Wealth Management

The Value of Multigenerational Family Meetings

If you’ve amassed sizable wealth, or are on the right path and getting there, it may be time to consider how to pass on some of that money to children and grandchildren—without creating big problems that could harm their futures and destroy family harmony.

The fact is, family wealth—how it’s managed, transferred and used—can generate major drama among family members. As wealth grows, so does the potential for that money to foment conflicts and bad financial decisions that can reduce a family’s financial position and even ruin intra-family relationships forever.

The good news: We can look to the strategies used by today’s ultra-wealthy families to avoid or mitigate such negative outcomes—and find ways to adopt similar strategies in our own families.

One of the most effective tools harnessed by the ultra-affluent is the family meeting—which is used to educate heirs and potential heirs about sound financial decision-making, to identify shared family financial values and to maintain (and grow) family wealth in a unified manner.

Click here to read more:

The Value of Multigenerational Family Meetings

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc.  The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles.  Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice.

The Importance of Personal Umbrella Policies

What would happen if you or your child caused a car accident that resulted in serious injuries or the deaths of others?

How would you pay for the treatment and damages of someone who was hurt in your home and claimed negligence? What happens when they claim to have suffered greatly because of the injury?

What if your dog was attacked by a stranger on your property and bit the person in self-defense—but you were still sued?

These are questions that anyone could face. However, one component of a wealth protection plan that is often overlooked or underused—even by the affluent—is the umbrella policy.

Here’s why an umbrella policy can make sense if you have significant assets.

The Importance of Personal Umbrella Policies

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.

 

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc.  The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles.  Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice.

Eye On Money November/December 2018

We invite you to check out the new issue of Eye On Money! Inside are articles on:                                      

Year-end tax planning. You may be able to reduce your 2018 taxes if you act soon. Several tax-minimization tips are presented here. For specific advice, please consult us before the end of the year.

How to document your charitable gifts. Find out what records you’ll need to keep if you want to claim a tax deduction for your charitable gifts.

Giving the gift of education. Don’t miss this one if you want to help a loved one save for college.

The taxation of alimony to change in 2019—but not for everyone. Here’s a summary of what you need to know if you currently pay or receive alimony, or are considering a divorce.

Also in this issue, you can check out how diversification can help manage risk and learn why credit reports matter. Plus, you can vicariously explore one of the world’s hottest tourist destinations—Iceland, choose which special exhibitions you want to see at major museums, and find out how much you know about international travel destinations.

 

Please let us know if you have questions about anything in Eye On Money.

Eye On Money November/December 2018

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.

 

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc.  The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles.  Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice.

Eye On Money September/October 2018

We invite you to check out the new issue of Eye On Money! Inside are articles on:               

Financial tips for your 50s and 60s that can help you build wealth and prepare for a financially secure retirement.

529 plans. They are not just for college anymore! Don’t miss this article if you plan to use money from a 529 plan to pay for grades K-12 tuition.

Roth IRAs. With lower income tax rates in place, this may be an ideal time to convert to a Roth IRA.

Asset location. Dividing your assets between your taxable investment accounts and retirement accounts in a tax-smart manner may boost your after-tax returns.

Also in this issue, you can check out how to prepare financially for a health crisis, learn what to consider when choosing a donor-advised fund sponsor, and review five things you should know about the new federal estate tax exemption. Plus, you can take an armchair tour of Arches National Park, learn where to find the darkest skies and best star-gazing, and see how much you really know about South America.       

Please let us know if you have questions about anything in Eye On Money.

­Eye On Money September/October 2018

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.

 

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc.  The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles.  Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice.

Insightful Questions That Can Ramp Up Your Success

Want to see some amazing results in your life? Ask questions and then listen well. We have discovered that a disproportionate number of the most successful people consistently and systematically use an approach known as insightful questioning to build rapport with other people in ways that generate much better outcomes.

Here’s how they engage in insightful questioning—and use it to generate truly impressive success.

The importance of insightful questioning

Being adept at using carefully chosen insightful questions serves a number of purposes:  

  • It enables you to be more effective at garnering useful and important information from other people—such as their goals and the drivers behind those goals. Armed with that information, you can potentially find ways to work together that might not have been obvious otherwise.
  • It facilitates rapport between you and other people because it seeks to create deeper levels of understanding of all those involved.
  • It’s a powerful way to connect with other people and provide you with information that you can use to further your own agenda—often while simultaneously helping them, too.

Be an engaged listener, too

Asking insightful and thought-provoking questions ultimately won’t help you learn new information or build rapport if you tune out when the other person answers. You must also be adept at deep listening—focusing intently on the person talking through fully present, nonjudgmental listening.

When you deeply listen to someone, it’s almost as though you are suddenly standing next to the person and seeing the world as he or she sees it. You become a comrade or partner. Since most people rarely have the experience of being deeply listened to, this experience of camaraderie is equally rare. The person you’re interacting with will feel more bonded to you as a result.

How do you do it? Start by creating by saying to yourself, “I am going to have a great conversation with this person, and we will both have a great experience.” With so many thoughts buzzing around in your head all day, you must intentionally commit to being as present as possible with the person in front of you. By keeping this intention foremost in your mind, you will greatly increase your odds of success.

Then listen on the surface to the information that the person provides. It’s important that you capture this surface information as accurately as possible. But also listen for the person’s thoughts, feelings, values and needs—which he or she might not come right out and say directly.

Click here to read more:

Flash Report: Insightful Questions That Can Ramp Up Your Success

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.

 

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc.  The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles.  Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice.

Maximizing Small-Business Tax Deductions

Maximizing small-business tax deductions

How small-business owners can take advantage of Section 199A

The Tax Cuts and Jobs Act (TCJA) passed in December 2017 offers a wealth of opportunities to small-business owners. Among the most notable provisions is Section 199A, which provides for qualified business income (QBI) deductions. These deductions are available to taxpayers who are not corporations, including S corporations, partnerships, sole proprietorships and rental properties.

While Section 199A provides a huge tax break for small-business owners, determining who is qualified can be complicated. In addition to eligibility requirements, there are income thresholds after which deductions are phased out. Here’s a look at who is eligible to use Section 199A, as well as strategies business owners above phase-out thresholds can use to recapture QBI deductions. 

Are you eligible?           

In general, small-business owners may qualify for QBI deductions if they meet one of the following criteria:

  •  No matter the type of business, if a business owner’s taxable income falls below $157,500 for single filers or $315,000 for joint filers, that business owner is eligible for a QBI deduction. That deduction is equal to the smaller of 20% of their qualified business income or 20% or their taxable income.

  • Businesses that offer specified service—such as lawyers, accountants, athletes, financial services, consultants, doctors, performing artists, and others with jobs based on reputation or skill—may have deductions phased out if they make too much money. If your income is above $207,500 for single filers or $415,000 for joint filers, you can no longer claim the QBI deduction.

  • If you own a business that is not a service business or a specialized trade, the QBI deduction is partially phased out if your taxable income is above $157,500 for single filers or $315,000 for joint filers. The deduction is limited to the lesser of either 20% of qualified business income or the greater of the following: 50% of W-2 wages paid, or the sum of 25% of W-2 wages paid by the business generating the income plus 2.5% times the cost of depreciable assets

The retirement solution

If your income is above the phase-out limits, you can preserve your full deduction by making smart use of retirement plans. Here’s a look at a few examples of ways to strategically employ retirement plans to reduce your income and recapture a QBI deduction:

Example 1: A couple, age 50, with a specified service business

A couple, each 50 years old, has a specific service business in the form of an S corp that pays W-2 wages of $146,000 and pass-through income of $254,000, for a total income of $400,000. The couple claims the standard deduction of $24,000, making their adjusted gross income $376,000. Because of their high earnings, the couple’s QBI deduction is only $19,812 due to QBI phase-outs. Their total income is  $356,188.

The couple can capture their full QBI deduction by setting up and funding a 401(k) plan. They can set up an individual 401(k) plan, deferring $24,500 as an employee contribution and contributing 25% of salary, or $36,500, as a profit sharing contribution. The deferral and profit sharing max out their individual 401(k) plan with a total contribution of $61,000. In this way, their W-2 wages are reduced to $121,500, and their pass-through income is reduced to $217,500 after the profit sharing contribution. Their total income after the standard deduction is $315,000.

As a result, the couple can claim their full QBI deduction of $43,500 (20% of 217,500), and their income is now $271,500. With a $61,000 contribution to a 401(k), the couple was able to effectively reduce their income by $84,688. In other words, this couple was able to get 1.39 times the income reduction for every dollar they contributed to a retirement plan. 

Example 2: A couple, age 55, with a higher-income specified service business,

Business owners who earn higher income may need to deploy additional retirement plans to capture their QBI deduction. Consider an S corp that pays W-2 wages of $146,000 to the couple, and pass-through income of $317,500 for a total income of $463,500. They claim the standard deduction of $24,000 and their adjusted gross income becomes $439,500. The couple does not receive a QBI deduction because their high income results in a complete phase-out. Their total income therefore remains $439,500.

