PWM - Financial & Investment Advisors in New Jersey | Private Wealth Management - Registered Investment Advisor, RIA | NJ, NY, PA, FL http://www.pwm-nj.com Tue, 18 Nov 2014 19:38:45 +0000 en-US hourly 1 http://wordpress.org/?v=4.0.1 Want to Donate but Don’t Want the Hassle? Consider a Donor Advised Fund http://www.pwm-nj.com/knowledge/investment/donate-daf http://www.pwm-nj.com/knowledge/investment/donate-daf#comments Tue, 18 Nov 2014 14:00:58 +0000 http://www.pwm-nj.com/?p=9970 more]]> image of seagulls

| Featured Author: Alyssa Monush |

An Easier Way to Donate to Your Favorite Charities

A donor-advised fund (DAF) is a philanthropic account established through a public charity. It offers you an easy way to make charitable gifts over an extended period of time while receiving an immediate tax benefit. A donor-advised fund is much like a charitable savings account where you can contribute as much as you want, when you want with the ability to make ongoing recommendations regarding charitable grants.

When you contribute to a donor-advised fund, you are making an irrevocable image of Alyssa Monushcontribution that must be used exclusively for charitable purposes. You receive an immediate tax deduction and can recommend grants to your favorite charities at any time. A donor-advised fund also creates a perfect opportunity to pass down charitable values to future generations.

Under current tax laws (2014), donor-advised fund participants can take a federal income deduction up to 50% of adjusted gross income for cash contributions and up to 30% of adjusted gross income for appreciated securities.* Furthermore, by contributing appreciated securities with unrealized capital gains, you can avoid capital gains taxes on the sale of the securities and use that money to increase your donation. Plus, any additional investment growth in your donor-advised fund is tax-free, and you can take your time choosing the charities you want to support.

 

daf flow chart

 

 

A donor-advised fund is similar to a private foundation but requires less money, time, legal assistance, and administration to establish and maintain. Because donor-advised funds are public charities, they also enjoy greater tax advantages than private foundations and allow for greater privacy of your personal information.
Setting up a donor-advised fund is a cost effective way for you to receive tax benefits while supporting your favorite charities.

  • Some advantages to having a DAF:
    • Low contribution minimums
    • Easier and less costly to set up and maintain than private foundations
    • Donors may receive immediate income tax deductions
    • Can reduce or eliminate capital gains and estate taxes
    • No excise tax or payout requirements
    • Donations can be personalized or donors can give anonymously
    • Accounts may be transferable to the next generation
  • Contributions to DAF are not limited to cash and publicly traded securities. On a case by case basis, it could receive other appreciated assets such as privately held and restricted stock, real estate, collectibles to name a few:
    • Restricted and controlled stock
    • Privately-held stock
    • Real estate
    • Proceeds from life insurance or from a full-paid policy
    • Private foundation grants or terminations
    • Bequests
    • Named beneficiary of charitable remainder trust
    • Named beneficiary of an IRA, 401(k), or other retirement account
    • Tangible personal property

Interested in setting up a Donor-Advised Fund? Give us a call today at 732-450-0147.

For further insight into donor-advised funds, check out the posts listed below from Charitable-nation.com:

* Tax deductibility limits are different by asset type. Contributions that exceed AGI limitations may be carried forward and deducted for five years. Your ability to claim itemized deductions may be subject to further limitations depending upon your specific tax situation. Please consult your tax advisor. Keep in mind tax law is subject to change.
For educational purposes only and is not intended for specific legal, accounting, investment, income tax or other professional advice. Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by PWM Advisory Group, LLC [“PWM”]), or any non-investment related content, made reference to directly or indirectly in the presented material(s) will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this presentation serves as the receipt of, or as a substitute for, personalized investment advice from PWM. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. PWM is neither a law firm nor a certified public accounting firm and no portion of the presented material(s) should be construed as legal, accounting or consulting advice. A copy of the PWM’s current written disclosure statement discussing our advisory services and fees is available for review upon request. To ensure compliance with U.S. Treasury rules, unless expressly stated otherwise, any U.S. tax advice contained in this communication (including attachments) is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code. Broadridge Investor Communication Solutions, Inc. Copyright 2013.Photo Credit: Andre_Rau

 

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Investment Outlook – Third Quarter in Review (Fall 2014) http://www.pwm-nj.com/knowledge/quarterly/q3-2014 http://www.pwm-nj.com/knowledge/quarterly/q3-2014#comments Wed, 29 Oct 2014 13:09:34 +0000 http://www.pwm-nj.com/?p=9944 more]]> image of mountains

The Quarter in Review

Global equity markets showed increasing signs of fatigue as a result of the ongoing geopolitical headwinds, concerns about global growth and the burgeoning Ebola situation. For the quarter, the S&P 500 advanced 1.1% while the FTSE All World ex US Index lost 5.1%.

Domestic fixed income, as measured by the Barclays US Aggregate Fixed Income Index, continued its positive performance, gaining 0.17% for the period.

