Articles tagged with: Cornerstone Financial Group Iowa

Increasing Farm Efficiency During Challenging Times

It’s no secret that for many producers the past few years have been challenging. The days of $7 corn and $15 beans are more than five years in the rearview mirror and it takes a sharper pencil these days to be profitable and maintain a viable farming operation.

Farm efficiency can be obtained in many different ways. A good farm tax expert can be extremely valuable.  Some farmers focus on being better marketers.  Others key in on reducing costs of inputs and understanding government programs. Using new technologies can help an operator better understand how resources are being used.  Working with a banker to effectively manage capital is very important to other operators.

Few farmers, however, have the time or resources necessary to study all of the areas where efficiencies can be gained. But in these times of lower margins, it’s worth taking a look at areas you might have ignored over the past few years or strategies that you may need to take a second look at.

Technology

Ag technology has come a long way in the past five years, and in general is now more affordable to more producers. Seth Robinson of AgriVision Equipment Group (John Deere) in Winterset, Iowa, says their 3i service often more than pays for the cost of the program for many farmers.

“The 3i program divides your land into three zones from high producing to low producing land and we’ve seen situations where we can raise production in all zones because the data the system collects can allow decisions like planting rates and fertilizing rates to be made on a micro basis. We price 3i on a per bushel basis according to the number of services the farmer wants help with, so we are tied to the growing season and varying conditions, just like the grower.”

Granular is another digital ag solution that consists of products that help farms track their inputs, outputs, crop planning, financial forecasts, and workflow. Their Farm Management Software (FMS) helps farmers understand profitability by field by organizing the numerous data points on the farm.

Dakota Hoben, Customer Success Manager with Granular says, “We typically find farms that are 2,000 acres and above really value the product. But we can work with farms anywhere from 1,000 – 50,000 acres.”

The software is priced on a per acre basis for about $3 and includes software, customer success manager, and support.

In today’s world, time is money – especially during planting and harvest seasons. Applications using smartphones can reduce much of the time it takes to resolve issues. Apps like AgriSync allow farmers to connect with their local, trusted agribusiness consultants for help adopting and implementing new technologies.

Broad based technology has also entered the world of ag finance. Steven Johnson, Iowa State University Extension Farm Management Specialist, said in a recent farmer meeting to Farm Credit Services members in Red Oak, Iowa, that producers who are customers of Farm Credit Services should consider using their AgriPoint technology to move money between accounts, pay bills, wire money and make payments. AgriPoint also offers tools to create balance sheets, cash flows, what-if scenarios, and the ability to apply checks as payments on your desktop or mobile device.

Marketing

Although no one has a crystal ball when it comes to selling commodities, there are ways to certainly put the odds in your favor. Johnson of Iowa State University said understanding your localized historical basis information can add many cents per bushel to the average selling price of corn and beans when part of an overall marketing strategy.  He believes better days are ahead, demand for animal protein will increase demand for grain and current conditions could represent a trough of the 5-7 year cycle.

Tax Strategies

In 1935, United States Court of Appeals for the Second Circuit Judge Learned Hand said, “Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes.” The U.S. tax code offers numerous opportunities for those in agriculture to use legal means to reduce their taxes. Karen Havens, a CPA in Greenfield, Iowa, who caters to farm clients, believes you can be creative while being ethical and legal.

“Farming has progressed to where business knowledge is essential, from choosing the right business structure to accurate records, tax planning, asset acquisition, cash flows and dealing with lenders. Farmers need to be aware of various tax strategies available to choose strategies that might benefit his particular circumstances, such as retirement funding, employees with employee health benefits, the Domestic Production Deduction, estate or succession planning, as well as other ideas.   Finding knowledgeable professionals to help navigate the maze of options is critical.”

Other strategies that can serve double-duty as both cost-reducers and tax-savers for specific situations include establishing your own captive insurance companies for property casualty coverage, creating conservation easements through land trusts to potentially generate both income tax credits and deductions, and for farmers close to retirement starting cash balance plans to create deductions, postpone taxes and fund retirement. These strategies are not new and not exclusive to agriculture but will most likely grow in popularity as some farmers get closer to retirement and the average farm operation continues to grow.

Government Programs

The United States Department of Agriculture (USDA), through its Farm Service Agency (FSA) division, offers many programs designed to aid farmers in becoming more efficient and potentially improve profitability. Producers are typically fairly well versed on the more popular FSA programs such as the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs that were authorized by the 2014 Farm Bill. Agriculture Loss Coverage-County (ARC-CO) provides revenue loss coverage at the county level. ARC-CO payments are issued when the actual county crop revenue of a covered commodity is less than the ARC-CO guarantee for the covered commodity.  Price Loss Coverage (PLC) program payments are issued when the effective price of a covered commodity is less than the respective reference price for that commodity. The effective price equals the higher of the market year average price (MYA) or the national average loan rate for the covered commodity.