However, this couple can still take advantage of a QBI deduction by setting up an individual 401(k) plan and deferring $24,500 as an employee contribution. They also can add a defined benefit (DB) plan or a cash balance (CB) plan and contribute even more to a retirement plan. Suppose they set up a DB or a CB plan and the actuaries calculated they could contribute $100,000 to the plan for a total combined contribution of $124,500. In this case, their W-2 wages are reduced to $121,500 and their pass thru income is $217,500.

The couple’s total income after the standard deduction is $315,000. Their QBI deduction is $43,500 (20% of $217,500) and their income is now $271,500. With $124,500 in contributions to their individual 401(k) plan and DB or CB plan the couple received a $168,000 income reduction. This couple was able to get 1.35 times of income reduction for every dollar they contributed to a retirement plan.  

This material is for educational purposes and is not intended to provide tax advice. Talk to your tax professional to find out how QBI deductions may apply to your financial situation.

To learn more about how to maximize your QBI deduction, please email us at rpyle@diversifiedassetmanagement.com or call (303) 440-2906.

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc.  The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles.  Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice

What Is Evidence-Based Investing?

How Do Traditional Active (TA) and Evidence-Based (EB) Investors Differ?

They See the Future Differently.

They Work on Different Timelines.

They Are Guided by Different Determinants.

They Define “Success” Differently.

They Use Risk Differently.

They Consider Costs Differently.

Click here to read more:

What Is Evidence-Based Investing?

Evidence Based Investing - Diversified Asset Management Inc.jpg

 

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.

 

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc.  The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles.  Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice.

The Tao of Wealth Management

July 2018

The path to success in many areas of life is paved with continual hard work, intense activity, and a
day-to-day focus on results. However, for many investors who adopt this approach to managing their wealth, that can be turned upside down.

The Chinese philosophy of Taoism has a phrase for this: “wei wu-wei.” In English, this translates as “do without doing.” It means that in some areas of life, such as investing, greater activity does not necessarily translate into better results.

In Taoism, students are taught to let go of things they cannot control. To use an analogy, when you plant a tree, you choose a sunny spot with good soil and water. Apart from regular pruning, you let the tree grow.

Click here to read more:

The Tao of Wealth Management

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.

 

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc.  The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles.  Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice.

Flash Report - Savvy Negotiating: To Get the Moon, Ask for the Stars

One key way to build serious wealth—whether in a business or your everyday life—is to effectively and consistently negotiate deals that are good for you and your bottom line. Ideally, everyone walks away from a negotiation feeling good about the outcome—a win-win scenario. But ultimately, to be successful you must achieve your minimum goals and preferably a whole lot more.

Trouble is, it’s common for people to end up failing to get what they want due to how they approach negotiations right from the start—from the first declarations of their terms. Here’s how you can avoid that negative outcome and get the results you truly want when hashing out a deal or arrangement with another party.

Start with your goals

Clarity about goals is job one. In any negotiation, you will be well-served by being quite clear about what you want to walk away with. Most people in negotiations have a range of goals, and it’s important you specify the top and bottom of the range.

Click here to read more:

Savvy Negotiating To Get the Moon, ask for the Stars-Flash Report

 

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.

 

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc.  The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles.  Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice.

Flash Report -The Super Rich Stress Test Their Financial Plans—and So Should You!

The Super Rich (those with a net worth of $500 million or more) who have family offices typically engage a sizable lineup of professional advisors to help them create and implement financial plans. To help ensure those plans are both state-of-the-art as well as in line with their needs and wants, many of them regularly “stress test” these plans.

Here’s why you should join them in that effort—even if you’re not nearly as wealthy.

Asking “What if?”

Stress testing financial plans can be a very smart way to help make certain that the plan will deliver as promised. The fact is, financial plans that might look great on paper all too often prove to be much less impactful once they are implemented. It is not uncommon for there to be unintended consequences that can even derail one’s agenda.

At heart, stress testing is when you ask, “What if …?” about a variety of areas of a financial plan you have or are considering. 

Click here to read more:

The Super Rich Stress Test Their Financial Plans—and So Should You!-Flash Report

 

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.

 

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc.  The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles.  Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice.

 

Flash Report - Want to Promote Family Entrepreneurship? Consider a Family Bank

A key objective among many single-family offices serving Super Rich families (those with a net worth of at least $500 million) is to enable future generations of family members to build their own wealth and create their own entrepreneurial legacies.

With that in mind, the Super Rich are embracing ways to develop the business acumen of inheritor family members—as well as ways to support them in forming new ventures of their own.

One way the Super Rich are making that happen is through family banks. And increasingly, families that aren’t as wealthy as the Super Rich are using these banks as well.

A way to generate family wealth—and family financial intelligence

A family bank is a formal legal entity a family sets up, with rules that govern how family members can access funds to start or support business ventures as well as how those family members are expected to pay back that money.

Family banks are designed to bring a level of structure, professionalism and accountability when providing money to family members to fund initiatives. As such, they can help instill financial intelligence, financial responsibility and financial values in family members—while also helping to avoid accusations of favoritism in families with multiple children.

Click here to read more:

Want to Promote Family Entrepreneurship Consider a Family Bank-Flash Report

 

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.

 

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc.  The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles.  Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice.

Flash Report - Three ‘Spy Secrets’ That Can Protect You, Your Family and Your Business

Imagine yourself in a vintage tuxedo, sipping a “shaken, not stirred” martini as you make eye contact across the bar with a beautiful secret agent who is about to covertly hand you a dossier with information that will help prevent World War III.

Okay—that’s almost certainly never going to happen to you. But you can use some of the same strategies employed by professional spies and operatives to prevent criminals from harming you, your family and your company.

These strategies come courtesy of Jason Hanson—a former CIA officer who spent nearly a decade at the agency. He then founded a business, Spy Escape & Evasion, to teach people how to be safe using insider spy tactics and wrote The New York Times best-selling book Spy Secrets That Can Save Your Life.

Secret #1: Run an SDR—a surveillance detection route

The SDR is a powerful way to make sure that you’re not being followed by a predator.

Here’s how it works for intelligence operatives. Because they are almost always being watched, they can’t simply drive to a meeting with someone and get handed an envelope of secrets. So an operative might go to Starbucks, go to the gym, go shopping and do other tasks hours before the scheduled meetup. “If I saw the same person or same car in all those spots, I knew I was being surveilled and I would abort the meeting,” says Hanson.

To see how you can apply that technique in your day-to-day life, Hanson offers a few examples.

Click here to read more:

Three “Spy Secrets” That Can Protect You, Your Family and Your Business-Flash Report

 

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.

 

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc.  The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles.  Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice.

Flash Report - What’s Your High-Net-Worth Personality?

Here’s why you need to know:

As a successful person with big goals, you require truly valuable financial advice that maximizes your ability to achieve your most important personal and professional financial objectives.

That means you need to work with professionals who connect with you. Who relate to you. Who understand you well enough to really “get” what you want your money to accomplish and why.

To get advice that works, it’s important to understand your own high-net-worth personality so you can select and work with advisors who are an ideal match.

What is a high-net-worth personality, anyway?

High-net-worth (HNW) psychology is all about understanding what the affluent want from the professionals they work with, as well as the “how” and “why” behind their attitudes and decisions about their money. Developed in the late 1990s, HNW psychology has been verified through the study of thousands of wealthy individuals. It’s also been adopted by elite, forward-thinking financial advisors and other professionals serving affluent individuals and families.

 

Click here to read more:

What’s Your High-Net-Worth Personality-Flash Report

 

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.

 

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc.  The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles.  Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice.

Maximizing your wealth: “Should I pay cash or finance my cars?”

In an earlier BizWest article, “Investors shouldn’t take the path of least resistance,” I shared several scenarios in which the easy way isn’t always the best way to maximize your wealth. I’ve got one more scenario to cover today: If you’ve got the money available, it’s easier to buy your cars with cash instead of on credit. But which is the wiser way for your wallet in a low-rate environment?

Contrary to your initial “neither a borrower nor a lender be” instincts, the current answer is likely to be: Take the credit … especially if it’s available at zero percent. One need only scan the car dealers’ ads to see that zero percent financing is a frequent incentive these days for basic and luxury vehicles alike.

Before we consider the choice empirically, think about it theoretically. If someone is offering you anything at zero percent, you’re basically being invited enjoy whatever it is you’ve purchased before you have to pay for it. As long as you have the discipline to let those dollars earn a little interest or a few investment returns until payment is due, when would that not play out in your favor?

With that in mind, let’s explore a few scenarios and make sure the numbers jive with the logic.

A typical (simplified) choice current car buyers face is as follows: Do you want to pay cash upfront in exchange for a discounted sticker price? Or would you rather take a zero percent or low-interest loan instead of the discount?