U.S. Economy

U.S. Economic data released at the end of the quarter was mostly positive. The final revision for second quarter Gross Domestic Product (GDP) showed a healthy 4.6% annual rate of growth, revised upwards from a previous read of 4.2%. While the economy appears to be heading in the right direction, the current expansionary period (2010-2014) has only averaged 2.2% a year, well below the 50 year average GDP growth rate of 3% (see “Real GDP” chart below). Business spending, or the lack there of, is a contributing factor to our current slow growth environment (see “Corporate Cash as a % of Current Assets” chart on the following page). As confidence in the business climate improves however, anticipated capital expenditures should rise as companies start to replace depreciating equipment and spend down some of the high cash balances on their books. The eventual realization of this deferred spending will likely help towards pushing GDP growth closer to its historical average.image of real gdp

The September jobs report, reflecting the creation of 248,000 new jobs, was another indication the economy is headed in the right direction, albeit at a slower than desired pace. The unemployment rate for September dropped to 5.9% for the first time since July 2008. Although we are encouraged by these numbers, the decrease in the labor force participation rate to 62.7%, a 36 year low, and lackluster wage growth should not be ignored. We attribute some of the drop in the labor force participation to structural factors. The main structural factor affecting the labor force participation is demographics, as baby boomers enter retirement permanently leaving the labor force. Unusual growth in disability benefits could also be a distorting factor within the labor force participation dynamics, as workers permanently collecting disability insurance have little incentives to return to the labor force. Over the long run, these dislocations need to be addressed, as labor growth and wage increases are an important component to long term growth and prosperity.

Another important trend witnessed in the third quarter was a strengthening dollar (see “US Dollar Index” chart on the following page). A strong dollar has both positive and negative implications:

On one hand, it should help keep inflation in check as foreign imports become more competitively priced versus items manufactured in the US, thus helping foreign exporters. A strong dollar also drives down dollar-denominated commodities such as oil, which means additional savings for the US consumer in the form of lower gasoline prices and higher disposable income. This disinflationary effect could reduce some of the pressure for the Federal Reserve to raise rates sooner.

image of corporate cash

On the other hand, a higher greenback could negatively impact the value of foreign earnings to U.S. multinational companies and also hurt US exporters. As the third quarter earnings season progresses, we will be able to better gauge how this currency translation issue impacts corporate profitability for multinational companies, as well as its effects on domestic exporters. The recently released Fed minutes indicate concerns about global growth and the economic impacts of a stronger dollar. This represents a meaningful development in the Fed’s running debate about when to raise short term interest rates from near zero.

International

The turbulent quarter was characterized with a continuation of the ongoing crisis in geopolitical hotspots (Ukraine & Russia, Hamas & Gaza, Iraq & ISIS), civil unrest around the globe and a vote for independence. In China, a group of pro- democracy students took to the streets of Hong Kong demanding public nomination for Hong Kong chief executive, the city’s top post. In Scotland, voters took to the polls to vote on a referendum to decide whether Scotland should remain part of the United Kingdom. The outcome of the referendum was that Scotland was to remain part of the U.K, alleviating a whole set of unknowns related to the potential break up. On top of the previously mentioned civil and military conflicts, Western Africa is battling an Ebola outbreak that, according to the World Health Organization (WHO), has already killed over 4,000 people mainly in Liberia, Sierra Leone and Guinea.image of US Dollar Index

A string of weak economic data has increased concerns that the Eurozone’s recovery could be losing steam. Germany, Europe’s biggest economy, has shown increasing signs of a slowdown. A drop in German exports came after poor readings for manufacturing orders and factory output in the country. To stimulate growth and battle falling inflation concerns, the European Central Bank is embarking on a series of measures, on top of interest rate cuts, intended to spur bank lending. European Central Bank president Mario Draghi stated: “We are accountable to the European people for delivering price stability, which today means lifting inflation from its excessively low levels. And we will do exactly that.” He also added “We are ready to alter the size and/or the composition of our unconventional interventions, and therefore, of our balance sheet, as required.” During his speech, Mario Draghi also stated that the ECB’s easy money policies would have limited effects without structural economic overhauls in Europe: “I am uncertain there will be very good times ahead if we do not reform now,” he said, adding those that are able should “exploit the available fiscal space” in European Union rules. As we have indicated previously, we believe the European countries should continue taking steps towards a more fiscally integrated European Union.

A Look Ahead

The wall of worry seems to be getting taller as the year progresses. The geopolitical issues do not seem to abate; the Ebola virus continues to wreak havoc in Western Africa & concerns about global economic growth are on the rise. In the US, uncertainty surrounding the timing of the first rate hike by the Federal Reserve, coupled with the fact that we are in the heels of a midterm election have dented investor confidence and increased volatility. Market valuations have increased and the U.S stock market has not had a 10% correction since March 2009.

Even though global fears have increased we do not want to lose sight of the longer term picture. The United States economy is improving and the Federal Reserve is paying close attention to the effects of weaker global growth and a stronger dollar before making changes to their monetary stance. The ECB and Japanese Central Bank are increasing their monetary easing actions; which should help pick up the slack from the removal of the Fed’s policies when the time comes.

While market volatility has escalated, we do not deem market timing as a reliable strategy. A Charles Schwab study using Standard and Poor’s data shows that between 1994-2013, missing the top ten up days in the market would have resulted in a reduction in average annual returns from 9.2% to 5.5% per year*. Fear, greed and the short term movements of the market should not drive investment decisions. Rather, we continue to advocate a disciplined approach to investing that is consistent with your long term goals, time horizon and risk tolerance.

