Financial Advisors – Business News

5 places to retire where you can feel rich, yet live on a budget

admin — Fri, 29 Mar 2019 19:44:30 +0000

You don’t need a million dollars to live a luxurious retirement — so long as you’re willing to leave the United States behind.

“Most people assume that a high-flying existence like that is the purview of the rich and famous alone,” said Jennifer Stevens, the executive editor of International Living.

They’re wrong, Stevens said.

The website for expatriates is out with a list of “5 Places to Live Like the Rich and Famous…Without their Bank Balance.”

Around 680,000 Americans currently receive their Social Security checks at a foreign addresses, yet the number of retirees abroad is likely higher since many people keep their U.S. bank account.

Here are the five destinations.

Gates, Bezos and other investors are pouring billions into clean tech

admin — Thu, 28 Mar 2019 18:49:54 +0000

Historically, start-ups developing new renewable energy-enabling technologies or developing clean energy projects have experienced difficulty raising funds from institutional investors, in part because of long development timelines and sizable technical risk. But particularly on the project financing side of things, renewable-energy projects suffer from a lack of familiarity. Institutional fund managers simply don’t have a thorough understanding in the renewable energy industry and the potential returns to be had there.

“There are huge opportunities, but it looks completely unfamiliar if you’re a pension fund — it just doesn’t look like the project finance you’re used to,” said Rob Day, managing partner at Boston-based investment firm Spring Lane Capital. “They see these trends, and they take a step back and say ‘we have to figure out how to play this from a 30-year investment perspective.’

“And I would say they’re actually frustrated by the paucity of good options being shown to them right now,” he added. “There are literally trillions of dollars sitting on the sidelines trying to be shown a good way to be put to work.”

Deals are often too small, as well. For major funds looking to deploy $50 million at a time, financing a $5 million renewable energy project or sinking $12 million into a grid storage start-up can seem trifling. Firms like Spring Lane Capital use their expertise to help connect financing dollars with meaningful projects, Day says, but a fundamental disconnect remains, necessitating new funding models. “If you have some of the world’s fastest-growing markets, and the existing investment models haven’t show that they can reliably make great returns off of that, you have to blame the investment models and not the markets.”

The models are coming around, however. Earlier this month, BEV invested $12.5 million in Baseload Capital, itself a project investment firm that provides financing to develop geothermal energy projects using new modular technology developed by Baseload’s Swedish parent company, Climeon.

Here’s how advisors turn real estate into a steady cash flow

admin — Tue, 26 Mar 2019 23:32:06 +0000

Investments in real assets, whether on the equity side or the debt side, offer seemingly endless options for fixed income. If you can build it or finance it, you can invest in it.

One easy-to-understand way to attain real estate participation for clients is through real estate investment trusts, which allow individual investors to buy shares in commercial real estate portfolios that generate income through leasing and property management from a variety of properties, said certified financial planner Chris Schiffer, executive vice president with AEPG Wealth Strategies in Warren, New Jersey.

“Generally, when the economy is doing well, there is a higher demand for real estate, benefiting the REIT through appreciation, higher occupancy and higher rent payments,” he said. “Also, REITs can protect in down markets, due to their low correlation to stocks.

“The REIT still collects its rents in recessions and down markets, which is paid out to the investors.”

Schiffer cautioned that some REITs may be excessively leveraged, overly speculative or illiquid (if non-traded).

Some advisors are using so-called interval funds, non-traded closed-end funds that offer to buy back a percentage of outstanding shares at different time intervals, to generate income for portfolios.

For his part, Michael Ciccone, CFP, investment advisor with Tradition Capital Management in Summit, New Jersey, uses these in the forms of private real estate funds that invest directly in income-producing real estate properties, and private real asset funds that invest in timberland, farmland and infrastructure.

“Because the majority of these interval funds are invested in private non-traded funds, with just a small public security sleeve for liquidity, these investments are largely insulated from market volatility, and instead the [net asset values] are mainly driven by the appraised values of the underlying properties,” he said. “This serves to provide investments with very stable and low volatility growth and income production.”

In contrast are limited partnership vehicles, or LPs, available only to accredited investors and less liquid than interval funds but, in general, more efficient and able to deliver better returns, all else being equal, said Eric Mancini, CFP, director of investment research and wealth advisor with the Traphagen Financial Group.

Mancini uses limited partnerships for both private real estate credit and equity. LP investments are more “pure,” he said.

Are you seeking responsible investing funds? There’s a rating for that

admin — Tue, 26 Mar 2019 15:30:27 +0000

If you want to see how the funds you’re invested in fare when it comes to environmental, social and governance factors, there’s a rating for that.

The Morningstar Sustainability Rating measures how well an investment fund’s holdings stack up on ESG issues compared to its peers.

