Don't pay Uncle Sam more than you have to! Tax day will be here before you know it, so take advantage of these tips before the end of the year to make April 15th a little easier to handle.
Tip 1: Be careful when buying a new mutual fund.
Most mutual funds pay out capital gains and dividend toward the end of the year. It's important to check for potential distributions before you buy a new fund to avoid a possible tax bill. The IRS doesn’t care how long you’ve a fund so you’ll be taxed even if you buy it just before the distribution. And since the share prices of funds and stocks drop by the amount they distribute, missing the dividend won’t affect your future return.
Tip 2: Prepay your property taxes.
Property tax payments aren’t due until the end of January, but you can deduct them this year if you pay them by the end of 2013. However, if you expect to be in a higher tax bracket next year, then it might make sense to wait until January to pay your 2013 property taxes and then prepay next year’s taxes by the end of 2014 in order to double your deduction in a single year.
Tip 3: Pay your January mortgage payment before December 31st.
Paying your January mortgage payment before the end of the year will increase your 2013 mortgage interest deduction by the extra amount of interest you pay in the January payment. This might not be a large deduction depending on your mortgage interest rate and outstanding loan balance, but every deduction counts!
Tip 4: Review your portfolio.
If you have investments in taxable accounts that are worth less than you paid for them, it might make sense to sell them by the end of the year to realize the loss. These losses can be written off against investment gains, and excess losses can be written off against income up to $3,000 then carried over to future years.
Tip 5: Defer income.
If you have your own business and use the cash method of accounting, you might be able to benefit from waiting until the end of the year to invoice customers so you don’t receive the income
– and have to pay taxes on it – until 2014.
To learn more about our company - and find out how we are different from other financial advisors - call (210) 587-6433 or visit www.VannoyAdvisoryGroup.com.
Monday, December 16, 2013
Saturday, November 9, 2013
Tips For Saving Money When Buying Gifts
The holiday season is upon us! This time of year can be stressful, especially if you overspend on gifts and and end up in debt. Use these tips to help you save money and get more out of your holiday spending.
Tip 1: Start shopping early.
Waiting until the last minute to do your shopping can blow your budget in a couple of ways. First, you might end up having to pay full price for gifts if you don't give yourself time to comparison shop and keep an eye out for deals. And second, if you do most of your shopping online, you’ll have to add on the cost of expedited shipping if you wait too long. So start your shopping early this year and give yourself time to look for deals and take advantage of free shipping!
Tip 2: Use your smartphone.
Shopping around for deals has never been easier thanks to technology! If you have a smartphone, apps like ShopSavvy, pic2shop, and Goodzer can help you comparison shop to make sure you’re getting the best price. By scanning the barcode on an item you can see if you can find it for less at another store nearby or online.
Tip 3: Avoid shopping with credit cards.
Studies have shown that people tend to spend up to 30% more when paying with credit cards as opposed to cash. To make sure you don’t blow your budget, decide ahead of time how much you’re going to spend for each person and carry cash when you shop.
Tip 4: Keep your receipts.
Not only will keeping the receipt help someone exchange or return a gift you give them, but it can also save you money. While you're doing your holiday shopping you might find that an item you bought has gone on sale shortly after your purchase. Most stores will refund you the difference if the purchase was made within a couple of weeks, so keep that receipt!
Tip 5: Give the gift of time.
Consider donating your time if you don’t have room in your budget for gift giving. Anyone with young children would probably appreciate you offering to babysit more than a gift anyway! If you’re handy, you can offer to help people with any unfinished projects around their home. And if you’re good with computers you can offer to help people fix their old computers or set up their new gadgets.
To learn more about our company - and find out how we are different from other financial advisors - call (210) 587-6433 or visit www.VannoyAdvisoryGroup.com.
Tip 1: Start shopping early.
Waiting until the last minute to do your shopping can blow your budget in a couple of ways. First, you might end up having to pay full price for gifts if you don't give yourself time to comparison shop and keep an eye out for deals. And second, if you do most of your shopping online, you’ll have to add on the cost of expedited shipping if you wait too long. So start your shopping early this year and give yourself time to look for deals and take advantage of free shipping!
Tip 2: Use your smartphone.
Shopping around for deals has never been easier thanks to technology! If you have a smartphone, apps like ShopSavvy, pic2shop, and Goodzer can help you comparison shop to make sure you’re getting the best price. By scanning the barcode on an item you can see if you can find it for less at another store nearby or online.
Tip 3: Avoid shopping with credit cards.
Studies have shown that people tend to spend up to 30% more when paying with credit cards as opposed to cash. To make sure you don’t blow your budget, decide ahead of time how much you’re going to spend for each person and carry cash when you shop.
Tip 4: Keep your receipts.
Not only will keeping the receipt help someone exchange or return a gift you give them, but it can also save you money. While you're doing your holiday shopping you might find that an item you bought has gone on sale shortly after your purchase. Most stores will refund you the difference if the purchase was made within a couple of weeks, so keep that receipt!
Tip 5: Give the gift of time.
