January 2012 Personal Finance Newsletter
January 17, 2012 by Jean Keener, CFP, CRPC, CFDS · Leave a Comment
The January 2012 personal finance newsletter is now available. It includes a 2011 investment market recap from Dimensional Fund Advisors with data on all the major indices and a summary of the major investing themes of 2011. In addition, there’s a comparison between the dividend rates of the S&P 500 and interest rate on treasuries and commentary of what this means to your portfolio. Plus, the newsletter announces the first half of 2012 schedule for Keller Financial Planning Workshops at the Keller Public Library. To read the newsletter, click here.
December 2011 Personal Finance Newsletter
December 20, 2011 by Jean Keener, CFP, CRPC, CFDS · Leave a Comment
The December personal finance newsletter is now available. It includes information on a new student loan repayment program going into effect in January 2012, gift tax strategies, and tips on keeping your online accounts secure. Plus, for those that enjoy history, there’s some perspective on stock market cycles and the effect of being in and out of the market at particular times. Please click here to read the newsletter. Happy holidays!
Harvesting Investment Losses for Tax Purposes
October 25, 2011 by Jean Keener, CFP, CRPC, CFDS · Leave a Comment
You frequently hear investment professionals suggest “harvesting losses” before the end of the calendar year to save money on taxes. Loss harvesting can be a highly productive strategy, and it pays to understand how it works and when you might not want to take advantage of it.
The opportunity to harvest losses is available in taxable investment accounts – this includes joint or individual accounts — not IRAs, education savings plans, or employer retirement accounts.
You calculate the gain or loss by subtracting the total purchase price for the investment (including any dividends reinvested) from the proceeds you received from selling the investment. For example, if you purchased a mutual fund for $10,000, reinvested $1,000 in dividends over the years you owned it, and then sold it for $13,000, you would have a tax gain of $2,000. If you sold it for $10,500, you would have a tax loss of $500.
When you sell an investment in a taxable account, you owe taxes on any gain and can deduct any losses against your income on your taxes (up to $3,000 per year). Gains or losses from different investment sales offset against each other to produce a “net” gain or loss. For example, if you have $10,000 in losses and $11,000 in gains, you have a $1,000 net gain. If you have net losses greater than $3,000 in a single year, they can be carried forward to offset gains or be deductible in future years.
Harvesting tax losses can help you offset gains from other investments sold in a given year, and it can result in a deduction on your tax return. Think of the value of a $3,000 deduction — if you’re in the 25% tax bracket, it saves you $750 on your taxes; in the 35% tax bracket, it saves $1,050.
So when wouldn’t you want to pursue this strategy?
- If it’s going to take your asset allocation away from your target. Asset allocation is the biggest factor in investment success. You shouldn’t implement a loss harvesting strategy if it can’t be done without maintaining your target asset allocation. You can usually maintain your target allocation while harvesting losses by purchasing other investments in the same asset class at the same time you sell the loser, but you have to understand and comply with the IRS’s specific wash sale rules to be sure you don’t negate your loss.
- If you’re in the 10% or 15% tax bracket this year and next – you can report long-term capital gains (>1 year holding period) up to the top of the 15% bracket and pay 0% in taxes. If you take losses to offset the gains, you would essentially be “giving” the losses away for free.
There are of course many other situations unique to the individual set of circumstances, so it pays to coordinate your strategy with your tax advisor and financial planner to make sure it’s a win for you.
August Personal Finance Newsletter
August 15, 2011 by Jean Keener, CFP, CRPC, CFDS · Leave a Comment
The August personal finance newsletter is now available. It features a Q&A on the debt ceiling, downgrade, and market response. Plus there’s a follow-up on the ABCs of Trusts article from last month’s newsletter, suggestions on talking with your high school student about college costs, an analysis of the real costs of keeping your long-term investment assets in cash, an overview on the difference between Medicare and Medicaid, and more. To read the newsletter, click here.
July Personal Finance Newsletter
July 14, 2011 by Jean Keener, CFP, CRPC, CFDS · Leave a Comment
The July personal financial planning newsletter is now available.
Because of the tumultuous investment markets and economic uncertainty, the newsletter includes two investing columns — one a recap of the second quarter market performance with a look forward, and another by Jim Parker with Dimensional Funds providing some compelling data on the importance of maintaining investment discipline.
The newsletter also has information on the new IRS mileage rates for the second half of 2011, a summary of how A/B and A/B/C trusts work for estate planning, and an overview of the tax and policy issues involved in taking a loan from your life insurance policy.
Plus, there’s an invitation to my social security workshop this coming Tuesday at the library.
Click here to read the newsletter.
May Personal Finance Newsletter
May 16, 2011 by Jean Keener, CFP, CRPC, CFDS · Leave a Comment
The May 2011 Personal Finance Newsletter is now available. It includes articles on long-term care planning, mid-year tax considerations, and deciphering health savings vehicles. A link to a great article on the relationship between how we spend our money and happiness is also included, as well as the monthly investment market update. Click here to read the newsletter.
Low-Cost Investing Basics
May 10, 2011 by Jean Keener, CFP, CRPC, CFDS · Leave a Comment
I will be hosting a free investment workshop at the Keller Library on Tuesday, May 17 at 6:30 pm.
This workshop will cover the fundamentals of successful long-term, goals-based investing. Effective investing doesn’t have to be complicated, but with so much information available, it can be difficult to tell fact from fiction. This workshop will reveal common pitfalls and investing myths and share information on how to avoid them. You will learn:
- The importance of keeping your investment costs low
- How to build a diversified, balanced portfolio
- How to know when to rebalance
- The relationship between risk and return
Registration is encouraged for planning purposes to library@cityofkeller.com.
March Personal Finance Newsletter
March 14, 2011 by Jean Keener, CFP, CRPC, CFDS · Leave a Comment
The March personal financial planning newsletter is now available. It includes an update on the investment market, tips on cutting discretionary spending to build your cash reserve, planned charitable giving, and social security survivors benefit. There’s also a special guest column from attorney Rania Combs on the complexities of dying intestate (without a will) for individuals in blended families in Texas. Click here to read the newsletter.
February Personal Finance Newsletter
February 14, 2011 by Jean Keener, CFP, CRPC, CFDS · Leave a Comment
The February personal finance newsletter is now available. In addition to the investing market update, the topics are:
- Extension of tax-free charitable contribution option from IRAs for those over 70 1/2
- New cost basis reporting rules (important for those with taxable investment accounts)
- Summary of the health care law provisions going into effect this year
Click here to read the newsletter.
January 2011 Personal Finance Newsletter
January 14, 2011 by Jean Keener, CFP, CRPC, CFDS · Leave a Comment
The January newsletter is now available with a 2010 investment market recap, a humorous look at investing resolutions for the new year, and details on the estate tax changes enacted in December. It also includes an announcement of topics for the Keller Public Library personal finance workshop series for January – June. Click here to read the newsletter.