The specific dollar amounts don’t really matter. Whether the choice involves tying up $10,000, $50,000 or $100,000 in an automobile … or keeping the same amount in your pocket to save or invest during the time you own the vehicle, the math and its relative outcomes are the same.

The essential question thus becomes: At what points do the scales tip one way or the other between cash or credit? I’ve done some math on that, assuming a six-year timeframe for all comparisons. That is, each loan is a six-year loan, and the saving/investment periods are eight years. Cars are replaced every 8 years over the next 32 years.

Scenario One: A zero percent loan with kept assets invested at 6%. Let’s imagine you took a zero percent loan and invested the cash that would otherwise have gone to the car purchase into the stock market. Fortune smiles on your investments and you earn 6% annualized market returns across the next six years. For paying upfront cash to be the better bargain, the dealer would have to offer you at least a 30% discount on the car purchase.

Scenario Two: A zero percent loan with kept assets saved at 2%. Let’s say you weren’t so keen to invest the assets earmarked for car costs. After all, if those dollars will eventually be needed to pay off the balance on the loan and you happen to invest just prior to a market downturn, you could just as readily lose instead of gain 6% annualized on your investments. What if you instead put the reserved assets in a CD or similar savings account, offering a lower but more dependable 2% annualized return? You’ll still come out ahead taking the loan until the dealer offers you at least an 11.5% discount to pay cash.

Scenario Three: Three percent financing with kept assets invested at 6%. Admittedly, the zero-percent loan incentives are unlikely to last forever. So what if auto loans are in the range of 3%? It still may pencil out in favor of keeping the cash and investing it in the market. Assuming 6% annualized market returns, the dealer would have to offer you at least a 23% discount before it would make sense to pay cash upfront instead.

Scenario Four: Three percent financing with kept assets saved at 3%. But again, that 6% annualized market return isn’t guaranteed. But if loan rates rise, you’ll probably also earn more interest in a CD or savings account too. That said, here, the scales begin to even out. Assuming you could earn 3% returns in your savings account, if the dealer is willing to offer you at least a 9% discount to pay cash, then the cash up front may become your better choice.  

Still weighing your options? If you’re willing to take a deeper dive, here’s one more illustration, offering a more detailed analysis of financing new cars versus paying cash for them.

Here, we’ve looked at purchasing $50,000 luxury vehicles versus more basic, $25,000 models, assuming a replacement cycle of every eight years across 32 years. (That is, you buy a new car every eight years.) We’ve assumed zero percent financing for the cars with a 6% annualized market return on the money not used to purchase them. The calculations also include:

·         A 10% down payment if you were financing the cars

·         A 5% discount if you instead pay cash

·         A 15% annual depreciation on the cars

·         A 3% inflation rate when replacing cars

·         A sufficient starting amount of investable cash (about $160,000), to cover paying for a luxury vehicle with cash every eight years

The following graph shows the residuals:

car financing.png

As you can see, the results vary wildly based on the scenarios. In the worst-case scenario, you would be left with about $27,000 after 32 years of purchasing a luxury vehicle for cash in a zero-interest-rate environment.

Mathematics aside, I get why families may still choose to pay cash for their cars. There’s less paperwork, no ongoing obligation, and that unquantifiable sense of satisfaction in knowing that what’s yours is yours. On the other hand, if you do decide to let the numbers be your guide, in a zero-interest-rate environment, I hope I’ve demonstrated how likely you are to end up with more money in your pocket for future car purchases if you let the lender be your friend.

 

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.

 

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc.  The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles.  Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice.

The Difference the Right Financial Advisor Makes

Tuning Out the Noise takes viewers on a journey through the "lost decade," featuring the media’s amplified coverage of headline events and pointing to the positive outcome that a disciplined investor could have experienced in the recovery.

 

You can watch the video below.

 

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.

 

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc.  The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles.  Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice.

Flash Report - Five Reasons to Make Philanthropy a Family Affair.

Getting your family involved in charitable giving can create a powerful legacy

A growing number of successful people have a strong urge to “pay it forward” by financially supporting causes and organizations that are near and dear to their hearts.

Many of you already make regular and sizable charitable contributions. And we know from research that one key reason successful people like you want to become even wealthier is to help other people increase their own success and advance in the world.

But have you gotten your family involved in philanthropy? If not, you could be missing a truly massive opportunity to teach your children and other loved ones about smart financial decision making and impart key financial values that can guide them throughout their lives.

Round up the kids

If you’re like many people we work with, your deepest financial concerns are focused on taking care of your family and ensuring they enjoy lives that are financially stable and financially responsible.

 

Click here to read more:

Five reasons to Make Philanthropy a Family Affair-Flash Report

 

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.

 

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc.  The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles.  Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice.

Flash Report - Smart Ways to Build a Moat Around Your Wealth

Have you taken steps to protect the assets you have worked so hard to build?

Chances are, you know someone who has been sued. Maybe that someone is you.

The fact is, your enviable position as a successful person comes with a major downside: You’re a potential magnet for lawsuits—which may very well be frivolous and unfounded—and other attacks that can wreak havoc on your financial health.

That means you need to take steps to protect the assets you’ve worked so hard to build. Otherwise, you may jeopardize the financial security of yourself and your family.

Why you need asset protection

The logic of asset protection planning is clear: You build a moat around your assets that is as difficult as legally possible for litigators, creditors and others to cross. Instead of trying to fight it out with you in court for months or years and risk losing, the litigant sees that the only reasonable option from a legal standpoint is to settle for pennies on the dollar—or, ideally, to leave empty-handed.

You probably recognize the threats to your wealth from others. According to research, more than 86 percent of successful business owners say they are concerned about becoming the object of unjust lawsuits or being victimized in divorce proceedings.

 

Click here to read more:

Smart Ways to Build a Moat Around Your Wealth-Flash Report

 

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.

 

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc.  The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles.  Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice.

Flash Report - The Billionaire Money Rules

What our research shows about how the self-made Super Rich build their wealth.

If you are like nearly every other successful person, you’re not ready to rest on your accomplishments. You want to build on your success so far to create even more wealth and more value. In fact, according to our research, 94 percent of successful business owners want to be wealthier. (And even if you don’t own a business, you are effectively the CEO of your family, so this all applies to you, too.)

Why you need serious wealth

You’re not driven by greed or after wealth simply for wealth’s sake. Instead, you probably want to grow your wealth substantially to achieve goals that are deeply meaningful to you.

As the chart below shows, these goals likely include taking care of your family and other loved ones, supporting the causes you care deeply about and perhaps even changing the world for the better. 

Click here to read more:

The Billionaire Money Rules- Flash Report

 

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.

 

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc.  The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles.  Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice.

 

Time-Tested Tactics to Build Your Wealth

Here is a nice article provided by the Editors of Kiplinger’s Personal Finance:

 

By the Editors of Kiplinger’s Personal Finance | April 2017

 

We have doled out a lot of good advice over the 70 years we’ve been publishing Kiplinger's Personal Finance magazine. So in many ways it was easy to come up with 70 ideas on how to create wealth. But when our editorial staff submitted nearly 300 ideas, the editors had to roll up our collective sleeves and distill the advice into absolute gems.

 

In this post, we offer advice on how to build, protect and enhance your wealth, time-tested strategies to help you keep your eye on the ball, and our top tips for finding value, so your hard-won wealth doesn’t leak out in dribs and drabs. We devote a section to the biggest goal of all -- a secure retirement. And because life isn’t all about making money, we include fulfilling ways to give back. Take a look.

 

Save Early and Often

The sooner you start to save, the easier it will be to amass a comfortable nest egg -- thanks to the power of time and the magic of compounding. A 25-year-old who saves $450 a month in a tax-deferred retirement account and earns an average yearly return of 7% will have about $1.1 million by age 65.

If the same investor waits until age 35 to start saving, she’d have to sock away $950 a month to reach roughly the same balance by age 65. Try to save 15% of your income, including any employer match for your retirement plan. If that’s not doable, put away as much as you can and increase the percentage as your income and budget allow.

“Getting started, even if you’re saving 3% of your income or $10 a week, is the critical goal,” says Molly Balunek, a certified financial planner in Cleveland. “Once you see progress, it becomes easier to save 1% more, or $5 more a week.”

Create an Emergency Fund

If you have a dedicated stash of cash at the ready in case of a job loss or an unexpected bill -- say, for a major car repair or hospital visit -- you won’t have to resort to racking up credit card debt or, say, tapping retirement savings to cover the tab.

Squirrel away at least three to six months’ worth of living expenses in a safe, easy-to-access savings or money market deposit account. (For a more personalized amount to save, use HelloWallet.com’s tool.) Look for an account with no monthly fee, a low (or no) minimum balance requirement and a competitive rate, such as the Synchrony Bank High Yield Savings and the GS Bank Online Savings accounts. Both recently yielded 1.05%.

