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Friday, July 24, 2015

Guarding Against Identity Theft: Take steps so criminals can't take vital information from you

At the current time, one in 14 Americans aged 16 or older have been a victim of identity theft in the past 12 months.  That equates to more than 16.6 million people – a sobering statistic.  While 86% of victims cleared up the resulting credit and financial problems in less than one day, 10% of victims had to struggle with the issues for a month or more.

Tax time is a prime time for identity thieves.  They would love to get their hands on your return and to claim a phony refund using your personal information.  E-filing of tax returns is becoming increasingly popular – just make sure you use a secure Internet connection.  When you e-file, you aren’t putting your Social Security number, address and income information through the mail.  If you can’t bring yourself to e-file, then consider sending your returns via Certified Mail.  And, make sure to put the rough drafts of your returns through a shredder.

The IRS does not use unsolicited emails to request information from taxpayers.  If you get an email claiming to be from the IRS asking for your personal or financial information, report it to your email provider as spam.

Another precaution to take is to be very careful using Wi-Fi networks. Don’t risk disclosing financial information over a public Wi-Fi network. A favorite hacker trick is to sit at a coffee house, library or airport and set up a Wi-Fi hotspot with a name similar to the legitimate one.  Inevitably, people will fall for the ruse and log on and get hacked.

Look for the “https” when you visit a website.  When you see the “s” at the start of the website address, you know the site has active SSL encryption.    A padlock icon in the address bar confirms an active SSL connection.  You can also opt for a virtual private network (VPN) service which encrypts 100% of your browsing traffic but it could cost you around $10 a month.

Make sure you check your credit report on a regular basis.  You are entitled to one free credit report per year from each of the big three agencies.  Another tip is to choose passwords that are really esoteric and preferably with number as well as letters to make them tougher to hack.

A final bit of information is to be careful talking to strangers.  If you get a call or email from someone you don’t recognize telling you you’ve won a prize, and claiming to be from the county clerk’s office, a pension fund or a public utility – be skeptical.  You could be doing yourself a big favor!


Posted by: David Shober at 9:59 AM
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Friday, July 24, 2015

Learning to Save for the Future

Don’t underestimate the importance of liquidity.  Throughout your investment journey there will be situations that arise requiring immediate access to your assets.  Personal emergencies and early retirement are both very real examples that may require you to liquidate certain assets to cover expenses.  If you do not have enough liquid assets, you may have to dip into illiquid investments which may mean paying stiff penalties.  Not understanding the importance of liquid assets can cause loss of positive investments and a gain in stress and frustration.    

As your age goes up your risk should go down.  There is no sense in aiming for one last homerun when there is less time to reap the benefits of a win and less time to make up for a loss.  Rebalancing your portfolio can help in reestablishing the original level of risk by resetting all asset allocation.  Although this may get rid of any possible big gains it will, more importantly, get rid of any possible big losses.

Be aware of biases.  Liking a company does not mean you should invest in that sector and neither does working in one.  Getting attached to specific investments will make you highly vulnerable to fluctuations within the economy and can decrease the value of your portfolio by extreme measures.  Diversification of investments is key when looking to reduce risk and achieve steady gains.  

Markets will always rise and fall so it is important not to panic.  You should always strive to keep your financial goals within reach even when going through shocks within the market.  This entails staying invested and staying positive. 


Posted by: Patrick Carroll at 9:58 AM
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Friday, July 24, 2015

Don't Waste Your U.S. Savings Bonds

A common mistake among Savings Bond holders is holding on too long.  Sometimes they forget or don’t know that they have maturity dates.  When a bond stops earning interest it is said to have matured and is time to cash it in.  The problem most people run into is forgetting about the maturity date or not knowing when it is.  This can cause problems when taxes are due and the Internal Revenue Service can penalize you for it.

The interest your bond accumulates must be reported on your 1040 form when the bond is either redeemed or reached full maturity.  Failing to do so will allow the IRS to issue a federal tax penalty taking away from the value of your bond. 

