Articles tagged with: cornerstone financial group

Family & Friends May Play a Crucial Role in Successful Aging

We all want to live independently for as long as we can. We may assume the keys are diet, exercise, and wealth, but we may be overlooking something very important – the degree of community and caring provided by our neighbors, friends, and loved ones.

A high-touch environment may be just as important as the high-tech devices that support “aging in place.” This is especially true since so many women live alone during retirement, and since many men and women see their circle of friends contract as they age. Birthrates have declined, which leaves fewer children and grandchildren to turn to for assistance with errands, yardwork, or help around the house. Living alone can be hazardous for those developing dementia: about 60% of such seniors wander at least once from their homes into unfamiliar or inhospitable environments.

Checking in on the elders we know is the kind and right thing to do: in doing so, we may help them stay engaged and active. We might even save them in an emergency. As we age, we should welcome our friends, neighbors, and children and grandchildren to check in on us and maintain those all-important close ties.1

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 – forbes.com/sites/josephcoughlin/2018/07/06/how-to-age-independently-retiring-well-requires-more-than-money-diet-and-exercise [7/6/18]

 

Beware of Lifestyle Creep

Sometimes more money can mean more problems.

“Lifestyle creep” is an unusual phrase describing an all-too-common problem: the more money people earn, the more money they tend to spend.

Frequently, the newly affluent are the most susceptible. As people establish themselves as doctors and lawyers, executives, and successful entrepreneurs, they see living well as a reward. Outstanding education, home, and business loans may not alter this viewpoint. Lifestyle creep can happen to successful individuals of any age. How do you guard against it?

Keep one financial principle in mind: spend less than you make. If you get a promotion, if your business takes off, if you make partner, the additional income you receive can go toward your retirement savings, your investment accounts, or your debts.

See a promotion, a bonus, or a raise as an opportunity to save more. Do you have a household budget? Then the amount of saving that the extra income comfortably permits will be clear. Even if you do not closely track your expenses, you can probably still save (and invest) to a greater degree without imperiling your current lifestyle.

Avoid taking on new fixed expenses that may not lead to positive outcomes. Shouldering a fixed mortgage payment as a condition of home ownership? Good potential outcome. Assuming an auto loan so you can drive a luxury SUV? Maybe not such a good idea. While the home may appreciate, the SUV will almost certainly not.    

Resist the temptation to rent a fancier apartment or home. Few things scream “lifestyle creep” like higher rent does. A pricier apartment may convey an impressive image to your friends and associates, but it will not make you wealthier.

Keep the big goals in mind and fight off distractions. When you earn more, it is easy to act on your wants and buy things impulsively. Your typical day starts costing you more money.

To prevent this subtle, daily lifestyle creep, live your days the same way you always have – with the same kind of financial mindfulness. Watch out for new daily costs inspired by wants rather than needs.

Live well, but not extravagantly. After years of law school or time toiling at start-ups, getting hired by the right firm and making that career leap can be exhilarating – but it should not be a gateway to runaway debt. According to the Federal Reserve’s latest Survey of Consumer Finances, the average American head of household aged 35-44 carries slightly more than $100,000 of non-housing debt. This is one area of life where you want to be below average.1

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 – time.com/money/5233033/average-debt-every-age/ [4/13/18]

 

Think Total Return

Never touch your principal in retirement?  Think again.

More than a century ago, an American financial archetype emerged – the household that lived on the interest earned by its investments, never touching its principal.

Times have changed. While the Vanderbilts, Carnegies, and Rockefellers could do that back in the Gilded Age, you will likely face a tough challenge trying to do the same in retirement. The reason? Low interest rates.

The federal funds rate has not topped 3% since the winter of 2008. In fact, the nation’s benchmark interest rate has been under 2% since October 2008. In today’s interest rate environment, you will need a substantial investment portfolio to live solely on income and dividends in retirement. In some parts of the country, a million-dollar portfolio might not generate enough income and dividends to help you maintain your lifestyle.1

Try another approach – the approach used by institutional investors. Wall Street money management firms and university endowment funds frequently rely on the total return investment strategy. In a retirement income context, this means that you strategically sell some assets to complement the dividends and interest income you receive.

Portfolio rebalancing is central to the total return strategy. The recurring ups and downs of the financial markets gradually unbalance a portfolio over time. A long bull market, for example, will usually leave a portfolio with a larger stock allocation than initially desired. To get back to the portfolio’s target allocations, you need to sell shares of stock (or, stocks aside, amounts of other kinds of investments). The proceeds of sale equal retirement income for you.

Before you pursue this strategy, you need to determine two things. One, do you have a portfolio built so that you can potentially derive income from diverse asset classes? Two, assuming you have that diversification, how much dividend and interest income is your portfolio likely to generate this year? The amount may fall short of the income you need. Rebalancing might be able to help you make up the slack.