Another popular FSA program is the Conservation Reserve Program (CRP). CRP is a land conservation program administered by FSA.  In exchange for a yearly rental payment, farmers enrolled in the program agree to remove environmentally sensitive land from agricultural production and plant species that will improve environmental health and quality.

Beyond that, there are other programs available that are less well known, such as Noninsured Crop Disaster Assistance Program (NAP), which provides financial assistance to producers of noninsurable crops when low yields, loss of inventory, or prevented planting occur due to natural disasters.

In addition, FSA has many different types of farms loans, such as Guaranteed Farm Loan Programs that help family farmers and ranchers obtain loans from USDA-approved commercial lenders at reasonable terms to buy farmland or finance agricultural production. There are beginning farmer loan programs, minority and women farmer loan programs and emergency farm loans.

Insurance

No one relishes the idea of purchasing insurance, yet there have never been more assets at risk in farming than there is today. Finding effective insurance strategies is a must, and finding efficient ways of paying for insurance is also critical.

“To be the most efficient with their coverage farmers really need to sit down with their agent on an annual basis and review coverage limits,” said Jamie Travis of Hometown Insurance in Creston, Iowa. “I advise my farmers to take risk where they can afford to and save premium.  Many times farmers do not have adequate coverage for their liability exposure.  Umbrellas are relatively inexpensive and they provide coverage in areas where farmers cannot afford to take risk.  If someone is injured or killed as a result of a farmer’s negligence, their responsibility to the injured party could be significantly more than their liability limit.  Adequate umbrella coverage can avoid being forced to sell assets in order to indemnify an injured party.”

In summary

According to futurist Jim Carroll (www.jimcarroll.com) estimates are that the world population will increase nearly 50 percent to almost 9 billion by 2050.  As a result, he predicts a great future for agriculture. To meet the demand, he predicts everyone in agriculture will need to be more efficient.  Producers will have to continue to focus on smarter, better, more efficient strategies in order to stay competitive and thrive.  To do that, they’ll need to seek out professionals in many disciplines to keep them up to date on trends and strategies that can help them stay efficient, improve their profitability and achieve their long-term goals.

Mike Moffitt is a Chartered Financial Consultant and founder of Cornerstone Financial Group with offices in West Des Moines, Iowa, and Creston, Iowa. Using his strategic partner network of professionals in accounting, legal and other key disciplines, he works closely with farmers and ag business owners on strategies that seek to help them grow their business and/or prepare for retirement. He can be reached at 641-782-5577.  Securities offered through LPL Financial, Member FINRA/SIPC.  Investment advice offered through Advantage Investment Management, a registered investment advisor.  Cornerstone Financial Group and Advantage Investment Management are separate entities from LPL Financial.  Other companies and their services mentioned in this article are not affiliated with LPL Financial and Cornerstone Financial Group.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.  There is no assurance that the techniques and strategies discussed are suitable for all individuals or will yield positive outcomes.

 

Examining the 2018 Social Security COLA

It will help retirees out, but it will not help them get ahead.

Seniors got a little good news this fall. Next year, monthly Social Security income payments to retirees will increase by 2.0%. That will mean an extra $326 – roughly $27.40 a month – for the average Social Security recipient in 2018.1

This is the largest cost-of-living adjustment (COLA) to Social Security benefits since 2012. In that year, retirees received 3.6% more in benefits than they had in 2011.2

Unfortunately, the 2.0% increase may not make much of a difference. After all, the COLA does not constitute a gain on inflation, but merely a response to it.

The Senior Citizens League, an advocacy group for retirees, thinks that rising Medicare premiums could absorb the 2.0% COLA for 70% of Social Security beneficiaries. Whether that happens or not, some analysts think retirees deserve larger Social Security COLAs than the ones they receive.2

The COLAs have constantly fallen short of rising housing costs and medical costs. In fact, yearly health care inflation exceeded annual Social Security COLAs in 33 of the 35 years ending in 2016.3

Should the method for figuring the annual COLA be changed? Perhaps it should be, as other metrics can be used.