Paying the tax on your Savings Bond can be done two ways.  Deferring the tax until maturity allows the holder to wait until they redeem it before reporting the interest through a 1099-INT form.  Paying the tax annually before redeeming can be reported as taxable interest each year and is a good way to stay on top of your payments and stay aware of the maturity date.

If you forgot to redeem the bond on or before the maturity date the federal tax return for the year of maturity must be amended.  This can be done through a Form 1040X and must be done immediately.  The longer you wait to amend the greater chance of being penalized and possibly a higher amount owed.

Beware of electronic bonds as well.  It is easier to forget about these and their maturity dates can sneak up on you.  Keeping track of maturity dates, yields and interest rates on your bonds can help in the redeeming process and bonds that are ten years old can have a value of 3-9 times that of the original face value.  These earnings can be extremely useful and can help you from withdrawing from other retirement accounts.  Don’t overlook your U.S. Savings Bonds and remember to check those maturity dates.


Posted by: Patrick Carroll at 9:54 AM
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Wednesday, June 03, 2015

Estate Planning

Estate planning is essential, but many individuals delay this because nobody enjoys talking about the end. Many individuals haven’t created a will or started planning at all. If this is the case, it is important to get a jump start, and start planning now. It may be overwhelming, so talking to professional for help will greatly reduce stress and reduce the change for emotional and legal issues.

First, make a will if you have not done so already, and then make a living will and a durable financial and medical power of attorney.

The living will states your wants clearly involving medical treatments; it is basically instructions for what you want. A durable medical power of attorney will allow someone else to take responsibility and make medical decisions for you if you become unable to make these decisions for yourself.

Think about and review your beneficiary designations. Your 401(k), life insurance need to have someone that you trust. Whoever is your beneficiary for your life insurance will get the death benefit when you pass, even if your will states otherwise. It is important to plan ahead so start estate planning as early as possible.

Estate planning can involve a complex web of tax rules and regulations.


Posted by: Patrick Carroll at 4:05 PM
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Wednesday, June 03, 2015

Retirement Planning Can Start with an IRA

IRA accounts are a good “first step” in retirement planning.  When you invest through a traditional or Roth IRA, you give those invested assets the potential to grow with compounding and you also position yourself for present or future tax savings.

An IRA is an account into which various investments can be placed.  It is yours and you control it, as compared to an employer-sponsored retirement account that you lose control over when you leave a job. 

IRAs are tax-advantaged.  In both Roth and traditional IRAs, account earnings compound with tax deferral until withdrawn – that is, they grow without being taxed.  With a traditional IRA, contributions are usually tax-deductible, based on your income, but withdrawals are taxed as ordinary income after age 59 ½.  With a Roth IRA, tax-deductible contributions are not permitted, but your earnings can be withdrawn tax-free.  That is the main difference between a traditional IRA and Roth IRA.  While both give you the chance to build retirement savings with tax advantages, the traditional IRA offers you a sizable tax break today, while the Roth IRA offers you a big tax break tomorrow.

Several variables should be considering when deciding to open a traditional IRA or a Roth IRA.  One key question is whether you will be in a lower tax bracket when you retire.  If you will be, a traditional IRA might be the better choice.  If you have decades to go until retirement and think you will retire to a higher tax bracket than you are in today, then the Roth IRA may be the better option.  When considering your options, chat with a financial professional to help you make the final decision. Then again, you could always open one of each!




Posted by: Patrick Carroll at 4:04 PM
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Wednesday, June 03, 2015

Beware the Ransomware Threat

It may sound like something out of a movie, but cybercriminals are actually holding business as well as household files for ransom.  Hackers are using ransomware to hijack computers and hold files hotage in exchange for payment.  Malware programs such as CryptoWall, CryptoLocker and CoinVault spring into action when you unsuspectingly click on a link in an email, encrypting all the data on your hard drive in seconds.  A “ransom note” appears on your screen informing you that you will need to pay $500, or more, to access your files again.  If you fail to pay, your files will be destroyed.