Besides being fundamental to a total return approach for retirement income, rebalancing may also help you accomplish other objectives.

Rebalancing keeps your portfolio diversified, so that your retirement income does not depend too heavily on the performance of one asset class. It can stave off a potentially risky response to the ongoing desire for yield (some investors, frustrated by poor returns, direct money into high-risk investments they barely understand). It may also allow you to sustain your lifestyle and spending; relying only on dividends and interest may cause you to pare your spending back and notably reduce your quality of life.

Think total return. Explore the total return approach to retirement income planning, today.

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

Website: www.cfgiowa.com

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

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 – thebalance.com/fed-funds-rate-history-highs-lows-3306135 [12/13/17]

 

Crowdfunding & Taxes

Information for those giving, receiving, and organizing.

Have you donated money to a crowdfunding campaign this year? You probably have. You may be wondering how the Internal Revenue Service treats these donations. Do the common tax rules apply?

 The I.R.S. may or may not define such donations as charitable contributions. It depends not only on who the crowdfunding is for, but also who has organized the campaign.

A donation to a qualified non-profit organization – a 501(c)(3) – is tax deductible if it is properly documented and itemized on Schedule A. Donations to crowdsourcing efforts administered by 501(c)(3)s are, likewise, tax deductible.1

If an individual sets up a crowdfunding campaign to raise money for another individual or a cause or project, it is highly unlikely that a 501(c)(3) organization is in place to accept the donations. (An organization can attain such status faster these days, thanks to the Internet, but attaining it still takes time.)

So, if you donate to a crowdfunding campaign that is simply created by a person to benefit a specific person or a group of specific persons, the donation will likely not be tax deductible, as no qualified charitable organization will be there to receive and distribute the money.1

There is a “middle ground” here that warrants further explanation. Sometimes you see a crowdsourcing effort created by an individual on behalf of what is termed a “charitable class.” These campaigns do not simply benefit one or more people that the organizer already knows. Rather, they benefit a community of people (perhaps, many people) that the organizer does not know.

If you give to such an effort, an income tax deduction may be possible if the campaign aligns with a qualified charity. If the qualified non-profit organization assumes full control over the collected donations and takes full possession of them, then a charitable deduction by the donor may be permitted.2

When donations are taken on behalf of a charitable class, they do not necessarily become present interest gifts. Still, a gift tax charitable contribution deduction may not be allowed.2

If you receive crowdsourcing contributions, are they characterized as gifts? Usually, they are considered gifts under federal tax law and not counted in your gross income – but there are some exceptions to this.2

If a donation you receive constitutes a loan, or if a donation is made to you with what the I.R.S. calls “detached and disinterested generosity,” then such a donation represents taxable income. The same holds true if crowdfunding donations amount to venture capital, payment for services rendered, or a percentage of gain from the sale of property.2

Some creators of crowdfunding campaigns may receive 1099-Ks. This is the federal tax form used to report payment card and third-party network transactions, and like all 1099 forms, it goes out within the first few weeks of a calendar year. If your campaign generates at least 200 transactions or $20,000 or more in gross payments during a single year, the crowdfunding site or the payment processing company it uses will send you one.1

The I.R.S. has not made formal rulings on crowdsourcing. Perhaps some will be made soon, if only to clarify some of the gray areas that now exist.

Mike Moffitt may be reached at 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 – legalzoom.com/articles/cash-and-kickstarter-the-tax-implications-of-crowd-funding [3/17]

2 – wealthmanagement.com/philanthropy/crowdsourcing-tax-confusion [10/20/17]

 

Finding Cheaper Flights

Ways to fly for less this season and any season.

What are the keys to landing inexpensive airfares? One, be flexible. Two, secure those seats now rather than later.

Locating cheaper airfares can be done through a variety of means. Try excellent search engines like Momondo (which canvasses more than 30 carriers and travel websites), Priceline, and Google Flights. Many travel websites will let you set price alerts so that you can be quickly notified when a carrier drops a fare into the “sweet spot” you want. (Fares really can rise and fall daily.) Book your airfare at least 30 days before you fly, and consider flights with connections rather than non-stops. Fly during the middle of the week – or if life permits, on an actual holiday. Go with the discount carriers – JetBlue, Southwest Airlines, or Alaska Airlines if you are flying domestically, or Norwegian, if traveling to Europe. Additionally, awards miles and credits accumulated on travel credit cards could lower the cost of your trip. Also, if you book a flight directly through a carrier via an airline rewards card, you can usually waive a baggage fee for at least one flyer.3  

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.