When the federal government figures out annual COLAs for Social Security, it references the annualized advance in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Critics argue that the CPI-W is the wrong benchmark. They feel COLAs should be calculated using the Consumer Price Index for the Elderly (CPI-E). The CPI-E only tracks spending for households headed by those aged 62 or older.3

Back in 2011, the Bureau of Labor Statistics scrutinized both the CPI-W and CPI-E. It determined that the CPI-E gave greater weight to rent and mortgage expenses and health care costs, but slightly less weight to education, food, entertainment, clothing, and transportation expenses. The CPI-E may, therefore, be a better measure of senior expenses – and if it is ever used as a yardstick to measure Social Security COLAs, those COLAs might be larger.3

Given all this, why does the federal government keep using the CPI-W to figure out COLAs? The CPI-E, it turns out, has flaws of its own. It does not include any Medicare Part A expenses, and the larger COLAs it would potentially generate for retirees would also help to speed the drawdown of Social Security’s coffers.3

A 2.0% raise may not be much, but it beats what happened in 2016 and 2017. The 2017 COLA was only 0.3%, and retirees went without any COLA the year before.2

Mike Moffitt may be reached at ph# 641-782-5577 or email: mikem@cfgiowa.com

Website: www.cfgiowa.com

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.       

Michael Moffitt is a Registered Representative with and Securities are offered through LPL Financial, Member FINRA/SIPC. Investments advice offered through Advantage Investment Management (AIM), a registered investment advisor. Cornerstone Financial Group and AIM are separate entities from LPL Financial.

Citations.

1 – marketwatch.com/story/social-security-checks-expected-to-increase-2-in-2018-2017-10-13/ [10/13/17]

2 – cnbc.com/2017/10/13/medicare-premiums-may-devour-increased-2018-social-security-benefit.html [10/13/17]

3 – fool.com/retirement/2017/08/05/social-security-benefits-are-expected-to-increase.aspx [8/5/17]

Your Social Security Benefits & Your Provisional Income

Earning too much may cause portions of your retirement benefits to be taxed. 

You may be shocked to learn that part of your Social Security income could be taxed. If your provisional income exceeds a certain level, that will happen.

Just what is “provisional income”? The Social Security Administration defines it with a formula.

Provisional income = your modified adjusted gross income + 50% of your total annual Social Security benefits + 100% of tax-exempt interest that your investments generate.1

Income from working, pension income, withdrawals of money from IRAs and other types of retirement plans, and interest earned by certain kinds of fixed-income investment vehicles all figure into this formula.

If you fail to manage your provisional income in retirement, it may top the threshold at which Social Security benefits become taxable. This could drastically affect the amount of spending power you have, and it could force you to withdraw more money than you expect in order to cover taxes.

Where is the provisional income threshold set? The answer to that question depends on your filing status.

If you file your federal income taxes as an individual, then up to 50% of your annual Social Security benefits are subject to taxation once your provisional income surpasses $25,000. Once it exceeds $34,000, as much as 85% of your benefits are exposed to taxation.1,2

The thresholds are set higher for joint filers. If you file jointly, as much as 50% of your Social Security benefits may be taxed when your provisional income rises above $32,000. Above $44,000, up to 85% of your Social Security benefits become taxable.2

The provisional income thresholds have never been adjusted for inflation. Since Social Security needs more money flowing into its coffers rather than less, it is doubtful they will be reset anytime in the future.

When the thresholds were put into place in 1983, just 10% of Social Security recipients had their retirement benefits taxed. By 2015, that had climbed to more than 50%.2

In 2017, the Seniors Center, a nonprofit senior advocacy organization based in Washington, D.C., asked retirees how they felt about their Social Security benefits being taxed. Ninety-one percent felt the practice should end.2

How can you plan to avoid hitting the provisional income thresholds? First, be wary of potential jumps in income, such as the kind that might result from selling a lot of stock, converting a traditional IRA to a Roth IRA, or taking a large lump-sum payout from a retirement account. Second, you could plan to reduce or shelter the amount of income that your investments return. Three, you could try to accelerate income into one tax year or push it off into another tax year.

Consult with a financial professional to explore strategies that might help you reduce your provisional income. You may have more options for doing so than you think.

Mike Moffitt may be reached at Ph# 641-782-5577 or email: mikem@cfgiowa.com

Website: www.cfgiowa.com

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Michael Moffitt is a Registered Representative with and Securities are offered through LPL Financial, Member FINRA/SIPC. Investments advice offered through Advantage Investment Management (AIM), a registered investment advisor. Cornerstone Financial Group and AIM are separate entities from LPL Financial.

Citations.

1 – kiplinger.com/article/retirement/T051-C032-S014-can-you-cut-taxes-you-pay-on-your-social-security.html [9/13/17]

2 – fool.com/retirement/2017/03/26/91-of-seniors-believe-this-social-security-practic.aspx [3/26/17]

Minimizing Probate When Setting Up Your Estate

What can you do to lessen its impact for your heirs?

