Fourth Quarter 2014

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Welcome to the fourth quarter of 2014. It’s been an interesting year so far. Let’s jump right in. First, if you own a small business, like me, your third quarter estimated tax payments are due to your buddies at the IRS by October 15. By now, you should start having a little bit of an idea how your income might go for the year. If you are doing more business than last year, consider bumping your payment to keep up with your higher income. On the other hand, if business is off, then back that withholding off a bit too. Also, if you are a small business owner and you don’t get your health insurance through a spouse or other plan, don’t forget about the Obamacare open enrollment period for 2015, which runs from November 15, 2014 to February 15, 2015. You got an extra extension into April this year while the government worked out some bugs. That won’t necessarily be the case this year, so double-check your plan, or see what the new ones are. You can go to HealthCare.gov and they’ll redirect you to your state exchange if necessary. September Jobs Number The September labor report is due …

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RMD Rules Required Minimum Distributions Guide

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Why Are There RMDs or Required Minimum Distributions? Required minimum distributions, or RMD, is the minimum amount you must withdraw from certain retirement accounts each year. To understand why there are RMDs, it helps to look at things from the government’s perspective. The government runs by collecting tax dollars. However the government also encourages certain behaviors in its citizens and companies by permitting certain tax breaks. (One behavior this encourages is big donations to politicians by companies to get and preserve tax breaks, but that is a topic for another day.) One behavior the government tries to encourage is getting people to save for retirement. It does this by providing several tax-advantaged accounts taxpayers can use to save for retirement, including 401k plans, IRA accounts, and Roth IRA accounts. In all three of these accounts, the interest, earnings, and capital gains are exempt from taxes each year so long as the money stays in the account. Not paying taxes is the incentive to save for retirement. If you do take the money out of the account before you turn 59 1/2 years old, then you have to pay a 10 percent tax penalty. That is the incentive to not take …

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Youth Accounts at Banks

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Banks have long offered various types of checking accounts and savings accounts. Some of these accounts are actually fully developed products that are different from other offerings. Others are merely gimmicks, and some bank account types lie in between. Youth Accounts Banking One such niche account offered at many banks is a youth account. These accounts are typically broken up into youth savings accounts and youth checking accounts. Just what each account is, and how it differs from other accounts depends on the bank. For the most part, special bank accounts for young people are joint accounts with limited access for one person. For most purposes, a person under the age of 18 cannot legally enter into a contract. No contract, or banking agreement, then no account, not even a kid bank account. Instead, in order to open a kid savings account or student checking account, the bank will require an adult’s signature. No matter what it gets called on the statement, what you have really just opened is a joint account with the child. So, then what is the point of a youth accounts? As an adult, you might not like the idea of joint account with your child. …

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Apple iPhone 6 Stock Update

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The real information about the possible impact on Apple stock from the iPhone 6 and iPhone 6 plus is in last week’s article, but since Apple released some new data, I’ll do a little update here. In particular, I’m going to a take a look at how some of what is “out there” applies to the things we wanted to watch for to see what, if any, impact the new iPhones have Apple stock. If this doesn’t make sense, it’s because you didn’t read the earlier article about whether now is a good time to invest in Apple stock. Go ahead, click the link, read it, and then hit the back button. We aren’t going anywhere 🙂 The original “Apple Event” where the new iPhones, Apple Watch, and Pay Now were announced was September 9th. iPhone Supply – So, we talked about sales of the iPhone. There wasn’t anybody who thought that Apple would sell anything less that “millions” of iPhone 6 and iPhone 6 Plus. The company released data showing just that on Monday. So, how is the supply of iPhones working out? There’s conservative, there’s underestimated, and there’s artificially creating an iPhone shortage. Which one is is? Apple …

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iPhone 6 and Apple Stock

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I wasn’t going to write this post, but I’ve gotten just enough emails and messages on the subject of what the new iPhone 6 and iPhone 6 Plus means for Apple stock that I thought I’d post some quick thoughts for readers here. First, the old saying in investing is to buy the rumor and sell the news. As with all Wall Street wisdom, this is a gross oversimplification and only partially true. However, consider that the time to buy the POTENTIAL of the new iPhone and Apple Watch was BEFORE the big event. The risk, of course, was that if the information was disappointing, the stock would have likely taken a  downturn. As it was, people, and analysts, seemed pleased with what they saw, and the stock has already reacted positively. What this means, is that if you wanted to invest for the short-term based on the fact that felt Apple’s new technology would be good, you are too late. Now, if you are looking to invest in Apple NOW, for the short-term, your investment will depend on: a) How well the products are received by the real consumer. – Potential risks here involve a new “antenna-gate” type of …