Worldwide, more than a million computer users have been threatened by ransomware, including a county sheriff’s department in Tennessee. 

If your files are held hostage, should you pay the ransom?  The Department of Homeland Security and most computer security analysts say no, because it may be pointless.  By the time you get the note, your files may be destroyed or encrypted so deeply that you will never be able to read them again.

How do you guard against a ransomware attack?  Back up your data frequently – and make sure the storage volumes are not connected to your computer. Second, make sure your anti-virus software is renewed and kept up to date.  And, most importantly, never click on a mysterious link or attachment.  Ransomware is a kind of cyberterrorism – don’t become the next victim.  


Posted by: Patrick Carroll at 2:41 PM
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Thursday, April 23, 2015

What to look for in a Financial Advisor: Select a financial consultant whose service offerings correspond to your goals

As the profession has evolved over the past 40 years, different types of advisors have emerged with different practice emphasis or specialties.  Different compensation methods have also emerged making it important to look for an advisor with an understanding of the differences.

Are you saving for retirement?  If so, look for a Certified Financial Planner™ or other financial advisor who offers comprehensive financial planning.  Comprehensive financial planning is not merely about the return, it is also about tax and risk management and helping you create the future you want.  Your advisor can help you with long-range planning designed to help you build and preserve your savings.

If you are mostly interested in a strategy that anticipates market changes and pro-actively adjusts your portfolio, you may want an advisor who offers active money management featuring tactical asset allocations.  Tactical asset allocation seeks to continually fine-tune portfolios in light of valuation and economic factors.  The goal with active portfolio management is to take advantage of the better-performing arts of the market.

Are you just seeking a basic financial strategy?  If you are just looking for a one-time financial plan, consider a Certified Financial Planner™ who can offer a “blueprint” along with a hand in implementing and carrying out the plan over time.

If you are looking for a “quarterback” to help you manage your financial life, a wealth management firm may be what you are looking for. Typically, this type of firm unites several specialists in investment management, retirement planning, estate planning and insurance, along with a network of other professionals they can refer to as needed.  In a team effort, they draw on their collective knowledge and abilities to design personalized, long-range strategies for each client.

Today, many financial advisors have fee-based practices and some only charge fees.  In working for fees only, a financial advisor is telling you that his or her business is built on advice and objectivity, not product sales.  Some advisors are still largely paid by commission and others through a mix of fees and commissions.  Keep in mind that if you want an advisor who can offer you insurance products, commissions will be part of the relationship.

Finally, take your time as you search for the right advisor.  Many people hire the first financial advisor they meet.  Shop around until you find an advisor who makes you feel comfortable that your finances are in their hands. 


Posted by: Patrick Carroll at 2:17 PM
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Thursday, April 23, 2015

How Credit Freezes May Help to Combat Identity Theft

If you are worried about getting hacked – and, these days, who isn’t – a credit freeze is a precautionary measure that may be worth considering.

Is a credit freeze an iron-clad, 100% guaranteed way to protect yourself from Identity Theft? Unfortunately, no. Think of credit “freezing” as an increased measure of security. While the term “credit freeze” may bring up some negative connotations in your mind, a credit freeze is actually a positive move you can make to reduce the chances of identity theft.

 The cost is minimal – and now many of us have the option. Years ago, only victims of hackers could request credit freezes. In 2007, that changed. In that year, the three consumer credit bureaus all decided to let consumers request freezes. The fee is nominal – typically $20 or less. Compare that with a credit monitoring service, which can run you over $100 yearly.

How does a credit freeze work? The person wishing to, in essence, seal their credit history would go online and contact one of the three credit bureaus - Equifax, TransUnion or Experian – to request a freeze. The credit bureau would then issue a PIN for purposes of accessing those “frozen” credit reports. So, if a thief wanted to exploit that credit and/or credit history, he or she wouldn’t be able to - without the PIN.