Probate subtly reduces the value of many estates. It can take more than a year in some cases, and attorney’s fees, appraiser’s fees, and court costs may eat up as much as 5% of a decedent’s accumulated assets.1

 What do those fees pay for? In many cases, routine clerical work. Few estates require more than that. Heirs of small, five-figure estates may be allowed to claim property through affidavit, but this convenience isn’t extended for larger estates.

So, how you can exempt more of your assets from probate and its costs? Here are some ideas.

Joint accounts. Married couples may hold property as a joint tenancy. Jointly titled property includes a right of survivorship and is not subject to probate. It simply goes to the surviving spouse when one spouse passes. Some states allow a variation called tenancy by the entirety, in which married spouses each own an undivided interest in property with the right of survivorship (they need consent from the other spouse to transfer their ownership interest in the property). A few states allow community property with right of survivorship; assets titled in this way also skip the probate process.2,3

Joint accounts can still face legal challenges. A potential heir to assets in a jointly held bank account may claim that it is not a “true” joint account, but a “convenience account” where a second accountholder was added just for financial expediency (an adult child able to make deposits and pay bills for a mom or dad with dementia, for example). Also, a joint account with right of survivorship may be found inconsistent with language in a will.4

POD & TOD accounts. Payable-on-death and transfer-on-death forms are used to permit easy transfer of bank accounts and securities (and even motor vehicles, in a few states). As long as the original owner lives, the named beneficiary has no rights to claim the account funds or the security. When the original owner passes away, all the named beneficiary has to do is bring his or her I.D. and valid proof of the original owner’s death to claim the assets or securities.5

Gifts. For 2017, the I.R.S. allows you to give up to $14,000 each to as many different people as you like, tax free. By doing so, you reduce the size of your taxable estate. Gifts over $14,000 may be subject to federal gift tax (which tops out at 40%) and count against the lifetime gift tax exclusion. The lifetime gift tax exclusion is currently set at $5.49 million per individual (and correspondingly, $10.98 million per married couple).6

Revocable living trusts. In a sense, these estate planning vehicles allow people to do much of their own probate while living. The grantor – the person who establishes the trust – funds it while alive with up to 100% of his or her assets, designating the beneficiaries of those assets at his or her death. (A pour-over will can be used to add subsequently accumulated assets to the trust at your death; yet, those assets “poured into” the trust at that time will still be probated.)7

The trust owns assets that the grantor once did, yet the grantor can invest, spend, and manage these assets while living. When the grantor dies, the trust lives on – it becomes irrevocable, and its assets should be able to be distributed by a successor trustee without having to be probated. The distribution is private (as opposed to the completely public process of probate) and it can save heirs court costs and time.7

Are there assets probate doesn’t touch? Yes, there are all kinds of non-probate assets. The common denominator of a non-probate asset is a beneficiary designation. By law, these assets must pass either to a designated beneficiary or a joint tenant, regardless of what a will states. Examples: jointly titled real property, jointly held bank accounts with right of survivorship, POD and “in trust for” accounts, life insurance policies, and IRA, 401(k), and 403(b) accounts.8

Make sure to list/update retirement account beneficiaries. When you open a retirement savings account (such as an IRA), you are asked to designate eventual beneficiaries of that account on a form. This beneficiary form stipulates where these assets will go when you die. A beneficiary form commonly takes precedence over a will.9

Your beneficiary designations need to be reviewed, and they may need to be updated. You don’t want your IRA assets, for example, going to someone you no longer trust or love.

If you are married and have a workplace retirement plan account, your spouse is the default beneficiary of the account under federal law, unless he or she declines to be in writing. Your spouse is automatically entitled to receive 50% of the account assets should you die, even if you designate another person as the account’s primary beneficiary. In contrast, a married IRA owner may name anyone as a primary or secondary beneficiary, without spousal consent.10

To learn more about strategies to avoid probate, consult an attorney or a financial professional with solid knowledge of estate planning.

Mike Moffitt may be reached at ph#641-782-5577 or email: mikem#cfgiowa.com

Website: www.cfgiowa.com

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Michael Moffitt is a Registered Representative with and Securities are offered through LPL Financial, Member FINRA/SIPC. Investments advice offered through Advantage Investment Management (AIM), a registered investment advisor. Cornerstone Financial Group and AIM are separate entities from LPL Financial

Citations.