Consider donating your time if you don’t have room in your budget for gift giving. Anyone with young children would probably appreciate you offering to babysit more than a gift anyway! If you’re handy, you can offer to help people with any unfinished projects around their home. And if you’re good with computers you can offer to help people fix their old computers or set up their new gadgets.
To learn more about our company - and find out how we are different from other financial advisors - call (210) 587-6433 or visit www.VannoyAdvisoryGroup.com.
Tuesday, October 29, 2013
Tips For Saving Money And Spending Less
Smart consumers are always trying to find ways to stretch their dollars. After all, the first step of financial success is to live below your means! Follow these tips to help you find ways to save money, spend less, and improve your finances.
Tip 1: Deal With Your Debt
The place to start saving money is by dealing with money you’ve already spent. Overspending can lead to credit card balances, expensive personal loans, and other high-interest debt. Unless you develop a plan to pay off these debts - and then stick to that plan over time - the odds of paying them off aren't in your favor!
Set aside a specific dollar amount for debt repayment each month, and make sure this amount is above the minimums due on all of your debts. Pay the minimum due on each of your debts and then direct the remaining amount toward the debt you'd like to pay off first.
Paying extra toward the debt with the highest interest rate is the best way to go mathematically. But if you're dealing with multiple debts, starting with the debt with the lowest balance might be the best way to go since you'll start reducing the number of your outstanding debts faster.
Tip 2: Implement A Cooling-Off Period
Impulse purchases are a big reason why many of us overspend. Even if your spending habits don't lead to you having debt, they could still hurt you by taking away money that could be used for your financial goals.
One way to cut down on impulse purchases is by implementing cooling-off period. And remember it's not just big-ticket items like TVs, smartphones, and cars that can lead to trouble; smaller purchases add up quickly! Consider implementing a cooling-off period of a week or two before making purchases. Use this time to see how the purchase will affect your budget and to determine whether the purchase is a “need” or just a “want.”
Tip 3: Stick To A Shopping List
How many times have you gone to a store like Wal-Mart or Target for just a couple of items and come out with a cart full of stuff? Making a list before you go shopping – and sticking to it once you’re there – can help you spend less.
It also helps to go directly to the part of the store that has what you're looking for. Wondering around a store aimlessly or carefully going down every aisle are two great ways to end up buying things you don't really need!
Tip 4: Use Automatic Bill Pay
Late payment fees are expensive and can add up quickly. You can make sure you never miss a due date by setting up automatic bill pay for your credit cards, utility bills, phone bills, etc. Not only will this make sure you're never charged a late fee, but it will also free up some of your time.
Most banks offer automatic bill pay, or you could have your bills charged directly to your credit card. I prefer to have my bills charged to my card and then have my card automatically deduct the full statement balance from my checking account at the end of the billing cycle. That way I get reward points and only have to worry about one draft from my bank account each month.
Tip 5: Check For Recurring Charges
It’s easy to lose track of how much you’re paying for magazines, newspapers, credit monitoring services, video services like Netflix and Hulu, and other recurring subscriptions. So go through your bank statements and credit card bills to see what you’re paying for and determine whether or not it’s worth keeping.
To learn more about our company - and find out how we are different from other financial advisors - call (210) 587-6433 or visit www.VannoyAdvisoryGroup.com
Tip 1: Deal With Your Debt
The place to start saving money is by dealing with money you’ve already spent. Overspending can lead to credit card balances, expensive personal loans, and other high-interest debt. Unless you develop a plan to pay off these debts - and then stick to that plan over time - the odds of paying them off aren't in your favor!
Set aside a specific dollar amount for debt repayment each month, and make sure this amount is above the minimums due on all of your debts. Pay the minimum due on each of your debts and then direct the remaining amount toward the debt you'd like to pay off first.
Paying extra toward the debt with the highest interest rate is the best way to go mathematically. But if you're dealing with multiple debts, starting with the debt with the lowest balance might be the best way to go since you'll start reducing the number of your outstanding debts faster.
Tip 2: Implement A Cooling-Off Period
Impulse purchases are a big reason why many of us overspend. Even if your spending habits don't lead to you having debt, they could still hurt you by taking away money that could be used for your financial goals.
One way to cut down on impulse purchases is by implementing cooling-off period. And remember it's not just big-ticket items like TVs, smartphones, and cars that can lead to trouble; smaller purchases add up quickly! Consider implementing a cooling-off period of a week or two before making purchases. Use this time to see how the purchase will affect your budget and to determine whether the purchase is a “need” or just a “want.”
Tip 3: Stick To A Shopping List
How many times have you gone to a store like Wal-Mart or Target for just a couple of items and come out with a cart full of stuff? Making a list before you go shopping – and sticking to it once you’re there – can help you spend less.
It also helps to go directly to the part of the store that has what you're looking for. Wondering around a store aimlessly or carefully going down every aisle are two great ways to end up buying things you don't really need!
Tip 4: Use Automatic Bill Pay
Late payment fees are expensive and can add up quickly. You can make sure you never miss a due date by setting up automatic bill pay for your credit cards, utility bills, phone bills, etc. Not only will this make sure you're never charged a late fee, but it will also free up some of your time.