DEFINITIONS:

EBOLA: A rare and deadly disease caused by infection with one of the Ebola virus strains. Ebola can cause disease in humans and nonhuman primates (monkeys, gorillas, and chimpanzees).Ebola was first discovered in 1976 near the Ebola River. Since then, outbreaks have appeared sporadically in Africa. On the basis of evidence and the nature of similar viruses, researchers believe that the virus is animal-borne and that bats are the most likely reservoir. (cdc.gov)

CAPEX: Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment. This type of outlay is made by companies to maintain or increase the scope of their operations. These expenditures can include everything from repairing a roof to building a brand new factory. (investopedia)

NET EXPORTS: The value of a country’s total exports minus the value of its total imports. It is used to calculate a country’s aggregate expenditures, or GDP, in an open economy.(investopedia)

DEPRECIATION: A method of allocating the cost of a tangible asset over its useful life. Businesses depreciate long-term assets for both tax and accounting purposes. (investopedia)

LABOR FORCE PARTICIPATION: A measure of the active portion of an economy’s labor force. The participation rate refers to the number of people who are either employed or are actively looking for work. The number of people who are no longer actively searching for work would not be included in the participation rate. During an economic recession, many workers often get discouraged and stop looking for employment, as a result, the participation rate decreases. (investopedia)

MARKET TIMING: The act of attempting to predict the future direction of the market, typically through the use of technical indicators or economic data. (investopedia)

Important Disclosure: Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by PWM Advisory Group. [“PWM”] ), or any non-investment related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from PWM. Please remember to contact PWM in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services. PWM is neither a law firm nor a certified public accounting firm and no portion of the newsletter content should be construed as legal or accounting advice. A copy of the PWM current written disclosure statement discussing our advisory services and fees is available for review upon request. Photo Credit:FrankWinkler

 

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Do You Know The Basics Of 401(k) Retirement Plans? http://www.pwm-nj.com/knowledge/investment/401k-retirement-plans http://www.pwm-nj.com/knowledge/investment/401k-retirement-plans#comments Tue, 28 Oct 2014 13:00:31 +0000 http://www.pwm-nj.com/?p=9325 more]]> image of a flower

How much do you know about your 401(k) plan?

Often, even though employer-sponsored retirement plans may make up the bulk of employees’ retirement savings, participants understand less than they need to about how this savings vehicle works. Here’s a primer covering 10 crucial facts:

1. You benefit from tax-favored treatment. For starters, contributions to your account are made on a pre-tax basis. For example, if you earn $100,000 a year and elect to defer $10,000 to the plan, you’re taxed on only $90,000. What’s more, the money you’ve contributed will grow, without taxes, inside the plan until you withdraw it.

2. There’s an annual limit on how much you can contribute. The normal ceiling, adjusted each year for inflation, remains $17,500 for 2014. Plus, you can sock away an extra $5,500 a year (also adjusted for inflation) if you’re age 50 or older. That adds up to as much as $23,000 for 2014. However, other tax law limits could affect your overall contribution.

3. Your employer may choose to match part of your contribution. Obviously, you’re reducing your take-home pay when you defer part of your salary, but companies often help offset that deduction. You might get a matching contribution with your employer kicking in, say, 50 cents for each dollar you put in for up to 6% of your pay. If you earn $100,000 and contribute $10,000 annually, that could add an extra $3,000 to your account each year (half of the first 6% of salary that you contribute).

4. Participation may be automatic. Increasingly, employers use an automatic enrollment feature that adds you to its 401(k) plan unless you opt not to participate. That encourages you to save for retirement and helps companies avoid penalties that may be applied if too few lower-paid employees sign up. The initial default-deferred amount might be 3% of your salary, and some companies now add an “escalator clause” that automatically increases later deferrals.

 Interested in a 401(k) plan for your company? Contact Carmine D’Avino today. »

5. You have a wide array of investment choices. How should you invest the funds in your 401(k)? You’ll normally be able to choose from among a dozen or more standard options that may include several “target date” mutual funds, which adjust their allocations as you get nearer to retirement. If you don’t make your own selections, a default option may be triggered.

6. You’re penalized if you take out money early. You’ll generally have to pay a 10% penalty on withdrawals you make prior to age 59½, unless a special tax law exception applies. That’s in addition to the regular income tax that applies to all withdrawals.

7. You’re penalized if you take out money too late. You must begin taking “required minimum distributions” (RMDs) from your 401(k), based on life expectancy tables, in the year after the year in which you turn age 70½. The penalty for not doing that is stiff—50% of the amount you should have taken. But you may be able to postpone RMDs if you’re still working full-time and you own less than 5% of your employer.

8. You may be able to “Rothify.” Some company plans now offer the opportunity to use a Roth 401(k). Just as with a Roth IRA, you make contributions on an after-tax basis, but withdrawals during retirement normally won’t be taxed. At companies that offer this option, you can divide your contribution between regular and Roth accounts as you choose.