1 – nolo.com/legal-encyclopedia/why-avoid-probate-29861.html [9/26/17]

2 – info.legalzoom.com/difference-between-community-property-rights-survivorship-vs-joint-tenancy-21133.html [9/26/17]

3 – law.cornell.edu/wex/tenancy_by_the_entirety [9/26/17]

4 – jpfirm.com/news-resources/survivorship-rights-in-joint-bank-accounts/ [1/15]

5 – nolo.com/legal-encyclopedia/avoid-probate-transfer-on-death-accounts-29544.html [9/26/17]

6 – tinyurl.com/y7rf2ayh [9/6/17]

7 – thebalance.com/how-does-a-revocable-living-trust-avoid-probate-3505224 [11/14/16]

8 – thebalance.com/what-are-non-probate-assets-3505237 [6/21/17]

9 – marketwatch.com/story/make-this-estate-planning-move-right-now-check-your-beneficiary-designations-2017-06-29/ [6/29/17]

10 – connorsandsullivan.com/Articles/Beneficiary-Designations-Getting-the-Right-Assets-to-the-Right-People.shtml [9/27/17]

 

Will Debt Spoil Too Many Retirements?

What pre-retirees owe could compromise their future quality of life. 

The key points of retirement planning are easily stated. Start saving and investing early in life. Save and invest consistently. Avoid drawing down your savings along the way. Another possible point for that list: pay off as much debt as you can before your “second act” begins.

Some baby boomers risk paying themselves last. Thanks to lingering mortgage, credit card, and student loan debt, they are challenged to make financial progress in the years before and after retiring.

More than 40% of households headed by people 65-74 shoulder home loan debt. That figure comes from the Federal Reserve’s Survey of Consumer Finances; the 2013 edition is the latest available. In 1992, less than 20% of Americans in this age group owed money on a mortgage. Some seniors see no real disadvantage in assuming and retiring with a mortgage; tax breaks are available, interest rates are low, and rather than pay cash for a home, they can arrange a loan and use their savings on other things. Money owed is still money owed, though, and owning a home free and clear in retirement is a great feeling.1

Paying with plastic too often can also exert a drag on retirement. Personal finance website ValuePenguin notes that the average U.S. household headed by 55- to 64-year-olds now carries $8,158 in credit card debt. As for households headed by those aged 65-69, they owe an average of $6,876 on credit cards.2

According to the latest Weekly Rate Report at CreditCards.com, the average APR on a credit card right now is 16.15%. How many investments regularly return 16% a year? What bank account earns that kind of interest? If a retiree’s consumer debt is increasing at a rate that his or her investments and deposit accounts cannot match, financial pain could be in the cards.3

Education debt is increasing. Older Americans are dealing with student loans – their own and those of their adult children – to alarming degree. In all 50 states, the population of people 60 and older with student debt has grown by at least 20% since 2012. That finding from the Consumer Financial Protection Bureau may be understating the depth of the crisis, which may have its roots in the Great Recession. Fair Isaac Corporation (FICO) says that between 2006-16, the number of Americans aged 65 and older with outstanding education loans has tripled.4,5

Just what kind of financial burden are these loans imposing? According to FICO, the average 65-or-older student loan borrower is dealing with a balance of $28,268. That is up 40% from the average balance in 2006.5 

How can pre-retirees and retirees address such debts? One way might be to reduce household expenses and apply the money not spent to debt. Financial assistance for adult children may need to end. Retiring later could also be a good move – income is the primary resource for fighting debt, and the more income earned, the more financial power a senior has to pay debts off.

Servicing debt in retirement can become very difficult. Large recurring debts can drain off a retiree’s cash flow and increase overall household financial risk. Retiring without major debt is a comparative relief.

Mike Moffitt may be reached at ph# 641-782-5577 or email: rsmlbyer@mchsi.com

Website: www.cfgiowa.com

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Michael Moffitt is a Registered Representative with and Securities are offered through LPL Financial, Member FINRA/SIPC. Investments advice offered through Advantage Investment Management (AIM), a registered investment advisor. Cornerstone Financial Group and AIM are separate entities from LPL Financial.    

Citations.

1 – nytimes.com/2017/06/02/business/retirement/mortgages-for-older-people-retirement.html [6/2/17]

2 – valuepenguin.com/average-credit-card-debt [9/28/17]

3 – creditcards.com/credit-card-news/interest-rate-report-92717-unchanged-2121.php [9/27/17]

4 – consumerfinance.gov/about-us/blog/nationwide-look-how-student-debt-impacts-older-adults/ [8/18/17]

5 – newsday.com/business/65-plus-crowd-facing-growing-burden-from-student-loan-debt-1.14124052 [9/10/17]

Avoiding the Cybercrooks

How can you protect yourself against ransomware, phishing, and other tactics?

