capital gains this month. That’s right, even though your fund’s value probably took a nose dive, there very well may have been trading in that fund throughout the year that could have resulted in a capital gain. Mutual funds distribute the bulk of such gains during December to their shareholders, so you COULD owe income tax on capital gains even though your fund is sporting a big fat loss, or even a mild-paunchy loss…

You see, when a lot of novice or nervous investors call 1-800-REDEEM (that’s a joke, not a real number to my knowledge) fund managers have to raise enough capital by 4pm EST each day of trading to satisfy all the redemptions. Well, quite a few savers sold out of mutual funds when the markets started declining. (Generally it’s savers, not investors, that panic and sell prematurely incidentally.) So, quite a few mutual fund managers had to juggle their portfolios, invariably selling out securities that had built-in capital gains. Yes, I know, a distant memory…over 6 months ago, even…but I digress.

If the mutual fund manager wasn’t able (or interested) to offset those gains with losses, there may have been an excess of gains over losses, resulting in us shareholders having to declare a portion of those gains on our individual income tax returns.

Here’s an example: Your mutual fund issued a gain to your account in mid December totalling $1,000. Look through your portfolio (as I mentioned in my earlier blog today) for a security whose value is at least $1,000 less than your basis (fancy term for what you paid for it, including all reinvested dividends, if applicable) and sell that security booking a $1,000 capital loss. Your losses offset your gains (for the most part it’s that simple, although long-term capital losses-securities held one year and one day–offset long-term capital gains, and short-term capital losses–securities held less than one year and one day–offset short-term capital gains).

Finally, the federal government allows you to deduct an additional $3,000 in excess of all offsetting capital gains and losses each year against ordinary income. If you have more than $3,000, you get to carry the excess forward to future tax years. Some states follow the feds in the unlimited carry forward of capital losses, New Jersey, however does not. Check with your CPA for details on this, to be sure, if you expect heavy losses in 2008.

At the end of the day, its the end of the year. No sense in paying unnecessary income taxes. So, while you did not actively sell any securities this year to produce a capital gain, you may be an unsuspecting shareholder who DID receive a capital gain. There’s still time to avoid paying tax on that by “booking;/realizing” an equal dollar capital loss, or even quite a bit more than the amount of capital gains, and deducting your $3,000 excess on your 2008 return and pushing the balance forward. Yes, Ms. Dubious, there WILL be capital gains in your future, and they JUST might start in 2009! You’ll be prepared however, with perhaps an ample supply of carried forward capital losses so you won’t have to pay taxes till they’re all used up. Now THAT’S planning, and THAT’S effective planning.

Consult your broker and/or CPA for details. (Most likely your fee-only financial planner has already contacted you and handled this for you.

Investing – Compounding Humor! November 14, 2008

That’s my prescription for whatever ails you…the markets, a speeding ticket, a less-than-great mood…you name it.

I’m delighted to have spent some quality time with Andy Andrews on Saturday at the Mark Victor Hansen MEGA Speaking event in Los Angeles.

We shared lunch together and talked of “noticing” even the little things, and the importance of having fun, something we both do a lot of.

My personal favorite is to remind myself that over a billion Chinese don’t even know I’m having a challenge right now. That helps to reframe my personal “issues” and put them in perspective in a hurry.

So with the stock markets and real estate valuations sliding I remember the giddiness of the 33.36% returns of US Stocks in 1997, followed by 28.58% in 1998 and 21.04% in 1999 as well as the 26.37% return of Real Estate investments in 2000, followed by 13.93% in 2001, 3.82% in 2002, 37.13% in 2003, 31.58% in 2004, 12.16% in 2005 and finally 35.06% in 2006. You don’t see those numbers being touted these days do you? Yet we all experienced and benefited by them, didn’t we?

It’s only natural that these high flying returns would cycle downward and trough for a few months and years. We women personally understand cycles and accept them, so it’s not a big psychological leap to recognize the markets’ cycles. We may not LIKE the downward cycles, yet it’s pointless to fight them.

It’s a great use of our energy however to strategize how we will enjoy these times. Months ago, I ordered the greatest Carol Burnett skits DVDs for my parents for Christmas, and I must admit I broke into them and watched 3 of them already. I’ll rationalize to them as they open an already-opened- package, that I leveraged my investment, cause they are HILARIOUS!

You see, we can compound our laughter too. Next time you are laughing so hard, just gently touch the knuckle on your pinky finger to “anchor” in that great feeling. Then, you can fire off that anchor later by gently touching that same spot, when you need to go back and experience and feel that great feeling. It’s there, we just have to remember to access it.

Same with our common sense about investing. It’s there, we just have to remember to access it. Stay tuned for some basics about investing in future posts. First rule: if you don’t understand it, don’t buy it, especially is someone is earning a commission for selling it to you.

We Can Do It Women!

motivational speaker

Simple Ways To Save On Holiday Shopping November 5, 2008

The coming of the holiday signals the start of seemingly endless Christmas shopping. And What could be worse than finding at the end of the year that your bank account is down to three digits, and credit cards are all maxed out? I know how hard earned your shopping budget is (Christmas bonus included), so here are some easy ways for moms and women to spend less this season – without having to scrimp on holiday presets for your loved ones.

PAY IN CASH

Because you spend only what you have on hand, logicaly, you can’t overspend. If you are wary about carrying cash around, use ATM as debit cards. Of course using cash is not a complete guarantee that you’ll cut down on spending. Be a planned spender. Comparison should be apple to apple. Sometimes you’ll come across the same item in in two stores; the price at store A is more expensive than store B. If you scout for the best deals, you’re sure to get better value for your money.

BUY IN BULK

When you buy in bulk, or more of the same items, chances are, prices will come out cheaper and you get bigger discount on your purchase. For gift items, home items like scented candles, frames and collectibles are ideal.

GIVE GROUP GIFTS

You wish to give your officemates something for christmas. A nice bottle of wine for everyone or a restaurant gift certificate or a bunch of small similar items is enough to make them feel you remember them this Christmas season.