Make the Most of Employer Incentives

For the slow-and-steady way to get rich, take full advantage of your company’s 401(k). You can contribute up to $18,000 ($24,000 for people 50 and older) in 2017 to this pretax account; your employer may kick in another 4% to 6% of your pay, or even more. Many companies enroll employees automatically, at a contribution rate of, say, 3% of their salary. But aim for 15% of your income, including the company match, from the beginning of your career until the end. If you have to cut back for a few years -- say, to buy a house or pay college bills -- try to kick in at least enough to get the full company match, and boost your contributions later to get back on track.

Teachers typically have access to 403(b) plans, which carry the same terms and benefits as 401(k)s but generally lack the breadth of investment options. Public-sector workers may be offered a 457 plan, which is also similar to a 401(k) plan but has a higher contribution limit for people within three years of normal retirement age, usually defined as the age when they can collect unreduced pension benefits.

Open a Roth

Another surefire wealth builder is a Roth IRA. You fund this account with after-tax dollars, so the pain is up front. The payoff? Withdrawals are tax-free if you’re at least 59½ and have held the account for at least five years (you can always withdraw your contributions tax- and penalty-free). You don’t have to take required minimum distributions from a Roth, as you do with traditional IRAs and 401(k)s, allowing you to withdraw the money strategically or let it grow and leave it to your heirs. And because withdrawals from a Roth aren’t reported to the IRS as income, they won’t increase the taxes on your Social Security benefits or trigger the high-income surcharge on Medicare Part B or Part D.

You can contribute up to $5,500 a year to a Roth ($6,500 if you’re 50 or older) in 2017. The allowed contribution starts to shrink if your modified adjusted gross income is more than $118,000 ($186,000 for married couples filing jointly) and disappears altogether at $133,000 ($196,000 for joint filers).

Earn too much to qualify for a Roth? Your employer may offer a Roth 401(k), which has no income limits and carries the same contribution cap as a regular 401(k).

Roths aren’t just for grown-ups. One of the best ways to help your children or grandchildren build wealth is to get them started early with a Roth IRA. Children of any age who have earned income from a job can contribute up to $5,500 to a Roth IRA (or their earnings for the year, if less), and you can give them the money to get started. Not all brokerages let children open Roths, but several -- including Fidelity, Charles Schwab and TD Ameritrade -- offer custodial Roths with little or no investing minimum and no IRA maintenance fees.

Ask a Pro for Advice

A financial adviser can help you blaze a path to financial success -- especially when you’re starting out or facing a complex financial situation. A certified financial planner (CFP), for example, offers guidance in strategizing retirement savings, allocating or managing investments, creating an estate plan, and performing other tasks.

At napfa.org, you can search for a fee-only adviser, who avoids conflicts of interest by accepting no commissions from selling investments or other products. If you need extra assistance with tax planning, look for a certified public accountant (CPA) with a personal financial specialist (PFS) designation at aicpa.org.

You don’t need deep pockets to get help. At GarrettPlanningNetwork.com, search for planners who charge hourly rates and require no asset or income minimum. Independent outfits, such as Betterment and Wealthfront, as well as full-service firms, such as Charles Schwab and Fidelity, offer online “robo” adviser services, which provide low-cost, computer-generated advice and portfolio management.

Polish Your Credit

Good credit helps you get the lowest interest rates and best terms on a credit card, mortgage or other loan, and your credit history may even affect your job prospects, insurance rates, and ability to get an apartment or cell phone plan. Generally, a credit score of 750 or higher (on a 300-to-850 scale) is considered top tier. The most important credit-building step is to pay all of your bills on time.

Another score booster: Keep the amount that you owe on your credit cards as a percentage of their overall limits (known as your credit utilization ratio) as low as possible. On each card, use no more than 30% of your limit, and keep the ratio to 10% or less on each card if you plan to apply for a loan soon.

Open a Brokerage Account

Once you’ve established a bank account and started to participate in your employer’s retirement savings plan, take your wealth-building program to the next level by opening a brokerage account. That will allow you to invest in individual stocks and exchange-traded funds, which most people can’t do in their 401(k), as well as no-transaction-fee mutual funds. You’ll need $2,500 to open an account at Fidelity, our top-ranked online broker; Charles Schwab requires just $1,000, which is waived if you sign up for automatic monthly deposits of at least $100.

Set Specific Goals

You’re more likely to accrue wealth if you have specific goals and a plan to reach them. That means coming up with short-term goals, such as paying off debt, buying a house, and saving for a rainy day or a vacation, as well as long-term goals, which may include funding your retirement and your children’s college education.

Make your goals specific and realistic. “Instead of saying that you want to save for your child’s education, say you want to have $50,000 saved for your child’s education in 15 years, and you’ll get there by depositing $200 a month into a 529 savings plan,” says Roger Ma, a certified financial planner in New York City.

Live Like the Invisible Rich

Live within -- and ideally below -- your means. By resisting the temptation to buy a big house or expensive cars, you can invest in things that will create long-term wealth, such as stocks and real estate.

Cultivate Your Career

Want to move ahead in your organization or switch to a more lucrative job? Keep your skills sharp and never stop networking, says Mary Eileen Williams, a career counselor and author of Land the Job You Love: 10 Surefire Strategies for Jobseekers Over 50. An updated LinkedIn profile is critical because most employers use the website to vet potential candidates, Williams says. And learning new job skills doesn’t have to cost a lot of money. Khan Academy, a nonprofit website, offers video tutorials on everything from statistics to computer programming.

Your local community college may also offer career-advancement courses. Considering an advanced degree? According to Payscale.com, nurse anesthetists, MBAs in business strategy and chemical engineers earn the highest salaries after graduate school; graduates with master’s degrees in education and human services earn the lowest pay.

Another secret to success: Spend half an hour a day learning about your job, industry or a dream you’re pursuing. More than 95% of self-made millionaires spend at least 30 minutes every day reading materials related to their careers or self-improvement, says Tom Corley, a certified financial planner who spent five years researching the habits of wealthy people for his book Rich Habits.

Buy a Home (When You're Ready)

Owning a home is one of the best ways to build wealth. You can still lock in low mortgage rates, and Uncle Sam offers a helping hand in the form of tax deductions for mortgage interest and property taxes. Ideally, you’ll put down at least 20% of a home’s purchase price, which allows you to avoid private mortgage insurance. The bank may be willing to lend you more than you can comfortably afford.

To avoid feeling house poor, however, figure out how much of your monthly budget you can devote to a mortgage payment and still have enough left over for retirement and college savings, travel, and just plain fun. And note that the maxim “Buy the worst house in the best neighborhood” doesn’t pay off.

In Zillow Talk: Rewriting the Rules of Real Estate, Spencer Rascoff, CEO of Zillow, and Stan Humphries, chief economist, write that the data prove you should “buy a decent house in the right neighborhood.” What’s the right neighborhood? The most expensive one where you can afford a home that is not in the bottom 10% of listings by price. Homes in the bottom 10% don’t appreciate as well as homes in the top 90%.

Save for College as Soon as Your Kids Are Born

Too many parents sacrifice their own wealth by raiding their retirement savings to pay for their kids’ college. Or their children graduate with large student-loan payments to go with their sheepskin. If you set aside money in a 529 college-savings plan every year starting when your children are born, you’ll have a big chunk of the tuition bill saved when they’re 18.

They can use the 529 money tax-free for college costs, and you may get a state income tax deduction for your contributions. Go to SavingForCollege.com for more information about each state’s rules. If your state doesn’t offer a tax break, check out Utah’s plan, which features low-cost Vanguard funds and FDIC-insured accounts.

Fill the Gaps in Home Insurance

Your home may be your biggest asset, so make sure you have enough insurance to protect it from disasters. Review your policy to see if your dwelling coverage is enough to rebuild. (Your insurer may inspect your home, or you can get an estimate for $25 at e2value.com.) Let your insurance company know about any major improvements that affect the value.

Check the amount of coverage for your possessions, and consider buying a rider to cover special items, such as jewelry. Add insurance for sewage back-ups (typically $130 for $10,000 of coverage), and consider flood insurance if you’re concerned about that risk (ask your homeowners insurance agent for a price quote, or go to FloodSmart.gov for additional information).

Shield Yourself From Lawsuits

The most important part of your auto insurance policy is the liability coverage, which protects your assets and future earnings if you are liable for injuries and damage as the result of an accident. State liability coverage requirements are usually inadequate; most people should get coverage to pay at least $250,000 per injured person and $500,000 per accident. Also make sure you have uninsured-motorist coverage (and underinsured-motorist coverage, in states with inadequate liability limits). That can pay for damage to your car, medical expenses and lost wages for you and your passengers if the at-fault driver does not have insurance.