Most banks offer automatic bill pay, or you could have your bills charged directly to your credit card. I prefer to have my bills charged to my card and then have my card automatically deduct the full statement balance from my checking account at the end of the billing cycle. That way I get reward points and only have to worry about one draft from my bank account each month.
Tip 5: Check For Recurring Charges
It’s easy to lose track of how much you’re paying for magazines, newspapers, credit monitoring services, video services like Netflix and Hulu, and other recurring subscriptions. So go through your bank statements and credit card bills to see what you’re paying for and determine whether or not it’s worth keeping.
To learn more about our company - and find out how we are different from other financial advisors - call (210) 587-6433 or visit www.VannoyAdvisoryGroup.com
Monday, October 7, 2013
The Importance Of Stock Dividends
Stock returns come from two sources: capital gains and dividends. A capital gain occurs when a stock you purchase appreciates in price. Dividends are payments made directly to shareholders and are not affected by the day-to-day changes of a stock's price.
Capital gains tend to be the most exciting portion of stock returns since stock prices fluctuate daily, but dividends have the potential to make a huge difference in your total return over time.
Price Return vs. Total Return
Return figures of indexes like the S&P 500 are often based on the "price return" that only includes price changes of the index (i.e. capital gains or losses). The "total return" figure also includes the dividends that were been paid out by the companies in the index.
The S&P 500 averaged a total return of 9.7% per year over the past 40 years. With dividends removed the return falls to 6.4% per year. So over the past 40 years dividends made up around 1/3 of the total return of large US stocks.
To put this into perspective, a $10,000 investment would grow to over $400,000 if it compounded at 9.7% per year over 40 years. That same investment would only be worth around $120,000 if it grew at 6.4% per year. That’s a huge difference and illustrates the impact of letting stock dividends compound over time.
How To Profit From Dividends
Hold Value Investments – Adding “value” investments to your portfolio can increase your dividend income since they tend to pay more dividends than “growth” investments. Keep in mind that growth and value tend to fall in and out of favor over time, so you might want to have a mix of both in your portfolio.
Don’t React to Market Swings – Instead of panicking out of stocks during downturns, focus on the fact that you’re able to buy shares at a discount with your dividend income. And remember that you won't receive the dividends if you sell your stocks during the downturn.
Be Careful Of Equity-Indexed Products – Some advisors sell annuities and insurance that promise “equity returns” without losses. Unfortunately most of these products use the “price index” that leaves out dividends, so your long-term expected return will be much lower than you might think.
To learn more about our company - and find out how we are different from other financial advisors - call (210) 587-6433 or visit www.VannoyAdvisoryGroup.com.
Capital gains tend to be the most exciting portion of stock returns since stock prices fluctuate daily, but dividends have the potential to make a huge difference in your total return over time.
Price Return vs. Total Return
Return figures of indexes like the S&P 500 are often based on the "price return" that only includes price changes of the index (i.e. capital gains or losses). The "total return" figure also includes the dividends that were been paid out by the companies in the index.
The S&P 500 averaged a total return of 9.7% per year over the past 40 years. With dividends removed the return falls to 6.4% per year. So over the past 40 years dividends made up around 1/3 of the total return of large US stocks.
S&P 500 Returns (12/31/1972 – 12/31/2012)
With Dividends
|
9.7% Per Year
|
Without Dividends
|
6.4% Per Year
|
To put this into perspective, a $10,000 investment would grow to over $400,000 if it compounded at 9.7% per year over 40 years. That same investment would only be worth around $120,000 if it grew at 6.4% per year. That’s a huge difference and illustrates the impact of letting stock dividends compound over time.
Initial Investment Of $10,000 Over 40 Years
@ 9.7% Per Year
|
$405,756
|
@ 6.4% Per Year
|
$119,582
|
*For
educational purposes only and does not take into account taxes, investment costs, and other fees.
How To Profit From Dividends
Hold Value Investments – Adding “value” investments to your portfolio can increase your dividend income since they tend to pay more dividends than “growth” investments. Keep in mind that growth and value tend to fall in and out of favor over time, so you might want to have a mix of both in your portfolio.
Don’t React to Market Swings – Instead of panicking out of stocks during downturns, focus on the fact that you’re able to buy shares at a discount with your dividend income. And remember that you won't receive the dividends if you sell your stocks during the downturn.
Be Careful Of Equity-Indexed Products – Some advisors sell annuities and insurance that promise “equity returns” without losses. Unfortunately most of these products use the “price index” that leaves out dividends, so your long-term expected return will be much lower than you might think.
To learn more about our company - and find out how we are different from other financial advisors - call (210) 587-6433 or visit www.VannoyAdvisoryGroup.com.
Monday, September 9, 2013
3 Things To Consider With Rising Interest Rates
There has been a lot of coverage in the news recently about the Fed’s decision to raise interest rates. With the recent history of record-low rates, it may be difficult to remember that periods of rising rates are normal. In fact, rising rates can create opportunities for investors. So how can you take advantage of the current interest rate climate?
