March 2016 Newsletter

March 2016 Newsletter

How to Succeed in a Failing Stock Market

March 2016 Newsletter - 1The start of 2016 has not been a good one for investors to say the least. Through the middle of January, the swift, sharp decline was the worst start to a new year ever. Even experienced investors and financial advisors find these market declines unsettling. As an investor what should you do during a falling stock market?

Relax.  Take a deep breath, go for a walk and turn off the cable financial news network. The world is not coming to an end. Market declines or corrections are common, we’ve seen them before and we will certainly see more of them in the future.

Review your overall financial picture.  Market declines are a good time to take stock of where you are in terms of your overall financial situation. This can help you see that things are likely not as bad you might have feared and it can help you determine where adjustments might be needed.

Go bargain hunting.  Investors should always have an investment shopping list. This is a great time to look for stocks or mutual funds that have seen their price beaten down. If you can pick up that investment at a bargain price, that’s great. One caution, be sure the price decline is due to the general decline in the markets and not some underlying problem with the stock or the fund.

If you’d like another viewpoint on your portfolio or your overall financial situation, please contact me to schedule a meeting.

What Should I Do With My Pension?

March 2016 Newsletter - 2While traditional defined benefit pension plans are fast going by the wayside, many people are still covered by a traditional pension plan. At retirement you may be faced with several decisions as to how to take your benefit. Everyone’s situation is different, but let’s look at the major decision many pension recipients need to make:



Lump-sum or Annuity

Many plans provide an option to take your benefit as a lump-sum payment based upon the present value of your accrued benefit or as a stream of payments over your lifetime (an annuity). Which option is better for you depends on your personal situation.

  • A lump-sum may be the better option if you have another pension plan (perhaps a spouse’s) and/or if you are eligible for Social Security. If you go this route you will want to open an IRA and transfer the money directly to the IRA to avoid paying any taxes. You will then need to invest the money. If you are not comfortable doing this, it may be a good time to consult with a financial professional.
  • The annuity payment has the advantage of being guaranteed by your former employer and you won’t have to worry about outliving your money. There are generally options as to how to take the payments, they range from a single-life annuity (which stops upon your death) to various joint and survivor options which provide a portion of the monthly payments to your spouse should you die first.

Faced with a pension decision? Give me a call and I can help you weigh your options in terms of your overall financial situation.

Tax-Smart Investing

March 2016 Newsletter - 3As we approach tax season, it’s a good time to think about the impact of taxes on your investments. We certainly don’t advocate that investing decisions be made solely for tax reasons, but there are some ways to be tax-smart about your investing.  Here are a few thoughts:

  • Use appreciated securities such as stocks and mutual funds as a vehicle to make charitable donations. As long as the investment has been held for at least a year and a day you can deduct the market value of the investment and avoid paying capital gains taxes to boot.
  • Look at the location of your holdings. For example, tax-deferred accounts such as IRAs might be a better place to hold investments such as actively managed mutual funds that throw off high levels of short-term capital gains or bond mutual funds. Taxable accounts might be more appropriate for stocks that you plan to hold longer than a year in order to take advantage of lower capital gains rates.
  • Consider tax-loss harvesting for any taxable holdings with losses. Not all of them should be sold of course, but especially if you have capital gains on other holdings these losses can be used to offset the tax impact. Consider your overall investment situation and be sure you understand the rules before going this route.


These are just a few ideas to make your investing a bit more tax-smart. Please feel free to give us a call for a review of your portfolio and some tips on how to become a more tax-smart investor.

The Importance of Beneficiary Designations

March 2016 Newsletter - 4Estate planning is complicated enough. One aspect people may not understand regarding certain types of accounts and financial instruments is that the beneficiary designation determines what happens to your money when you die, and not what beneficiary designation may be in your will. It is important that the beneficiary designations on these types of accounts be kept current and in accordance with your wishes. Some examples of where the beneficiary designation is key, include:

  • Your workplace retirement plan such as a 401(k) or a 403(b). In order for someone other than your spouse to be the primary beneficiary, they typically need to sign off on this agreement and have the signature witnessed by a notary.
  • Life insurance policies designate the recipient of the death benefit via the beneficiary designation.
  • Annuity contracts also require you to designate a beneficiary.
  • Both Traditional and Roth IRA accounts pass on to heirs via a beneficiary designation.
  • Certain solely owned bank and brokerage accounts can have a “payable on death” or “transfer on death” designation naming a beneficiary upon your death.

Note that the beneficiary designation will generally override any intentions that you may have to the contrary. For example, if you are remarried but still have your former spouse as the beneficiary on your life insurance policy the ex-spouse will receive the death benefit.

Contact me to discuss your beneficiary designation questions on your investment accounts and to review your overall estate and financial planning situation.

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