Imagine finding out that your computer has been hacked. The hackers leave you a message: if you want your data back, you must pay them $300 in bitcoin. This was what happened to hundreds of thousands of PC users in May 2017 when they were attacked by the WannaCry malware, which exploited security flaws in Windows.

How can you plan to avoid cyberattacks and other attempts to take your money over the Internet? Be wary, and if attacked, respond quickly.

Phishing. This is when a cybercriminal throws you a hook, line, and sinker in the form of a fake, but convincing, email from a bank, law enforcement agency, or corporation, complete with accurate logos and graphics. The goal is to get you to disclose your personal information – the crooks will either use it or sell it. The best way to avoid phishing emails: stick to a virtual private network (VPN) or extremely reliable Wi-Fi networks when you are online.1

Ransomware. In this scam, online thieves create a mock virus, with an announcement that freezes your monitor. Their message: your files have been kidnapped, and you will need a decryption key to get them back, which you will pay handsomely to receive. In 2016, the FBI fielded 2,673 ransomware attack complaints, by companies and individuals who lost a total of $2.4 million. How can you avoid joining their ranks? Keep your security software and operating system as state of the art as you can. Your anti-virus programs should have the latest set of virus definitions. Your Internet browser and its plug-ins should also be up to date.2

Advance fee scams. A crook contacts you via text message or email, posing as a charity, a handyman, an adult education provider, or even a tax preparer ready to serve you. Oh, wait – before any service can be provided, you need to pay an “authorization fee” or an “application fee.” The crook takes the money and disappears. Common sense is your friend here; avoid succumbing to something that seems too good to be true.

I.R.S. impersonations. Cybergangs send out emails to households and small businesses with a warning: you owe money. That money must be paid now to the Internal Revenue Service through a pre-paid debit card or a money transfer. These scams often prey on immigrants, some of whom may not have a great understanding of U.S. tax law or the way the I.R.S. does business. The I.R.S. never emails a taxpayer out of the blue demanding payment; if unpaid taxes are a problem, the agency first sends a bill and an explanation of why the taxes need to be collected. It does not bully businesses or taxpayers with extortionist emails.1

Three statistics might convince you to obtain cyberinsurance for your business. One, roughly two-thirds of all cyberattacks target small and medium-sized companies. About 4,000 of these attacks occur per day, according to IBM. Two, the average cost of a cyberattack for a small business is around $690,000. This factoid comes from the Ponemon Institute, a research firm that conducted IBM’s 2017 Cost of Data Breach Study. That $690,000 encompasses not only lost business, but litigation, ransoms, and the money and time spent restoring data. Three, about 60% of small companies hit by an effective cyberattack are forced out of business within six months, notes the U.S. National Cyber Security Alliance.3

Most online money threats can be avoided with good security software, the latest operating system, and some healthy skepticism. Here is where a little suspicion may save you a lot of financial pain. If you do end up suffering that pain, the right insurance coverage may help to lessen it.

Mike Moffitt may be reached at phone: 641-782-5577 or email:  mikem@cfgiowa.com

Website: www.cfgiowa.com

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Michael Moffitt is a Registered Representative with and Securities are offered through LPL Financial, Member FINRA/SIPC. Investments advice offered through Advantage Investment Management (AIM), a registered investment advisor. Cornerstone Financial Group and AIM are separate entities from LPL Financial. 

Citations.

1 – gobankingrates.com/personal-finance/avoid-12-scary-money-scams/ [8/28/17]

2 – eweek.com/security/the-true-cost-of-ransomware-is-much-more-than-just-the-ransom [8/18/17]

3 – sfchronicle.com/business/article/Interest-in-cyberinsurance-grows-as-cybercrime-12043082.php [8/28/17]

Is a Home an Investment?

From one perspective, the answer is yes; from another, no.

When you buy a home, are you investing? If you buy it to flip it or buy it as a rental property, the answer is yes. If you buy a home simply to live in it, the answer may be no.

Your home is an expression of your lifestyle, a wonderful setting for your life, and a place you can enjoy in privacy and comfort. As an investment, though, it is essentially illiquid, and its rate of return is no sure thing.

Home values do not automatically increase with time. Buyers learned that lesson in the Great Recession. Simply using the S&P/Case-Shiller home price index as a barometer, house prices today are roughly where they were in 2007 – it has taken the residential real estate market that long to recover from the mortgage meltdown.1

Through the decades, real estate values have risen, and they will probably keep rising for the near term – but perhaps, not as quickly as some buyers hope. Why, exactly?