1. Buy Stocks.
Since 1970, there have been 21 periods where the 10-year rate moved a whole percentage point. The S&P 500 had a positive return for 15 of those 21 periods.
Yes, every market is unique, and every spike in interest rates can be due to a wide range of influences. Generally speaking, however, increasing rates will cause investors to sell bonds and buy stocks. Bond prices move inversely with interest rates, so as rates go up, prices come down. Long periods of low rates indicate high relative prices for bonds. When prices start to come down, investors look for more attractive investments. The increase in demand raises stock prices.
2. Rebalance Your Portfolio.
Interest rates affect an organization’s ability to borrow and pay back debt. Low rates improve the ability to pay back loans, so companies borrow more. The increased funds create more spending, which drives corporate development. When rates go up, the concern is that companies will be less likely to borrow. This concern affects pricing within the market.
When market prices are impacted from Fed activity, the movements are typically erratic. The reason for this is that changes in interest rates can create uncertainty, which leads to volatility. The more volatile a market, the more opportunities there are for an investor to buy low and sell high. Active investors can benefit from buying during down swings and selling during peaks.
3. Diversify Your Bonds.
Corporate Bonds – Higher rates are not necessarily bad for companies. An increase in value of a company’s equity (which we’ve seen in times of rising rates) improves a company’s credit quality. This positively affects the value of the company’s debt. Corporate bonds are impacted much more by the company’s financials than external factors.
Short-Term Bonds – Changing interest rates can create opportunities in bonds with different maturities. Shorter duration bonds are typically less sensitive to changes in interest rates. This is primarily because there is less exposure to the long-term effects from Fed activity. A strategy that uses short-term fixed income gives investors the ability to capitalize on rate movements. When these bonds mature, the principal can be reinvested at the higher rates.
Global Bonds – Foreign bonds can be a great way to diversify your U.S. investments. Interest rates in each nation are driven by different factors. By taking a look at the entire global landscape, investors can uncover other opportunities within the bond market. At the same time, investors who diversify can avoid the potential impact of a continuing rise in U.S. rates.
This is a guest post by Kyle Brennan. Kyle is a financial author, specializing in SEO and copywriting services for investment advisors. He received his MBA and MS from Creighton University and is a Level III Candidate with the CFA Institute. If you’d like to contact him, please e-mail kylembrennan@gmail.com.
To learn more about our company - and find out how we are different from other financial advisors - call (210) 587-6433 or visit www.VannoyAdvisoryGroup.com.
1. Buy Stocks.
Since 1970, there have been 21 periods where the 10-year rate moved a whole percentage point. The S&P 500 had a positive return for 15 of those 21 periods.
Yes, every market is unique, and every spike in interest rates can be due to a wide range of influences. Generally speaking, however, increasing rates will cause investors to sell bonds and buy stocks. Bond prices move inversely with interest rates, so as rates go up, prices come down. Long periods of low rates indicate high relative prices for bonds. When prices start to come down, investors look for more attractive investments. The increase in demand raises stock prices.
2. Rebalance Your Portfolio.
Interest rates affect an organization’s ability to borrow and pay back debt. Low rates improve the ability to pay back loans, so companies borrow more. The increased funds create more spending, which drives corporate development. When rates go up, the concern is that companies will be less likely to borrow. This concern affects pricing within the market.
When market prices are impacted from Fed activity, the movements are typically erratic. The reason for this is that changes in interest rates can create uncertainty, which leads to volatility. The more volatile a market, the more opportunities there are for an investor to buy low and sell high. Active investors can benefit from buying during down swings and selling during peaks.
3. Diversify Your Bonds.
Corporate Bonds – Higher rates are not necessarily bad for companies. An increase in value of a company’s equity (which we’ve seen in times of rising rates) improves a company’s credit quality. This positively affects the value of the company’s debt. Corporate bonds are impacted much more by the company’s financials than external factors.
Short-Term Bonds – Changing interest rates can create opportunities in bonds with different maturities. Shorter duration bonds are typically less sensitive to changes in interest rates. This is primarily because there is less exposure to the long-term effects from Fed activity. A strategy that uses short-term fixed income gives investors the ability to capitalize on rate movements. When these bonds mature, the principal can be reinvested at the higher rates.
Global Bonds – Foreign bonds can be a great way to diversify your U.S. investments. Interest rates in each nation are driven by different factors. By taking a look at the entire global landscape, investors can uncover other opportunities within the bond market. At the same time, investors who diversify can avoid the potential impact of a continuing rise in U.S. rates.
This is a guest post by Kyle Brennan. Kyle is a financial author, specializing in SEO and copywriting services for investment advisors. He received his MBA and MS from Creighton University and is a Level III Candidate with the CFA Institute. If you’d like to contact him, please e-mail kylembrennan@gmail.com.
To learn more about our company - and find out how we are different from other financial advisors - call (210) 587-6433 or visit www.VannoyAdvisoryGroup.com.
