Articles tagged with: cornerstone financial group

Major Risks to Family Wealth

Will your accumulated assets be threatened by them?

All too often, family wealth fails to last. One generation builds a business – or even a fortune – and it is lost in ensuing decades. Why does it happen, again and again?

Often, families fall prey to serious money blunders. Classic mistakes are made; changing times are not recognized.

Procrastination. This is not just a matter of failing to plan, but also of failing to respond to acknowledged financial weaknesses.

As a hypothetical example, say there is a multimillionaire named Alan. The named beneficiary of Alan’s six-figure savings account is no longer alive. While Alan knows about this financial flaw, knowledge is one thing, but action is another. He realizes he should name another beneficiary, but he never gets around to it. His schedule is busy, and updating that beneficiary form is inconvenient.

Sadly, procrastination wins out in the end, and as the account lacks a payable-on-death (POD) beneficiary, those assets end up subject to probate. Then, Alan’s heirs find out about other lingering financial matters that should have been taken care of regarding his IRA, his real estate holdings, and more.1

Minimal or absent estate planning. Every year, there are multimillionaires who die without leaving any instructions for the distribution of their wealth – not just rock stars and actors, but also small business owners and entrepreneurs. According to a recent Caring.com survey, 58% of Americans have no estate planning in place, not even a basic will.2

Anyone reliant on a will alone risks handing the destiny of their wealth over to a probate judge. The multimillionaire who has a child with special needs, a family history of Alzheimer’s or Parkinson’s, or a former spouse or estranged children may need a greater degree of estate planning. If they want to endow charities or give grandkids a nice start in life, the same applies. Business ownership calls for coordinated estate planning and succession planning.

A finely crafted estate plan has the potential to perpetuate and enhance family wealth for decades, and perhaps, generations. Without it, heirs may have to deal with probate and a painful opportunity cost – the lost potential for tax-advantaged growth and compounding of those assets.

The lack of a “family office.” Decades ago, the wealthiest American households included offices: a staff of handpicked financial professionals who worked within a mansion, supervising a family’s entire financial life. While traditional “family offices” have disappeared, the concept is as relevant as ever. Today, select wealth management firms emulate this model: in an ongoing relationship distinguished by personal and responsive service, they consult families about investments, provide reports, and assist in decision-making. If your financial picture has become far too complex to address on your own, this could be a wise choice for your family.

Technological flaws. Hackers can hijack email and social media accounts and send phony messages to banks, brokerages, and financial advisors to authorize asset transfers. Social media can help you build your business, but it can also expose you to identity thieves seeking to steal both digital and tangible assets.

Sometimes a business or family installs a security system that proves problematic – so much so that it is turned off half the time. Unscrupulous people have ways of learning about that, and they may be only one or two degrees separated from you.

No long-term strategy in place. When a family wants to sustain wealth for decades to come, heirs have to understand the how and why. All family members have to be on the same page, or at least, read that page. If family communication about wealth tends to be more opaque than transparent, the mechanics and purpose of the strategy may never be adequately explained.

No decision-making process. In the typical high net worth family, financial decision-making is vertical and top-down. Parents or grandparents may make decisions in private, and it may be years before heirs learn about those decisions or fully understand them. When heirs do become decision-makers, it is usually upon the death of the elders.

Horizontal decision-making can help multiple generations commit to the guidance of family wealth. Estate and succession planning professionals can help a family make these decisions with an awareness of different communication styles. In-depth conversations are essential; good estate planners recognize that silence does not necessarily mean agreement.

You may plan to reduce these risks to family wealth (and others) in collaboration with financial and legal professionals. It is never too early to begin.

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.

Securities and Registered Investment Advisory Services offered through Silver Oak Securities, Inc., Member FINRA/SIPC. Silver Oak Securities, Inc. and Cornerstone Financial Group are separate entities.

Citations.

1 – thebalance.com/what-is-a-payable-on-death-or-pod-account-3505252 [1/15/19]

2 – cbsnews.com/news/failing-to-have-a-will-is-one-of-the-worst-financial-mistakes-you-can-make [3/13/19]

 

TOD or Living Trust?

A look at two basic methods for shielding assets from probate.  

How do you keep assets out of probate? If that estate planning question is on your mind, you should know that there are two basic ways to accomplish that objective.

One, you could create a revocable living trust. You can serve as its trustee, and you can fund it by retitling certain accounts and assets into the name of the trust. A properly written and properly implemented revocable living trust allows you to have complete control over those retitled assets during your lifetime. At your death, the trust becomes irrevocable and the assets within it can pass to your heirs without being probated (but they will be counted in your taxable estate). In most states, assets within a revocable living trust transfer privately, i.e., the trust documents do not have to be publicly filed.1

If that sounds like too much bother, an even simpler way exists. Transfer-on-death (TOD) arrangements may be used to pass certain assets to designated beneficiaries. A beneficiary form states who will directly inherit the asset at your death. Under a TOD arrangement, you keep full control of the asset during your lifetime and pay taxes on any income the asset generates as you own it outright. TOD arrangements require minimal paperwork to establish.2

This is not an either-or decision; you can use both of these estate planning moves in pursuit of the same goal. The question becomes: which assets should be transferred via a TOD arrangement versus a trust?