The measurement is put together using the thousands of portfolios that Morningstar collects from mutual funds, ETFs and managed portfolios around the world. The firm then applies company-level data from its partner firm, Sustainalytics, to come up with asset-weighted scores for funds.

Investors can access the ratings by going to the Morningstar website. The score appears as globes, with five representing the highest score and one the lowest. Those symbols appear alongside other fund information, including an overall Morningstar rating. The top 10 percent of funds in each category receive five globes.

The score has provided a way to see how well funds that are branded as ESG funds are executing on those strategies.

“Virtually all of the intentional funds do well, meaning they score at least four or five globes,” said Jon Hale, sustainability research expert at Morningstar.

These people won’t have their taxes ready by April 15

admin — Wed, 20 Mar 2019 19:55:46 +0000

Business owners with pass-through entities — including sole proprietorships, S-corporations and partnerships — may be entitled for a new 20 percent deduction on qualified business income on their 2018 tax return.

Entrepreneurs with taxable income below $157,500 if single or $315,000 if married and filing jointly may qualify.

Limitations to the tax break kick in over those taxable income thresholds.

For instance, “specified service trades or businesses,” including doctors, lawyers and accountants, can’t take the deduction at all if their taxable income exceeds $207,500 if single, or $415,000, if married.

The IRS has spent most of 2018 and part of January 2019 fine-tuning the deduction.

Even tax software providers have run into difficulty incorporating last-minute changes to the deduction, which led to some hiccups with accountants’ tax prep programs.

“You have taxpayers who are in more complex situations with the impact of all of these changes, and it’s causing practitioners to have to extend those returns more than they normally do,” said Edward Karl, CPA and vice president of taxation for the American Institute of CPAs.

In a search for fixed income, advisors look past mainstream bond funds

admin — Wed, 20 Mar 2019 03:34:07 +0000

In the search for fixed income, financial advisors are looking beyond bonds to alternatives — from the commonplace to the more arcane.

Some view certificates of deposit as an alternative to individual bonds in the current environment.

“If I don’t want to outguess the direction of rates, the CD option gives me a very low risk way to get some yield,” said Leon LaBrecque, CPA, certified financial planner and “chief growth officer” at Sequoia Financial Group, noting that the yields on six-month CDs vs. five-year Treasurys are converging.

“This means that the old-fashioned CD ladder will come back into style, with an additional advantage of cash flow,” he said. “If you think rates might fall, you can ladder out to four or five years.

“The backstory is that this exacerbated a yield-curve inversion – if money flows into CDs and money markets and out of bonds, bond prices drop and yields go up.”

Many clients who are looking past bonds are now considering dividends to generate more income from their portfolio, said Scott A. Bishop, CPA/PFS, CFP, executive vice president of financial planning with STA Wealth Management.

But he has a warning for investors who want to go this route: Those who chase yields through buying dividends, especially those who really chase yield through master limited partnerships and real estate investment trusts, will see that they will have a big surprise in stability given market volatility.

“They need to do it with eyes wide-open, as they could see 10 [percent] to 15 percent price swings,” he added.

Responding to this type of client interest, he is investigating dividend yield and growth exchange traded funds, specifically reasonably strong and diversified ETFs paying 3 percent to 4 percent yields. This approach would provide a diversified portfolio in one holding that can either target higher yield or dividend growth, the latter for longer-term investors.

For his part, CFP Ashley Folkes, senior vice president of investments with Moors & Cabot Investment, has found that structured notes have grown increasingly attractive to investors because they often pay higher interest than regular corporate debt and usually track the performance of an underlying market or index. These instruments can provide some or most of the upside potential of the market but with options for downside protection.

5 quirky tax deductions you may not know about

admin — Tue, 19 Mar 2019 19:07:03 +0000

If you are looking for a way to lower your taxes and have already worked your way through well-known deductions such as child-care expenses and property taxes, it may pay to think outside the box.

There are some write-offs you may not have known about, and those could apply to your situation.

That could come in handy if you are nearing the new, higher threshold for the standard deduction. Under the new Tax Cuts and Jobs Act, it is now $12,000 for single filers and $24,000 for married couples filing jointly.

“If you are close and you weren’t aware of any of these deductions, you could possibly push yourself over the standard deduction and be able to take itemized deductions and possibly more of them,” said Lisa Greene-Lewis, a CPA and tax expert with TurboTax.

The higher standard deduction, along with the cap or elimination of some deductions, means more people will forgo itemizing. TurboTax estimates about 90 percent of people will use the standard deduction for 2018.

For those estimated 18 million people who likely will still itemize, they need to be sure to have information that backs up their claim, such as doctors’ notes for medical conditions. And they generally need to work with an appropriate tax expert.