Thursday, August 29, 2013
How To Handle A Lump Sum Of Money
A bonus, inheritance, or other lump sum of money is a great opportunity to improve your finances if handled properly. Ensure you make the most of your money by following these four steps.
Step 1: Don’t make hasty decisions.
It’s important to realize that you don’t have to make any decisions right away about what you want to do with the money. In fact, you probably shouldn’t. Receiving a lump sum can lead to a lot of strong emotions – especially if it’s an inheritance after a loved one passed away – so it’s a good idea to work through those emotions before you make any decisions.
Step 2: Consider keeping the money separate.
In community property states like Texas, inherited money is a separate asset if you don’t commingle it with your spouse’s assets. Keeping an inheritance separate could help protect it in the case of divorce or if your spouse were to be sued. I don’t practice law so consider consulting an attorney, especially if you’re dealing with a large sum of money.
Step 3: Seek out security while considering your options.
Your primary goal while considering what you want to do with your money should be to keep it safe. You can do this by keeping it in an FDIC insured account like a savings account, money market account, or certificate of deposit (CD). You won’t earn much, but you won’t lose any money either. The FDIC coverage limit is $250,000 so one account is sufficient if you have less than this amount, and you can use more than one bank if you need more coverage.
Step 4: Be careful when getting professional advice.
Do your homework before trusting someone with your money. Ask about qualifications, experience, and credentials when interviewing potential financial advisors. Be sure to ask how advisors are paid and how much they'll earn if you follow their recommendations. This is especially important if you're interviewing a commission or fee-based advisor since hidden sales commissions can be a huge conflict of interest. Working with a fee-only advisor like us will help keep the focus on advice rather than sales. You can get a list of questions to ask a potential advisor from the CFP Board’s website (www.cfp.net).
To learn more about our company - and find out how we are different from other financial advisors - call (210) 587-6433 or visit www.VannoyAdvisoryGroup.com.
Step 1: Don’t make hasty decisions.
It’s important to realize that you don’t have to make any decisions right away about what you want to do with the money. In fact, you probably shouldn’t. Receiving a lump sum can lead to a lot of strong emotions – especially if it’s an inheritance after a loved one passed away – so it’s a good idea to work through those emotions before you make any decisions.
Step 2: Consider keeping the money separate.
In community property states like Texas, inherited money is a separate asset if you don’t commingle it with your spouse’s assets. Keeping an inheritance separate could help protect it in the case of divorce or if your spouse were to be sued. I don’t practice law so consider consulting an attorney, especially if you’re dealing with a large sum of money.
Step 3: Seek out security while considering your options.
Your primary goal while considering what you want to do with your money should be to keep it safe. You can do this by keeping it in an FDIC insured account like a savings account, money market account, or certificate of deposit (CD). You won’t earn much, but you won’t lose any money either. The FDIC coverage limit is $250,000 so one account is sufficient if you have less than this amount, and you can use more than one bank if you need more coverage.
Step 4: Be careful when getting professional advice.
Do your homework before trusting someone with your money. Ask about qualifications, experience, and credentials when interviewing potential financial advisors. Be sure to ask how advisors are paid and how much they'll earn if you follow their recommendations. This is especially important if you're interviewing a commission or fee-based advisor since hidden sales commissions can be a huge conflict of interest. Working with a fee-only advisor like us will help keep the focus on advice rather than sales. You can get a list of questions to ask a potential advisor from the CFP Board’s website (www.cfp.net).
To learn more about our company - and find out how we are different from other financial advisors - call (210) 587-6433 or visit www.VannoyAdvisoryGroup.com.
Thursday, April 18, 2013
2013 IRA Cheat Sheet - Get A Head Start On This Year's Contribution!
Did you remember to make a 2012 IRA contribution by the April 15th deadline? If not, you're not alone.
A recent study found that 58% of Americans don't have a retirement plan. The study also revealed that 20% of Americans plan on relying on Social Security for all of their retirement needs. That's a shocking revelation given the fact that the current average Social Security benefit is only $1,237 per month!
Don't let retirement sneak up on you. Even if you're only a few years away from leaving the workforce, there's still time to improve your financial outlook in retirement. Starting an IRA in 2013 is a great way to do it!
The following cheat sheet will help you determine which IRA is best for your financial situation.
The study sited was conducted by Deloitte Center for Financial Services. The 2013 IRA Contribution Cheat Sheet is used with permission from Greene IRA Success.
To learn more about our company - and find out how we are different from other financial advisors - call (210) 587-6433 or visit www.VannoyAdvisoryGroup.com.
A recent study found that 58% of Americans don't have a retirement plan. The study also revealed that 20% of Americans plan on relying on Social Security for all of their retirement needs. That's a shocking revelation given the fact that the current average Social Security benefit is only $1,237 per month!
Don't let retirement sneak up on you. Even if you're only a few years away from leaving the workforce, there's still time to improve your financial outlook in retirement. Starting an IRA in 2013 is a great way to do it!
The following cheat sheet will help you determine which IRA is best for your financial situation.