Home prices are inexorably linked to wages. Over the past year, hourly earnings have grown 2.5%. This has mystified many economists and frustrated others. Normally, when the jobless rate is below 5%, you have much greater wage growth. Six months before the start of the Great Recession (March 2007), the unemployment rate was 4.4% (right where it is now), and wages were growing at 4.2% a year.2,3

Ideally, wage growth keeps pace with rising real estate values. That is not happening now. Across the past year, the 20-city S&P/Case-Shiller home price index has shown home values appreciating at a rate of between 5.5-6% annually. If real estate values continue to climb 6% per year and wages rise just 2.5%, you will soon see buyers priced out of the market – unless, of course, home prices drop because sellers can no longer get the prices they want. That is something prospective sellers (and buyers) ought to keep in mind, plus some other truths.4

The fact is, stocks have appreciated more than real estate in the long run. Through the decades, home values have increased about 4% annually and stocks have increased about 10% annually (albeit with some remarkable year-to-year volatility).1

Stocks do not need upkeep. You will never need to tear out, reroof, or repaint a portfolio. Houses need all kind of repairs with time, and repair costs can eat into your gains. You must also pay property taxes. If you envision your home as an income-producing asset, that means playing landlord on some level. Many homeowners are not ready to take that step.

Remember that home values tend to rise gradually. If you see your home as an investment, see it as a long-term one. Staying put ten years or more before selling or trading up could help you realize the kind of financial outcome you want.

Mike Moffitt may be reached at ph#641-782-5577 or email: mikem@cfgiowa.com

Website: www.cfgiowa.com    

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Michael Moffitt is a Registered Representative with and Securities are offered through LPL Financial, Member FINRA/SIPC. Investments advice offered through Advantage Investment Management (AIM), a registered investment advisor. Cornerstone Financial Group and AIM are separate entities from LPL Financial.

Citations.

1 – businessinsider.com/buying-your-home-as-an-investment-is-a-1990s-mentality-2017-8 [8/9/17]

2 – epi.org/nominal-wage-tracker/ [9/5/17]

3 – bls.gov/opub/ted/2007/apr/wk2/art01.htm [4/9/07]

4 – ycharts.com/indicators/case_shiller_home_price_index_composite_20 [9/5/17]

The Equifax Data Breach

Have you been affected?  If so, how can you try to protect yourself?

On September 7, credit reporting agency Equifax dropped a consumer bombshell. It revealed that cybercriminals had gained access to the personal information of as many as 143 million Americans between May and July – about 44% of the U.S. population. The culprits were able to retrieve roughly 209,000 credit card numbers, in addition to many Social Security and driver’s license numbers.1

How can you find out if you were affected? Visit equifaxsecurity2017.com, the website Equifax just created for consumers. There, you can enter your last name and the last six digits of your Social Security number to find out. (Having to enter the last six digits of your SSN hints at how significant this breach is.)2

If you are among the consumers whose data was hacked, Equifax will ask you to return to equifaxsecurity2017.com to enroll in an identity theft protection product, TrustedID Premier. This program will provide you with free credit monitoring for a year. (The lingering question is whether your data could be used easily by criminals afterward.)1,2

How should you respond? Beyond simply taking Equifax up on its offer of one year of identity theft insurance and free credit monitoring, you can take other steps.

Check your credit reports now. (Unless you have already done so in the past month). You can get one free credit report per year from Equifax, TransUnion, and Experian. To request yours, go to annualcreditreport.com. Scrutinize your credit card and bank account statements for unfamiliar activity, and sign up for email or text alerts offered by your bank or credit card issuer(s), so that notice of anything suspicious can quickly reach you.

Consider changing the password for your main email account. A weak password on that account is a low bar for a cybercrook to hurdle – and once hurdled, that crook could potentially pose as you to change the passwords on your financial accounts.3

Regarding bank, investment, and credit card account passwords, avoid the obvious. Too many people use simple passwords based on their pet’s name, their last name and year of birth, the high school they attended, etc. Sadly, these same simple facts are often answers to security questions for credit card and bank accounts. Ask your bank or credit card issuer if you can use additional, random words or a PIN for passwords or security question answers. That way, you can avoid logging in using data that is in the public record. You want your password to be long and random, to make it harder for a would-be thief to guess.

You may want to consider paying for additional identity theft protection for years to come. This is one way to try and shield yourself from the unauthorized use of your Social Security number, driver’s license number, email accounts, and credit card numbers.

If someone calls you out of the blue claiming to be from Equifax, do not cooperate with them. Unless Equifax is returning your call, they will not contact you by phone. The same applies if you get a random, unsolicited email or text from “Equifax” – do not comply, or you may inadvertently hand over personal information to a fraudster. Stay vigilant, today and in the future.

