June 2014

24 Jun

Donating Highly Appreciated Stock

It can give you a tax break. It can give a charity a tax break in the future.

Why sell shares when you can gift them? If you have appreciated stocks in your portfolio (and you hold them in a nonqualified account that doesn't get special tax treatment), then you might want to consider donating those shares to charity rather than selling them someday.

Why, exactly? Donating appreciated securities to a tax-exempt charity can result in a pair of tax breaks. If you have held the stock for more than a year, you can deduct the fair market value of the stock in the year that you make the donation. If the charity is tax-exempt, it won't face capital gains tax on the stock if it sells it in the future. Again, this is all provided you donate the shares to the charity out of a nonretirement account (and not out of a qualified retirement plan such as an IRA).1

24 Jun

Classic Investing Mistakes

How many can you prevent yourself from making?

Year after year, in bull and bear markets, investors make some all-too-common blunders. They have been written about, talked about and critiqued at some length—and yet they are still made. You can chalk them up to psychology, human nature, perhaps even a degree of peer pressure. You just don't want to find yourself making them more than once.

24 Jun

The Troubling National Debt

It is projected to grow even larger. What does that imply for the economy?

In 1835, something financially remarkable happened: The federal government paid off the national debt.1

It hasn't happened since. Through myriad presidential administrations and economic cycles, the national debt has persisted. Wars, depressions and recessions have all helped send it higher, and while it can shrink in the short term, it isn't going away. Currently it stands at $17.6 trillion, with $12.6 trillion of it held by the public.2

13 Jun

The Value of Roth IRA Conversions in a Down Market

One upside to a down market is that it can be an ideal time to do an in-kind Roth IRA conversion, which involves transferring assets directly from your traditional IRA to your Roth IRA without liquidating the investments. Why is this beneficial? By doing a conversion in a down market, your depressed shares will incur less of a tax burden than if they were transferred at a higher price. Simply put, you will be able to transfer more shares for the same amount of tax.

02 Jun

How to Title Your Assets

How you title your assets is an important part of your financial plan. While it may seem logical to maintain accounts in your own name—after all, the assets belong to you—doing so can add challenges when it comes time to distribute your estate. First, probate can be costly and time consuming, and should be avoided if possible. Second, when titled correctly, the cost basis of some assets can be stepped up to fair market value—which means that your inheritor could be spared from having to pay capital gains taxes when your estate is dispersed.