Many investment & retirement savings accounts are TOD to begin with. The beauty of the TOD arrangement is that the beneficiary form establishes the simplest imaginable path for the asset as it transfers from one owner to another. The risk is that the instruction in the beneficiary form will contradict something you have stated in your will.

One common situation: a parent states in a will that her kids will receive equal percentages of her assets, but due to TOD language, the assets go to the kids not by equal percentage, but by some other factor, with the result that the heirs have slightly or even greatly unequal percentages of family wealth. Will they elect to redistribute the assets they have inherited this way (in fairness to one another)? Perhaps, and perhaps not.

How complex should your estate planning be? A conversation with a trusted legal or financial professional may help you answer that question and illuminate whether simple TOD language or a trust is right to keep certain assets away from probate.

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.

Securities and Registered Investment Advisory Services offered through Silver Oak Securities, Inc., Member FINRA/SIPC. Silver Oak Securities, Inc. and Cornerstone Financial Group are separate entities.

Citations.

1 – investopedia.com/articles/pf/06/revocablelivingtrust.asp [3/7/2019]
2 – investopedia.com/terms/t/transferondeath.asp [4/25/2019]

Social Security by the Numbers

Facts about the federal Old-Age, Survivors, and Disability Insurance (OASDI) program. 

Social Security has been a pillar of retirement life for several decades, but how much do you really know about it? Here are some facts that might surprise you:

The Social Security trust fund exceeds the gross domestic product of every major economy in the world, except the nine largest: China, the European Union, the United States, India, Japan, Germany, Russia, Indonesia, and Brazil.1

For 61% of retirees, Social Security is a major source of income.1

Benefits are subject to federal income taxes, but it wasn’t always so. Amendments to the Social Security Act made benefits potentially taxable beginning in 1984.1

Benefits are determined by your average earnings during a lifetime of work, based on your 35 highest-earning years.1

If you receive Social Security, you no doubt welcome cost-of-living-adjustments (COLAs) to your benefits. Did you know that Social Security COLAs once required an act of Congress? That was the case before 1975, when they were finally pegged to advances in the Consumer Price Index.1

In the middle of 2018, more than 1 in 6 Americans were collecting Social Security benefits. Older Americans constitute about 80% of Social Security recipients, and their average monthly benefit in June 2018 was $1,413.2

When should you begin taking Social Security? That may depend on several factors, but many people choose to claim benefits as soon as they are eligible. You can receive benefits beginning at age 62, but you may choose to delay taking them. You can wait until age 70 to claim them, and if you take them before reaching Social Security’s Full Retirement Age (67 for those born in 1960 or later), your monthly benefit will be fractionally reduced. You may receive over one million dollars total in benefits across your retirement, so when and how you decide to take that income may be critical.1,3

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

Website:  www.cfgiowa.com

Securities and Registered Investment Advisory Services offered through Silver Oak Securities, Inc., Member FINRA/SIPC. Silver Oak Securities, Inc. and Cornerstone Financial Group are separate entities.

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 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.

Citations.

1 – https://www.waddell.com/explore-insights/market-news-and-guidance/planning/9-facts-about-social-security [2/13/19]
2 – https://www.cbpp.org/research/social-security/policy-basics-top-ten-facts-about-social-security [8/14/18]
3 – https://www.ssa.gov/planners/retire/agereduction.html [12/13/18]

Seasons Greetings and a Quick Market Update

I hope you had a very Merry Christmas and holiday season and all of us at Cornerstone Financial Group wish you a Happy New Year in 2019!

I thought it would be important to reach out to give a quick update on some of the facts regarding what’s been going on in the stock and bond markets recently as we approach the end of 2018 and look into 2019. I’ll try to make this short but concise, and stick with what we know and what we don’t!
In an earlier letter to all clients at the end of September, I mentioned we were overdue for a bear market, which is defined by Investopedia as decline of 20% or more.1 As I write this the day after Christmas, the S&P 500 index has now officially declined 20% from it’s high on September 21. The Dow Jones 30 Industrials index is not quite there, but very close. The NASDAQ 100 index is down more than 20%. Google is down about 23%, Apple down about 37% and Netflix down over 40%. So it’s safe to say we’ve achieved bear market status.

Bear markets typically happen about every 3.5 years. Doing a little research, I found the average bear market decline was 35.4%.2 This could indicate the current bear market has a while yet to run. The average bear market lasts about 10 months – we’re just over 3 months into this one. It’s easy to say that investors should get out at the top of the market and back in at the bottom, right? In reality, this is quite hard to do since we only know the high and the low in hindsight. So how do we manage risk in client portfolios?