Created by 2013 Tax Rules
The study sited was conducted by Deloitte Center for Financial Services. The 2013 IRA Contribution Cheat Sheet is used with permission from Greene IRA Success.
To learn more about our company - and find out how we are different from other financial advisors - call (210) 587-6433 or visit www.VannoyAdvisoryGroup.com.
Thursday, March 28, 2013
2012 IRA Cheat Sheet - Don't Let Confusion Keep You From Contributing!
A recent survey found that almost half of Americans have little or no confidence that they'll be financially prepared for retirement. Many individuals in this situation plan on working longer, but that option could be cut short by bad health, disability, or loss of a job.
If you haven't started saving for retirement - or haven't saved enough - now's the time to start, and an individual savings account (IRA) is a great investment vehicle to use.
The deadline for making a 2012 IRA contribution is April 15, 2013, so you need to hurry if you want to contribute for last year. Confused about which IRA to select? Here's an excellent cheat sheet that will help you determine which IRA is best for your financial situation.
The study sited was conducted by the Employee Benefit Research Institute. The 2012 IRA Contribution Cheat Sheet was used with permission from Greene IRA Success.
To learn more about our company - and find out how we are different from other financial advisors - call (210) 587-6433 or visit www.VannoyAdvisoryGroup.com.
If you haven't started saving for retirement - or haven't saved enough - now's the time to start, and an individual savings account (IRA) is a great investment vehicle to use.
The deadline for making a 2012 IRA contribution is April 15, 2013, so you need to hurry if you want to contribute for last year. Confused about which IRA to select? Here's an excellent cheat sheet that will help you determine which IRA is best for your financial situation.
Created by Tax Code 2013
To learn more about our company - and find out how we are different from other financial advisors - call (210) 587-6433 or visit www.VannoyAdvisoryGroup.com.
Tuesday, March 5, 2013
Make The Most Of Your Tax Refund
For many Americans, tax season means looking forward to a refund when they file their taxes. If you're one of the filers that will be getting money back, I have some good and bad news for you.
First, the bad news. A tax refund represents money you overpaid throughout the year, so it's basically an interest-free loan to Uncle Sam. Instead of overpaying and receiving a refund, you can use the IRS Form W-4 to adjust your tax withholding and keep more of your money throughout the year.*
The good news is that getting a tax refund offers you an opportunity to make some smart financial decisions. The average tax refund was around $2,800 in 2012, so many people receive enough to make a huge positive impact on their financial situation.
Here are a few smart options to use your tax refund.
Option 1. Pay off debt.
Paying off debt is the first thing to consider doing with your refund since dedicating a lump sum toward your debt is a great way to get started down the road to eliminating it completely. A low interest mortgage or student loan is one thing, but what about a high interest credit card or other loan?
Paying off high interest debt is an excellent financial move. Any extra dollar you put toward a debt will save you that percentage of interest over the next year. For example, if you have a credit card with an 18% interest rate, you'd essentially be earning an 18% return on every dollar you put toward that debt since you’d avoid that interest.
Option 2: Build your emergency fund.
Most people know that you should have from 3 to 6 months in a cash reserve, but not everyone has a reserve. A tax refund could be used to start a reserve if you don’t already have one, or use it to replenish your cash reserve if you’ve used some of the funds over the past year. You can check www.DepositAccounts.com or www.BankRate.com to find a no-fee, high-interest savings or money market account to use for your emergency fund.
Option 3: Fund an Individual Retirement Account (IRA).
You have until April 15th to make an IRA contribution for 2012, but if you miss that deadline you can still get a head start on 2013. Funding an IRA is a great way to prepare for retirement, and you can choose between Traditional IRAs that give you a tax deduction now or Roth IRAs that can provide tax-free income in retirement.
The maximum contribution for 2012 is $5,000, or $6,000 over 50, as long as you had at least this amount of earned income for the year. Both contribution limits are $500 higher for 2013, for a total of $5,500 and $6,500 respectively.
Option 4: Fund your college savings.
It’s often difficult to juggle saving for retirement with other financial goals like preparing for your children’s college education expenses. Using a tax refund as a lump sum contribution toward college savings can be a great way to save money for college without adding an extra monthly bill. You can go to www.savingforcollege.com to learn more about the different types of college savings plans.
*Be sure to consult your tax preparer for help determining your tax withholding. The IRS doesn't like it when you underpay!
To learn more about our company - and find out how we are different from other financial advisors - call (210) 587-6433 or visit www.VannoyAdvisoryGroup.com.
First, the bad news. A tax refund represents money you overpaid throughout the year, so it's basically an interest-free loan to Uncle Sam. Instead of overpaying and receiving a refund, you can use the IRS Form W-4 to adjust your tax withholding and keep more of your money throughout the year.*
The good news is that getting a tax refund offers you an opportunity to make some smart financial decisions. The average tax refund was around $2,800 in 2012, so many people receive enough to make a huge positive impact on their financial situation.
Here are a few smart options to use your tax refund.
Option 1. Pay off debt.
Paying off debt is the first thing to consider doing with your refund since dedicating a lump sum toward your debt is a great way to get started down the road to eliminating it completely. A low interest mortgage or student loan is one thing, but what about a high interest credit card or other loan?