Mike Moffitt may be reached at ph# 641-782-5577 or email: mikem@cfgiowa.com

Website: www.cfgiowa.com

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Michael Moffitt is a Registered Representative with and Securities are offered through LPL Financial, Member FINRA/SIPC. Investments advice offered through Advantage Investment Management (AIM), a registered investment advisor. Cornerstone Financial Group and AIM are separate entities from LPL Financial.

Citations.

1 – wired.com/story/how-to-protect-yourself-from-that-massive-equifax-breach/ [9/7/17]

2 – washingtonpost.com/news/the-switch/wp/2017/09/08/after-data-breach-equifax-asks-consumers-for-social-security-numbers-to-see-if-theyve-been-affected [9/8/17]

3 – cleveland.com/business/index.ssf/2017/09/devastating_data_breach_at_equ.html [9/8/17]

 

 

When Should You Buy a Car?

Could timing be a factor in getting a better deal?

If you are on the verge of shopping for a new or late-model used vehicle, some recent research from TrueCar may interest you – and even lead you to some savings. TrueCar, which monitors both U.S. auto dealer sales and dealer incentives and discounts, says that Monday and Thursday are the ideal days of the week to buy. Fewer buyers head to dealerships on those two days than any other, and the average sales discount off MSRP is slightly higher (8.1% compared to 7.5% on Sundays).

Fall and winter may be the right season to arrange a car or truck purchase. October is when dealerships tend to offer their biggest discounts on full-size pickups. November sees the deepest discounts on compact and mid-sized cars. Markdowns on luxury and mid-sized SUVs tend to be largest in December. Also, New Year’s Eve and New Year’s Day are often the very best days of the year to buy. TrueCar found an average discount of 8.5% off MSRP on January 1.2

Mike Moffitt may be reached at ph# 641-782-5577 or email: mikem@cfgiowa.com

Website: www.cfgiowa.com

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Michael Moffitt is a Registered Representative with and Securities are offered through LPL Financial, Member FINRA/SIPC. Investments advice offered through Advantage Investment Management (AIM), a registered investment advisor. Cornerstone Financial Group and AIM are separate entities from LPL Financial.  

Citations.

2 – cars.usnews.com/cars-trucks/6-best-times-to-buy-a-car [3/31/17]

Celebration of the Common Worker

In honor of Labor Day 2017

It has been known by many different names–Worker’s Day, Labor Day, the last big weekend of the summer-and sadly, once Labor Day passes, we put the summer clothes away, drain the swimming pools and fountains, and start to batten down the hatches for winter.

“Labor Day differs in every essential way from the other holidays of the year in any country,” notes Samuel Gompers, founder and longtime president of the American Federation of Labor. “All other holidays are (to some degree) connected with conflicts and battles of man’s prowess over man, of strife and discord for greed and power, of glories achieved by one nation over another.  Labor Day…is devoted to no man, living or dead, to no sect, race, or nation.”

The holiday is a creation of the labor movement and is dedicated to the social and economic achievements of American workers. It constitutes a yearly national tribute to the contributions workers have made to the strength, prosperity and well-being of the country.

The first Labor Day was celebrated on Tuesday, September 5, 1882, in New York City, in accordance with the plans of the Central Labor Union. In 1884, the first Monday in September was selected to be the annual holiday, and the idea spread with the growth of labor organizations.  In 1885, Labor Day was celebrated in many industrial centers of the country.

Originally, Labor day was to be celebrated with a street parade to exhibit to the public “the strength and spirit de corps of the trade and labor organizations” of the community, followed by a festival for the recreation and amusement of the workers and their families. In recent years, the celebration has undergone a change, especially in large industrial centers where mass displays and huge parades have proved a problem.  The change is more a shift in emphasis and medium of expression.  Addresses by leading union officials, industrialists, educators, clerics, and government officials are given wide coverage in the media.

The vital force of American labor has added materially to the highest standard of living and the greatest production the world has ever known and has brought us closer to the realization of our traditional ideals of economic and political democracy. It is appropriate, therefore, that the nation pay tribute to the creators of so much of the nation’s strength, freedom, and leadership-the American workers.

As you and your family gather for this celebration, may you find comfort and joy in knowing that America still has the strongest, most stable economy in the world, all thanks to those who work for the common good every day. 1

Mike Moffitt may be reached at ph# 641-782-5577 or email: mikem@cfgiowa.com

Website: www.cfgiowa.com

Michael Moffitt is a Registered Representative with and Securities are offered through LPL Financial, Member FINRA/SIPC. Investments advice offered through Advantage Investment Management (AIM), a registered investment advisor.  Cornerstone Financial Group and AIM are separate entities from LPL Financial.

Citations

1 – www.dol.gov