Most families with typical risks should also safeguard their assets and future earnings with an umbrella policy. You can boost your auto and home liability protection by $1 million with an umbrella policy for about $200 to $400 per year. Make sure you have at least as much liability coverage as your net worth.

Get Enough Life Insurance

Life insurance would replace lost income if you or your spouse died early. One rule of thumb calls for buying at least eight to 10 times your gross income, and you can get a refined estimate by using a life insurance calculator (such as the one at LifeHappens.org). A 20- to 30-year term policy, which has no savings component, is best for most families. The policy would likely cover you until your kids are out of college, you pay off your house or you stop working.

You can compare rates for several insurers at AccuQuote.com. If you need insurance longer—for example, if you’re supporting a child with special needs -- consider a permanent insurance policy, such as whole life or universal life, which builds cash value. (Note that premiums for permanent coverage tend to be much higher than for term insurance.)

Buy Disability Insurance

If you become disabled and unable to work, you don’t want to be forced to raid your retirement savings or incur expensive debt. You may have some disability insurance through your employer, but employers’ policies typically cover just 60% of income, with a $5,000 monthly maximum, and don’t take bonuses and commissions into account. Plus, payments from employer disability plans are taxable.

Calculate how much your policy will pay out every month, compare that with your monthly expenses, and consider buying an individual policy to fill the gaps (see Why You Need Disability Coverage). You may be able to cover up to 85% of your income, and payouts from individual disability policies are tax-free.

Make the Most of a Health Savings Account

Instead of using HSA money to cover current medical bills, let the money grow long term and cover medical costs out of pocket. Keep your receipts for eligible medical expenses you incur after you open the account and withdraw the money later -- even in retirement.

To set up an HSA, you need an eligible health insurance policy with a deductible of at least $1,300 for individual coverage or $2,600 for family coverage. You can contribute up to $3,400 to the HSA for individual or $6,750 for family coverage, plus $1,000 if you’re 55 or older. Your contributions are tax-deductible (or pretax if they’re through your employer), and the money grows tax-deferred.

You can’t contribute to an HSA after you’ve enrolled in Medicare, but you can use the money already in the account tax-free to pay premiums for Medicare Part B, Part D and Medicare Advantage, plus a portion of long-term-care premiums based on your age.

Invest in Stocks

The best way to build wealth over the long haul is to invest in stocks. U.S. stocks, as measured by Standard & Poor’s 500-stock index, have returned about 10% per year compounded. Stocks are notoriously fickle and volatile over the short term, and after their long ascent, they are due for a breather or possibly a full-fledged bear market. But with interest rates still in the gutter, stocks will almost certainly outpace bonds and cash-type investments (for instance, savings accounts and money market funds) over the next decade and beyond.

Start investing with low-cost exchange-traded funds, such as iShares Core S&P 500 (symbol IVV), which tracks the S&P 500, or Vanguard Total Stock Market (VTI), which follows a benchmark that includes nearly every U.S. stock. You can rev your engines with a sector ETF, such as Vanguard Information Technology ETF (VGT) or Guggenheim S&P 500 Equal Weight Health Care ETF (RYH). But don’t invest money you’ll need soon.

Monitor Your Credit

You may not know if an ID thief has struck or when a mistake is marring your credit record. To check, go to AnnualCreditReport.com and order your credit reports from the three major credit bureaus (Equifax, Experian and TransUnion). You can get a free report from each bureau once a year. Pore over each one for mistakes, such as variations on your name or accounts you never opened. If you find an error, file disputes with both the lender and the bu­reau(s) that reported the error, preferably by certified mail so you can create a paper trail.

On a more regular basis, monitor your credit score for un­explained dips that could signal something fishy is going on in your credit report. If your bank doesn’t offer a free FICO score, look up services that do.

Thwart ID Thieves

Cleaning up after identity theft can be costly and time-consuming. Worse, ID theft may prevent you from getting credit, at least until you finish the painstaking process of cleaning up your credit files. Rule one: Don’t carry your Social Security card in your wallet or give out your Social Security number unless you’re sure it’s needed, and shred unneeded documents that include the number.

If a thief has already stolen your SSN, he may try to file a tax return in your name and collect a refund. To deter such an attempt, submit your tax return as early as possible. Watch out for calls or e-mails from crooks posing as representatives of your bank, the IRS or other entities in attempts to collect your personal information or money, and never click on a link in an e-mail or text message unless you’re sure of its source. Password-protect your PC and smartphone, and use strong and diverse passwords for your online accounts, too.

Update Your Estate Plan

Pat yourself on the back if you already have a will and other estate-planning documents, including a durable power of attorney (which lets the person you appoint manage your finances and legal affairs) and health care power of attorney (which gives a trusted person the authority to make health care decisions on your behalf if you can’t). Now make sure these documents reflect current circumstances, including the birth of a child, a divorce or a move to a new state (see Estate-Planning for Snowbirds). Also review the beneficiaries of your life insurance, 401(k) and IRA.

Do your family another favor by leaving instructions as to whether you want your body to be buried, cremated or donated to science, and let family members know whether you prefer a funeral service or a memorial service, and where it should be held. Better yet, plan and put aside funds for the whole thing yourself (see How to Plan Your Own Funeral). The median price for a traditional, full-service funeral runs $7,180, not including cemetery costs or extras, such as flowers, according to a 2015 report by the National Funeral Directors Association. Prices vary widely even in the same area, however, so check costs at several funeral homes.

Let Uncle Sam Help Pay for Raising Your Kids

The Department of Agriculture says middle-income parents will spend more than $233,000 to raise a child to age 17, and high-income parents will spend more than $372,000. You’ll feel less of a pinch in the pocketbook if you take advantage of family-friendly tax breaks. Parents who pay for child care are eligible for two breaks: a dependent-care flexible spending account and the child-care credit. You usually have to choose one or the other, and for most families, the flex account is a better deal (assuming your employer offers one).

You can set aside up to $5,000 pretax in a dependent-care FSA. (The maximum contribution is $5,000 per household each year, even if both spouses have access to a dependent-care FSA where they work.) That money avoids not only federal income taxes but also the 7.65% Social Security and Medicare tax, and it may bypass state income taxes as well. The higher your tax bracket, the bigger the benefit. If you have two or more kids, you can max out your dependent-care FSA and still take the child-care credit for up to $1,000 in additional expenses. Don’t forget to count all child-care costs (even the cost of summer day camp) for children younger than 13.

Teach Your Children Well

Raising financially literate and responsible kids should be part of your estate plan. Be up front about the wealth you have and your plans for it, and make sure your legacy is as much about your values as it is about your bank account. Start teaching budgeting skills at an early age. Have teens use allowance to pay some of their own expenses, and steel yourself to let the cell phone go dark if they fall behind on the wireless bill. Seed an investment account for young adults, and perhaps promise to match a portion of the investment returns. The kids are free to withdraw the money, but parents can’t add to the principal. This shows the power of compound growth as well as the opportunity cost of robbing a nest egg.

Shelter Retirement Income

The general post-retirement rule is to draw from taxable accounts first: When you sell investments in a taxable account, you pay tax only on the profit, and if you’ve held the investments for more than a year, the profit is taxed at the long-term capital-gains rate, which tops out at 20%. But you may get an even sweeter break: In 2017, married couples with taxable income up to $75,900 and single people with income up to $37,950 are eligible for a 0% capital-gains rate. (President Trump’s tax reform plan would retain the 0% capital-gains rate; under the House Republican tax reform plan, the lowest hit on capital gains would be 6%.)

With pretax accounts, every dollar you withdraw is taxed at the ordinary income tax rate of up to 39.6%. Generally, it’s best to tap such tax-deferred accounts after your taxable accounts, letting Roth IRAs -- which aren’t subject to required minimum distributions—ride to take advantage of tax-free growth. There are lots of exceptions to these rules of thumb, so consult an adviser if you’re not sure what’s best for you.

Keep an Eye on Recurring Fees

Don’t let recurring charges nibble away at your assets. Households with two cell phones, a landline, and a cable and internet bundle spend a whopping $2,700 a year, on average, on those services, according to a Consumer Federation of America report. Consider sharing a phone plan with family members and dropping your cable plan in favor of using an antenna to get over-the-air channels and signing up for streaming video. You may also find you’re not getting your money’s worth out of, say, your satellite radio or audiobook subscription. And don’t overlook hidden fees, such as hotel resort fees, airline charges and bank fees, which can add up to big bucks. You can look up resort fees at ResortFeeChecker.com and airline fees at Kayak.com. Search for low-fee checking accounts at FindABetterBank.com.