Paying off high interest debt is an excellent financial move. Any extra dollar you put toward a debt will save you that percentage of interest over the next year. For example, if you have a credit card with an 18% interest rate, you'd essentially be earning an 18% return on every dollar you put toward that debt since you’d avoid that interest.
Option 2: Build your emergency fund.
Most people know that you should have from 3 to 6 months in a cash reserve, but not everyone has a reserve. A tax refund could be used to start a reserve if you don’t already have one, or use it to replenish your cash reserve if you’ve used some of the funds over the past year. You can check www.DepositAccounts.com or www.BankRate.com to find a no-fee, high-interest savings or money market account to use for your emergency fund.
Option 3: Fund an Individual Retirement Account (IRA).
You have until April 15th to make an IRA contribution for 2012, but if you miss that deadline you can still get a head start on 2013. Funding an IRA is a great way to prepare for retirement, and you can choose between Traditional IRAs that give you a tax deduction now or Roth IRAs that can provide tax-free income in retirement.
The maximum contribution for 2012 is $5,000, or $6,000 over 50, as long as you had at least this amount of earned income for the year. Both contribution limits are $500 higher for 2013, for a total of $5,500 and $6,500 respectively.
Option 4: Fund your college savings.
It’s often difficult to juggle saving for retirement with other financial goals like preparing for your children’s college education expenses. Using a tax refund as a lump sum contribution toward college savings can be a great way to save money for college without adding an extra monthly bill. You can go to www.savingforcollege.com to learn more about the different types of college savings plans.
*Be sure to consult your tax preparer for help determining your tax withholding. The IRS doesn't like it when you underpay!
To learn more about our company - and find out how we are different from other financial advisors - call (210) 587-6433 or visit www.VannoyAdvisoryGroup.com.
Monday, February 18, 2013
Tips For Finding Tax Preparer
Many Americans have already started preparing their taxes even though the deadline to file isn't until April 15th. While doing your own taxes might save you some money, the penalties and interest charged by the IRS for even a simple mistake can wipe out years of savings. Working with a tax preparer can free you from the stress of doing your taxes and help make sure they're done correctly.
Here are a few tips to follow when looking for a tax preparer.
Tip 1: Check the tax preparer’s qualifications.
An easy way to start your search for a qualified tax preparer would be to look for an Enrolled Agent (EA), Certified Public Accountant (CPA), or tax attorney. Anyone that carries one or more of these credentials will have gone through a lot of education, testing, and is required to do continuing education.
Just because someone isn't an EA, CPA, or attorney doesn't mean that he or she isn't qualified to do your taxes. It just means that you'll need to do more due diligence. One way to do this is ask if he or she is affiliated with any professional association that requires testing and/or continuing education.
Tip 2: Check the preparer’s history.
You can check up on an EA's background through the IRS Office of Enrollment. In Texas you can research a CPA’s history through the Texas State Board of Public Accountancy and a tax attorney’s history through the State Bar of Texas. You can also contact your local Better Business Bureau to see if there are any complaints against a tax preparer you’re considering.
Tip 3: Ask about fees.
Be sure to select a tax preparer that charges a flat fee, by the hour, or similar method. Avoid preparers that charge a percentage of the refund or make wild claims about how large of a refund they can get you. You want to make sure that the preparer you select doesn't have an incentive to bend the law to get you a larger refund.
Tip 4: Ask about availability after April 15th.
Many tax preparers are only available during tax season. This is especially true of preparers that work for many of the large franchises. If you want someone that will be available after April 15th – and this is important if you’re a business owner or have complicated tax situation – then make sure the person you’re working with will be available throughout the year.
Tip 5: Review the return before signing it.
You’re still responsible for the accuracy of the information on your tax return even if you pay someone to prepare it for you, so make sure you understand everything on the form before signing it. Ask questions about anything you're unsure of and never sign a blank return or tax form.
To learn more about our company - and find out how we are different from other financial advisors - call (210) 587-6433 or visit www.VannoyAdvisoryGroup.com.
Here are a few tips to follow when looking for a tax preparer.
Tip 1: Check the tax preparer’s qualifications.
An easy way to start your search for a qualified tax preparer would be to look for an Enrolled Agent (EA), Certified Public Accountant (CPA), or tax attorney. Anyone that carries one or more of these credentials will have gone through a lot of education, testing, and is required to do continuing education.
Just because someone isn't an EA, CPA, or attorney doesn't mean that he or she isn't qualified to do your taxes. It just means that you'll need to do more due diligence. One way to do this is ask if he or she is affiliated with any professional association that requires testing and/or continuing education.
Tip 2: Check the preparer’s history.
You can check up on an EA's background through the IRS Office of Enrollment. In Texas you can research a CPA’s history through the Texas State Board of Public Accountancy and a tax attorney’s history through the State Bar of Texas. You can also contact your local Better Business Bureau to see if there are any complaints against a tax preparer you’re considering.
Tip 3: Ask about fees.