9. You have several options when you leave the company. When you leave your job, you can take a lump-sum payout from your account—which will trigger income tax and a penalty if you’re under 59½—leave the money where it is, or roll it over to another company’s plan or to an IRA. With a rollover, you won’t owe any tax as long as the transfer is completed within 60 days of leaving. To avoid 10% withholding, make a trustee-to-trustee rollover.

10. You’ll owe fees that may vary widely from plan to plan. If your 401(k) charges high administrative or investment management fees, those could siphon off a significant portion of your investment earnings. The lower the “expense ratio” of the mutual funds you select, the less you’ll pay in fees. Index funds that passively track market benchmarks can be especially inexpensive.

Make sure you have all of the information you need to make smart choices about your account.

 

Please note that various factors such as changes in tax laws, inflation, and the uncertainty of social security can have a significant impact on the results of the study discussed in this section.This presentation was designed for educational purposes only and is not intended for specific legal, accounting, investment, income tax or other professional advice. Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by PWM Advisory Group, LLC [“PWM”]), or any non-investment related content, made reference to directly or indirectly in the presented material(s) will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this presentation serves as the receipt of, or as a substitute for, personalized investment advice from PWM. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. PWM is neither a law firm nor a certified public accounting firm and no portion of the presented material(s) should be construed as legal, accounting or consulting advice. A copy of the PWM’s current written disclosure statement discussing our advisory services and fees is available for review upon request. To ensure compliance with U.S. Treasury rules, unless expressly stated otherwise, any U.S. tax advice contained in this communication (including attachments) is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code. ©2012 Advisor Products Inc. All Rights Reserved. Photo Credit: @Doug88888

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The Encouraging Trend in Corporate Responsibility http://www.pwm-nj.com/knowledge/investment/corporate-responsibility http://www.pwm-nj.com/knowledge/investment/corporate-responsibility#comments Wed, 22 Oct 2014 12:44:31 +0000 http://www.pwm-nj.com/?p=9933 more]]> image of fingers touching

|Featured Author: Monica Jalife|

Responsible Culture & Supply Chain

Photo of Monica Jalife, CFA, MBA

Monica Jalife

Last week I attended the “COMMIT! To A Responsible Culture & Supply Chain” conference in New York City. This year’s conference, organized by Corporate Responsibility magazine, focused on the people aspect of corporate responsibility, namely employees and other stakeholders. It contained tracks related to sustainability of the workforce and programs to promote literacy, education & employee engagement, as well as voluntarism and community and employee well-being. The second main theme revolved around procurement and supply chain related issues. We heard from a panel of CEOs about what they are doing to drive the vision of corporate responsibility throughout their organizations, and also from Chief Human Resources officers as to the challenges and opportunities within this area. Over 500 companies were in attendance and it was very encouraging to see so many corporate leaders in a room discussing their current initiatives and the need to continue moving forward and engaging employees, partners and the communities in which they operate.

My key takeaways:
A diverse, conscious & connected workforce is critical not only to a company’s business strategy, but also the biggest driver of successful, authentic engagement within the community. I learned about programs companies such as Fidelity and John Hancock have developed to motivate their employees while addressing some of the most pressing educational challenges in the regions in which they conduct business. The common denominator in many of these engagement programs is that businesses, non-profits and employees of all backgrounds need to collaborate to address community challenges.

Philanthropy is evolving. The landscape is shifting towards a new model of collaboration. IBM discussed how it partnered with 850 nonprofits, small businesses and government agencies in some of the world’s most remote regions to provide $65 million in pro bono services. Several of these partnerships yielded valuable insights into new markets and led to assignments that are now increasing access to education, healthcare and ultimately, generating jobs. A panel including members from the Rockefeller Foundation, Social Finance and Center for Employment Opportunities (CEO) discussed a new model for funding social change in which public, private and non-profit sectors worked together to achieve social outcomes through a pay for success program.

At PWM we believe that positive financial performance and corporate responsibility are not mutually exclusive and we were happy to confirm many companies operate within those beliefs. Even more encouraging is the fact that awareness in the field of sustainability seems to be growing every day. It is our belief that companies can Do Good and Do Well and we hope to see more and more corporate leaders embrace this idea. On our end, we remain committed and involved with our community. We recently established a Donor Advised Fund and continue to support charities within our community.

 

Important Disclosure: Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by PWM Advisory Group. [“PWM”] ), or any non-investment related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from PWM. Please remember to contact PWM in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services. PWM is neither a law firm nor a certified public accounting firm and no portion of the newsletter content should be construed as legal or accounting advice. A copy of the PWM current written disclosure statement discussing our advisory services and fees is available for review upon request. Photo Credit: PublicDomainImages

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]]> http://www.pwm-nj.com/knowledge/investment/corporate-responsibility/feed 0 Get a Tax-Smart Plan for In-Retirement Withdrawals http://www.pwm-nj.com/knowledge/investment/tax-smart-plan http://www.pwm-nj.com/knowledge/investment/tax-smart-plan#comments Wed, 08 Oct 2014 13:00:11 +0000 http://www.pwm-nj.com/?p=9922 more]]> image of snack stand on beach

Tax-Smart Planning

The following sequence may make sense for retirees to preserve the tax-saving benefits of tax-sheltered investments for as long as possible.