There are multiple ways to handle risk. Many investors and advisors build diversified portfolios that hold assets other than stocks, such as bonds. Earlier in the year as interest rates worked higher (often bonds drop in value as interest rates rise) our bond portfolios were a drag on performance but we always anticipated that when we finally saw the larger correction the bonds would help us manage through it. This has proved accurate as the bond holdings now are helping protect capital. During the last couple of years, we also recommended and invested in FDIC-insured market-linked Certificates of Deposit for clients wishing to protect a portion of their portfolios. While these are priced somewhat in relationship to the value of their underlying holdings, which have been generally lower, they do have FDIC insurance protection at maturity so we feel comfortable that these will protect capital. As a result of these actions, for those people who have completed risk tolerance surveys we believe their portfolios should be pretty well aligned with their stated risk tolerance.

Other options we have used include traditional CDs, fixed index annuities, high quality (or insured) bonds that you can hold to maturity, or buying put options (a little more complicated strategy). But in general, our plan through corrections (and I’ve lived through 5 of them in my career) is to help you build portfolios that can potentially help you keep risk within your comfort level. If your risk comfort level is high, it’s true that stocks have outperformed many alternatives and based on an NYU study has vastly outperformed government-guaranteed United States treasury bills and bonds.3
What is ahead? Most likely uncertainty. A weak or slowing economy may bring on a bear market — the signs of a weak or slowing economy are typically low employment, low disposable income, weak productivity and a drop in business profits. That doesn’t seem to be the case right now, however. In addition, any intervention by the government in the economy may also trigger a bear market. We may be seeing that with the China tariff situation. A drop in investor confidence may also signal the onset of a bear market.

But at these levels, many stocks are fairly priced based on their historical price/earnings ratios. It’s a little like a sale at a department store. When you see a sale where an item is 20% off, you know that is a better price than it used to be. But what you don’t know is if that item might be marked down further – which would represent a better deal! While there are in general no guarantees in investing, I’m as confident there will be a rally next year as I was earlier this year that there was a correction coming around the corner. So I do not believe this is a good time to be a seller. It’s probably a better time to be a buyer but the “mark downs” might not be done yet, either. Patience is the best virtue to have here. If you believe your risk tolerance is changing as you watch the market move, we should use the next rally as an opportunity to shift your portfolio to a more conservative mix.
Feel free to give me a call if you wish to discuss this further.

Sincerely,
Mike

Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal advice or accounting 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 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.

Securities and Registered Investment Advisory Services offered through Silver Oak Securities, Inc., Member FINRA/SIPC. Silver Oak Securities, Inc. and Cornerstone Financial Group are separate entities.

Citations
1 – https://www.investopedia.com/terms/b/bearmarket.asp
2 – https://www.gold-eagle.com/article/history-us-bear-bull-markets-1929
3 – http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html

Why Do You Need a Will?

It may not sound enticing, but creating a will puts power in your hands.According to the global analytics firm Gallup, only about 44% of Americans have created a will. This finding may not surprise you. After all, no one wants to be reminded of their mortality or dwell on what might happen upon their death, so writing a last will and testament is seldom prioritized on the to-do list of a Millennial or Gen Xer. What may surprise you, though, is the statistic cited by personal finance website The Balance: around 35% of Americans aged 65 and older lack wills.1,2

A will is an instrument of power. By creating one, you gain control over the distribution of your assets. If you die without one, the state decides what becomes of your property, with no regard to your priorities.

A will is a legal document by which an individual or a couple (known as “testator”) identifies their wishes regarding the distribution of their assets after death. A will can typically be broken down into four parts:

*Executors: Most wills begin by naming an executor. Executors are responsible for carrying out the wishes outlined in a will. This involves assessing the value of the estate, gathering the assets, paying inheritance tax and other debts (if necessary), and distributing assets among beneficiaries. It is recommended that you name an alternate executor in case your first choice is unable to fulfill the obligation. Some families name multiple children as co-executors, with the intention of thwarting sibling discord, but this can introduce a logistical headache, as all the executors must act unanimously.2,3
*Guardians: A will allows you to designate a guardian for your minor children. The designated guardian you appoint must be able to assume the responsibility. For many people, this is the most important part of a will. If you die without naming a guardian, the courts will decide who takes care of your children.
*Gifts: This section enables you to identify people or organizations to whom you wish to give gifts of money or specific possessions, such as jewelry or a car. You can also specify conditional gifts, such as a sum of money to a young daughter, but only when she reaches a certain age.
*Estate: Your estate encompasses everything you own, including real property, financial investments, cash, and personal possessions. Once you have identified specific gifts you would like to distribute, you can apportion the rest of your estate in equal shares among your heirs, or you can split it into percentages. For example, you may decide to give 45% each to two children and the remaining 10% to your sibling.

A do-it-yourself will may be acceptable, but it may not be advisable. The law does not require a will to be drawn up by a professional, so you could create your own will, with or without using a template. If you make a mistake, however, you will not be around to correct it. When you draft a will, consider enlisting the help of a legal, tax, or financial professional who could offer you additional insight, especially if you have a large estate or a complex family situation.

Remember, a will puts power in your hands. You have worked hard to create a legacy for your loved ones. You deserve to decide how that legacy is sustained.

Mike Moffitt may be reached at 641-782-5577 or 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 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.

Securities and Registered Investment Advisory Services offered through Silver Oak Securities, Inc., Member FINRA/SIPC. Silver Oak Securities, Inc. and Cornerstone Financial Group are separate entities.

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]