3 – forbes.com/sites/johnnyjet/2017/10/06/10-tips-for-booking-cheaper-flights/ [10/6/17]

Old Phone, New Uses

Ways to repurpose, rather than recycle that constant companion. When you get a new phone, you need not toss the old one. Yes, you could recycle it – but you could also keep it around and get further use from it. That old phone could become a lightweight alarm clock thanks to its clock app. It could serve as a camera; you could transmit the images taken via Wi-Fi. Amazon Fire TV, Apple TV, and Roku will allow you to use a smartphone as a Wi-Fi TV remote. A wired adapter and a phone mount could give an old car or truck a touchscreen user interface for music and podcasts. In a similar vein, you could use it as a dedicated music player in your bedroom or kitchen, with a Bluetooth speaker to improve sound quality. You could even set it up as an emergency 911 phone (ready and positioned to dial). Skype or FaceTime users with good Wi-Fi connections could potentially take a generation-old phone and make it an always-on FaceTime or Skype interface. So, before you recycle that old phone, think about all the ways it might still be handy.1 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 – pcmag.com/feature/351781/11-uses-for-your-old-smartphone [3/11/17] Ways to repurpose, rather than recycle, that constant companion.

Can Your Life Insurance Policy Help You Out in Retirement?

Under certain circumstances, it can play a crucial financial role. Besides a death benefit, a permanent life insurance policy can accrue cash value over time (provided the premiums are paid). That cash value could prove useful in or near retirement. If you need to, you could withdraw some of it to pay for medical procedures, home improvements, long-term care, or a child’s college education. It could even provide you with additional retirement income. Moreover, distributions from a permanent life insurance policy are tax free as opposed to distributions from traditional IRAs (and some other retirement plans), which are taxed at regular rates.

There is one notable negative to all this. When you take cash value from a life insurance policy, it is not a withdrawal – it is a loan. You are borrowing against the value of your policy, and in doing so, you reduce its death benefit. You can restore the full value of the death benefit by paying back the loan in full – but that loan may carry 7-8% interest. Also, life insurance premiums and fees can be costly when weighed against other retirement savings vehicles. Dollars that fund a permanent life insurance policy are also dollars that could alternately go into your other retirement accounts, which you do not pay premiums to keep up.

Michael Moffitt may be reached at 641-782-5577 or email: www.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/investing/T034-C032-S014-careful-buying-life-insurance-for-your-retirement.html [5/17]

What Could You Do With Your Tax Refund?

Instead of just spending the money, you could plan to pay yourself.

About 70% of taxpayers receive sizable refunds from the Internal Revenue Service. Just how sizable? The average refund totals about $2,800.1

What do households do with that money? It varies. Last year, consumer financial services company Bankrate asked Americans about their plans for their federal tax refunds. Thirty-one percent of the respondents to Bankrate’s survey said that they would save or invest those dollars, and 28% indicated they would attack their debts with the money. Another 27% said they would buy food with that cash or use it to pay utility bills. Just 6% said they would earmark their refunds for shopping sprees or vacations.2

So, according to those survey results, about six in ten people who get a refund will use it to try and improve their personal finances. You could follow their example.

Do you have an adequate emergency fund? If not, maybe you could strengthen it with your refund. If you have no such fund at all, your refund gives you an opportunity to create one.

You might use your refund to pay off your worst debts. High-interest debts, in particular – if you pay off a debt that carries 16% interest, getting rid of that liability is, effectively, like getting a 16% return. If you lack an emergency fund, you should create that first, then think about reducing your debt. Paying debt down without an emergency fund or some reservoir of savings just sets you up for quickly accumulating more debt.

If you own a home, you may want to consider making a thirteenth mortgage payment before 2017 ends. Putting your refund to work that way may make more sense financially than putting it in the bank, given the minimal interest rates on so many deposit accounts today.

You could pay insurance premiums with the funds. An IRS refund of around $3,000 could go a long way. If you have put off buying a term or permanent life policy, your refund might make insuring yourself easier.

Could you invest the money the IRS returns to you? You could increase (or max out) your annual retirement plan contribution with it or simply direct it into another type of investment account. Whether the savings or investment vehicle is tax-advantaged or not, you have a chance to make that lump sum grow with time.

Aside from investing in equities or debt instruments, you could take your refund and invest in yourself. Maybe you might use it to start a business or support a business you already own. It could also be spent on education. Think of these options as “indirect investments” that might help you or your household grow wealthier one day.

Lastly, remember what a federal or state tax refund represents. It is a percentage of your earnings that the government holds back, in the event that you owe it in taxes. If you repeatedly get a refund, you might want to carefully adjust your W-4 withholding, so that your paychecks are larger during the year.3

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 – azcentral.com/story/money/business/consumers/2017/01/21/tax-season-6-things-to-know/96776554/ [1/21/17]

2 – thestreet.com/story/13523031/2/why-you-should-invest-your-tax-refund-instead-of-spending-it.html [4/8/16]

3 – turbotax.intuit.com/tax-tools/tax-tips/IRS-Tax-Forms/Top-5-Reasons-to-Adjust-Your-W-4-Withholding/INF14437.html [2/9/17]