1) For retirees over age 70 1/2, the first stop for withdrawals are those accounts that carry required minimum distributions, or RMDs, such as Traditional IRAs and company retirement plans such as 401(k)s (to avoid paying penalties).

2) For retirees who are not required to take RMDs or have taken their RMDs and still need cash, turning to taxable assets may be an option. A good start may be selling assets with the highest cost basis first and then moving on to those assets where cost basis is lower (and the tax hit higher). Relative to tax-deferred or tax-free assets, these assets have the highest costs associated with them. However, taxable assets could also be valuable to tap in later retirement years because retirees will pay taxes on withdrawals at their capital gains rate, which is generally lower than the ordinary income tax rate.

3) Finally, after taking RMDs or tapping taxable assets, retirees still in need of cash may want to further tap company retirement-plan accounts and IRAs (Roth IRA assets last.)

401(k) and IRA plans are long-term retirement-savings vehicles. Withdrawal of pretax contributions and/or earnings will be subject to ordinary income tax and, if taken prior to age 59 1/2, may be subject to a 10% federal tax penalty. Direct contributions to a Roth IRA are not tax-deductible but may be withdrawn free of tax at any time. Earnings may be withdrawn tax and penalty free after a 5 year holding period if the age of 59 1/2 (or other qualifying condition) is met. Otherwise, a 10% federal tax penalty may apply. Please consult with a financial or tax professional for advice specific to your situation.

 

This presentation was designed for educational purposes only and is not intended for specific legal, accounting, investment, income tax or other professional advice. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by PWM Advisory Group, LLC [“PWM”]), or any non-investment related content, made reference to directly or indirectly in the presented material(s) will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this presentation serves as the receipt of, or as a substitute for, personalized investment advice from PWM. PWM is neither a law firm nor a certified public accounting firm and no portion of the presented material(s) should be construed as legal, accounting or consulting advice. A copy of the PWM’s current written disclosure statement discussing our advisory services and fees is available for review upon request. ©2012 Morningstar, Inc. All Rights Reserved. The information contained herein (1) is intended solely for informational purposes; (2) is proprietary to Morningstar and/or the content providers; (3) is not warranted to be accurate, complete, or timely; and (4) does not constitute investment advice of any kind. Neither Morningstar nor the content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. “Morningstar” and the Morningstar logo are registered trademarks of Morningstar, Inc. Morningstar Market Commentary originally published by Robert Johnson, CFA, Director of Economic Analysis with Morningstar and has been modified for Morningstar Newsletter Builder. To ensure compliance with U.S. Treasury rules, unless expressly stated otherwise, any U.S. tax advice contained in this communication (including attachments) is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code. Photo Credit: Greyerbaby

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Charity Fraud – Don’t Fall Victim http://www.pwm-nj.com/knowledge/investment/charity-fraud-dont-fall-victim http://www.pwm-nj.com/knowledge/investment/charity-fraud-dont-fall-victim#comments Wed, 17 Sep 2014 12:43:50 +0000 http://www.pwm-nj.com/?p=9901 more]]> image of aloe tree

| Featured Author: Elizabeth DeSandolo |

Know Where Your Money is Going

I recently received an email from the director of a child welfare organization soliciting donations to help fund their program. Their foundation initially appeared to be a charity that PWM would be interested in helping. The profile looked promising, their website was impressive and an internet search produced several positive articles. However, further vetting of this organization on CharityNavigator.org uncovered evidence of charity fraud.bio image

CharityNavigator.org can be a useful resource for those interested in giving back to their community. This organization evaluates a variety of charities and acts as an independent source of information regarding their practices. Charity Navigator does not accept contributions from the organizations it reviews and is therefore able to provide honest and objective feedback.

The foundation that we were considering to support was in fact fraudulent. Upon further investigation, we were able to uncover information about the director and his counterfeit charities.

At PWM, we participate in Impact Investing and donate a portion of our revenues to many worthy causes. We are conscious of our charitable objectives, but perhaps not always aware of the predators who try to take advantage of our philanthropy. We believe very strongly in putting our resources behind worthwhile charities and investments that respect social causes and support equality.

We will continue to give back whenever we can. For those of you that are charitably inclined, we encourage you to take from our experience. Always be mindful of fraudsters and take measures to ensure your money is getting to those who really need it.

 

Important Disclosure: Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by PWM Advisory Group. [“PWM”] ), or any non-investment related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from PWM. Please remember to contact PWM in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services. PWM is neither a law firm nor a certified public accounting firm and no portion of the newsletter content should be construed as legal or accounting advice. A copy of the PWM current written disclosure statement discussing our advisory services and fees is available for review upon request. Photo Credit: PublicDomainImages

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Dispel These 7 Popular Myths About Retirement http://www.pwm-nj.com/knowledge/investment/retirement-myths http://www.pwm-nj.com/knowledge/investment/retirement-myths#comments Tue, 16 Sep 2014 13:00:08 +0000 http://www.pwm-nj.com/?p=9910 more]]> image of a man thinking

Make Sure You Don’t Fall Short of Your Goals

Retirement is changing. People are living longer, and many stay healthy and vital into their 80s and 90s. Working, at least part time, has become more commonplace. Yet with fewer and fewer corporate pensions to fall back on these days, the money to pay for a long life after work may not be there. And with change comes confusion and misperceptions about what really may happen during your retirement, however you define it. Consider these seven common ideas that may prove overly optimistic—and then tweak your plans to make sure you don’t fall short of your goals:

Myth #1: You’ll have saved enough for retirement when you get there. According to a 2014 survey by the Employee Benefits Research Institute (EBRI), an independent research firm, only 42% of current workers over age 55 say they’ve saved at least $100,000, while just 23% have set aside more than $250,000. The EBRI survey also indicated that just 18% of all workers were “very confident” they’ve saved enough for retirement. You easily could find yourself facing a shortfall.