Invest to Beat Inflation

Kiplinger expects inflation for 2017 to be a still-modest 2.4%, up from 2.1% in 2016. That’s nowhere near 1970s-style runaway levels, but it’s enough to merit some inflation protection in your portfolio. One good option: Treasury inflation-protected securities. The principal value of TIPS is adjusted to keep pace with increases in consumer prices. Buy TIPS directly from Uncle Sam at TreasuryDirect.gov. Another inflation fighter is Fidelity Floating Rate High Income (FFRHX), which invests in loans that banks make to borrowers with below-average credit ratings. The interest rates adjust periodically in response to changes in short-term rates, which are likely to rise as inflation accelerates. Commodities should also perform well as inflation heats up. For exposure to commodities, consider Harbor Commodity Real Return Strategy (HACMX). For more on staying ahead of inflation, see Inflation-Proof Your Assets.

Capitalize on a Windfall

About one-fifth of U.S. retirees are expected to have estates that top $390,000, according to the banking and financial services organization HSBC. If you are the beneficiary of parental largesse (or you win the lottery), start by doing nothing. Stash your bounty in a safe place, such as a savings or money market account, for six months to a year. That will give you time to come up with a solid plan to get the most out of your good fortune. It will also give you time to assemble a team of advisers to help you manage your money.

Your team should include a financial planner and a certified public accountant or enrolled agent. Depending on the nature of your windfall, you may also need help from a lawyer and an insurance professional. Resist the temptation to tell your boss to take your job and shove it. Windfall recipients often underestimate how much money it will take to replace their income. Plus, once you quit, you’ll stop earning income that contributes to your Social Security benefits -- which you may need if your investments go sour.

Spread Out Your Investments

Playing it safe with a diversified mix of stocks and bonds can help your portfolio stay afloat during bad times and improve your long-term returns. If you have at least 10 years until retirement, for example, hold 70% of your portfolio in stocks and 30% in high-quality bonds. A mutual fund can work nicely, too. Vanguard Wellington (VWELX), a member of the Kiplinger 25 (the list of our favorite mutual funds), holds about two-thirds of its assets in stocks and the rest in bonds, and it has an annualized 8.2% return over the past 20 years.

Give Emerging Markets a Shot

Before delivering modest gains in 2016, stocks in developing markets, such as China and India, had lost money in four of the previous five years. But emerging-market stocks still deserve a place among your assets. Not only are the stocks relatively cheap, but corporate earnings in emerging-markets firms are expected to expand by more than 13% in 2017—far more than firms in the U.S. For access to these stocks, invest in Baron Emerging Markets (BEXFX), a Kiplinger 25 fund, or in exchange-traded iShares Core MSCI Emerging Markets ETF (IEMG), which tracks an index.

Don't Try to Time the Market

Wondering if it’s time to sell all of your stocks? Don’t. First, what are you going to do with the proceeds? Cash pays almost nothing, and bonds come with their own set of risks. And how will you know when it’s time to get back in the market? Our advice: Set an appropriate allocation, then rebalance.

Take a Flier on Small Stocks

After you’ve stashed money in an emergency fund and maxed out contributions to retirement accounts, consider taking a moonshot on stocks that could turbocharge your returns. Small, fast-growing companies may be a good bet now because small companies should benefit from a focus on the healthy U.S. economy, and they could get a lift from fewer regulations and lower corporate tax rates now being considered in Washington. Two top choices: T. Rowe Price QM U.S. Small-Cap Growth Equity (PRDSX) and T. Rowe Price Small-Cap Value (PRSVX), both members of the Kip 25.

Also on our shopping list these days are companies cashing in on high-tech trends. Chipmaker Broadcom (AVGO), factory robotics firm Cognex (CGNX) and cybersecurity company CyberArk Software (CYBR) all look compelling. We also like biotechnology stocks for their long-term growth prospects. You can buy a bundle of them in an exchange-traded fund such as SPDR S&P Biotech ETF (XBI).

Get a Side Gig

Turning a hobby or activity you love into a part-time enterprise can help you raise money to pay down debt and beef up savings. If you’re well along in your first career, it could also lay the foundation for your next one or turn into a part-time retirement job. Websites such as Etsy and Zazzle provide a way to turn your creative endeavors into cash.

Plan to relocate when you retire? Consider buying a property in your retirement destination now -- which will lock in the price -- and renting it out until you’re ready to move.

Rebalance Regularly

You’ll need to trim your winners periodically and add to your laggards to keep your mix intact. Check your brokerage statements every six months to see if your portfolio has veered off track. If your allotment to a particular category has drifted by more than five percentage points from your target allocation, make the needed trades to bring your allocations back into alignment.

Get on Top of Your Spending

You can’t set long-term goals unless you get a handle on where your money goes. Budgeting apps make the task a lot easier. After you monitor your cash flow for several months, you’ll have the tools to hew to your spending limits. With Mint, for example, you link to credit card, loan, bank and investment accounts to track and categorize balances and transactions automatically and get a snapshot of your net worth. You can also create budgets for each spending category and set savings goals, and Mint sends you alerts when you exceed your limits.

If you’re primarily interested in keeping an eye on cash flow and investment performance, check out Personal Capital, which lets you both watch the big picture and dig in to expenses, income and other areas with easy-to-navigate charts and graphs.

Set It and Forget It

Set up an automatic transfer from your checking account to your savings or brokerage account (or both) each month shortly after payday so that your emergency and retirement funds will fatten up before you have a chance to spend the cash. Alternatively, see if your employer can divvy your paycheck between two accounts. Automating certain payments can also pay dividends: A number of auto insurers, including Allied, Allstate and Geico, offer a small discount or cut you a break on fees if you enroll in auto-pay.

You can also slice 0.25 percentage point off your federal student loans by signing up for automatic debit. Even AT&T, Sprint, T-Mobile and Cricket Wireless trim the monthly charges for some plans if you sign up for auto-pay. For the rest of your bills, use automatic bill payments through your bank. Your payment will arrive before the due date, you’ll avoid late fees, and you won’t have to buy stamps and envelopes, either.

Target Your Investing

Target-date funds, which are widely available in 401(k) plans, are designed to be set-it-and-forget-it investments. They are best for investors who aren’t sure how to invest or don’t want to bother figuring out how much of their portfolio should be in stocks or bonds or when to rebalance.

In a target-date fund, the pros do the work for you, shifting the stock-bond mix to a more conservative allocation as you get older and even after you retire. Choose the fund with the year in its name that matches when you plan to retire. Our favorite target-date series are Vanguard Target Retirement, which holds index funds, and T. Rowe Price Retirement, which holds mostly actively managed funds. If you’re 18 years from retirement, for example, go for Vanguard Target Retirement 2035 (VTTHX).

Maximize Your Credit Card Rewards

By playing your (credit) cards right, you’ll earn hundreds of dollars annually in cash back or free flights and hotel stays. For travel, choose a card that offers a hefty sign-up bonus. The Chase Sapphire Preferred ($95 annual fee) ponies up 50,000 bonus points after you spend $4,000 in the first three months, as well as double miles on travel and dining purchases.

For cash back, the no-fee Citi Double Cash card can’t be beat for its flat return of 2% on every purchase. You might also want a card with a return of 3% to 5% in cate­gories you spend the most on, such as groceries or gas. You can also save money with the perks that many credit cards offer: extended warranties, price matching, coverage for damage and theft of recent purchases, rental car insurance, and travel insurance.

Get All the Insurance Discounts You Deserve

Ask your auto and home insurers for a list of potential discounts. You may get an automatic break (typically 10% to 20%) by bundling your home and auto policies with the same company or keeping a clean driving record, but you may need to let your insurer know if you qualify for other discounts. Most insurers offer a good-student discount (usually worth up to 25% if your student maintains a B average or better).

Some offer a break of 10% to 15% for certain jobs, and a 15% discount if you’re 55 or older and sign up for a defensive-driving course. You may get a bigger break -- as much as 50% -- by signing up for a data-tracking service, such as Progressive’s Snapshot or State Farm’s Drive Safe & Save, if you have low annual mileage and practice sedate driving habits. You could get home insurance discounts for many home improvements, such as adding storm-proof shutters (up to 44%, depending on the state) or an alarm system (up to 15%).

Tap the Sharing Economy

The sharing economy isn’t always about sharing. It’s often simply about saving money. For example, you can rent a house, apartment or private room (or a castle, houseboat or yurt) through sites such as Airbnb and HomeAway. The nightly rate may be lower than a hotel, especially when you’re splitting the cost among a group. To avoid paying for accommodations at all, swap your home with another traveler through a service such as HomeLink or Intervac.

If you live in an area with a car-sharing service, you could skip the high cost of buying, insuring and maintaining a car or two. Car2Go charges $15 per hour or 41 cents per minute, and Zipcar typically charges $70 per year or $7 per month plus hourly or daily rates. Need home services? At TaskRabbit or Handy, you can find gardeners, painters and plumbers, among a plethora of other helpers, who often charge surprisingly low rates.

Reshop Your Car Insurance Every Year

Rates can vary a lot by insurer, and by shopping around, you may be able to trim your premiums and put hundreds of dollars a year back in your pocket. Compare premiums at InsuranceQuotes.com or Insurance.com, or look for an independent agent at TrustedChoice.com. You can find sample prices for all insurers licensed in your state at most state insurance departments’ websites (find links for each state at naic.org, and search for the auto insurance shoppers’ guide).