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How Much You REALLY Need to Retire

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In all my years as a financial planner, I never met someone who had “enough” money to retire when they were in their 40s or even 50s. Yet, every year, I saw clients who either were already retired, or were retiring. The interesting part was that they didn’t have “enough” money to retire either, no matter how much money they were stuffing into a 401k plan or IRA account. The glitch in this system is the assumption about how much money you’ll need and where it will come from. How Much to Retire Determining how much money you need to retire, which in some circles is getting called, your magic number for retirement, is just two calculations, but the data is filled in with several guesses. The only math comes in the form of a time value of money calculation in order to reach a single number that is calculated form a present value calculation. Simple right, well it would be, if we knew: How much money you’ll spend each year in retirement How long you will live Unfortunately, we don’t know either of those two things, so we guess. Guessing doesn’t sound very like something an advisor or planner …

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Cost of Raising a Child

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Every year, the United States Department of Agriculture publishes a report about how much it costs to raise a child until age 18 in America. Of course, the information is only an average, and even then, to make any sort of calculation, a lot of assumptions have to be made. After all, raising a child is a very personal experience and the cost varies a lot based on the choices you make, not to mention variations based on where you live. It obviously takes a lot of time to compile all the necessary data, so the report with numbers for 2013, was just released here in fall of 2014. You can find the full-report, or cute graphics containing the official report’s details at the USDA’s website. Raising A Child Costs Money It’s no surprise to any parent that kids can be expensive. Of course, there is food and clothing. Then, there is education, insurance, school supplies, birthday parties, and so on and so on. So, how much does it cost to raise a child from birth to 18? The report breaks out various categories, but the quick version is this: Urban West $261,330 Urban Midwest $240,570 Urban Northeast $282,480 Urban …

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Second Quarter GDP Stays Good

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We’ve talked a bit about the economic numbers that came out this summer. In large part this is because the economy is in a transition period. After a seemingly unending drift (upward, but drifting nonetheless), the economy might, MIGHT, finally be sputtering to life. However, economic numbers can be tricky. Earlier this year, the GDP numbers unexpectedly showed a major contraction. Most analysts dismissed this as an abberition due to the harsh weather experienced in the Northeast during the first quarter. At the half way point of the year, the economy looked like it was at least heading in the right direction. When the second quarter numbers came out, they were pretty good, but there was fear that the revisions might not be so pleasant. Revised Second Quarter GDP In order to produce numbers for each quarter without a significant delay, economic reports are released based upon preliminary data. It is accepted that these numbers are likely to be revised later as economic figures that aren’t as readily available come in. Typically, the adjustments to numbers like the GDP are relatively small. Big adjustments are unusual and come with lengthy explanations about what went wrong. The final numbers are issued …

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Are You Paying for College Wrong?

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There is an article floating around on Marketwatch titled Parents You’re Paying for College Wrong. This kind of article is one of the reasons I write Finance Gourmet. After being a Financial Planner in Denver for several years (and, yes, I was a Certified Financial Planner), I saw a lot of different financial situations from a lot of different people. I realized two things: Too often useful information gets bogged down and confusing because it spends so much time covering small, infrequent, exceptions to the rule. On the other hand, useful information is often harmful because it glosses over all of the possibilities in favor of hard and fast statements that aren’t necessarily accurate for everyone. If those to reasons seem a bit contradictory, then you understand why writing personal financial advice can be tricky. How To Pay for College The Wrong Way According to the article on Marketwatch, a lot of parents are “paying for college in ways that experts say aren’t smart.” Fair enough, that’s probably true. However, the way the article goes on to explain what is “smart,” makes it sound like you are a fool for doing certain things that are not foolish whatsoever. The important thing …

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How People Pay for College

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Here is an interesting infographic from Sallie Mae, the quasi-government entity that handles most federal student loans today. It goes with an upcoming post about financial articles and how people are supposedly paying for college “the wrong way.” While you’re at it, check out our article about opening a 529 plan account online to save for your child’s college education.