Be sure to select a tax preparer that charges a flat fee, by the hour, or similar method. Avoid preparers that charge a percentage of the refund or make wild claims about how large of a refund they can get you. You want to make sure that the preparer you select doesn't have an incentive to bend the law to get you a larger refund.
Tip 4: Ask about availability after April 15th.
Many tax preparers are only available during tax season. This is especially true of preparers that work for many of the large franchises. If you want someone that will be available after April 15th – and this is important if you’re a business owner or have complicated tax situation – then make sure the person you’re working with will be available throughout the year.
Tip 5: Review the return before signing it.
You’re still responsible for the accuracy of the information on your tax return even if you pay someone to prepare it for you, so make sure you understand everything on the form before signing it. Ask questions about anything you're unsure of and never sign a blank return or tax form.
To learn more about our company - and find out how we are different from other financial advisors - call (210) 587-6433 or visit www.VannoyAdvisoryGroup.com.
Monday, January 14, 2013
It's Not Too Late To Reduce Your 2012 Taxes
Did the New Year sneak up on you? Were you too busy over the holidays to do any year-end tax planning? If so, don't worry! There are a few things you might still be able to do to reduce your 2012 tax bill.
Contribute to a Traditional IRA
One of the easiest tax deductions you can still take for last year is to contribute to a Traditional Individual Retirement Account (IRA). To claim an IRA deduction for 2012 you need to make the contribution by April 15th and designate it is a “prior-year contribution” when you deposit the money.
(Note that you could contribute to a Roth IRA instead of a Traditional IRA, but you don't get tax deductions for Roth contributions. You can learn more about IRAs here.)
The maximum contribution for 2012 is $5,000, or $6,000 if you’re over 50, as long as you had at least this amount of earned income for 2012. Keep in mind that your ability to deduct the contribution will depend on things like your filing status, whether you have a retirement plan at work, and your income level.
Contribute to a Health Savings Account (HSA)
If you have a high deductible health insurance plan you might be eligible to contribute to a health savings account, or HSA. Contributions are tax-deductible, money inside an HSA isn’t subject to taxes, and withdrawals are tax-free if they are for qualified medical expenses. Your HSA account balance can be rolled over to future years to save for future expenses.
For 2012, individuals can contribute up to $3,100 and families can contribute up to $6,250. You can contribute an extra $1,000 if you’re age 55 or older. Just like IRA contributions, contributions to HSAs for the 2012 tax year must be made by April 15.
Contribute to a SEP IRA
If you’re a business owner, there is still time to set up and fund a Simplified Employee Pension (SEP) IRA. The maximum contribution for 2012 is 25% of your wages up to a maximum contribution of $50,000, so this has the potential to be a huge deduction.
If you have employees you have to contribute the same percentage to their SEP IRAs as you contribute to yours, so keep this in mind when deciding how much to contribute. Contributions to SEP IRAs must be made by your tax-filing deadline including extensions, so you could potentially have up until October 15, 2013 to take this deduction on your 2012 tax return.
To learn more about our company - and find out how we are different from other financial advisors - visit www.VannoyAdvisoryGroup.com or call us at (210) 587-6433.
Contribute to a Traditional IRA
One of the easiest tax deductions you can still take for last year is to contribute to a Traditional Individual Retirement Account (IRA). To claim an IRA deduction for 2012 you need to make the contribution by April 15th and designate it is a “prior-year contribution” when you deposit the money.
(Note that you could contribute to a Roth IRA instead of a Traditional IRA, but you don't get tax deductions for Roth contributions. You can learn more about IRAs here.)
The maximum contribution for 2012 is $5,000, or $6,000 if you’re over 50, as long as you had at least this amount of earned income for 2012. Keep in mind that your ability to deduct the contribution will depend on things like your filing status, whether you have a retirement plan at work, and your income level.
Contribute to a Health Savings Account (HSA)
If you have a high deductible health insurance plan you might be eligible to contribute to a health savings account, or HSA. Contributions are tax-deductible, money inside an HSA isn’t subject to taxes, and withdrawals are tax-free if they are for qualified medical expenses. Your HSA account balance can be rolled over to future years to save for future expenses.
For 2012, individuals can contribute up to $3,100 and families can contribute up to $6,250. You can contribute an extra $1,000 if you’re age 55 or older. Just like IRA contributions, contributions to HSAs for the 2012 tax year must be made by April 15.
Contribute to a SEP IRA
If you’re a business owner, there is still time to set up and fund a Simplified Employee Pension (SEP) IRA. The maximum contribution for 2012 is 25% of your wages up to a maximum contribution of $50,000, so this has the potential to be a huge deduction.
If you have employees you have to contribute the same percentage to their SEP IRAs as you contribute to yours, so keep this in mind when deciding how much to contribute. Contributions to SEP IRAs must be made by your tax-filing deadline including extensions, so you could potentially have up until October 15, 2013 to take this deduction on your 2012 tax return.
To learn more about our company - and find out how we are different from other financial advisors - visit www.VannoyAdvisoryGroup.com or call us at (210) 587-6433.
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