Contact the companies with the best rates for the situation most like yours and compare premiums for the same amount of coverage you have now. If one offers a better rate, let your current insurer know before switching; it may offer to match the lower rate if you’re a longtime customer.

Never Pay Retail (Part 1)

A new car starts to depreciate as soon as you drive it off the dealer’s lot. After three years, it has typically lost half its original value. Those numbers bolster the argument for buying used, which can save tens of thousands of dollars over the years. The growth of factory-inspected, certified preowned vehicles, which are the cream of the used-vehicle crop and come with a warranty, has injected transparency into what you might charitably call the opacity of the used-car industry.

What if you are stubbornly in the new-car camp? Negotiate hard. Shop for an identically equipped model at several dealers, then use your best price to squeeze concessions from the other dealers. (Or use a service that does this for you, such as CarBargains.org.) If you lean toward the luxury side of the market, consider leasing. Carmakers often offer subsidies that hold down monthly payments.

Never Pay Retail (Part 2)

You can get money back from your online shopping sprees if you route your purchases through a cash-back site such as BeFrugal, CouponCabin, Ebates or Splender. The process is easy: Register at the site, search for your retailer, and click the site’s link to make your purchase (browser cookies must be turned on). You’ll typically earn back less than 10% of your purchase price, but rebates can go as high as 35% to 40%. Once your cash stash reaches a certain level, you can collect it via check, PayPal or gift card. Compare offerings for retailers across various sites through CashbackHolic.com or CashbackMonitor.com.

Negotiate for Practically Everything

You know it pays to haggle hard over cars and homes. A lot of other purchases are ripe for negotiation, too. Avoid naming your top price right away. If the seller has a lower figure in mind than you do, you won’t save as much as you could have. Instead, ask the seller how much he could come down in price.

Keep Investing Costs Low

All else being equal, the less you pay, the more you get to keep for yourself. Start by opening an account with an online broker, such as Fidelity or Charles Schwab. You’ll be able to buy and sell stocks for roughly $7 per trade. In addition, many of the top discounters let you trade select ETFs without sales fees. Fund investors should focus on mutual funds and ETFs with low expense ratios. You can buy index funds, such those that track the S&P 500, with annual fees of roughly 0.05%. Top low-cost actively managed funds include Dodge & Cox Stock (DODGX) and Mairs & Power Growth (MPGFX), both Kip 25 members.

If you work with a money manager, you’ll probably pay about 1% a year. Try to negotiate a lower fee. Or consider signing up with a “robo” adviser, which uses technology to manage your port­folio. Betterment charges just 0.25% of assets under management annually. Wealthfront levies no management fee for balances under $10,000 and charges 0.25% a year for any amount above that.

Trim Your Wireless Costs

Families with children spent an average of $1,526 on cell phone service in 2015, or about $127 per month, according to the U.S. Bureau of Labor Statistics. That number may be a lot higher if you have, say, a couple of data-hungry teens. Take stock of your typical monthly usage and shop for a plan that fits your needs at the lowest price. If you use data to stream several hours of music or video monthly, for example, switching to an unlimited data plan may make sense.

Consider smaller carriers, which often piggyback on the networks of larger ones and offer plans at lower rates. Use the tool at WireFly.com to search for suitable plans based on your typical usage. With the demise of subsidized phones, look beyond the latest iPhone or Samsung phones for more-affordable options. Or, rather than getting the latest model, consider buying a previous-generation phone (say, an iPhone 6s rather than an iPhone 7), which could save you $100. Or buy a preowned phone that has been refurbished and inspected by the carrier or manufacturer.

Find the Best Airfare

Scope out the cheapest dates to fly to your destination—or find a destination that fits your price range—using the flexible search features on Kayak and Google Flights. Register for airfare alerts from Airfarewatchdog.com and flight deals from ScottsCheapFlights.com, and skim Twitter for flash sales using the hashtag #airfare. Online travel agencies (OTAs), such as Expedia and Priceline, can piece together cheaper itineraries for international flights using multiple airlines on complex routes. To compare OTA fares with the airlines’ fares or with other OTAs, run your itinerary through Kayak or Momondo. Don’t forget budget airlines, such as Wow Air and Norwegian Air.

Vow to Be Debt-Free

High-interest-rate debt is an obstacle in your path to wealth. One way to attack the problem is to pay down the highest-interest-rate debt first. For example, if you’re carrying a balance on a credit card with a hefty rate, consider transferring the balance to a card such as Chase Slate, which charges a 0% rate for the first 15 months and no transfer fee if you move the balance within 60 days of opening the card. Just be sure to pay it off before interest starts to accrue. Auto and student loans are also candidates for accelerated payoff.

Foster Your Philanthropic Side

Money can’t buy happiness, but studies show that charitable giving can make you happier. Better yet, philanthropy can lower your tax bill. Your donations to a charity or, say, a school are tax-deductible if you itemize, and you’ll get an extra tax break if you give stock, funds or other investments that have appreciated in value. If you bought the investments more than a year ago, you’ll get a tax write-off for the current value of the donation, and you won’t owe capital-gains taxes on the increase in value since purchase.

Use Home Equity Strategically

Thanks to rising home values since the Great Recession, you may be well positioned to borrow against the equity in your home, which can help finance renovations or consolidate other, higher-rate debts. Recently, a home-equity line of credit (HELOC) with a $30,000 limit carried an average 5.1% rate, according to Bankrate.com. HELOCs often come with variable rates, so your payments will increase as interest rates rise. Some lenders allow you to lock in a fixed rate on all or a portion of your HELOC balance, which may be wise if you expect to spend a few years or more paying off the debt. A fixed-rate loan may be a good option if you have a one-time expense.

Give to Charity From Your IRA

Uncle Sam offers an extra incentive to be charitable when it’s time to take required minimum distributions from your IRAs. If you’re 70½ or older, you can transfer up to $100,000 each year tax-free from your IRAs directly to one or more charities. You can make the transfer anytime during the year. And your donation benefits you as well as the charity: The money counts as your RMD but isn’t included in your adjusted gross income. Lower AGI may push you below the threshold for the Medicare high-income surcharge or help make less of your Social Security benefits subject to taxes.

Open a Donor-Advised Fund

If you contribute to a donor-advised fund, you can take a charitable tax deduction for the full amount now but take as much time as you want to decide which charities to support. By making giving a family affair, you can build a charitable fund that lasts for generations and share your philanthropic values with your children and grandchildren. Mutual fund companies, brokerage firms and community foundations offer donor-advised funds. You can open an account at Fidelity or Schwab with $5,000 or at Vanguard with $25,000. You can donate cash, stock or mutual funds, and some donor-advised funds, such as Fidelity’s, even let you contribute real estate or shares of privately held companies.

Pay Off Your Mortgage

If you’re free of other debt and your savings are on track, put extra cash toward your mortgage or refinance into a 15-year mortgage to free up your finances by the time you retire. Patrick Lach, a certified financial planner in Louisville, Ky., offers this example: Say you want to refinance a $200,000 mortgage. With a 30-year loan at a 4.06% fixed rate, your monthly payment would be about $962. With a 15-year mortgage at a 3.2% fixed rate, your payment would be $1,400, but you would save more than $94,000 in interest.

Take Stock of Where You Stand

Estimate the future value of your current savings and see how much more you’ll need to save to hit your retirement goal. You could work with a financial adviser to make a plan, but in the meantime crunch the numbers with an online cal­culator, such as Kiplinger's Retirement Calculator. Our tool lets you factor in such variables as home equity and potential windfalls, such as an inheritance.

Write Down a Retirement Plan

Create a retirement budget, devoting one column to essential costs, such as housing and food, and another to discretionary expenses, including travel and hobbies. Factor in inflation for overall expenses, expected to be 2.4% over the next 20 years, according to the Congressional Budget Office. Consider making a separate calculation for health care costs, which are likely to have a much higher rate of inflation; HealthView Services, which analyzes health costs, projects a 5.1% inflation rate over the next 20 years.

Match expenses to guaranteed income, including any pensions and Social Security payments, plus the annual amount you plan to draw from savings. If there’s a gap, reconcile yourself to spending less—or working longer. Staying in the workforce for a few extra years gives you more time to contribute to your retirement accounts. Plus, you have fewer years to finance once you do retire.

Maximize Social Security

Postponing retirement also helps you delay taking Social Security. For every year after full retirement age (66 or 67, depending on when you were born) that you postpone claiming until you reach age 70, the benefit goes up by 8%. For help deciding when and how to claim benefits, bone up on your options with Kiplinger’s Boomer’s Guide to Social Security, $10. Then consult a financial planner with training in Social Security strategies. Or subscribe to software such as Maximize My Social Security, starting at $40, or Social Security Solutions, starting at $20. These programs run scenarios based on your circumstances and show how different filing strategies affect the total payout.