“Be careful about advice,” said Jackie Perlman, principal tax research analyst at The Tax Institute at H&R Block. “Your deductions have to be legitimate.”

With that in mind, here are five under-the-radar ways to save on your taxes.

A happy retirement is more than just money

admin — Mon, 18 Mar 2019 13:41:02 +0000

Nastasic | E+ | Getty Images

If you enjoy gardening, consider working part time at a nursery a few years before leaving your job.

Reports of Americans being unprepared for retirement have become so widespread that it no longer seems to elicit any emotional response.

The Employee Benefit Research Institute found that 40.6 percent of all U.S. households (where the head of the household is between ages 35 and 64) are projected to run out of money in retirement. Moreover, the average Social Security benefit provides an income equivalent to the poverty level for a family of four.

Daunting numbers indeed, but these conditions speak to priorities undertaken years earlier. Many families would list education as their No. 1 goal, and given the exorbitant cost of college tuition, it only makes sense that their nest egg is less than robust.

This is an important distinction to make, that insufficient retirement savings could be more a function of conscious decisions made in the past than a failure to behave responsibly.

Furthermore, saving for retirement is not as easy as advertised.

Glossy financial planning brochures with couples in their mid-50s riding a sailboat notwithstanding, this is simply an unrealistic expectation for many households. Given our increasing life expectancy, accumulating enough money in 35 to 40 years of working to sustain us for the remainder of our lives is no easy task.

To put this into perspective, if you take out 5 percent from a diversified portfolio each year, you stand a 58 percent chance of running out of money within 30 years of retirement.

After all, anyone taking withdrawals during the 2008 housing crisis would have a dramatically different outcome than investors who retired in 2009 and lived off market returns in the beginning of retirement. Volatility matters. This would suggest that you need $2,000,000 saved to generate $100,000 in annual income.

It’s also worth mentioning that distributions from retirement accounts are subject to ordinary income taxes. In other words, there’s a fair chance that a great many savers — unless they make lifestyle sacrifices or wiser investment decisions or have an actual pension — won’t be able to maintain their current quality of life once they leave the workforce.

Here’s the tax bill if you hit the $448 million Powerball jackpot

admin — Wed, 13 Mar 2019 19:52:18 +0000

If someone hits the $448 million jackpot in Wednesday night’s Powerball drawing, Uncle Sam will be waiting in the wings with both palms out.

While the odds of winning the top prize are stacked against players, the IRS — and often the state where you live — wastes no time getting at least a slice of every big lottery win.

“Winners are surprised by how much is withheld in taxes from the initial payment, and then how much more is owed when they file their taxes the following year,” said Jason Kurland, a partner at Rivkin Radler, a law firm in Uniondale, New York.

“All of the numbers involved in these huge jackpots are staggering, and the taxes are no exception,” said Kurland, who helps big lottery winners navigate their windfall.

The chance of winning the Powerball jackpot — which has been climbing since late December — is about 1 in 292 million.

Of course, at some point, there will be a jackpot winner. And whether the person takes their prize as an annuity spread out over three decades or as an immediate reduced lump sum, lottery officials are required to withhold 24 percent for federal taxes.

However, the top marginal tax rate of 37 percent means the winner would owe a lot more.

Here are the 10 cities where seniors are most prepared for retirement

admin — Tue, 12 Mar 2019 19:33:47 +0000

Online personal finance portal SmartAsset and its SmartAdvisor Match service surveyed and compiled a list of the U.S.cities where seniors are most prepared for retirement. The company noted that Northwestern Mutual has found more than a fifth of Americans, overall, have nothing saved for their retirement, and that government analyses show that those families that do have retirement savings accounts have only $1,100 saved up on average. “But in some locales,” SmartAsset said, “retirees are bucking the trend and living a life full of the pleasures that come with careful retirement planning and financial security.”

SmartAsset looked at seven criteria: percent of seniors with retirement income, retirement income levels, food stamp reliance, poverty rate, home-ownership rate, the housing cost–burdened rate for seniors, and housing costs as a percent of retirement income.

Among SmartAsset’s findings: Arizona is home to three cities with seniors who are “financially well prepared for retirement.” The state is also a favorite destination for out-of-state retirees looking to make a move, perhaps accounting for its high retirement-preparedness scores, according to the company.

Large U.S. cities, meanwhile, scored poorly. New York, Los Angeles and Chicago, where retirees may find housing costs and living expenses challenging, all landed in the bottom 10 of the SmartAsset ranking.

Here’s a look at the 10 cities where seniors are best prepared for their retirement:

Source: SmartAsset (Note: SmartAsset’s analysis also included percentage of senior-headed households with retirement income, housing costs as percentage of said income and percentage of said households using food stamps. These numbers do not appear here.)