If you need to apply for a loan or a job, you can “thaw” your frozen credit history using your PIN. There is also a fee to thaw your credit, typically about $10 per bureau. Paying that fee may allow you a one-time thaw or a thaw for a specified time period.

Why doesn’t everyone do this? Some people don’t realize they have the option. Others have considered it, but they would rather not put up with a couple of factors. If you constantly open new credit accounts or if your credit history is checked frequently, it is irritating to pay a thaw fee again and again. Then there’s the wait: thawing your credit usually takes a few days.

It is important to recognize that a credit freeze will not keep everyone out of your credit history – it is only as secret as your PIN. Not only that, businesses that have an existing relationship with you can still look inside your credit reports. A freeze is also not a remedy for ID theft – if theft is already occurring in one of your credit accounts, a freeze won’t stop it. A freeze must be requested before the crime is committed.

Should YOU freeze your credit?
The older you are, the more merit the idea may have. Credit freezes are also sometimes requested by divorcing couples when trust is in short supply between ex-spouses. You may want to freeze your credit whether you have been hit by ID theft or not – it may end up saving you money and stress someday. 


Posted by: Patrick Carroll at 2:17 PM
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Thursday, April 23, 2015

Have You Considered Life Insurance?

Many young people do not have life insurance, most people don’t think about the end of their life, especially when they are unmarried or young. It is important to start thinking about getting life insurance when you get married or have kids.

 There are two types of life insurance; term and cash value.  Terms are less expensive, but are limited. They have a designated time period, if you live past the term, you can try to renew them. Term policies will provide a stated benefit if you do pass away during or at the end of the designated time. Cash value premiums are permanent; they gain value during your lifetime and pay out upon the time you pass away. People decide which type of insurance is right for them based on their own needs.


Posted by: Patrick Carroll at 10:32 AM
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Thursday, April 23, 2015

Long Term Care How to Avoid a Financial "Sick Bed" in Retirement

Retirees and current workers may need to plan to pay much more out of pocket for medical care during retirement than they realize. What can you do about this?  For current retirees, options are limited.  Workers still saving for retirement or nearing retirement have more options, if they start planning now. 

How do you start? Assess your future need for healthcare.  While most of us can’t know our future need for healthcare, we often can make a reasonable guess.  What is your health history? Are you overweight? Do you smoke? What is your family health history?  Study your options thoroughly before retiring.  Beyond any plan your employer may offer, what is available on an individual basis? 

 Long Term Care (LTC) insurance may be your best strategy for preserving your retirement savings and income.  According to a study conducted by Northwestern Mutual , the average hourly rate for Home Health Aides is $20.65.  The U.S. state annual average cost for a room in an Assisted Living Facility is $40,469.  The average annual cost  of a private room in a nursing home is $89,812 per year.  Can you imagine spending  this amount of money out of your retirement savings each year?  What if you had to do it for more than one year? The only thing more frightening than the idea of needing nursing home or home health care is the prospect of paying for it.

 According to AARP, approximately 60% of people over the age of 65 will require some type of long term care during their lifetime. So what should you do?  Considering what is at stake, it is important to weigh your future risks against the cost of buying a Long Term Care policy.  The earlier you purchase LTC coverage, the less expensive the premiums, but the longer you will pay them. People purchase coverage before they retire.  Those in poor health or over the age of 80 are frequently ineligible for coverage.  Long Term Care coverage can pay for a variety of nursing, social and rehabilitative services at home or away from home for people with a chronic illness, a disability or who just need assistance bathing, eating or dressing. One drawback is that Long Term Care insurance can be costly. However, they can be quite reasonable compared to real-world costs for long term care.  Considering what is at stake, it is important to weigh your future risks against the cost of buying a policy.

 Please feel free to contact us to discuss your situation and what options will work best for you.

 


Posted by: Patrick Carroll at 10:31 AM
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