Myth #2. You’ll spend a lot less than you do now. Some cash outlays, such as paying off the mortgage and sending the kids to college, no longer may apply. But what do you want your retirement to look like? If you’ve envisioned globe-trotting or indulging in expensive hobbies, you may find that will erode your nest egg more quickly than you expected. Unexpected expenses—high-priced dental work, say, or a down payment for a child’s home—also can siphon away funds.

Myth #3. You’ll save a lot of money when you downsize your home. Moving to a smaller place probably will reduce maintenance costs and property taxes. But that doesn’t mean you won’t still have all the usual expenses associated with home ownership—just on a smaller scale—plus other possible fees that may apply if you’ve moved into an over-55 community. And if you’ve relocated to a ritzy neighborhood in a city or resort area, your expenses could go up.

Myth #4. You’ll continue working past the normal retirement age. You may want to stay on the job or shift to something else, but such plans don’t always work out, and health problems also could pose obstacles. And if you’re counting on job income to shore up your finances through many years of “retirement,” not being able to do it—or deciding you’re just not up to it—could leave a big hole in your retirement income.

Myth #5. You easily can get a part-time job if you need one. When you retire from your full-time position, you might seek part-time employment, but those jobs may be harder to find, and to keep, than you imagine. You may be competing with youngsters who are more tech-savvy than you for jobs requiring computer skills. What’s more, if you’re living in an area with numerous other retirees, which is often the case, the competition can be fierce.

Myth #6. You can rely on Medicare for all your medical expenses. Retirees often expect Medicare to pick up the entire cost of physician visits, hearing or eye exams, or the like, but that’s simply not how the system works. In fact, Medicare covers only roughly half of such expenses, according to data recently provided by the Kaiser Family Foundation. And don’t overlook the exorbitant costs of staying in a long-term care facility or paying for in-home nursing care. If you don’t have a supplemental policy, Medicare might not provide enough coverage for you.

Myth #7. You can rely on Social Security for most of your income. Different people have different ideas about Social Security. Some almost disregard those payments from the government, thinking they’ll be too small to make any difference in funding retirement. Others, though, talk about Social Security like it’s the be-all, end-all. It’s neither. The fact is, Social Security can be genuinely helpful, often covering some of your essential expenses. But for most people it’s not nearly enough to live on. The Social Security Administration says the average monthly benefit in 2014 is $1,294, which works out to $15,528 a year. That’s why it’s vital to take steps to supplement Social Security with income from investments, employer retirement plans, IRAs, and other sources. There’s one more myth we would like to expose—that it’s too late to change your destiny. Reexamine your basic assumptions about your retirement and then make a reasonable retirement savings plan based on your needs and realistic objectives.

 

Please note that various factors such as changes in tax laws, inflation, and the uncertainty of social security can have a significant impact on the results of the study discussed in this section.This presentation was designed for educational purposes only and is not intended for specific legal, accounting, investment, income tax or other professional advice. Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by PWM Advisory Group, LLC [“PWM”]), or any non-investment related content, made reference to directly or indirectly in the presented material(s) will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this presentation serves as the receipt of, or as a substitute for, personalized investment advice from PWM. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. PWM is neither a law firm nor a certified public accounting firm and no portion of the presented material(s) should be construed as legal, accounting or consulting advice. A copy of the PWM’s current written disclosure statement discussing our advisory services and fees is available for review upon request. To ensure compliance with U.S. Treasury rules, unless expressly stated otherwise, any U.S. tax advice contained in this communication (including attachments) is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code. ©2012 Advisor Products Inc. All Rights Reserved. Photo Credit: geralt

 

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The Rising Cost of Not Going to College http://www.pwm-nj.com/knowledge/investment/cost-of-not-going-to-college http://www.pwm-nj.com/knowledge/investment/cost-of-not-going-to-college#comments Wed, 03 Sep 2014 13:00:35 +0000 http://www.pwm-nj.com/?p=9885 more]]>

image of campus

Why Education Matters Today

A recent study from the Pew Research Center found that on virtually every measure of economic well-being and career attainment, from personal earnings to job satisfaction, young college graduates are outperforming their peers with less education. Moreover, the findings show that when today’s young adults are compared with previous generations, the disparity in economic outcomes between college graduates and those with a high school diploma or less formal schooling has never been greater in the modern era.

Millennial college graduates aged between 25 and 32 who are working full time earn about $17,500 more annually than their peers who only hold a high-school diploma. This pay gap was significantly smaller in previous generations.

This presentation was designed for educational purposes only and is not intended for specific legal, accounting, investment, income tax or other professional advice. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by PWM Advisory Group, LLC [“PWM”]), or any non-investment related content, made reference to directly or indirectly in the presented material(s) will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this presentation serves as the receipt of, or as a substitute for, personalized investment advice from PWM. PWM is neither a law firm nor a certified public accounting firm and no portion of the presented material(s) should be construed as legal, accounting or consulting advice. A copy of the PWM’s current written disclosure statement discussing our advisory services and fees is available for review upon request. ©2012 Morningstar, Inc. All Rights Reserved. The information contained herein (1) is intended solely for informational purposes; (2) is proprietary to Morningstar and/or the content providers; (3) is not warranted to be accurate, complete, or timely; and (4) does not constitute investment advice of any kind. Neither Morningstar nor the content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. “Morningstar” and the Morningstar logo are registered trademarks of Morningstar, Inc. Morningstar Market Commentary originally published by Robert Johnson, CFA, Director of Economic Analysis with Morningstar and has been modified for Morningstar Newsletter Builder. To ensure compliance with U.S. Treasury rules, unless expressly stated otherwise, any U.S. tax advice contained in this communication (including attachments) is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code. Photo Credit: Picography

 

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Concerned About Longevity? Three Mistakes to Avoid http://www.pwm-nj.com/knowledge/investment/longevity http://www.pwm-nj.com/knowledge/investment/longevity#comments Tue, 02 Sep 2014 13:00:33 +0000 http://www.pwm-nj.com/?p=9895 more]]> image of a retired couple - PublicDomainPictures

Better to Be Safe Than Sorry

Longevity is often cheered as an achievement, but the downside of living well beyond one’s average life expectancy is that it can strain (or worse, completely deplete) an individual’s financial resources. The first step in addressing longevity risk is to evaluate just how great the odds are that either you or your spouse will have a much longer-than-average life span. Health considerations, family longevity history, employment choices, and income level may all be factors. If you’ve assessed these considerations and are concerned about longevity risk–or if you’ve determined that you’d simply rather be safe than sorry–here are three key mistakes to avoid.

Mistake 1: Holding a Too-Conservative Portfolio. When investors think about reducing risk in their portfolios, they often set their sights on curtailing short-term volatility—the risk that their portfolios will lose 10% or even 20% in a given year. But a too-conservative portfolio (one that emphasizes cash and bonds at the expense of stocks) can actually enhance shortfall risk while keeping a lid on short-term volatility. But, right now, interest rates have much more room to move up than they do down, which may reduce the opportunity for bond-price appreciation during the next decade. With such low returns, retirees with too-safe portfolios may not even outearn the inflation rate over time.

Mistake 2: Not Delaying Social Security Filing.* Because it provides an inflation-adjusted income stream for the rest of your life, Social Security is designed to provide you with at least some money coming in the door even if your investment portfolio runs low (or out) during your later years. If you file early (you’re eligible to do so as early as age 62), you permanently reduce your annual benefit from the program.

Delayed filing, on the other hand, has the opposite effect, amping up the value of your hedge. Not only will your benefits last as long as you do, but they’ll be higher, perhaps even substantially so, as well. Those who delay filing until age 70 may receive an annual benefit that’s more than 30% higher than what they would have received had they filed at full retirement age (currently 66) and more than 50% higher than their benefit had they filed at age 62.

Mistake 3: Not Adjusting Withdrawal-Rate Assumptions. Just as savings rates are the main determinant of success during the accumulation years (much more than investment selection, in fact), spending rate is one of the central determinants of retirement plans’ viability.

The 4% rule, which indicates that you can withdraw 4% of your total portfolio balance in year 1 of retirement, then annually inflation-adjust that dollar amount to determine each subsequent year’s portfolio payout, is a decent starting point in the sustainable withdrawal-rate discussion. But it’s important to tweak your withdrawal rate based on your own situation. If you have a sparkling health record and it looks likely that you’ll be retired longer than the 30-year withdrawal period that underpins the 4% rule, you may be better off starting a bit lower.

In a similar vein, it’s important to not set and forget your retirement-plan variables, such as your spending rate and your asset allocation, because retirement progresses and new information becomes available about your health and potential longevity, market valuations, and so forth.

This is for informational purposes only and should not be construed as legal, tax, or financial planning advice. Please consult a legal, tax, and/or financial professional for advice specific to your individual circumstances. Asset allocation and diversification are methods used to help manage risk. They do not ensure a profit or protect against a loss. Returns and principal invested in securities are not guaranteed, and stocks have been more volatile than bonds.

*Source: Social Security Administration.

This presentation was designed for educational purposes only and is not intended for specific legal, accounting, investment, income tax or other professional advice. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by PWM Advisory Group, LLC [“PWM”]), or any non-investment related content, made reference to directly or indirectly in the presented material(s) will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this presentation serves as the receipt of, or as a substitute for, personalized investment advice from PWM. PWM is neither a law firm nor a certified public accounting firm and no portion of the presented material(s) should be construed as legal, accounting or consulting advice. A copy of the PWM’s current written disclosure statement discussing our advisory services and fees is available for review upon request. ©2012 Morningstar, Inc. All Rights Reserved. The information contained herein (1) is intended solely for informational purposes; (2) is proprietary to Morningstar and/or the content providers; (3) is not warranted to be accurate, complete, or timely; and (4) does not constitute investment advice of any kind. Neither Morningstar nor the content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. “Morningstar” and the Morningstar logo are registered trademarks of Morningstar, Inc. Morningstar Market Commentary originally published by Robert Johnson, CFA, Director of Economic Analysis with Morningstar and has been modified for Morningstar Newsletter Builder. To ensure compliance with U.S. Treasury rules, unless expressly stated otherwise, any U.S. tax advice contained in this communication (including attachments) is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code. Photo Credit: PublicDomainPictures

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Digital Estate Planning http://www.pwm-nj.com/knowledge/investment/digital-estate-planning http://www.pwm-nj.com/knowledge/investment/digital-estate-planning#comments Wed, 20 Aug 2014 13:00:25 +0000 http://www.pwm-nj.com/?p=9866 more]]> image of laptop

Do You Have a Plan for Your Digital ‘Estate’?

Even people who think they’ve ticked off all of the usual boxes on their estate-planning to-do lists may have overlooked an increasingly important component of the process: ensuring the proper management and orderly transfer of their digital assets. Just as traditional estate-planning relates to the management and transfer of financial accounts and hard assets, digital estate-planning encompasses digital possessions, including data stored on tangible digital devices (computers and smartphones), data stored in the cloud, and online user accounts.

Digital estate planning is, in many respects, more complicated than traditional estate planning. The field of digital estate planning is evolving rapidly, as are digital providers’ policies on what should happen to digital assets that are left behind. Digital assets are also governed by a complex web of rapidly evolving laws, both at the state and federal levels. Precisely because of all the potential complications, it’s important to take a few minutes and get a plan in order. Here are several key steps to take.

1) Conduct a Digital ‘Fire Drill.’ A good first step in the digital estate-planning process is to conduct a digital fire drill, which tends to jog your memory about what digital assets you deem important. Consider the following questions. What valuable items would you lose if your computer was lost or stolen today? If you were in an accident, would your loved ones be able to gain access to your valuable or significant digital information while you were incapacitated? If you were to die today, to what valuable or significant digital property would you like your loved ones to have access?

2) Take an Inventory of Your Assets. The next must-do is to create an inventory of the digital assets you named during the fire drill. Document the item/account name as well as user names and passwords associated with that item. Among the items to document in your digital inventory are: digital devices such as computers and smartphones, data-storage devices or media, electronically stored data, including online financial records, whether stored in the cloud or on your device, user accounts, domain names, and intellectual property in electronic format. This document would be chock-full of sensitive information, so keeping it safe is crucial. A printed document should be stored in a safe or safe deposit box, and an electronic document should, of course, be password protected.

3) Back It Up. We’ve all been schooled on the importance of regularly backing up digital assets, and estate-planning considerations make it doubly important to do so. Even if a specific device malfunctions, storing digital assets on another storage device or in the cloud helps ensure the longevity of those assets. Moreover, online account service providers may voluntarily disclose the contents of electronic communications, but they’re not compelled to do so. If you want to help ensure that your loved ones have access to the information in your online accounts, backing it up on your own device is a best practice.

4) Put Your Plan in Writing. Experts also recommend formalizing your digital estate plan. That means naming a digital executor—someone who can ensure that your digital assets are managed or disposed of in accordance with your wishes after you’re gone. If your primary executor is savvy with technology, there’s probably no need to name a separate digital executor. But if not, or if you have particularly valuable or special digital property, such as intellectual property, experts advise a separate fiduciary/executor for digital assets. Depending on the type of property, the fiduciary may also need special powers and authorizations to deal with specific assets.

This is for information purposes only and should not be construed as legal, tax, or financial planning advice. Please consult a legal, tax, and/or financial professional for advice regarding your personal estate planning situation.

This presentation was designed for educational purposes only and is not intended for specific legal, accounting, investment, income tax or other professional advice. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by PWM Advisory Group, LLC [“PWM”]), or any non-investment related content, made reference to directly or indirectly in the presented material(s) will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this presentation serves as the receipt of, or as a substitute for, personalized investment advice from PWM. PWM is neither a law firm nor a certified public accounting firm and no portion of the presented material(s) should be construed as legal, accounting or consulting advice. A copy of the PWM’s current written disclosure statement discussing our advisory services and fees is available for review upon request. ©2012 Morningstar, Inc. All Rights Reserved. The information contained herein (1) is intended solely for informational purposes; (2) is proprietary to Morningstar and/or the content providers; (3) is not warranted to be accurate, complete, or timely; and (4) does not constitute investment advice of any kind. Neither Morningstar nor the content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. “Morningstar” and the Morningstar logo are registered trademarks of Morningstar, Inc. Morningstar Market Commentary originally published by Robert Johnson, CFA, Director of Economic Analysis with Morningstar and has been modified for Morningstar Newsletter Builder. To ensure compliance with U.S. Treasury rules, unless expressly stated otherwise, any U.S. tax advice contained in this communication (including attachments) is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code. Photo Credit: 

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