I know many people reading this blog post have never engaged a professional financial planner before, and may be a bit anxious about what to expect. So let me tell you all about working with a financial planner at CameronDowning.
You can book an appointment online, or just call in. One of our support staff will ask you several questions to determine if we are equipped to advise you properly. This will involve asking you a series of questions: What is your main concern? What is your current financial status (assets; debts). These aren't to be nosy, but to prepare for your meeting with a financial planner. You'll be given a list of documents to upload to a secure vault in preparation for that meeting.
When you have your first meeting - in person or virtually - it will be with a financial planner. You'll have a deeper discussion then, and share more of your...
Although there are many similarities these are two very different kinds of insurance. Disability insurance coverage protects wages lost due to an illness or accident. In contrast, long term care insurance is designed to help cover costs of health care services. Typically, health services are in your home, a nursing home, a rehabilitation center, or an assisted living facility.
Disability insurance coverage provides replacement for lost wages when you are unable to work. Your ability to earn a living – reflecting your professional education and experience – are what’s insured. Long term care insurance, in contrast, addresses expenses associated with palliative medical care services in your home, a nursing home, a rehabilitation center, or an assisted living facility.
Disability insurance coverage may address either short term...
One of the most popular ways to save for retirement is in a Roth Individual Retirement Account, or a Roth IRA. Roth IRAs first came out in 1997 after being championed by former Senator William V. Roth of Delaware. Tax-wise, a Roth IRA is basically like a Traditional IRA but backwards. In a Traditional IRA, just like 401ks, you generally get an up-front tax deduction when making a contribution. The account grows over time, tax-deferred. You don’t pay any taxes as the account grows. When it’s time to retire, whatever you take out of a Traditional IRA is taxable at your ordinary income rate.
Let’s do some basic math: if your tax bracket at retirement is 24% and you distribute $1000 from your Traditional IRA you will get to keep $760. The IRS keeps $240. Remember, since contributions are made before tax, distributions from a Traditional IRA are fully taxable.
The Roth IRA basically works the other way around....
A Roth conversion means taking your Traditional IRA, or some portion of it, and turning it into a Roth IRA. Whatever dollars are converted become taxable to you right then and there.
In a previous post we went into the Roth IRA – how it works, and how to make it work for you. In this blog post we delve into the topic of Roth conversions. Before launching in, though, we’ll begin with a brief review of IRS rules on getting money into your Roth IRA.
Your contribution limits are $6000 year or $7000 if age 50 or older (2020). You must have earned income to contribute. This is W-2 income or income from a trade or business. In other words, investment earnings and Social Security income do not count. Additionally, the IRS begins to phase out a taxpayer's ability to make a Roth contribution if his adjusted gross income, as a single taxpayer, exceeds $124,000, or $196,000 for...
In this post I’m tackling a tax topic: The difference between ordinary income taxation and capital gains taxation. What’s the difference and why is it important to know? One word: taxes.
The IRS taxes your income, as you know, but it also taxes profits. If you buy a stock for, say, $100/share, and then sell it for $120/share, you have a $20 gain which is taxable. The original $100 purchase price is what’s called your basis in the stock. Basis is increased by sales taxes paid on the item, any legal fees associated with its purchase – even inbound freight costs. When you sell at a profit, you want your basis to be as high as possible, to reduce your taxes on the gain.
Let’s look at how that $20 gain is taxed. It all depends upon your holding period for the asset – how long you owned it. If you held the asset for more than one year, then it is taxed at a capital gains rate. That rate...
In a previous entry I discussed the difference in taxation of capital gains property vs. ordinary income property. That piece discussed what happens on your form 1040. This piece looks ahead to your eventual mortality. What happens when you die and bequeath these assets to your heirs?
Previously I used the example of a stock that I bought at $100. Now say I leave it to my daughter at my death, and it is trading at $120 on the day I die. How is she taxed? Since stock is capital gains property, she gets a step up in basis to the date of death value. This means that she does not inherit my original basis of $100 – on the date of my death the stock is worth $120, so $120 becomes her new basis. That $20 gain is therefore never taxed! She could turn around and sell the stock the next day for $120 and have no taxable event. If she sold it two months later for $130/share, she'd have a $10 long...
With this blog post I’d like to share some thoughts about investment risk tolerance.
Generally, we think about risk as a bad thing – something we want to avoid. “I won’t drive faster and risk a speeding ticket”, and, “No, baby, that dress doesn’t make you look fat,” are two examples of conscious choices made to avoid unpleasant consequences.
The context for risk in this post is investment risk – I put money out there in some type of vehicle, and expect it to be returned to me, and then some. And then some can be interest, dividends, capital gains, and lottery winnings.
Channeling David Letterman and all those Top Ten lists. I thought it might be fun to compile one of my own. To wit:
This is a list compiled after about 25 years of experience.
You eat out way too much. This is what your kitchen is for! If you get a sandwich and a coffee in Miami on a daily basis, you’ve spent ($10/day * 20 days) $200 in a month! How about all that fast food? I’m seeing families who spend several hundred dollars each month eating out, when a little planning and Publix time could save much of that money and everyone would be healthier and richer for it.
You don’t have enough life insurance. What happens if you get hit by a bus? Are your existing savings enough for your surviving spouse and children? Term insurance is relatively cheap and easy to obtain. No excuses. See Mistake #5.
You don’t have an emergency fund....
Picture the scene: My wife has a group of friends visiting. I come home from work, greet everyone, and have a glass of wine to be sociable. At some point I announce that I’ll retire to my study for the evening. What does that verb mean – to retire? It means to go away or apart; to withdraw; to be in a place of privacy or shelter. It can also simply mean that I’m going to bed for the night. It isn’t until about three generations ago that the definition expanded to mean cessation of paying work.
Up until WWII people simply worked until they could no longer do so. Retirement, as we currently think of it, is a relatively new concept. When extended families lived together on the farm, everyone worked and contributed in some way. When the same families moved to the cities at the beginning of the last century, it was the same way. So how did our current concept...
In this blog post I want to go just a little bit beyond the basics of traditional IRAs and how they work.
An IRA is an individual retirement account by definition, with the emphasis on individual. One IRA means one owner, so there can be no joint titling. In order to contribute to an IRA you must have earned income. That is, income from compensation defined as wages, salaries, tips, alimony, and separate maintenance payments. These are all earned income. Income from capital gains, dividends, and interest is not considered earned income by the IRS – they classify it as investment income.
Your contribution limit is $6000 per year (2020). If you’re over 50 an additional $1000 catch up contribution is allowed, so the limit becomes $7000. Age limits on contributions have been repealed in the 2020 CARES Act, so as long as you have earned income you can contribute.