Spring isn’t just for cleaning house. Maybe it’s time for you to clean up your investments.
Spring brings things growing and blooming, and fresh beginnings. With that in mind, it might be a good time for you to look at what you have in place to ensure everything is up-to-date. Have you recently married? Are you considering a change in jobs? Have you recently bought new property?
Financial Housecleaning tips
• Make sure life changes such as employment, housing or health are accounted for in your investments
• Your financial and tax situation
• Do you have any 401(K)s at previous employers that need to be moved?
• Think through your objectives and risk tolerance. Has this changed from when initial plans were made?
• Review your trust to ensure it is still accurate, all assets you want are in the name of the trust, and it reflects your current life situation. Also review your Successor Trustee. Is this person still who you want it to be? Is this person still willing?
• Review insurance policies to ensure they continue to meet your needs. This can include consideration of long term care insurance along with life insurance.
Have any of these things changed for you? Schedule time with the Granite team to discuss any changes that you think might be relevant for your investment approach. The team is here to help you achieve your financial goals.
Tax Planning for Millennials
Are you sitting in the shade? Tax planning for the millennial in your life.
You’ve just made it through another tax cycle. For recent college graduates — sometimes referred to as “millennials” – it may appear that you have no control over how much you pay in taxes. You may think it is easiest to just file the short form, take the standard deduction, and be done with it.
“Unintentional ignorance is the largest obstacle that millennials today face,” said Chris Sonzogni, the managing editor of GenFKD, a nonprofit that helps millennials make sense of personal finance. “For a lot of the graduates that we talk to, the idea of ‘filing your taxes’ is something that they realize is important, but they have little to no practical understanding of what the term means. That can lead to a scramble to file, which means that they often use the easiest method of filing, as opposed to the method that is best for them.”
There are things you can do to help ensure a better outcome next year. Take a look at the ideas below to see if you might benefit from planning now for next year’s taxes.
- Look at your taxable income
- Are you using your company 401(K) program? For 2017, maximum contribution is $18K – if you’re over 50, you can add an additional $6K
- Review a ROTH 401(K) to determine if it is better for you
- Health Care Spending Account (HSA)
- Check your withholdings on your W2
- Tax deferred investments — http://www.investopedia.com/terms/t/taxdeferred.asp
- Earned income tax credit — https://en.wikipedia.org/wiki/Earned_income_tax_credit
- Savers credit (aka Retirement Savings Contribution Credit) https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-savings-contributions-savers-credit
- Deducting student loan interest https://www.irs.gov/publications/p970/ch04.html
- Charitable contributions https://www.irs.gov/charities-non-profits/charitable-organizations/charitable-contribution-deductions
- Lifetime learning credit — https://www.irs.gov/publications/p970/ch03.html
- American opportunity tax credit — https://www.irs.gov/publications/p970/ch03.html
- Deducting job hunting expenses https://www.irs.gov/uac/job-search-expenses-can-be-tax-deductible
- Deducting moving expenses – that are not covered by your employer https://www.irs.gov/taxtopics/tc455.html
- 1099s –Are you a part of the gig generation – such as driving for Uber? Be sure to keep track of all allowable business expenses against that income. If you make more than $600 from any job, you’ll receive a 1099 form showing the income you made. https://en.wikipedia.org/wiki/Form_1099
There are few “quick fixes” to investments and tax planning
Both take time and patience. Taking the time now to plan for taxes will help in future years. The earlier you plant the seeds for your investments, the longer they have to grow.
As Warren Buffett once said, “Someone’s sitting in the shade today, because someone planted a tree long ago.”
For additional information: see Forbes article “9 Best Tax Break For Millennials” https://www.forbes.com/sites/millennialmoney/2015/03/13/9-best-tax-breaks-for-millennials/#6ba2a1d2714b
Automatic Savings Apps
Helpful apps can simplify by saving automatically
Do any of these sound familiar?
I just don’t have any money to save.
After paying the bills, there is not much left to save.
I forget to put something away regularly.
Saving $5 here and there isn’t going to help.
Whatever the reason, there are some things you can do to help get over the hurdle of contributing to your savings on a regular basis. The concept of “automatic savings apps” is one that we will explore here. We see the use of these apps working in conjunction with your Granite Wealth team. Savings can be moved into your Granite Wealth portfolio where they can be invested to grow for long term return.
Below is a list of apps – but keep in mind this is certainly not an exhaustive list. The primary objective of these apps is to take the mental hurdle out of saving your money – the old “set it and forget it” way of saving.
Digit www.digit.co — $2.99/month
Securely connect Digit to your bank account, and it will analyze your spending and income to help you put away small amounts of money that you don’t need for your bills or day-to-day expenses. Every few days, money (usually somewhere between $5–50) will get transferred from your checking account to a Digit savings account. If you don’t see the money, then you won’t spend it.
Acorns www.acorns.com — $1.00/month for accounts under $5,000
Acorns allows users to set up recurring deposits to grow your savings and use the helpful Round-Ups feature. With every purchase you make, Acorns rounds it up to the nearest dollar and withdraws the collective amount from your account daily.
Rize www.rizeup.io – fees are voluntary each month
Rize is a new entry in the world of automatic savings and it is set up to help users do what finance experts advise: pay themselves first. After you receive each paycheck, Rize automatically moves money from your checking account to your Rize account.
Bank of America Keep the Change www.bankofamerica.com Must be BofA customer
For people banking with Bank of America. Sign up and debit card purchases will be rounded up with the “round up” amount deposited to your savings account.
Dobot www.mydobot.com — no fees
Dobot allows you to set the dollar amount you are working toward along with when you’ll need to access that money (say, in 12 months to buy your new car). Once you connect your checking account, the app determines the ideal amount of savings to be transferred each week. You can pick one goal (your new car) or multiple (next semester’s tuition, a trip to the Bahamas, etc). The app allows you to visualize each of your individual savings goals, making it easy to see your progress.
Note: many of these require you to open a checking/savings account.