Tweak Your Investments as You Age

As you approach retirement, aim for a portfolio that generates enough growth to combat inflation but ratchets down risk. A mix of 55% stocks, 40% bonds and 5% cash accomplishes that goal. For more growth, adjust the mix to 60% stocks and 40% bonds and cash; for less risk, go with 60% bonds and cash and 40% stocks.

Supersize Your Retirement Contributions

If you’re 50 or older, you can make catch-up contributions to your IRA and 401(k). In 2017, you can add $6,000 to your 401(k) above the $18,000 annual contribution limit, for a total of $24,000 for the year. You can stash an extra $1,000 in a traditional or Roth IRA beyond the $5,500 annual contribution limit, for a total of $6,500 for the year. If you invest $24,000 in a 401(k) every year starting at age 50, you’ll boost your retirement savings by more than $580,000 by the time you’re 65, assuming your investments return 6% per year. If you invest $6,500 in your IRA during those years, you could amass more than $157,000 in your IRA in 15 years.

If you’re self-employed, you can also step up savings. In 2017, you can contribute up to 20% of your net self-employment income (business income minus half of your self-employment tax) to a SEP-IRA, up to a maximum of $54,000. In a solo 401(k) plan, you can put aside even more money because you can contribute as both an employer and an employee. In 2017, the maximum contribution is $54,000, or $60,000 if you’re 50 or older.

Retire to a Place That’s Healthy, Fun and Tax-Friendly

If you plan to relocate in retirement, scope out a city that boasts an array of opportunities for outdoor activities, restaurants that pique the palate and enough cultural amenities to keep the brain limber. All of our picks have those qualities as well as excellent health care, and they’re located in states with tax policies that are kind to retirees.

Austin, Texas, has outdoorsy options including Zilker Park, a 351-acre green space; Barton Springs Pool, a spring-fed swimming hole; and Lady Bird Lake, where you can go canoeing and kayaking. Downtown, you’ll find a bustling mix of shops, restaurants, taco trucks, barbecue joints, music and film festivals.

Naples, Fla., offers a sophisticated mix of cafés, art galleries and boutiques, as well as beaches and gracious homes in walkable neighborhoods.

Nashville’s music scene lately has competed with the thrum of the city’s construction boom, but you can also find quiet old neighborhoods bordered by parks and greenways. The city is home to Vanderbilt University.

Philadelphia boasts world-class museums such as the Philadelphia Museum of Art and the Barnes Foundation. You can sample meats, cheese and produce at the Ninth Street Italian Market. The Manayunk Canal Towpath connects with 60 miles of trails along the Schuylkill River.

Seattle locals have easy access to the bounty of the Pacific Northwest as well as such urban attractions as the Pike Place Market and the Seattle Opera. Rain happens in Rain City, but mild temperatures let residents enjoy the outdoors year-round.

Create Savings Buckets in Retirement

Talk about a wealth killer: If you’re forced to sell your investments in a bear market, especially at the beginning of retirement, your carefully laid plans for making your savings last the rest of your life could be in jeopardy. To avoid that scenario, create three “buckets” for your savings. The first should hold enough cash, CDs and other short-term investments to cover one to three years of living expenses, after factoring in guaranteed income, such as Social Security. Create a second bucket with slightly riskier investments, such as intermediate-term bond funds and a few diversified stock funds. The third bucket is for long-term growth; fill it with diversified stock and bond funds. As you draw down the first bucket, you eventually refill it with profits from the second bucket, and the second bucket gets refilled with gains from the third.

Cover Long-Term Care

At a median cost of $92,000 a year, a stay in a nursing home can quickly deplete your retirement nest egg. Long-term-care insurance can help preserve your wealth. But the cost of long-term-care insurance has skyrocketed, so most people need to find an affordable way to set up their safety net. First, look up the cost of care in your area (see genworth.com/costofcare) and estimate how much of, say, a three-year stay you could cover with income and savings. Then shop for a policy to cover the gap. You can save money on premiums by lowering the inflation adjustment from 5% to 3%; shortening the benefit period or pooling it with your spouse to use between the two of you; or extending the waiting period from, for

 

10 Timeless Tips From Knight Kiplinger

Some lessons from our 70 years of giving readers practical advice on how to save, manage, invest and spend their money.

1. Wealth creation isn’t a matter of what you earn. It’s how much of it you save.

2. Your biggest barrier to becoming rich is living like you’re rich before you are.

3. Pay yourself first. Arrange to have your retirement and other savings deducted from your paycheck before the money hits your bank account. If there isn’t enough left over for your bills, cut your spending.

4. No one ever got into trouble by borrowing too little.

5. Conspicuous consumption will make you inconspicuously poor.

6. The key to stock market success isn’t your timing of the market. It’s your time in the market—the longer, the better.

7. Diversify, because every asset has its day in the sun—and its day in the doghouse.

8. Keep a cool head when others are losing theirs. When others are selling investments, it’s usually a good time to buy. The foundations of great fortunes are laid in bear markets, not bull markets.

9. Money can’t buy happiness, but it can make unhappiness easier to bear.

10. Sharing your wealth with others is more fun than spending it on yourself.

 

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail  info@diversifiedassetmanagement.com.

 

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc. The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles. Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice.

The Alternative Minimum Tax -- Not Just for the Wealthy

When first introduced, the alternative minimum tax (AMT) was widely acknowledged to be a rich person's 's tax -- a fallback tax for those wily taxpayers with big incomes and numerous deductions. However, as finances evolved and incomes grew, more and more people found themselves subject to the AMT, even after the introduction of automatic inflation adjustments in 2013. That's why a general understanding of how the tax works can help you avoid it and even use it to your advantage.

The Other Federal Tax

The AMT truly functions as an alternative tax system. It has its own set of rates and rules for deductions, and they are more restrictive than the regular system. Taxpayers who meet certain tests essentially have to calculate their net tax liabilities under both sets of rules, and then file using whichever calculation yields the greater tax assessment.

The AMT can be triggered by a number of different variable s. Although those with higher incomes are more susceptible to the tax, factors such as the amount of your exemptions or deductions can also prompt it. Even commonplace items such as a deduction for state income tax or interest on a second mortgage can set off the AMT. To find out if you are subject to the AMT, fill out the worksheets provided with the instructions to Form 1040 or complete Form 6251, Alternative Minimum Tax -- Individuals.

AMT rates start at 26%, rising to 28% at higher income levels. This compares with regular federal tax rates, which start at 10% and step up to 39.6%. Although the AMT rates may appear to cap out at a lower rate than regular taxes, the AMT calculation allows significantly fewer deductions, making for a potentially bigger bottom-line tax bite. Unlike regular taxes, you cannot claim exemptions for yourself or other dependents, nor may you claim the standard deductio n. You also cannot deduct state and local tax, property tax, and a number of other itemized deductions, including your home-equity loan interest, if the loan proceeds are not used for home improvements. Accordingly, the more exemptions and deductions you normally claim, the more likely it is that you'll have an AMT liability.

There's also an AMT credit that allows you to claim a credit on your tax return in future years for some of the extra taxes you paid under the AMT. However, you can only use the AMT credit in a year when you're not paying the AMT. To apply for the credit, you'll need to fill in yet another form, Form 8801, to see if you are eligible.

AMT.png

Averting Triggers for the AMT

< br>Because large one-time gains and big deductions that trigger the AMT are sometimes controllable, you may be able to avoid or minimize the impact of the AMT by planning ahead. Here are some practical suggestions.

Time your capital gains. You may be able to delay an asset sale until after the end of the year, or spread a gain over a number of years by using an installment sale. If you're looking to liquidate an investment with a long-term gain, you should review your AMT consequences and determine what impact such a sale might have.

Time your deductible expenses. When possible, time payments of state and local taxes, home-equity loan interest (if the loan proceeds are not used for home improvements), and other miscellaneous itemized deductions to fall in years when you won't face the AMT. Since they are not AMT deductible, they will go unused in a year when you pay the AMT. The same holds true for medical deductions, which fac e stricter deduction rules for the AMT.

Look before you exercise. Exercising ISOs is a red flag for triggering the AMT. The AMT on ISO proceeds can be significant. Because ISO tax issues are complex, you should consult with your tax advisor before exercising ISOs.

Stock Options.png

Required Attribution

Because of the possibility of human or mechanical error by DST Systems, Inc. or its sources, neither DST Systems, Inc. nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall DST Systems, Inc. be liable for any indirect, special or consequential damages in connection with subscriber's or others' use of the content.

© 2017 DST Systems, Inc. Reproduction in whole or in part prohibited, except by permission. All rights reserved. Not responsible for any errors or omissions.

 

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constit ute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.

 

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc.  The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles.  Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice.