The Diversified Blog

A wealth management blog dedicated to creating a long lasting sustainable retirement

Robert Pyle, CFP®, CFA, is a wealth manager at Diversified Asset Management. He focuses on providing wealth management solutions to successful individuals, families as well as senior executives, small business owners and retirees. Together with his strategic partners, he helps successful, affluent clients address their five biggest concerns: preserving their wealth, mitigating taxes, taking care of their heirs, ensuring their assets are not unjustly taken, and charitable giving.   Robert founded Diversified Asset Management, Inc. in 1996 with the goal to simplify his client’s financial life and solve their most pressing financial challenges, allowing them to have more time with their families and the things they love. He uses a unique consultative process to gain a detailed understanding of his client’s deepest values and goals. He then employs customized recommendations designed to address each client’s unique needs and goals beyond simply investments.   Successful individuals and families work with Robert to: -Develop and implement a comprehensive wealth management plan to help them reach their financial goals and create a long lasting, sustainable retirement. -Make smarter decisions in today’s uncertain political, economic and social environment. -Obtain an independent second opinion from a top financial advisor in their community. -Receive fee-only advice that promotes the clients’ best interests at all times, while avoiding any potential conflict of interest with commissions.   Robert is a widely recognized leader in the Boulder financial advisor community, serving on the Boulder County Estate Planning Council board from 2009-2011. Mr. Pyle has received the CFP® (Certified Financial Planner) and CFA (Chartered Financial Analyst) professional designations. He completes a minimum of 30 hours of continuing education every two years. Robert is a frequent contributor to the Boulder County Business Report (BCBR) and has appeared on 9News.

Job-Changer’s Financial Checklist

As you look forward to starting a new job, it's important to consider how you will manage your finances while making the transition from one employer to the next.

The checklist to use before starting a new job:

●  Proactively manage your health insurance to avoid a lapse in coverage.

●  Discuss dates with your old and new employers to assure continuous coverage.

●  Check on the status of any pending claims under your old coverage.

●  Arrange any needed transfers of records from your old insurer to your new insurer.

●  Provide forwarding and contact information to the trustee of any health savings accounts (HSAs). If you expect to enroll in a high-deductible health plan at your new job, you can generally have any remaining balance in your HSA transferred, so you should determine what procedures you may need to follow. If you do not plan to enroll in a new high-deductible health plan, you can generally leave any HSA assets in your current plan and draw them down as needed for eligible future expenses.

If you have a flexible spending account (FSA) with your current employer, it's important to pay attention to the details of the plan before you change jobs.

●  A flexible spending account (FSA) lets you set aside a pretax portion of your paycheck to cover qualified medical expenses that would have otherwise come out of your pocket. Be sure to file all eligible expenses because, under current rules, you may only carry over up to $500 in unused funds to the next year.

●  Prepare for your job change by submitting all eligible expenses for reimbursement under your old programs before you leave your current job, and check with your company's HR department to find out whether or not you have a grace period for submission.

●  Determine whether any future child care or commuting expenses may qualify for reimbursement from your old accounts.

Address important decisions about your future financial security by managing your retirement accounts.

●  Evaluate all of the post-employment options for assets in your current plan -- leave the assets in place, roll them over to an IRA, or roll them over to your new employer.

●  Determine whether your old plan will require you to arrange a transfer within 60 days or get automatically cashed out, keeping in mind that cash-outs carry immediate tax consequences.

●  Provide any necessary change-of-address information.

●  Keep up your retirement savings efforts at your new employer.

Manage your employer-sponsored life and disability coverage.

●  Determine the extent to which your new employer's coverage might be a complete replacement for your existing coverage.

●  Evaluate conversion options for existing coverage.

●  Consider the need for individual disability insurance.

Keep records and receipts of any moving and transfer expenses for potential tax adjustments and reimbursements.

The checklist to use when you don't have a job lined up:
Manage your health insurance.

●  Determine the date for termination of coverage and look into extension and conversion options to avoid a lapse in coverage.

●  Find out what kind of private individual and government-sponsored health insurance might be available in your area and evaluate your options.

●  Check on the status of any pending claims.

●  Track down copies of your insurance records.

●  Provide forwarding and contact information to the trustee of any HSAs. Keep in mind that any remaining HSA balance should remain available to you for future eligible medical expenses, so you should determine what your plan procedures would be.

Manage your FSAs.

●  Submit all eligible expenses for reimbursement before your departure, or confirm that you will have a grace period for submission.

Manage your retirement accounts.

●  Evaluate the post-employment options for assets in your current plan -- leaving the assets in place or rolling them over to an IRA.

●  Determine whether your plan will require you to arrange a transfer within 60 days or get automatically cashed out, keeping in mind that cash-outs carry immediate tax consequences.

●  Provide any necessary change-of-address information.

Manage your employer-sponsored life and disability coverage.

●  Evaluate all conversion and replacement options for existing coverage.


Source:

You have choices for what to do with your employer-sponsored retirement plan accounts. Depending on your financial circumstances, needs, and goals, you may choose to roll over your eligible savings to an IRA or convert to a Roth IRA, roll over an employer-sponsored plan from a prior employer to an employer-sponsored plan at your new employer, take a distribution, or leave the account where it is. Each choice may offer different investment options and services, fees and expenses, withdrawal options, required minimum distributions, tax treatment, and may provide different protection from creditors and legal judgments. These are complex choices and should be considered with care.


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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 constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.


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Using Trusts to Maximize Charitable Giving While Minimizing Estate Taxes

If you're eager to pass along accumulated wealth to heirs in the most tax-efficient manner possible while also retaining the ability to support a charity either right away or at some point in the future, then a split-interest trust may be just the tool you need. Split-interest trusts are so named because their financial interest is split between two beneficiaries -- typically a charitable beneficiary and noncharitable beneficiary.

Two of the most popular types of split-interest trusts are charitable remainder trusts (CRTs) and charitable lead trusts (CLTs). The two vehicles are related, yet fundamentally different. They essentially work in opposite fashions. A CLT pays income to a charitable beneficiary for a certain period of time, after which the remaining assets in the trust (the remainder interest) passes to a noncharitable beneficiary or beneficiaries, such as children or grandchildren, or even the donor. With a CRT, the assets placed in trust provide a stream of income to noncharitable beneficiaries for a period of time, after which the assets become the property of a charity. Income tax, capital gains tax, and estate and gift tax differ significantly between CLTs and CRTs. As a result, you should seek the advice of a qualified tax and trust professional before determining which strategy is better for your situation.

Charitable Lead Trusts

A CLT can be set up to pay either a fixed annuity or a unitrust amount to a charitable organization, which means that it can pay either a fixed dollar amount each year or a fixed percentage of the fair market value of the trust's assets. While there is no limit on the amount of time a CLT can remain in effect, it must be for either a predetermined number of years or until the death of the donor.

CLTs are often the tool of choice for individuals with assets that have a high potential for future appreciation. They may also be well suited for those with heirs who are minors or otherwise not ready to assume full control of significant assets. By creating and funding a CLT, a grantor can make final arrangement for the disposition of an estate, but defer the date at which beneficiaries actually receive and control the property. In the meantime, the charity of choice receives immediate and ongoing benefits. When the assets do eventually pass to the noncharitable beneficiaries, they are not subject to the federal estate tax.

Keep in mind, however, that the grantor is not able to claim an income tax deduction for making contributions to a CLT. In addition, the grantor may have to pay a federal gift tax on a portion of each contribution, albeit only on the value of the remainder interest earmarked for noncharitable beneficiaries.

Also remember that while a CLT allows assets to pass to heirs with no federal estate taxes, a CLT is not a tax-free entity. Any income the trust generates in excess of the amount paid to charity is still taxable. And the sale of appreciated assets held within the trust may trigger capital gains taxes.

Charitable Remainder Trusts

In the eyes of a charity, a CRT is the mirror image of a CLT. A CRT first pays income to noncharitable beneficiaries before permanently awarding ownership of its assets to the charity. But in the eyes of Uncle Sam and taxpayers, the most significant differences lie elsewhere.

First and foremost, a CRT is a tax-exempt entity. For this reason, CRTs can be extremely useful for individuals who want to sell appreciated assets, such as investors eager to liquidate highly appreciated, concentrated stock portfolios in order to reallocate the money within more diversified portfolios or to create income streams for themselves or beneficiaries.

In addition, a grantor can claim a tax deduction for his or her donation to a CRT, equal to the present value of the charitable remainder interest. And although a CRT's assets are ultimately distributed to the charity free of estate and gift taxes, the noncharitable beneficiaries of a CRT must pay income taxes on the income received from the trust.

As with CLTs, CRTs are classified according to their payment methods. A charitable remainder annuity trust pays a fixed dollar amount at least annually, whereas a charitable remainder unitrust pays a fixed percentage of the fair market value of the trusts assets. According to IRS guidelines, each type of CRT must pay no less than 5%, but no more than 50%, of its fair market value annually. A CRT may remain in effect for life or for a predetermined period of time, not to exceed 20 years.


Tax rules governing trusts are complex. You should seek the advice of a qualified tax and trust professional before determining which strategy is better for your situation.


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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 constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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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 variables. 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 deduction. 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.



Averting Triggers for the AMT

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 face 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.



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 constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.



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Ten Investment Mistakes to Avoid

Who needs a pyramid scheme or a crooked money manager when you can lose money in the stock market all by yourself. If you want to help curb your loss potential, avoid these 10 strategies.

1.  Go with the herd. If everyone else is buying it, it must be good, right? Wrong. Investors tend to do what everyone else is doing and are overly optimistic when the market goes up and overly pessimistic when the market goes down. For instance, in 2008, the largest monthly outflow of U.S. domestic equity funds occurred after the market had fallen over 25% from its peak. And in 2011, the only time net inflows were recorded was before the market slid over 10%.

2.  Put all of your bets on one high-flying stock. If only you had invested all your money in Apple 10 years ago, you'd be a millionaire today. Perhaps, but what if, instead, you had invested in Enron, Conseco, CIT, WorldCom, Washington Mutual, or Lehman Brothers? All were high flyers at one point, yet all have since filed for bankruptcy, making them perfect candidates for the downwardly mobile investor.

3.  Buy when the market is up. If the market is on a tear, how can you lose? Just ask the hordes of investors who flocked to stocks in 1999 and early 2000—and then lost their shirts in the ensuing bear market.

4.  Sell when the market is down. The temptation to sell is always highest when the market drops the furthest. And it's what many inexperienced investors tend to do, locking in losses and precluding future recoveries.

5.  Stay on the sidelines until markets calm down. Since markets almost never "calm down," this is the perfect rationale to never get in. In today's world, that means settling for a minuscule return that may not even keep pace with inflation.

6.  Buy on tips from friends. Who needs professional advice when your new buddy from the gym can give you some great tips? If his stock suggestions are as good as his abs workout tips, you can't go wrong.

7.  Rely on the pundits for advice. With all the experts out there crowding the airwaves with their recommendations, why not take their advice? But which advice should you follow? Cramer may say buy, while Buffett says sell. And remember that what pundits sell best is themselves.

8.  Go with your gut. Fundamental research may be OK for the pros, but it's much easier to buy or sell based on what your gut tells you. Had problems with your laptop lately? Maybe you should sell that IBM stock. When it comes to hunches, irrationality rules.

9.  React frequently to market volatility. Responding to the market's daily ups and downs is a surefire way to lock in losses. Even professional traders have a poor track record of guessing the market's bigger shifts, let alone daily fluctuations.

10.  Set it and forget it. Ignoring your portfolio until you're ready to cash it in gives it the perfect opportunity to go completely out of balance, with past winners dominating. It also makes for a major misalignment of original investing goals and shifting life-stage priorities.


Source:

1.  ICI; Standard & Poor's. The stock market is represented by the S&P 500, an unmanaged index considered representative of large-cap U.S. stocks. These hypothetical examples are for illustrative purposes only, and are not intended as investment advice.


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 constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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Tax Strategies for Retirees

Nothing in life is certain except death and taxes. —Benjamin Franklin

That saying still rings true roughly 300 years after the former statesman coined it. Yet, by formulating a tax-efficient investment and distribution strategy, retirees may keep more of their hard-earned assets for themselves and their heirs. Here are a few suggestions for effective money management during your later years.

Less Taxing Investments

Municipal bonds, or "munis" have long been appreciated by retirees seeking a haven from taxes and stock market volatility. In general, the interest paid on municipal bonds is exempt from federal taxes and sometimes state and local taxes as well (see table).1 The higher your tax bracket, the more you may benefit from investing in munis.

Also, consider investing in tax-managed mutual funds. Managers of these funds pursue tax efficiency by employing a number of strategies. For instance, they might limit the number of times they trade investments within a fund or sell securities at a loss to offset portfolio gains. Equity index funds may also be more tax-efficient than actively managed stock funds due to a potentially lower investment turnover rate.

It's also important to review which types of securities are held in taxable versus tax-deferred accounts. Why? Because the maximum federal tax rate on some dividend-producing investments and long-term capital gains is 20%.* In light of this, many financial experts recommend keeping real estate investment trusts (REITs), high-yield bonds, and high-turnover stock mutual funds in tax-deferred accounts. Low-turnover stock funds, municipal bonds, and growth or value stocks may be more appropriate for taxable accounts.

The Tax-Exempt Advantage: When Less May Yield More



Which Securities to Tap First?

Another major decision facing retirees is when to liquidate various types of assets. The advantage of holding on to tax-deferred investments is that they compound on a before-tax basis and therefore have greater earning potential than their taxable counterparts.

On the other hand, you'll need to consider that qualified withdrawals from tax-deferred investments are taxed at ordinary federal income tax rates of up to 39.6%, while distributions—in the form of capital gains or dividends—from investments in taxable accounts are taxed at a maximum 20%.* (Capital gains on investments held for less than a year are taxed at regular income tax rates.)

For this reason, it's beneficial to hold securities in taxable accounts long enough to qualify for the favorable long-term rate. And, when choosing between tapping capital gains versus dividends, long-term capital gains are more attractive from an estate planning perspective because you get a step-up in basis on appreciated assets at death.

It also makes sense to take a long view with regard to tapping tax-deferred accounts. Keep in mind, however, the deadline for taking annual required minimum distributions (RMDs).

The Ins and Outs of RMDs

The IRS mandates that you begin taking an annual RMD from traditional IRAs and employer-sponsored retirement plans after you reach age 70½. The premise behind the RMD rule is simple—the longer you are expected to live, the less the IRS requires you to withdraw (and pay taxes on) each year.

RMDs are now based on a uniform table, which takes into consideration the participant's and beneficiary's lifetimes, based on the participant's age. Failure to take the RMD can result in a tax penalty equal to 50% of the required amount. TIP: If you'll be pushed into a higher tax bracket at age 70½ due to the RMD rule, it may pay to begin taking withdrawals during your sixties.

Unlike traditional IRAs, Roth IRAs do not require you to begin taking distributions by age 70½.2 In fact, you're never required to take distributions from your Roth IRA, and qualified withdrawals are tax free.2 For this reason, you may wish to liquidate investments in a Roth IRA after you've exhausted other sources of income. Be aware, however, that your beneficiaries will be required to take RMDs after your death.

Estate Planning and Gifting

There are various ways to make the tax payments on your assets easier for heirs to handle. Careful selection of beneficiaries of your money accounts is one example. If you do not name a beneficiary, your assets could end up in probate, and your beneficiaries could be taking distributions faster than they expected. In most cases, spousal beneficiaries are ideal, because they have several options that aren't available to other beneficiaries, including the marital deduction for the federal estate tax.

Also, consider transferring assets into an irrevocable trust if you're close to the threshold for owing estate taxes. In 2016, the federal estate tax applies to all estate assets over $5.45 million. Assets in an irrevocable trust are passed on free of estate taxes, saving heirs thousands of dollars. TIP: If you plan on moving assets from tax-deferred accounts, do so before you reach age 70½, when RMDs must begin.

Finally, if you have a taxable estate, you can give up to $14,000 per individual ($28,000 per married couple) each year to anyone tax free. Also, consider making gifts to children over age 14, as dividends may be taxed—or gains tapped—at much lower tax rates than those that apply to adults. TIP: Some people choose to transfer appreciated securities to custodial accounts (UTMAs and UGMAs) to help save for a grandchild's higher education expenses.

Strategies for making the most of your money and reducing taxes are complex. Your best recourse? Plan ahead and consider meeting with a competent tax advisor, an estate attorney, and a financial professional to help you sort through your options.


Source(s):

1.  Capital gains from municipal bonds are taxable and interest income may be subject to the alternative minimum tax.

2.  Withdrawals prior to age 59½ are generally subject to a 10% additional tax.
*Income from investment assets may be subject to an additional 3.8% Medicare tax, applicable to single-filer taxpayers with modified adjusted gross income of over $200,000, and $250,000 for joint filers.


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 constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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Starting Out: Begin Funding for Your Financial Security

Congratulations! You’ve graduated from school and landed a job. Your salary, however, is limited, and you don't have much money (if any) left at the end of the month. So where can you find money to save? And, once you find it, where should this cash go?

Here are some ways to help free up the money you need for current expenses, financial protection, and future investments -- all without pushing the panic button.

Get Out From Under

For most young adults, paying down debt is the first step toward freeing up cash for the financial protection they need. If you’re spending more than you make, think about areas where you can cut back. Don't rule out getting a less expensive apartment, roommates, or trading in a more expensive car for a secondhand model. Other expenses that could be trimmed include dining out, entertainment, and vacations.

If you owe balances on high-rate credit cards, look into obtaining a low-interest credit card or bank loan and transferring your existing balances. Then plan to pay as much as you can each month to reduce the total balance, and try to avoid adding new charges.

If you have student loans, there's also help to make paying them back easier. You may be eligible to reduce these payments if you qualify for the Federal Direct Consolidation Loan program. Though the program would lengthen the payment time somewhat, it could also free up extra cash each month to apply to your higher-interest consumer debt. The program can be reached at 800-557-7392.

What You Really Should Buy

How would you pay the bills if your paychecks suddenly stopped? That's when you turn to insurance and personal savings -- two items you should “buy” before considering future big-ticket purchases.

Health insurance is your first priority. Health care insurance is now also mandatory under the Affordable Care Act. If you're not covered under an employer plan, look into the new state or national health insurance exchanges, which offer a variety of coverage options and providers to choose from. You may also qualify for a subsidy if your taxable income is under 400% of the federal poverty level.

Life insurance is the next logical step, but may only be a concern if you have dependents.

Disability insurance should be another consideration. In fact, government statistics estimate that just over 25% of today's 20-year-olds will become disabled before they retire. 1  Disability insurance will replace a portion of your income if you can't work for an extended period due to illness or injury. If you can't get this through your employer, call individual insurance companies to compare rates.

Build a Cash Reserve

If you should ever become disabled or lose your job, you'll also need savings to fall back on until paychecks start up again. Try to save at least three months' worth of living expenses in an easy-to- access "liquid" account, which includes a checking or savings account. Saving up emergency cash is easier if your financial institution has an automatic payroll savings plan. These plans automatically transfer a designated amount of your salary each pay period -- before you see your paycheck -- directly into your account.

To get the best rate on your liquid savings, look into putting part of this nest egg into money market funds. Money market funds invest in Treasury bills, short-term corporate loans, and other low-risk instruments that typically pay higher returns than savings accounts. These funds strive to maintain a stable $1 per share value, but unlike FDIC-insured bank accounts, can't guarantee they won't lose money. 2

Some money market funds may require a minimum initial investment of $1,000 or more. If so, you'll need to build some savings first. Once you do, you can get an idea of what the top-earning money market funds are paying by referring to iMoneyNet, which publishes current yields. Many newspapers also publish yields on a regular basis.


Build Your Financial Future

Some long-term financial opportunities are too good to put off, even if you are still building a cache for current living expenses.

One of the best deals is an employer-sponsored retirement plan such as a 401(k) plan, if available. These tax-advantaged plans allow you to make pretax contributions, and taxes aren't owed on any earnings until they're withdrawn. What's more, new Roth-style plans allow for after-tax contributions and tax-free withdrawals in retirement, provided certain eligibility requirements are met. Another big plus is direct contributions from each paycheck so you won't miss the money as well as possible employer matches on a portion of your contributions.

Don't underestimate the potential power of tax savings. If you invested $100 per month into one of these accounts and it earned an 8% return compounded annually, you would have $146,815 in 30 years -- nearly $50,000 more than if the money were taxed annually at 25%. 3 Bear in mind, however, that you will have to pay taxes on the retirement plan savings when you take withdrawals. If you took a lump-sum withdrawal and paid a 25% tax rate, you'd have $110,111, which is still more than the balance you'd have in a taxable account.

If you're already participating, think about either increasing contributions now or with each raise and promotion.

If a 401(k) isn't available to you, shop around for individual retirement accounts (IRAs), both traditional and Roth, at banks or mutual fund firms. In 2016, you can contribute up to $5,500 to traditional IRAs or Roth IRAs. Generally, contributions to and income earned on traditional IRAs are tax deferred until retirement; Roth IRA contributions are made after taxes, but earnings thereon can be withdrawn tax free upon retirement. Note that certain eligibility requirements apply and nonqualified taxable withdrawals made before age 59½ are subject to a 10% additional federal tax.

Stop Waiting for the Next Paycheck

Beginning your working life with good financial decisions doesn't call for complex moves. It does require discipline and a long-term outlook. This commitment can help get you out of debt and keep you from a paycheck-to- paycheck lifestyle.


Source(s):

1.  Social Security Administration, Fact Sheet, March 2014.

2.  An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.

3.  This hypothetical example is for illustrative purposes only. It does not represent the performance of any actual investment.


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 constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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Frequently Asked Retirement Income Questions

When should I begin thinking about tapping my retirement assets and how should I go about doing so?

The answer to this question depends on when you expect to retire. Assuming you expect to retire between the ages of 62 and 67, you may want to begin the planning process in your mid- to late 50s. A series of meetings with a financial advisor may help you make important decisions such as how your portfolio should be invested, when you can afford to retire, and how much you will be able to withdraw annually for living expenses. If you anticipate retiring earlier, or enjoying a longer working life, you may need to alter your planning threshold accordingly.

How much annual income am I likely to need?

While studies indicate that many people are likely to need between 60% and 80% of their final working year's income to maintain their lifestyle after retiring, low-income and wealthy retirees may need closer to 90%. Because of the declining availability of traditional pensions and increasing financial stresses on Social Security, future retirees may have to rely more on income generated by personal investments than today's retirees.

How much can I afford to withdraw from my assets for annual living expenses?

As you age, your financial affairs won't remain static: Changes in inflation, investment returns, your desired lifestyle, and your life expectancy are important contributing factors. You may want to err on the side of caution and choose an annual withdrawal rate somewhat below 5%; of course, this depends on how much you have in your overall portfolio and how much you will need on a regular basis. The best way to target a withdrawal rate is to meet one-on-one with a qualified financial advisor and review your personal situation.

When planning portfolio withdrawals, is there a preferred strategy for which accounts are tapped first?

You may want to consider tapping taxable accounts first to maintain the tax benefits of your tax-deferred retirement accounts. If your expected dividends and interest payments from taxable accounts are not enough to meet your cash flow needs, you may want to consider liquidating certain assets. Selling losing positions in taxable accounts may allow you to offset current or future gains for tax purposes. Also, to maintain your target asset allocation, consider whether you should liquidate overweighted asset classes. Another potential strategy may be to consider withdrawing assets from tax-deferred accounts to which nondeductible contributions have been made, such as after-tax contributions to a 401(k) plan.

If you maintain a traditional IRA, a 401(k), 403(b), or 457 plan, in most cases, you must begin required minimum distributions (RMDs) after age 70½. The amount of the annual distribution is determined by your life expectancy and, potentially, the life expectancy of a beneficiary. RMDs don't apply to Roth IRAs.

Are there other ways of getting income from investments besides liquidating assets?

One such strategy that uses fixed-income investments is bond laddering. A bond ladder is a portfolio of bonds with maturity dates that are evenly staggered so that a constant proportion of the bonds can potentially be redeemed at par value each year. As a portfolio management strategy, bond laddering may help you maintain a relatively consistent stream of income while managing your exposure to risk.1

In addition, many of today's annuities offer optional living benefits that may help an investor capitalize on the market's upside potential while protecting investment principal from market declines and/or providing minimum future income. Keep in mind, however, that riders vary widely, have restrictions, and that additional fees may apply. Your financial advisor can help you determine whether an annuity is appropriate for your situation.2

When crafting a retirement portfolio, you need to make sure it is positioned to generate enough growth to prevent running out of money during your later years. You may want to maintain an investment mix with the goal of earning returns that exceed the rate of inflation. Dividing your portfolio among stocks, bonds, and cash investments may provide adequate exposure to some growth potential while trying to manage possible market setbacks.


Source(s):

1.  Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise. Bonds are subject to availability and change in price.

2.  Annuity protections and guarantees are based on the claims-paying ability of the issuing insurance company.


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 constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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A Vote for Small Cap Stocks?

Here is a nice article provided by Weston Wellington of Dimensional Fund Advisors:


In the days immediately following the recent US presidential election, US small company stocks experienced higher returns than US large company stocks. This example helps illustrate how the dimensions of expected returns can appear quickly, unpredictably, and with large magnitude.
CLICK HERE TO READ MORE:

A Vote for Small Cap Stocks.pdf


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 This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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New Market Highs and Positive Expected Returns

Here is a nice article provided by Dimensional Fund Advisors:


There has been much discussion in the news recently about new nominal highs in stock indices like the Dow Jones Industrial Average and the S&P 500. When markets hit new highs, is that an indication that it’s time for investors to cash out?
CLICK HERE TO READ MORE:

New Market Highs and Positive Expected Returns.pdf


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 i This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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The Fed, Yields, and Expected Returns

Here is a nice article provided by Dimensional Fund Advisors:


In liquid and competitive markets, current interest rates represent the expected
probability of all foreseeable actions by the Fed and other market forces. CLICK HERE TO READ MORE:

The Fed Yields and Expected Returns.pdf


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 This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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Things You Should Never Buy at Aldi

Here is a nice article provided by Bob Niedt of Kiplinger:


Haven’t shopped at an Aldi supermarket yet? That could change soon. The German chain, famous for its no frills and low prices, is in the midst of a boom. After steadily expanding its footprint in the eastern part of the country over the past 40 years – the first U.S. store opened in Iowa in 1976 – Aldi is now adding locations in Southern California. By 2018, the company expects to have close to 2,000 stores nationwide, up from fewer than 1,600 today.

If you’re new to Aldi’s minimalist approach to grocery shopping, you’re in for a shocker. You pay a refundable quarter to rent a cart. You bag your own groceries. Oh, and you’ll even need to pay for those bags unless you bring your own. There are few shelves, few employees and none of the amenities you’ve come to expect from the likes of Wegmans or Whole Foods. Still, discount shoppers have proven willing to accept the trade-offs. We compared prices and reached out to shopping experts to identify some of the best things to buy at Aldi based on cost, quality or both. We also identified some of the worst things to buy. Have a look.

1.  Buy Kitchen Staples

Heading to the supermarket for some basics, say a gallon of milk, a dozen Grade A eggs, a loaf of white bread and a jar of peanut butter? Strictly judging by the bottom line, you may want to give Aldi a shot.

We priced out these four kitchen staples at an Aldi in Northern Virginia, and then compared the everyday, non-sale prices to similarly packaged store brands at three other nearby grocery retailers: Giant, Harris Teeter and Target. Here are the results (from cheapest to most expensive):

Eggs: Aldi, 39 cents; Harris Teeter, $1.39; Target, $1.49; Giant, $1.99
Bread: Aldi, 85 cents; Harris Teeter, 97 cents; Giant, 99 cents; Target, $1.64
Peanut butter: Aldi, $1.49; Target, $1.79; Giant, $2.19; Harris Teeter, $2.29
Milk: Aldi, $1.49; Target, $2.98; Giant, $3.49; Harris Teeter, $3.59

2.  Don’t Buy Fruits and Vegetables*

Like most of Aldi’s goods, fruits and vegetables are typically sold from the bulk boxes they were shipped in. No fancy, bountiful horn-of-plenty displays. And unlike major chains, the bulk of Aldi’s stores don’t refrigerate produce. While I’ve found Aldi’s fruits and vegetables generally top notch, others disagree.

“Produce [from Aldi] can spoil more quickly,” says Tracie Fobes, a money-saving expert at the website Pennypinchinmom.com, “so buy only what you can eat within a few days.”

Also, Aldi pre-packages many of its fruits and vegetables in bulk, so if you want, say, an apple you need to buy an entire bag. Most big supermarket chains sell similar produce loose. The latter approach allows shoppers to pick out the freshest individual items available.

* This advice applies to most of Aldi’s older existing stores. New (and newly renovated) stores are another story…

3.  But Do Buy Fruits and Vegetables at New Aldi Stores

Aldi is rolling out changes aimed at fending off competitors including Whole Foods’ offshoot discount chain, 365 by Whole Foods. On top of better lighting and wider aisles, Aldi’s new store format puts fresh produce center stage and includes refrigerated units for the likes of greens, perishable fruits and (shocker!) premade soups and dips. Bulk packaging still rules at new stores, but that’s a big reason why Aldi can keep produce prices so low.

If you’re produce shopping at an Aldi store that hasn’t adopted this new format – which means most of them – there are workarounds.

“Aldi’s fruit and vegetables are usually the lowest price compared to other grocers, and they rate as good quality, especially if you shop early mornings when stock is full to choose from,” says Brent Shelton of money-saving site FatWallet.com. “A good tip to improve shelf life is to make sure you wash any produce as soon as you get home.”

4.  Buy Aldi’s Name-Brand Knockoffs

You won’t find many name brands at Aldi. About 90% of the items it stocks are private-label products wedged into a mere 15,000 square feet of space (about one third the size of a standard supermarket).

Yet, as you walk Aldi’s aisles, a lot of the packaging will seem familiar even if the brands aren’t. That’s not by accident.

“A good majority of Aldi’s private-label products are actually name-brand products, just repackaged,” says FatWallet’s Shelton, “so quality is high, and price is usually lower than the brands available at regular grocers.”

Fobes of Pennypinchinmom.com says quality is especially high in Aldi’s canned goods, pasta, condiments and almond milk, which is “smooth and creamy, but more affordable.”

5.  Buy European Novelty Foods and Drinks

Aldi wears its German roots proudly. Look no further than the strudel in the freezer case for proof. You’ll find German and other European chocolates on store shelves, too. According to Fobes, specialty chocolates, in general, are among the best things to buy at Aldi because they are “smooth and creamy at a much lower cost than most other stores.”

Aldi loyalists also rave about the inexpensive, and interesting, selections of wines and beers, as well as the selections of Italian and French sodas and lemonades. Look for packaged gourmet cheese, too.

Prowl the aisles to find more European products that aren’t carried by other U.S. grocers. Keep checking back, since Aldi tends to rotate stock at a high rate. Many products are here today, gone tomorrow.

6.  Buy Organic and Gluten-Free Products

Aldi has been stepping up its game with organic and gluten-free products, especially as it escalates its war on Whole Foods with the redesigned stores.

“They have a huge variety [of organic and gluten-free products],” says Fobes, “which is much less expensive than the name brands.”

And if, from a health perspective, you’re concerned about the quality of Aldi’s private-label foods, there’s been a major change over the past year.

Aldi has removed from the majority of its private-label goods such healthy eating no-nos as partially hydrogenated oils and MSG, says Shelton. The company has also removed growth hormones from its dairy products and carries a line of packaged meats labeled “Never Any!” that is free of added antibiotics, hormones and animal by-products.

7.  Don’t Buy Anything You Can’t Eat or Drink

Savings experts say it’s best to steer clear of most toys, home goods, cleaning supplies and other non-food items at Aldi. But if you’re tempted – every so often, Aldi will score national-brand products and put what appears to be amazing prices on them – first pull out your smartphone and price-compare.

“Make sure you check the price on these as they tend to be higher prices on lower quality items at Aldi,” says Shelton. “Plus, you can often find coupons for these types of items at other stores, even grocers, which would make buying them elsewhere a smart thing to do.” Aldi doesn’t accept coupons.

When we compared prices on a roll of paper towels, for example, Aldi’s price of 99 cents was the same as the price at Giant and Target. However, coupons and loyalty discounts could’ve brought down the price more at the latter retailers. (Aldi doesn’t have a loyalty program, either.)

“Paper products are not always less expensive [at Aldi],” agrees Fobes. “You may find a better deal and quality at the big-box stores.”


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 This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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The 23 Most-Overlooked Tax Deductions

Here is a nice article provided by Kevin McCormally of Kiplinger:


Years ago, the fellow running the IRS told Kiplinger's Personal Finance magazine that he figured millions of taxpayers overpaid their taxes every year by overlooking just one of the money-saving tax breaks listed here.

We’ve updated all the key details in this popular guide to the common tax deductions many filers miss to ensure that your 2016 return is a money-saving masterpiece. Cut your tax bill to the bone by claiming all the tax write-offs you deserve.

1.  State Sales Taxes

After years of uncertainty, in 2015 Congress finally made this break “permanent.” This is particularly important to you if you live in a state that does not impose a state income tax. Congress offers itemizers the choice between deducting the state income taxes or state sales taxes they paid. You choose whichever saves you the most money. So if your state doesn't have an income tax, the sales tax write-off is clearly the way to go.

In some cases, even filers who pay state income taxes can come out ahead with the sales tax choice. And, you don’t need a wheelbarrow full of receipts. The IRS has tables that show how much residents of various states can deduct, based on their income and state and local sales tax rates. But the tables aren't the last word. If you purchased a vehicle, boat or airplane, you may add the sales tax you paid on that big-ticket item to the amount shown in the IRS table for your state. The IRS even has a calculator that shows how much residents of various states can deduct, based on their income and state and local sales tax rates.

We put those quotations marks around permanent above because, as Congress takes up tax reform in 2017, one possibility is the elimination of both the sales tax and the state income tax deductions. But you’re still sure to have the choice for your 2016 return.

2.  Reinvested Dividends

This isn't a tax deduction, but it is an important subtraction that can save you a bundle. And this is the one that former IRS commissioner Fred Goldberg told Kiplinger millions of taxpayers miss . . . costing them millions in overpaid taxes.

If, like most investors, you have mutual fund dividends automatically reinvested to buy extra shares, remember that each new purchase increases your tax basis in the fund. That, in turn, reduces the taxable capital gain (or increases the tax-saving loss) when you redeem shares. Forgetting to include reinvested dividends in your basis results in double taxation of the dividends—once in the year when they were paid out and immediately reinvested and later when they're included in the proceeds of the sale.

Don't make that costly mistake.

If you're not sure what your basis is, ask the fund for help. Funds often report to investors the tax basis of shares redeemed during the year. In fact, for the sale of shares purchased in 2012 and later years, funds must report the basis to investors and to the IRS.

3.  Out-of-Pocket Charitable Deductions

It's hard to overlook the big charitable gifts you made during the year, by check or payroll deduction (check your December pay stub).

But little things add up, too, and you can write off out-of-pocket costs incurred while doing work for a charity. For example, ingredients for casseroles you prepare for a nonprofit organization's soup kitchen and stamps you buy for a school's fund-raising mailing count as charitable contributions. Keep your receipts. If your contribution totals more than $250, you'll also need an acknowledgement from the charity documenting the support you provided. If you drove your car for charity in 2016, remember to deduct 14 cents per mile, plus parking and tolls paid, in your philanthropic journeys.

4.  Student-Loan Interest Paid by Mom and Dad

Generally, you can deduct interest only if you are legally required to repay the debt. But if parents pay back a child's student loans, the IRS treats the transactions as if the money were given to the child, who then paid the debt. So as long as the child is no longer claimed as a dependent, he or she can deduct up to $2,500 of student-loan interest paid by Mom and Dad each year. And he or she doesn't have to itemize to use this money-saver. (Mom and Dad can't claim the interest deduction even though they actually foot the bill because they are not liable for the debt.)

5.  Job-Hunting Costs

If you're among the millions of unemployed Americans who were looking for a job in 2016, we hope you were successful . . . and that you kept track of your job-search expenses or can reconstruct them. If you were looking for a position in the same line of work as your current or most recent job, you can deduct job-hunting costs as miscellaneous expenses if you itemize. Qualifying expenses can be written off even if you didn't land a new job. But such expenses can be deducted only to the extent that your total miscellaneous expenses exceed 2% of your adjusted gross income. (Job-hunting expenses incurred while looking for your first job don't qualify.) Deductible costs include, but aren't limited to:

Transportation expenses incurred as part of the job search, including 54 cents a mile for driving your own car plus parking and tolls. (The rate falls to 53.5 cents a mile for driving in 2017.)

Food and lodging expenses if your search takes you away from home overnight

Cab fares

Employment agency fees

Costs of printing resumes, business cards, postage, and advertising.

6.  Moving Expenses to Take Your First Job

Although job-hunting expenses are not deductible when looking for your first job, moving expenses to get to that job are. And you get this write-off even if you don't itemize. To qualify for the deduction, your first job must be at least 50 miles away from your old home. If you qualify, you can deduct the cost of getting yourself and your household goods to the new area. If you drove your own car on a 2016 move, deduct 19 cents a mile, plus what you paid for parking and tolls. (The rate falls to 17 cents a mile for 2017 moves.) For a full list of deductible moving expenses, check out IRS Publication 521.

7.  Military Reservists' Travel Expenses

Members of the National Guard or military reserve may write off the cost of travel to drills or meetings. To qualify, you must travel more than 100 miles from home and be away from home overnight. If you qualify, you can deduct the cost of lodging and half the cost of your meals, plus an allowance for driving your own car to get to and from drills.

For 2016 travel, the rate is 54 cents a mile, plus what you paid for parking fees and tolls. You may claim this deduction even if you use the standard deduction rather than itemizing. (The rate falls to 53.5 cents a mile for 2017 travel.)

8.  Deduction of Medicare Premiums for the Self-Employed

Folks who continue to run their own businesses after qualifying for Medicare can deduct the premiums they pay for Medicare Part B and Medicare Part D, plus the cost of supplemental Medicare (medigap) policies or the cost of a Medicare Advantage plan.

This deduction is available whether or not you itemize and is not subject to the 7.5% of AGI test that applies to itemized medical expenses for those age 65 and older. One caveat: You can't claim this deduction if you are eligible to be covered under an employer-subsidized health plan offered by either your employer (if you have a job as well as your business) or your spouse's employer (if he or she has a job that offers family medical coverage).

9.  Child-Care Credit

A credit is so much better than a deduction; it reduces your tax bill dollar for dollar. So missing one is even more painful than missing a deduction that simply reduces the amount of income that's subject to tax. In the 25% bracket, each dollar of deductions is worth a quarter; each dollar of credits is worth a greenback.

You can qualify for a tax credit worth between 20% and 35% of what you pay for child care while you work. But if your boss offers a child care reimbursement account—which allows you to pay for the child care with pretax dollars—that’s likely to be an even better deal. If you qualify for a 20% credit but are in the 25% tax bracket, for example, the reimbursement plan is the way to go. Not only does money run through a reimbursement account avoid federal income taxes, it also is protected from the 7.65% Social Security tax. (In any case, only amounts paid for the care of children younger than age 13 count.)

You can't double dip. Expenses paid through a plan can't also be used to generate the tax credit. But get this: Although only $5,000 in expenses can be paid through a tax-favored reimbursement account, up to $6,000 for the care of two or more children can qualify for the credit. So if you run the maximum through a plan at work but spend even more for work-related child care, you can claim the credit on as much as $1,000 of additional expenses. That would cut your tax bill by at least $200.

10.  Estate Tax on Income in Respect of a Decedent

This sounds complicated, but it can save you a lot of money if you inherited an IRA from someone whose estate was big enough to be subject to the federal estate tax.

Basically, you get an income-tax deduction for the amount of estate tax paid on the IRA assets you received. Let's say you inherited a $100,000 IRA, and the fact that the money was included in your benefactor's estate added $40,000 to the estate-tax bill. You get to deduct that $40,000 on your tax returns as you withdraw the money from the IRA. If you withdraw $50,000 in one year, for example, you get to claim a $20,000 itemized deduction on Schedule A. That would save you $5,600 in the 28% bracket.

11.  State Tax Paid Last Spring

Did you owe tax when you filed your 2015 state income tax return in the spring of 2016? Then, for goodness' sake, remember to include that amount in your state-tax deduction on your 2016 federal return, along with state income taxes withheld from your paychecks or paid via quarterly estimated payments during the year.

12.  Refinancing Points

When you buy a house, you get to deduct in one fell swoop the points paid to get your mortgage. When you refinance, though, you have to deduct the points on the new loan over the life of that loan. That means you can deduct 1/30th of the points a year if it's a 30-year mortgage. That's $33 a year for each $1,000 of points you paid—not much, maybe, but don't throw it away.

Even more important, in the year you pay off the loan—because you sell the house or refinance again—you get to deduct all as-yet-undeducted points. There's one exception to this sweet rule: If you refinance a refinanced loan with the same lender, you add the points paid on the latest deal to the leftovers from the previous refinancing, then deduct that amount gradually over the life of the new loan. A pain? Yes, but at least you'll be compensated for the hassle.

13.  Jury Pay Paid to Employer

Many employers continue to pay employees' full salary while they serve on jury duty, and some impose a quid pro quo: The employees have to turn over their jury pay to the company coffers. The only problem is that the IRS demands that you report those jury fees as taxable income. To even things out, you get to deduct the amount you give to your employer.

But how do you do it? There's no line on the Form 1040 labeled “jury fees.” Instead, the write-off goes on line 36, which purports to be for simply totaling up deductions that get their own lines. Include your jury fees with your other write-offs and write "jury pay" on the dotted line.

14.  American Opportunity Credit

Unlike the Hope Credit that this one replaced, the American Opportunity Credit is good for all four years of college, not just the first two. Don't shortchange yourself by missing this critical difference. This tax credit is based on 100% of the first $2,000 spent on qualifying college expenses and 25% of the next $2,000 ... for a maximum annual credit per student of $2,500. The full credit is available to individuals whose modified adjusted gross income is $80,000 or less ($160,000 or less for married couples filing a joint return). The credit is phased out for taxpayers with incomes above those levels.

If the credit exceeds your tax liability, it can trigger a refund. (Most credits are “nonrefundable,” meaning they can reduce your tax to $0, but not get you a check from the IRS.)

15.  A College Credit for Those Long Out of College

College credits aren’t just for youngsters, nor are they limited to just the first four years of college. The Lifetime Learning credit can be claimed for any number of years and can be used to offset the cost of higher education for yourself or your spouse . . . not just for your children.

The credit is worth up to $2,000 a year, based on 20% of up to $10,000 you spend for post-high-school courses that lead to new or improved job skills. Classes you take even in retirement at a vocational school or community college can count. If you brushed up on skills in 2016, this credit can help pay the bills. The right to claim this tax-saver phases out as income rises from $55,000 to $65,000 on an individual return and from $110,000 to $130,000 for couples filing jointly.

16.  Those Blasted Baggage Fees

Airlines seem to revel in driving travelers batty with extra fees for baggage, online booking and for changing travel plans. Such fees add up to billions of dollars each year. If you get burned, maybe Uncle Sam will help ease the pain. If you're self-employed and traveling on business, be sure to add those costs to your deductible travel expenses.

17.  Credits for Energy-Saving Home Improvements

Your 2016 return is the last chance to claim a tax credit for installing energy-efficient windows or making similar energy-saving home improvements. You can claim up to $500 in total tax credits for eligible improvements, based on 10% of the purchase cost (not installation) of certain insulation, windows, doors and skylights. The credit is subject to a lifetime cap, so if you’ve already pocketed the max, you’re out of luck. But there’s no such limit on the much more powerful incentive for those who install qualified residential alternative energy equipment, such as solar hot water heaters, geothermal heat pumps and wind turbines in 2016. Your credit can be 30% of the total cost (including labor) of such systems.

18.  Bonus Depreciation ... And Beefed-Up Expensing

Business owners—including those who run businesses out of their homes—have to stay on their toes to capture tax breaks for buying new equipment. The rules seem to be constantly shifting as Congress writes incentives into the law and then allows them to expire or to be cut back to save money. Take “bonus depreciation” as an example. Back in 2011, rather than write off the cost of new equipment over many years, a business could use 100% bonus depreciation to deduct the full cost in the year the equipment was put into service. For 2013, the bonus depreciation rate was 50%. The break expired at the end of 2013 and stayed expired until the end of 2014 . . . when Congress reinstated it retroactively to cover 2014 purchases. Then, the provision expired again . . . but near the end of 2015, Congress revived the break. The 50% bonus applies for property purchased in 2016 and 2017, too; the bonus drops to 40% in 2018 and 30% in 2019.

Perhaps even more valuable, though, is another break: supercharged "expensing," which basically lets you write off the full cost of qualifying assets in the year you put them into service. This break, too, has a habit of coming and going. But as part of the 2015 tax law, Congress made the expansion of expensing permanent. For 2016 and future years, businesses can expense up to $500,000 worth of assets. The half-million-dollar cap phases out dollar for dollar for firms that put more than $2 million worth of assets into service in a single year.

19.  Social Security Taxes You Pay

This doesn’t work for employees. You can’t deduct the 7.65% of pay that’s siphoned off for Social Security and Medicare. But if you’re self-employed and have to pay the full 15.3% tax yourself (instead of splitting it 50-50 with an employer), you do get to write off half of what you pay. That deduction comes on the face of Form 1040, so you don’t have to itemize to take advantage of it.

20.  Waiver of Penalty for the Newly Retired

This isn’t a deduction, but it can save you money if it protects you from a penalty. Because our tax system operates on a pay-as-you earn basis, taxpayers typically must pay 90% of what they owe during the year via withholding or estimated tax payments. If you don’t, and you owe more than $1,000 when you file your return, you can be hit with a penalty for underpayment of taxes. The penalty works like interest on a loan—as though you borrowed from the IRS the money you didn’t pay. The current rate is 3%.

There are several exceptions to the penalty, including a little-known one that can protect taxpayers age 62 and older in the year they retire and the following year. You can request a waiver of the penalty—using Form 2210—if you have reasonable cause, such as not realizing you had to shift to estimated tax payments after a lifetime of meeting your obligation via withholding from your paychecks.

21.  Amortizing Bond Premiums

If you purchased a taxable bond for more than its face value—as you might have to capture a yield higher than current market rates deliver—Uncle Sam will effectively help you pay that premium. That’s only fair, since the IRS is also going to get to tax the extra interest that the higher yield produces.

You have two choices about how to handle the premium.

You can amortize it over the life of the bond by taking each year’s share of the premium and subtracting it from the amount of taxable interest from the bond you report on your tax return. Each year you also reduce your tax basis for the bond by the amount of that year’s amortization.

Or, you can ignore the premium until you sell or redeem the bond. At that time, the full premium will be included in your tax basis so it will reduce the taxable gain or increase the taxable loss dollar for dollar.

The amortization route can be a pain, since it’s up to you to both figure how each year’s share and keep track of the declining basis. But it could be more valuable, since the interest you don’t report will avoid being taxed in your top tax bracket for the year—as high as 43.4%, while the capital gain you reduce by waiting until you sell or redeem the bond would only be taxed at 0%, 15% or 20%.

If you buy a tax-free municipal bond at a premium, you must use the amortization method and reduce your basis each year . . . but you don’t get to deduct the amount amortized. After all, the IRS doesn’t get to tax the interest.

22.  Legal Fees Paid to Secure Alimony

Although legal fees and court costs involved in a divorce are generally nondeductible personal expenses, you may be able to deduct the part of your attorney’s bill.

Since alimony is taxable income, you can deduct the part of the lawyer’s fee that is attributable to setting the amount. You can also deduct the portion of the fee that is attributable to tax advice. You must itemize to get any tax savings here, and these costs fall into the category of miscellaneous expenses that are deductible only to the extent that the total exceeds 2% of your adjusted gross income. Still, be sure your attorney provides a detailed statement that breaks down his fee so you can tell how much of it may qualify for a tax-saving deduction.

23.  Don’t Unnecessarily Report a State Income Tax Refund

There’s a line on the tax form for reporting a state income tax refund, but most people who get refunds can simply ignore it even though the state sent the IRS a copy of the 1099-G you got reporting the refund. If, like most taxpayers, you didn’t itemize deductions on your previous federal return, the state tax refund is tax-free.

Even if you did itemize, part of it might be tax-free. It’s taxable only to the extent that your deduction of state income taxes the previous year actually saved you money. If you would have itemized (rather than taking the standard deduction) even without your state tax deduction, then 100% of your refund is taxable—since 100% of your write-off reduced your taxable income. But, if part of the state tax write-off is what pushed you over the standard deduction threshold, then part of the refund is tax-free. Don’t report any more than you have to.


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 This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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10 Reasons You Will Never Make $1 Million Dollars

Here is a nice article provided by Stacy Rapacon of Kiplinger:


Wealthy people usually aren't born that way. Most spend their lives amassing their fortunes by working hard, spending little, saving a lot and investing wisely. It may sound like a simple strategy, but the fact that the vast majority of Americans fall short of millionaire status proves that it's easier said than done.

Then again, 10.4 million households in the U.S. have $1 million or more in investable assets, according to market research and consulting firm Spectrem Group, and their ranks are growing. So it's not impossible.

Read on to learn what you might be doing to keep yourself out of the millionaire's club. More importantly, find out how you can change your ways and build your own seven-figure nest egg.

1.  You Picked the Wrong Profession

Accumulating wealth starts with your first paycheck, and some jobs can get you going faster than others. According to consulting firm Capgemini's World Wealth Report, many wealthy people today work in technology, finance and medicine—fields that are well represented in our list of the best jobs for the future. Positions in these areas have generous salaries and are in high demand. For example, among our top jobs is nurse practitioner, which has a median salary of more than $97,000 a year. In contrast, a door-to-door sales worker, among our worst jobs for the future, can expect to make about $20,700 a year. Of course, given enough time and the right saving and spending habits, you can build a fortune even with a small salary. But a higher income can certainly make it easier to save more, faster.

What you can do about it

If you're still in school, majoring in a promising field can put you on the path to a lucrative career and help make you a millionaire. But remember: You'll have an easier time working hard for the rest of your life if you have a legitimate interest in your chosen profession.

If you're past your college days, you can still learn some skills to advance your career and increase your earning potential with free online courses.

2.  You Fear the Stock Market

Cash stuffed under your mattress or even deposited in a savings account won't keep up with inflation, much less grow into $1 million. In order to maximize your gains, you need to invest your money wisely. In many cases, that means putting your money mostly in stocks.

Consider the math: According to Bankrate.com, the highest yield you can expect from a money market account right now is 1.26%. If you put away $10,000 in one and added nothing else, in 10 years, with monthly compounding, you'd have about $11,340 total. But if you invested that $10,000 and earned a 6% return, you'd have almost $18,200, or $6,860 more.

What you can do about it

There's no denying that the stock market can take you on a bumpy ride, so your fears are understandable. But steeling yourself and diving in is well worth it. Over the long term, stocks have marched upward and proved to be the investment of choice for expanding wealth.

Savings earmarked for retirement are particularly well suited for the stock market. With a long time horizon, you have time to recover from market dips.

3.  You Don’t Save Enough

If you don't save money, you're never going to be rich. It's hard to get around that obvious (but often ignored) principle. Even if you earn seven figures, if you spend it all, you still net zero.

What you can do about it

Begin saving as soon as possible. The sooner you start putting your money to work, the less you actually have to save. If you start saving at age 35, you'll need to put away $671 each month in order to reach $1 million by the time you turn 65, assuming you earn an 8% annual return. If you wait until you're 45 years old to start saving, you'll have to save $1,698 a month to hit $1 million in 20 years.

How can you start saving? First, you need a budget (more on budgeting later). Lay out all of your expenses to see where your money is going. Then, you can figure out where you can trim costs and save. Any little bit you can muster is a good start. And whenever you get a bonus or some extra cash—for example, after selling some belongings or getting a generous birthday gift—add it to your savings before you have time to think of ways you can spend it.

4.  You Live Beyond Your Means

Spending more than you earn can put you in a dangerous hole of debt. On the bright side, you won't be in there alone: According to the National Foundation for Credit Counseling, one in three American households carries credit card debt from month to month. And among those balance-carrying households, the average credit-card debt is $16,048, according to financial research firm ValuePenguin.

What you can do about it

Again, you need to have a budget to make sure you have more money coming in than going out. With the availability of credit, it's easy to fall into thinking you can afford more than you actually can. But, as Knight Kiplinger has pointed out, "the biggest barrier to becoming rich is living like you're rich before you are."

Even once you are rich, you may still want to live like you're not. According to U.S. Trust's Insights on Wealth and Worth survey, the majority of millionaires don't actually consider themselves "wealthy." If you don't think of yourself as well off, and you maintain the same lifestyle after your income and savings increase, you can put away even more for your short- and long-term goals without losing an ounce of comfort.

5.  You overlook the value of nickels and dimes

No, we're not suggesting that you search for loose change under your sofa cushions. Rather, cutting seemingly insignificant expenses—such as baggage charges on your flights, late-payment penalties on your bills and out-of-network ATM fees on your cash withdrawals—can add up to substantial savings.

Investing fees attached to mutual funds and 401(k) plans can be especially detrimental. For example, let's assume you currently have $25,000 saved in your 401(k) and earn 7% a year, on average. If you pay fees and expenses of 0.5% a year, your account would grow to $227,000 after 35 years. But increasing the extra charges to 1.5% annually would mean your account would grow to just $163,000 over that time.

What you can do about it

More than you realize. Pay attention to the fine print, and avoid those sneaky extra charges. You can skip airline baggage fees by packing lightly and bringing only a carry-on or by flying Southwest Airlines, which allows you to check two bags free. If you make a late payment on a credit card, ask the issuer to waive the fee. Long-time customers who usually pay on time are often given a pass. For more, see How to Avoid Paying 21 Annoying Fees.

For your 401(k), you can see how it rates with other plans at www.brightscope.com. You can select low-cost mutual funds to lower your investing costs. (Check out the Kiplinger 25, a list of our favorite no-load funds.) Also consider talking to your employer about the possibility of lowering the plan's fees.

6.  You are drowning in debt

Again, debt can be a danger to your financial well-being. If you're constantly paying credit card bills and racking up interest, you won't have a chance to save any money.

But not all debt is bad. Borrowing to go to school, to get professional training or to start your own business can help boost your career and income potential. Especially in a low-interest-rate environment, the investment can be well worth it. In fact, borrowing funds is one of the most preferred funding strategies used by high-net-worth individuals with 60% opting to use bank credit before tapping their own holdings for quick cash, according to U.S. Trust.

What you can do about it

If you already have some debt troubles, be sure to devise a repayment plan. One strategy is to pay off the debt with the highest interest rate first. The sooner you clear that away, the more you save on interest. Another strategy is to pay off the smallest debt first to give yourself a psychological boost and encourage you to keep chipping away.

If you're considering taking out new loans—to go back to school or seed your business, for example—make sure you understand all the terms, including your interest rate and repayment details, so you can decide whether it's truly worth it.

7.  You neglect your health

You need to work to make money, and you need to be healthy in order to work. The rich understand that, and 98% of millionaires consider good health to be their most important personal asset, according to U.S. Trust.

What you can do about it

Take care of yourself—and do it on the cheap. You can take advantage of free wellness programs offered by your employer, as well as free preventive-care services guaranteed by federal law, such as blood pressure screenings, mammograms for women older than 40 and routine vaccinations for children. Also try to quit any bad health habits, such as smoking or excessive drinking, that can cost you dearly.

8.  You don't have a budget

Without a budget, it's easy to lose track of how much you're spending and live beyond your means. Working toward financial goals, such as saving for a vacation, buying a house or funding your retirement, can also prove difficult if you don't have a well-thought-out plan.

What you can do about it

Do what the majority of millionaires do: Establish a budget. Knowing where your money is going helps you identify ways to keep more in your pocket. Break out the pencil, paper and calculator to lay out your income and expenses.

Or go digital with your finances by using a budgeting Web site such as Mint or BudgetPulse to help you track your spending. With Mint, you provide your usernames and passwords for bank accounts, credit cards and other financial accounts, and the site organizes your money movement for you. Your bank or credit card issuer might offer similar tools to help you analyze your spending habits.

9.  You pay too much in taxes

Did you get a tax refund this year? Receiving that lump-sum payment from Uncle Sam may seem like a good thing. But it actually means that you've loaned the government money without earning any interest.

What you can do about it

Adjust your tax withholding. You can use our tax-withholding calculator to see how much you can fatten your paycheck by doing so. If you got a $3,000 refund (about average for 2015), claiming an additional three allowances on your Form W-4 can boost your monthly take-home pay by $250. The extra money, which can be invested in stocks or deposited in an interest-bearing account, should start showing up in your next paycheck.

Such a sum may not lend itself to millionaire status on its own, but being mindful of taxes is important to increasing—and keeping—your wealth. Indeed, 55% of high-net-worth investors prioritize minimizing taxes when it comes to investment decisions. A couple of smart tax-planning strategies you should consider: picking the right tax-deferred retirement savings accounts and holding investments long enough to qualify for the lower, long-term capital gains tax. Even choosing the right state to live in can have a big impact on your finances when it comes to taxes.

10.  You lack purpose in your life

There's more to life than money, and wealthy people know it. According to U.S. Trust, 94% of millionaires say they have a clear sense of purpose in their lives. "Whatever that purpose or direction happens to be—whether it's their family, their family legacy, philanthropy or stewardship of a business—[knowing their purpose means] they have the emotional maturity to focus on it and make decisions in the context of what's most important to them," says Paul Stavig, managing director and wealth strategist of U.S. Trust.

What you can do about it

Entire religions and philosophies are dedicated to helping people figure out what they're meant to do in this life. We won't try to compete. But we will note that a clear purpose can help motivate you to make and save more. Indeed, 76% of millionaires recognize that money can give you the opportunity to create change and fulfill your life's purpose.


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 This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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9 IRS Audit Red Flags for Retirees

Here is a nice article provided by Joy Taylor of Kiplinger:


In 2015, the Internal Revenue Service audited only 0.84% of all individual tax returns. So the odds are generally pretty low that your return will be picked for review.

That said, your chances of being audited or otherwise hearing from the IRS escalate depending on various factors. Math errors may draw an IRS inquiry, but they’ll rarely lead to a full-blown exam. Whether you're filing your 2015 return in October after getting an extension or looking ahead to filing your 2016 return early next year, check out these red flags that could increase the chances that the IRS will give the return of a retired taxpayer special, and probably unwelcome, attention.

1.  Making a Lot of Money

Although the overall individual audit rate is only about one in 119, the odds increase dramatically as your income goes up, as it might if you sell a valuable piece of property or get a big payout from a retirement plan.

IRS statistics show that people with incomes of $200,000 or higher had an audit rate of 2.61%, or one out of every 38 returns. Report $1 million or more of income? There's a one-in-13 chance your return will be audited. The audit rate drops significantly for filers reporting less than $200,000: Only 0.76% (one out of 132) of such returns were audited, and the vast majority of these exams were conducted by mail.

We're not saying you should try to make less money—everyone wants to be a millionaire. Just understand that the more income shown on your return, the more likely it is that you'll be hearing from the IRS.

2.  Failing to Report All Taxable Income

The IRS gets copies of all 1099s and W-2s you receive. This includes the 1099-R (reporting payouts from retirement plans, such as pensions, 401(k)s and IRAs) and 1099-SSA (reporting Social Security benefits).

Make sure you report all required income on your return. IRS computers are pretty good at matching the numbers on the forms with the income shown on your return. A mismatch sends up a red flag and causes the IRS computers to spit out a bill. If you receive a tax form showing income that isn't yours or listing incorrect income, get the issuer to file a correct form with the IRS.

3.  Taking Higher-Than-Average Deductions

If deductions on your return are disproportionately large compared with your income, the IRS may pull your return for review. A large medical expense could send up a red flag, for example. But if you have the proper documentation for your deduction, don't be afraid to claim it. There's no reason to ever pay the IRS more tax than you actually owe.

4.  Claiming Large Charitable Deductions

We all know that charitable contributions are a great write-off and help you feel all warm and fuzzy inside. However, if your charitable deductions are disproportionately large compared with your income, it raises a red flag.

That's because the IRS knows what the average charitable donation is for folks at your income level. Also, if you don't get an appraisal for donations of valuable property, or if you fail to file Form 8283 for non-cash donations over $500, you become an even bigger audit target. And if you've donated a conservation or facade easement to a charity, chances are good that you'll hear from the IRS.


Be sure to keep all your supporting documents, including receipts for cash and property contributions made during the year.

5.  Not Taking Required Minimum Distributions

The IRS wants to be sure that owners of IRAs and participants in 401(k)s and other workplace retirement plans are properly taking and reporting required minimum distributions. The agency knows that some folks age 70½ and older aren’t taking their annual RMDs, and it’s looking at this closely.

Those who fail to take the proper amount can be hit with a penalty equal to 50% of the shortfall. Also on the IRS’s radar are early retirees or others who take payouts before reaching age 59½ and who don’t qualify for an exception to the 10% penalty on these early distributions.

Individuals age 70½ and older must take RMDs from their retirement accounts by the end of each year. However, there’s a grace period for the year in which you turn 70½: You can delay the payout until April 1 of the following year. A special rule applies to those still employed at age 70½ or older: You can delay taking RMDs from your current employer’s 401(k) until after you retire (this rule doesn’t apply to IRAs). The amount you have to take each year is based on the balance in each of your accounts as of December 31 of a prior year and a life-expectancy factor found in IRS Publication 590-B.

6.  Claiming Rental Losses

Claiming a large rental loss can command the IRS’s attention. Normally, the passive loss rules prevent the deduction of rental real estate losses. But there are two important exceptions. If you actively participate in the renting of your property, you can deduct up to $25,000 of loss against your other income. This $25,000 allowance phases out at higher income levels. A second exception applies to real estate professionals who spend more than 50% of their working hours and more than 750 hours each year materially participating in real estate as developers, brokers, landlords or the like. They can write off losses without limitation.

The IRS is actively scrutinizing rental real estate losses. If you’re managing properties in your retirement, you may qualify under the second exception. Or, if you sell a rental property that produced suspended passive losses, the sale opens the door for you to deduct the losses. Just be ready to explain things if a big rental loss prompts questions from the IRS.

7.  Failing to Report Gambling Winnings or Claiming Big Losses

Whether you’re playing the slots or betting on the horses, one sure thing you can count on is that Uncle Sam wants his cut. Recreational gamblers must report winnings as other income on the front page of the 1040 form. Professional gamblers show their winnings on Schedule C. Failure to report gambling winnings can draw IRS attention, especially because the casino or other venue likely reported the amounts on Form W-2G.

Claiming large gambling losses can also be risky. You can deduct these only to the extent that you report gambling winnings. And the costs of lodging, meals and other gambling-related expenses can only be written off by professional gamblers. Writing off gambling losses but not reporting gambling income is sure to invite scrutiny. Also, taxpayers who report large losses from their gambling-related activity on Schedule C get an extra look from IRS examiners, who want to make sure that these folks really are gaming for a living.

8.  Writing Off a Loss for a Hobby

Your chances of "winning" the audit lottery increase if you file a Schedule C with large losses from an activity that might be a hobby—dog breeding, jewelry making, coin and stamp collecting, and the like. Agents are specially trained to sniff out those who improperly deduct hobby losses. So be careful if your retirement pursuits include trying to convert a hobby into a moneymaking venture.

You must report any income from a hobby, and you can deduct expenses up to the level of that income. But the law bans writing off losses from a hobby.

To be eligible to deduct a loss, you must be running the activity in a business-like manner and have a reasonable expectation of making a profit. If your activity generates profit three out of every five years (or two out of seven years for horse breeding), the law presumes that you're in business to make a profit, unless the IRS establishes otherwise. If you're audited, the IRS is going to make you prove you have a legitimate business and not a hobby. Be sure to keep supporting documents for all expenses.

9.  Neglecting to Report a Foreign Bank Account

Just because you may be traveling more in retirement, be careful about sending your money abroad. The IRS is intensely interested in people with money stashed outside the U.S., and U.S. authorities have had lots of success getting foreign banks to disclose account information. The IRS also uses voluntary compliance programs to encourage folks with undisclosed foreign accounts to come clean—in exchange for reduced penalties. The IRS has learned a lot from these amnesty programs and has been collecting a boatload of money (we’re talking billions of dollars). It’s scrutinizing information from amnesty seekers and is targeting the banks that they used to get names of even more U.S. owners of foreign accounts.

Failure to report a foreign bank account can lead to severe penalties. Make sure that if you have any such accounts, you properly report them.


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 This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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Hedge Fund Math: Heads We Win, Tails You Lose

Here is a nice article written by James B. Stewart of The New York Times:


In a letter to Pershing Square Holdings Ltd. investors this month, Bill Ackman disclosed that through the end of November, the fund had declined 13.5 percent this year after accounting for fees.  The reality is that many hedge funds reap far higher percentages of their gains than that stated in their fee structure. That’s because when they experience substantial losses they don’t have to give anything back.  Investors seem to be finally catching on to the fact that most hedge fund managers share generously in the good times, but are exposed to none of the losses in bad.  READ MORE HERE:


Hedge Fund Math: Heads We Win, Tails You Lose


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 This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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12 Reasons You Will Go Broke in Retirement

Here is a nice article provided by Stacy Rapacon of Kiplinger:

 

Retirement is a major milestone that brings many life changes. One thing that doesn't change for most people: the fear of running out of money. According to the Transamerica Center for Retirement Studies, the most frequently reported retirement worry is outliving savings and investments. Across all ages, 51% of respondents cited this concern, and 41% of retirees claim the same fear. Additionally, only 46% of retirees think they've built a nest egg large enough to last through retirement.

Now is the time to face your fears. Take a look at a dozen ways you could go broke in retirement and learn how to avoid them. Some you can avert with careful planning; others you have little control over. But you can prepare your finances to make the best of whatever may come.

1.  You Abandon Stocks:

It's true that stocks can be risky. For example, so far in 2016, Standard & Poor's 500-stock index, a benchmark for many investors, has experienced several wild swings, opening with a 5% decline in January and including a headline-grabbing, single-day drop of 3.4% on June 24 in response to the Brexit. So once you're retired, you might be inclined to move your money out of stocks altogether and instead focus on preserving your wealth.

But that would be a mistake. Despite the volatility, the S&P 500 is up about 6% year-to-date, as of mid October 2016. Without stocks, "you don't get the growth that you need," says Carrie Schwab-Pomerantz, senior vice president at Charles Schwab and author of The Charles Schwab Guide to Finances After Fifty. "You need your money to continue to grow through those 20 to 30 years of retirement." She recommends maintaining a stock allocation of at least 20% during retirement for your portfolio to outpace inflation and help maintain your lifestyle.

2.  You invest too much in stocks:

On the other hand, you're right: Stocks are risky. "You don't want to have too much in stocks, especially if you're so reliant on that portfolio, because of the volatility of the market," says Schwab-Pomerantz. There's no one-size-fits-all formula, but for the average investor Schwab-Pomerantz recommends moving to 60% stocks as you approach retirement, then trimming back to 40% stocks in early retirement. Later in retirement, allocate 20% to stocks.

If you're hesitant to make these portfolio adjustments yourself and don't want to work with a financial adviser, consider investing in target-date mutual funds instead. These funds are designed to reduce exposure to stocks gradually over time as you approach (and surpass) your target date for retirement. Not all target-date funds are the same, even if they sport the same retirement target year in their names. Be aware of specific funds' expenses and asset-allocation strategies to ensure they are affordable and fit your needs.

3.  You Live Too Long:

More time to enjoy the life you love is a joy; trying to afford it can be a pain. Current retirees are expecting a long retirement—a median of 28 years, according to the Transamerica Center for Retirement Studies. And 41% of retirees expect their retirements to go on for more than three decades. Women have to plan for an even longer life. According to the Centers for Disease Control and Prevention, a man who was age 65 in 2014 can expect to live to age 83, on average, while a woman of the same age may reach 85.5 years.

When saving for retirement, plan for a long life. But if it starts to look like your nest egg will come up short, you have to adjust your budget. For example, it might behoove you to downsize your home or relocate to an area with low taxes and living costs. You may even consider finding ways to pull in extra income, such as starting an encore career, taking a part-time job or cashing in on the sharing economy, if you can.

4.  You Spend Too Much:

It might seem obvious, but most of us—retired or not—are guilty of making this mistake and could benefit from a reminder to quit it. In fact, according to the Employee Benefit Research Institute, nearly 46% of retired households spent more annually in their first two years of retirement than they did just before retiring.

And retirees on a fixed income are particularly vulnerable to the ill effects of committing this error. "One of the biggest mistakes, I think, is that people continue to spend the way they did in their earning years without taking a close look at their current income," says Schwab-Pomerantz. "For retirees, budgeting is more important than ever." (Use Kiplinger's Household Budgeting Worksheet to get your expenses under control.)

5.  You rely on a single source of income:

Multiple income streams are better than one, especially in retirement. Case in point: Social Security is the primary source of income for 61% of retirees, according to the Transamerica Center for Retirement Studies. And 44% of retirees report that one of their biggest financial fears is that Social Security will be reduced or cease to exist in the future. Based on current projections, Social Security will only be able to pay 77% of promised retirement benefits beginning in 2035.

A pension, which 42% of retirees use as a source of income, or inheritance likely can't stand alone to support you through retirement, either. But when you put them all together, along with your self-funded retirement accounts—such as 401(k)s and IRAs—then you have a more stable and diversified financial base to rely on throughout your retirement.

6.  You can't work:

Another good reason for needing plenty of savings and multiple streams of income to support you in retirement: You can't count on being able to bring in a paycheck if you need it. While 51% of workers expect to continue working some in retirement, only 6% of retirees report working in retirement as a source of income.

Whether you work is not always up to you. In fact, 60% of retirees left the workforce earlier than planned, according to the Transamerica Center for Retirement Studies. Of those, 66% did so because of employment-related issues, including organizational changes at their companies, losing their jobs and taking buyouts. Health-related issues—either their own ill health or that of a loved one—was cited by 37%. Just 16% retired early because they felt they could afford to.

7.  You get sick:

As you age, your health is bound to deteriorate, and getting the proper care is expensive. According to a 2015 report from the Employee Benefit Research Institute, a 65-year-old man would need to save $68,000 to have a 50% chance of affording his health-care expenses in retirement (excluding long-term care) that aren't covered by Medicare or private insurance. To have a 90% chance, the same man would need to save $124,000. The news is worse for a 65-year-old woman, who would need to save $89,000 and $140,000, respectively. Be sure you're doing all you can to cut health-care costs in retirement by considering supplemental medigap and Medicare Advantage plans and reviewing your options every year.

Long-term care bumps up the bill even more. For example, the median cost for adult day health care in the U.S. is $1,473 a month; for a private room in a nursing home, it costs a median of $7,698 a month, according to Genworth. No wonder 44% of retirees fear declining health that requires long-term care and 31% fear cognitive decline, dementia and Alzheimer's disease. Consider getting long-term-care insurance to help cover those costs, and use these tactics to make it affordable.

8.  You tap the wrong retirement accounts:

This mistake probably won't leave you flat broke, but lacking a smart withdrawal strategy can cost you. The most tax-efficient way to go, suggests Schwab-Pomerantz, is to draw down the principal from your maturing bonds and certificates of deposit first, since they are no longer bearing interest. Next, if you're 70½ or older, take your required minimum distributions from your traditional tax-deferred accounts, such as IRAs and 401(k)s, focusing on assets that are overweighted or no longer appropriate for your portfolio. You face a stiff penalty from the IRS for neglecting to take RMDs on time.

Then, sell from your taxable accounts, for which you only have to pay the capital-gains tax. (Note: Retirees in the two lowest income tax brackets pay no tax at all on their capital gains.) Finally, withdraw from your tax-deferred and Roth accounts, in that order.

9.  You don't consider taxes:

Needing to be tax-smart extends beyond your drawdown strategy (see #8). Where you live impacts what you pay in taxes big time. That's part of why so many people flock to Florida and Arizona after they retire. Along with the warm weather and ample sunshine, those states offer two of the country's ten most tax-friendly environments for retirees. Other states with retirement-friendly tax codes include Alaska, Georgia and Nevada.

Of course, taxes alone shouldn't dictate where you live in retirement. Friends, family and other community ties play a major role. But you have to keep state and local taxes in mind (especially sales taxes, property taxes and taxes on retirement income) when planning your budget. Take a look at our state-by-state guide to taxes on retirees for more.

10.  You bankroll the kids:

A mistake made out of love is a mistake all the same. You may feel obligated to assist your children financially—paying for college, contributing to the down payment for a first home and covering them in emergencies, for example. But doing so at the expense of your retirement security may cause bigger problems for both you and your kids in the long run.

"It sounds awful to think a parent won't help [his children], but you're only going to become a drag on your kids eventually if you don't really focus on your own financial security during those later years," says Schwab-Pomerantz. "You gotta take care of yourself first."

11.  You are underinsured:

Cutting costs in retirement is important, but scrimping on insurance might not be the best place to do it. Adequate health coverage, in particular, is essential to prevent a devastating illness or injury from wiping out your nest egg. Medicare Part A, which covers hospital services, is a good start. It’s free to most retirees. But you’ll need to pay extra for Part B (doctor visits and outpatient services) and Part D (prescription drugs). Even then, you’ll probably want a supplemental medigap policy to help cover deductibles, copayments and such. "Medicare is very complex, and it's more expensive than people realize," says Schwab-Pomerantz. "So it definitely needs to be part of the budgeting process."

And don't forget about other forms of insurance. As you age, your chances of having accidents both at home and on the road increase. In fact, according to the Centers for Disease Control and Prevention, an average of 586 adults who are 65 and older are injured every day in car crashes. Beyond your own medical expenses, all it can take is a single adverse ruling in an accident-related lawsuit to drain your retirement savings. Review the liability coverage that you already have through your auto and home policies. If it’s not sufficient, either bump up the limits or invest in a separate umbrella liability policy that will kick in once your primary insurance maxes out. Premiums on a $1 million umbrella policy might run about $300 a year.

12.  You get scammed:

Older adults are particularly vulnerable to scam artists and fraudsters. The FBI notes that seniors are prime targets for such criminals because of their presumed wealth, relatively trusting nature and typical unwillingness to report these crimes. Even worse, the perpetrators may be closer than you think. According to a study from MetLife and the National Committee for the Prevention of Elder Abuse, an estimated one million elders lose $2.6 billion a year due to financial abuse—and family members and caregivers are the perpetrators 55% of the time.

Some common scams to watch out for: Con artists may pretend to represent Medicare to collect your personal information. Cheap prescription drugs marketed online could be knock-offs, and you may be handing over your credit card information in exchange for endangering your health. Charity workers seeking donations for disaster aid might actually pocket the money for themselves. See our advice on how to protect yourself from fraudsters.


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 This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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Prediction Season

Here is a nice article provided by Dimensional Fund Advisors:


Predictions about future price movements come in all shapes and sizes, but most of them tempt the investor into playing a game of outguessing the market.  READ MORE HERE:

Prediction Season.pdf


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 This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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Making Billions With One Belief: The Markets Can’t Be Beat

Here is a nice article written by Jason Zweig of The Wall Street Journal:


The fastest-growing major mutual-fund company in the U.S. isn’t strictly an active or passive investor. It’s both.

Dimensional Fund Advisors LP, or DFA, is the sixth-largest mutual-fund manager, up from eighth a year ago, according to Morningstar Inc., drawing nearly $2 billion in net assets per month at a time when investors are fleeing many other firms. Learn why DFA’s founders are pioneers of index funds here:

Making Billions With One Belief: The Markets Can’t Be Beat


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 This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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Dissecting Dimensional

Here is a nice article written by Charles McGrath of Pensions & Investments:


Dimensional Fund Advisors began with the idea that using academic research to invest in smaller, under priced companies with a tilt to profitability could outperform the market by avoiding subjective stock picking and the rigidness of pure index investing. The firm’s assets have grown significantly since the financial crisis as institutions look for low-cost active strategies that deliver alpha. It is the largest manager of quantitative strategies, strictly to institutional investors.  LEARN MORE:

Dissecting Dimensional


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 This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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15 Things You Should Never Buy During the Holidays

Here is a nice article provided by Bob Niedt of Kiplinger:


The season of giving is also the season of getting. You're likely spending lots of money purchasing gifts for friends and loved ones during the holidays. But proceed with caution: There are a number of things you shouldn't be buying between Thanksgiving and Christmas. Why? Because certain items tend to be considerably less expensive outside the peak holiday shopping season.

We reached out to deal experts to give us the particulars on what not to buy during the holidays. Here are 15 things they say you will be better off purchasing at other times of the year.

1.  Cars

Forget the notion of waking up on Christmas morning to find a new car in the driveway. Instead, think New Year's Eve (during business hours, of course) to get the best deal on a new vehicle. Car dealers are in the mood to haggle and clear their inventory before year's end to make room for new models and earn manufacturer incentives.

Looking for a used car? Hold off until April for the best deals. It's the month dealers tend to buy the most at auction, giving you the best selection.

2.  Exercise Equipment

You might see a few sales on fitness gear and apparel in late November and December, but January is when the real deals appear on exercise equipment, according to Benjamin Glaser of DealNews.com.

Hey, we've all done it and retailers know it: We resolve to lose weight and get fit in the New Year. To that end, those retailers have sales on fitness equipment in January. Look for markdowns of 30% to 70% on fitness DVDs, treadmills, elliptical trainers, stationary bikes and complete home gyms.

3.  Caribbean Cruises

Cruising during the holidays can often mean more crowds and higher fares, says Colleen McDaniel, managing editor of Cruise Critic. By booking a cruise for January, February or March, you can take advantage of lower fares, avoid the holiday crowds and beat the spring break rush. The industry's "wave season" also takes place during that time, when cruise lines offer added discounts that may help you save even more on your trip, she says. You can score some of the best cruise deals if you book at the last minute -- just don't expect the really cheap tickets to get you a stateroom with a view.

4.  Bedding

If you're considering stocking up on bedding during the holidays -- we're talking everything from comforters to sheets and pillow cases -- wait a few weeks longer for even deeper discounts, according to the deals website BensBargains.com. Take advantage of "white sales" in January at big-name retailers including Macy's, Target and Kohl's. Savings on bedding during these annual sales can add up to as much as 50%.

5.  Broadway Tickets

You can get two tickets for the price of one to several popular shows during Broadway Week (which is actually two weeks). In 2017, it runs from January 17 to February 5. The twofer tickets go on sale January 5. Some shows might even offer the discount for up to four weeks, according to one Broadway insider we spoke with.


In general, January and February are good months to see Broadway shows. It's off-season and the dead of winter, so ticket prices tend to drop. Avoid the crush between Christmas and New Year's.

6.  Furniture

If you need to spruce up the living or dining room before guests arrive for the holidays, don't expect to find a good deal on a sofa or table and chairs before Christmas. Instead, wait until after Christmas, when furniture stores hold clearance sales to make room for new styles that are usually released in February. For example, furniture retailer Room & Board has an in-store and online clearance sale once a year, typically the day after Christmas. Expect discounts of up to 50% on discontinued furniture styles and in-store floor samples.

Also, many stores offer 0% financing along with the big discounts during annual clearance sales. Put this note on your 2017 calendar: Because new styles often are released in August, too, July is another good month to look for deals on furniture.

7.  Gift Cards

Gift cards are a no-brainer when you're stumped for ideas. However, if you can hold off until after the holiday shopping frenzy has died down to purchase gift cards, you could save yourself some money.

Here's the scoop from deals experts: Some people who receive unwanted gift cards for the holiday turn around and sell them for cash online. Web sites such as CardCash.com and Cardpool.com buy the gift cards at a steep discount and re-sell them below face value. Since sites typically get flooded with gift cards right after the holidays, the average card price is driven down due to the increased inventory. Also on eBay right after the holidays, gift cards can sell for up to 15% cheaper than the original price.

8.  Winter Sports Gear

Hold off on gifts for winter sports enthusiasts until the New Year. Snowboards, skis, ice skates, goggles, hockey gear and more will be marked down at least 10% to 20% in January, according to DealNews. If you can wait a bit longer, expect even deeper discounts during clearance sales in February and March when the winter sports season winds down.

9.  Jewelry

A new piece of jewelry ranks high on many holiday wish lists. But high demand often means higher prices, so you may want to give your sweetheart a rain check and wait until after Valentine's Day to buy that pearl necklace or those diamond earrings. You can save 15% to 25% on jewelry during post-Valentine's Day sales, says Howard Schaffer of deal site Offers.com.

10.  Luggage

If you need to replace a beat-up roll-on that's been tossed around too many times by airline baggage handlers, March is the best time to buy luggage. Retailers mark down luggage because sales have slowed after the busy holiday travel season and haven't picked up yet for summer travel, according to Deals2Buy.com, a deals and coupons website. Look for discounts ranging from 20% to 70%.

11.  Mattresses

You probably don't expect Santa to shove a mattress down your chimney. But if you were thinking about giving your holiday guests something more comfortable than a futon to sleep on, you might want to reconsider buying a mattress during November or December. You'll save as much as 70% by waiting until Memorial Day sales in May to buy a mattress. In the meantime, promise your guests a plush mattress next year and hope they don't mind sleeping on the couch this year.

12.  Perfume

Perfume sales often peak around Christmas and Valentine's Day. So retailers tend to discount perfume heavily after these holidays have passed. FreeShipping.org founder Luke Knowles says consumers can expect prices on perfume to be slashed by as much as 50% in late February and March, with the best sales at websites dedicated to perfume.

13.  Tools

Tools typically are discounted during Black Friday sales. But wait to buy a new drill, wrench set or tool chest around Father's Day instead. You'll save 5% to 15% more on tools in June when retailers have sales on gifts for dads, says Offers.com's Schaffer.

14.  Winter Apparel

Retailers will offer discounts on coats, sweaters and other cold-weather clothing during Black Friday and Cyber Monday sales. However, the deals will be even better in January when stores have clearance sales on winter apparel to make room for spring clothing. You can expect to see markdowns of at least 75%.

15.  Holiday Decorations

Resist the urge to buy new holiday decorations before Christmas because you can get them at bottom-of-the-barrel prices in January, according to Glaser of DealNews.com. Retailers typically mark down ornaments, garlands, artificial trees and décor as much as 90% after December 25. If you don't mind the red-and-green theme or chocolates shaped like a wreath, you can also load up on deeply discounted edible holiday treats in January. Buy durable decorations that will last in storage until next year, says Glaser.


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 This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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8 Things You Should Never Keep in Your Wallet

Here is a nice article provided by The Editor’s of Kiplinger’s Personal Finance:


That overstuffed wallet of yours can’t be comfortable to sit on. It’s probably even too clunky to lug around in a purse, too.

And with every new bank slip that bulges from the seams, your personal information is getting less and less safe. With just your name and Social Security number, identity thieves can open new credit accounts and make costly purchases in your name. If they can get their hands on (and doctor) a government-issued photo ID of yours, they can do even more damage, such as opening new bank accounts. These days, con artists are even profiting from tax-return fraud and health-care fraud, all with stolen IDs.

We talked with consumer-protection advocates to identify the eight things you should purge from your wallet immediately to limit your risk in case your wallet is lost or stolen.

And when you’re finished removing your wallet’s biggest information leaks, take a moment to photocopy everything you’ve left inside, front and back. Stash the copies in a secure location at home or in a safe-deposit box. The last thing you want to be wondering as you're reporting a stolen wallet is, “What exactly did I have in there?”

1.  Your Social Security Card:
...and anything with the number on it.

Your nine-digit Social Security number is all a savvy ID thief needs to open new credit card accounts or loans in your name. ID-theft experts say your Social Security card is the absolute worst item to carry around.

Once you’ve removed your card, look for anything else that may contain your SSN. As of December 2005, states can no longer display your SSN on newly issued driver's licenses, state ID cards and motor-vehicle registrations. If you still have an older photo ID, request a new card prior to the expiration date. There might be an additional fee, but it's worth it to protect your identity.

Retirees, double check your Medicare card, too: If it was issued before April, 2015, it has your SSN on it.

Instead: Photocopy your Medicare card (front and back) and carry it with you instead of your real card. Experts are torn when it comes to blacking out a portion of your Social Security number on the copy, so to be safe, black out all nine digits. If an appointment requires the full SSN, you can then provide it as needed.

2.  Password Cheat Sheet:

The average American uses at least seven different passwords (and probably should use even more to avoid repeating them on multiple sites/accounts). Ideally, each of those passwords should be a unique combination of letters, numbers, and symbols, and you should change them regularly. Is it any wonder we need help keeping track of them all?

However, carrying your ATM card’s PIN number and a collection of passwords (especially those for online access to banking and investment accounts) on a scrap of paper in your wallet is a prescription for financial disaster.

Instead: If you have to keep passwords jotted down somewhere, keep them in a locked box in your house. Or consider an encrypted mobile app, such as SplashID (free or $1.99 monthly for Pro), Password Safe Pro ($19.95, Android only) or Pocket (free, Android only).

3.  Spare Keys:

A lost wallet containing your home address (likely found on your driver's license or other items) and a spare key is an invitation for burglars to do far more harm than just opening a credit card in your name. Don't put your property and family at risk. (And even if your home isn't robbed after losing a spare key, you'll likely spend $100+ in locksmith fees to change the locks for peace of mind.)

And, speaking of keys, be careful what you hand to the valet, warns Adam Levin, chairman and cofounder of Identity Theft 911. "Remember that every time you stop and hand your key to a valet, depending on what's in the glove box [or trunk], you are making yourself vulnerable."

Instead: Keep your spare keys with a trusted relative or friend. If you’re ever locked out, it may take a little bit longer to retrieve your backup key, but that’s a relatively minor inconvenience.

4.  Checks:

Blank checks are an obvious risk—an easy way for thieves to quickly withdraw money from your checking account. But even a lost check you've already filled out can lead to financial loss—perhaps long after you've canceled and forgotten about it. With the routing and account numbers on your check, anybody could electronically transfer funds from your account.

Instead: Only carry paper checks when you will absolutely need them. And leave the checkbook at home, bringing only the exact amount of checks you anticipate needing that day.

5.  Passport:

A government-issued photo ID such as a passport opens up a world of possibilities for an ID thief. “Thieves would love to get (ahold of) this,” says Nikki Junker, a victim adviser at the Identity Theft Resource Center. “You could use it for anything”—including traveling in your name, opening bank accounts or even getting a new copy of your Social Security card.

Instead: Carry only your driver’s license or other personal ID while traveling inside the United States. When you're overseas, photocopy your passport and leave the original in a hotel lockbox.

6.  Multiple Credit Cards:

Although you shouldn’t ditch credit cards altogether (those who regularly carry a card tend to have higher credit scores than those who don’t), consider a lighter load. After all, the more cards you carry, the more you’ll have to cancel if your wallet is lost or stolen. We recommend carrying a single card for unplanned or emergency purchases, plus perhaps an additional rewards card on days when you expect to buy gas or groceries.

Also: Maintain a list, someplace other than your wallet, with all the cancellation numbers for your credit cards. They are typically listed on the back of your cards, but that won’t do you much good when your wallet is nowhere to be found.

7.  Birth Certificate:

The birth certificate itself won’t get ID thieves very far. However, “birth certificates could be used in correlation with other types of fraudulent IDs,” Junker says. “Once you have those components, you can do the same things you could with a passport or a Social Security card.”

Be especially cautious on occasions—such as your mortgage closing—when you may need to present your birth certificate, Social Security card and other important personal documents at once. “Everything’s together,” Junker notes, “and someone can just come along and steal them all. Take the time to take them home, and don’t leave them in your car.”

8.  A Stack of Receipts:

Beginning in December 2003, businesses may not print anything containing your credit or debit card’s expiration date or more than the last five digits of your credit card number. Still, a crafty ID thief can use the limited credit card info and merchant information on receipts to phish for your remaining numbers.

Instead: Clear those receipts out each night, shredding the ones you don’t need. But for receipts you save, keep them safe by going digital. An app like Shoeboxed lets you create and categorize digital copies of your receipts and business cards. Plans start at $9.95 per month. For even more ideas, check out 7 Steps to Convert Paper Files to Digital.


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 This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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8 Things Kohl's Shoppers Need to Know

Here is a nice article provided by Bob Niedt of Kiplinger:


Chances are, if you’re not a Kohl’s fan, you know someone who is – and given the opening that someone will shower you with stories of saving big. The Wisconsin-based department store chain boasts a fiercely loyal customer base made up mostly of thrifty suburban shoppers. You’ll find a typical Kohl’s – there are 1,164 stores in 49 states – in a standalone location in a well-to-do shopping center. Malls are not its thing.

If it strikes you as puzzling that Kohl’s has a cult following along the lines of Trader Joe's or Wegmans, then this story is for you. Current customers might even learn a hack or two, as we look into the nuts and bolts of shopping – and saving – at Kohl’s.

1.  Hand Over Your Personal Info:

Yes, you want to give them your name and email address. If you’re like me and tired of giving out your email address, you’ve stopped. But give it up for Kohl’s. It’s where the savings will start. You will also want to sign up for Kohl’s Yes2You Rewards. You can do it in-store or via the Kohl’s app (we’ll get to that later). It’s basically a 5% cash-back program. You garner points as you buy stuff. You will also get special discount offers throughout the year.

Give them your birthday, too. It pays off. You’ll get birthday discounts when your special day rolls around.

2.  Collect Kohl’s Cash:

Take advantage of Kohl’s Cash. Kohl’s Cash is, in essence, a coupon that you earn by shopping during a specified time period. It can be redeemed on a future purchase made during a corresponding redemption period. You get $10 worth of Kohl’s Cash for every $50 you spend after all discounts are applied and before sales tax. (Insider tip: Kohl’s will round up to $50 even if you only spend $48.) So, for example, if you shop between the 15th and 20th of the month, you can redeem the Kohl’s Cash you earn when you shop again between the 21st and 31st of the month.

3.  Download Kohl’s App:

Use it to store all of your Kohl’s coupons including Kohl’s Cash. Additionally, when fired up in-store, you can score 10 free Yes2You rewards points.

“Kohl's always has a coupon offer available and the app is the easiest way to make sure you always have the best coupons available when you walk into the store,” says Heather Schisler, founder of PassionForSavings.com, a coupon and deal website. “You can also use the bar-code scanner in the app to check the price of any item in the store.”

4.  In-Store Technology Is Your Friend:

Use the Kohl’s in-store kiosk. It’s like a self-checkout, except, in my Kohl’s experiences, it’s usually near the customer service counter in another part of the store. It has its savings perks – like free shipping anywhere in the U.S., straight to you or your friends and family (think birthday or holiday gifts).

While shopping at Kohl’s, connect to the free Wi-Fi. A coupon could come your way, typically in the range of $5 off a $25 purchase or $10 off a $30 purchase.

5.  Pile On The Coupons:

Kohl’s accepts multiple coupons for most purchases. Take advantage. “Kohl's coupon policy allows you to stack a dollar-off coupon (a $10 off $30 purchase coupon) with a percent-savings coupon (save 20% on your entire purchase). By using one of each type of coupon you can get double the savings,” says Schisler. “This is one of the best ways to save big when shopping at Kohl's.”

You can even use coupons on clearance items, which have already been marked down 60% or more. So if the clearance price is 80% off and you have a 30% off coupon, stack it, baby.

There’s a caveat to couponing at Kohl’s. Increasingly, more products are on the no-sale list, meaning you can’t use Kohl’s coupons and promotional offers to buy them. Count out most electronics, Keurig items and Nike goods. Check before you commit to a purchase.

6.  Read The Signs:

Electronic price tags on the shelves of Kohl’s stores are there to be easily changed by corporate to reflect new pricing. Learn to interpret the codes parked in the upper-left corner of the LCD readout. BB stands for Bonus Buy (meaning Kohl's bought a lot of these from a manufacturer at a ridiculously low price); BGH stands for Buy One, Get One Half Off; PP is Product Placement, meaning the sale price is fixed by the manufacturer or Kohl's and not discounted; and S stands for Sale, meaning that item will be on sale for up to two weeks. Is there a square in the upper-right corner of the electronic tag? That means the product is at its lowest price – until it goes on clearance.

7.  Know the Best Days and Times to Shop:

Start by playing the age card. If you’re 55 or older, you get a 15% discount every Wednesday in-store. And yes, that’s an offer that’s stackable with other discounts and promotions. Bring valid identification.

Night owls should shop on certain Fridays from 3 p.m. until closing time, when in-store and online specials are offered. Early birds get similar treatment on some Saturdays from opening until 1 p.m. Night Owl/Early Bird specials occur at least twice a month. Check your newspaper insert or Kohls.com for specific dates.

8.  Go Off-Aisle:

Kohl’s is experimenting with a new off-price concept, Off/Aisle by Kohl’s. The recently opened pilot stores in Wauwatosa and Waukesha, Wis., and the year-old store in Cherry Hill, N.J., sell overstock items as well as goods customers have returned to Kohl’s stores or Kohls.com. The heavily discounted merchandise has locked-in prices – meaning you can’t use Kohl’s discounts, offers, promotions, coupons or gift cards at Off/Aisle. And all sales are final, with no returns or exchanges. Kohl’s deemed the New Jersey store a big hit before opening the Wisconsin stores in June. Expect more.


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 This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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15 Worst States to Live in During Retirement

Here is a nice article provided by Stacy Rapacon of Kiplinger:


Number crunching alone can't tell you where to retire. That's a choice you'll ultimately need to make on your own. But identifying the places that hold the lowest appeal for retirees can at least help narrow your search.

We rated all 50 states based on quantifiable factors that are important to many retirees. Our rankings penalized states with high living expenses—especially taxes and health care costs—and rewarded states with relatively prosperous populations of residents age 65 and up. We also ranked states lower if their populations are medically unhealthy, or if the state has fiscal health problems (red ink in state budgets could lead to tax hikes and program spending cuts for seniors).

Using our methodology, the following 15 states rank as the least attractive for retirees. That doesn't make them terrible places to live. They might, indeed, be great states in which to work or raise a family. You might even choose to stick around in retirement simply to be close to your grandchildren. But in dollars-and-practical-sense terms, retirees might be better off looking to settle elsewhere.

The average health care cost in retirement of $387,731 we cite is a lifetime cost for a 65-year-old couple who are expected to live to 87 (husband) and 89 (wife). For a complete explanation of our methodology and our data sources, see the Methodology slide at the end of this slide show.

15.  Minnesota

Population: 5.4 million

Share of population 65+: 13.6% (U.S.: 14.5%)

Cost of living: 2% above the U.S. average

Average income for 65+ households: $43,623 (U.S.: $50,291)

Average health care costs for a retired couple: About average at $387,007 (U.S.: $387,731)

Minnesota's tax rating for retirees: Least Tax Friendly

The Land of 10,000 Lakes is a hard place for retirees to stay afloat. Above-average living expenses and below-average incomes can equate to imbalanced budgets in retirement. Plus, the tax situation adds an extra burden. One of the 10 Worst States for Taxes on Retirees, Minnesota taxes Social Security benefits the same as the feds. Most other retirement income, including military, government and private pensions, is also taxable. And the state's sales and income taxes are high.

On the other hand, Minnesota is a great place for health-focused retirees. The state is the third-healthiest in the country for seniors, according to the United Health Foundation rankings, which are based on people's behaviors, such as physical activity, as well as community support and clinical care provided. In fact, Rochester, home of the renowned Mayo Clinic, ranks seventh among the best small metro areas for successful aging, according to the Milken Institute, in part due to its abundance of health care providers.

14.  West Virginia

Population: 1.9 million

Share of population 65+: 16.8%

Cost of living: 3% below the U.S. average

Average income for 65+ households: $38,917

Average health care costs for a retired couple: Below average at $370,403

West Virginia's tax rating for retirees: Tax Friendly

Despite its below-average living costs and positive tax rating, the Mountain State offers some rocky terrain for retirees. According to a recent report from the Mercatus Center at George Mason University, West Virginia ranks as the eighth-worst state in terms of fiscal soundness, indicating low confidence that it can keep up with short-term expenses and long-term financial obligations.

The state also scores poorly for the health of its 65-and-over population, ranking 45th in the country, according to the United Health Foundation. While 41.8% of older adults nationwide enjoy excellent or very good health, only 29.5% of those in West Virginia can say the same.

13.  Maine

Population: 1.3 million

Share of population 65+: 17.0%

Cost of living: 6% above the U.S. average

Average income for 65+ households: $38,504

Average health care costs for a retired couple: Below average at $367,832

Maine's tax rating for retirees: Not Tax Friendly

The Pine Tree State can be a bit prickly when it comes to its retirees. While Social Security benefits are not subject to state taxes, most other retirement income is taxable. There's even an estate tax. Plus, the Mercatus Center at George Mason University ranks Maine as the ninth-worst state in the country in terms of fiscal soundness.

Individuals in the state may have an equally difficult time balancing their own budgets. With below-average household incomes, retirees may struggle to cover Maine's above-average living costs.

12.  Kentucky

Population: 4.4 million

Share of population 65+: 14.0%

Cost of living: 9% below the U.S. average

Average income for 65+ households: $39,935

Average health care costs for a retired couple: About average at $384,317

Kentucky's tax rating for retirees: Tax Friendly

Kentucky seniors suffer the third-worst state of health in the country, according to the United Health Foundation's rankings. Among its challenges are a high rate of smoking, limited access to low-cost, nutritious food, and a low number of quality nursing homes. Also, physical inactivity among residents age 65 and up has increased to 40.2% over the past two years, compared with a national rate of 33.1%.

The Bluegrass State does offer low living costs, as well as a number of tax breaks for retirees. Social Security benefits, as well as up to $41,110 of other retirement income, are exempt from state taxes. However, with a low ranking of 45th in the country for fiscal soundness, those tax benefits may not be very secure. Also, despite the state's overall affordability, plenty of older residents struggle to make ends meet: 11.4% of those age 65 and older are living in poverty, compared with 9.4% for the U.S. as a whole.

11.  Indiana

Population: 6.5 million

Share of population 65+: 13.6%

Cost of living: 4% below the U.S. average

Average income for 65+ households: $39,260

Average health care costs for a retired couple: About average at $388,954

Indiana's tax rating for retirees: Not Tax Friendly

With its below-average living expenses, Indiana might seem like a winner for retirees. But when you consider the well-below-average household income, the older residents of the Hoosier State start looking more like underdogs. And the tax situation doesn't help their cause much. Most retirement income other than Social Security benefits is taxable at ordinary rates.

The state's health ranking is also among the 10 worst in the country. Some of the challenges Indiana's older residents face are high rates of obesity, physical inactivity and premature deaths, according to the United Health Foundation.

10.  Wisconsin

Population: 5.7 million

Share of population 65+: 14.4%

Cost of living: 10% above the U.S. average

Average income for 65+ households: $37,673

Average health care costs for a retired couple: About average at $387,705

Wisconsin's tax rating for retirees: Mixed

High living costs and low average incomes can put a yoke on retirees in Wisconsin. In fact, the state's average household income for seniors is the second-lowest in the country, behind only Montana. The tax situation in the Badger State doesn't help, either. Social Security benefits are exempt from state taxes, but most other retirement income is subject to taxation (though there are some breaks for low-income residents).

If you can afford it, though, the state capital of Madison holds its charms for retirees, offering an abundance of quality health care facilities, as well as plenty of museums, libraries and the University of Wisconsin.

9.  Vermont

Population: 626,358

Share of population 65+: 15.7%

Cost of living: 19% above the U.S. average

Average income for 65+ households: $42,599

Average health care costs for a retired couple: Below average at $373,830

Vermont's tax rating for retirees: Least Tax Friendly

It's not easy being retired in the Green Mountain State. Exorbitantly high living costs and taxes weigh heavily on below-average incomes. Social Security benefits, as well as most other forms of retirement income, are subject to state taxes, and the top income tax rate is a steep 8.95% (which kicks in at $411,500 for both single and married filers).

On a positive note, Vermont boasts the healthiest seniors in the country, according to the United Health Foundation's rankings. Burlington, a small city on the shores of Lake Champlain, rates as a great place to retire thanks to beautiful surroundings that surely help boost physical activity and overall health among the locals.

8.  Montana

Population: 1.0 million

Share of population 65+: 15.7%

Cost of living: 1% above the U.S. average

Average income for 65+ households: $36,933

Average health care costs for a retired couple: Below average at $377,877

Montana's tax rating for retirees: Least Tax Friendly

Despite its Treasure State nickname, it can be hard to hold onto your fortune in Montana. Living costs are about average, but incomes are well below the norm. In fact, the average household income for residents age 65 and up is the lowest in the country. The tax situation certainly doesn't help. One of the 10 Worst States for Taxes on Retirees, Montana taxes most forms of retirement income, and the top rate of 6.9% kicks in once taxable income tops just $17,000.

Still, Big Sky Country seems to retain a large number of retirement-age folks: The state's 65-and-older population is 15.7%, compared with 14.5% for the U.S. The great (albeit cold) outdoors, including Yellowstone and Glacier national parks, may be what trumps the state's drawbacks for adventurous retirees. Great Falls, on the high plains of Montana's Rocky Mountain Front Range, proves particularly popular with the over-65 crowd, which makes up 16.1% of the metro area's population.

7.  Rhode Island

Population: 1.1 million

Share of population 65+: 15.1%

Cost of living: 13% above the U.S. average

Average income for 65+ households: $55,802

Average health care costs for a retired couple: Above average at $392,592

Rhode Island's tax rating for retirees: Least Tax Friendly

Tiny Rhode Island packs in big bills for older folks. On top of the above-average living costs, it's one of the 10 Worst States for Taxes on Retirees, taxing virtually all sources of retirement income at ordinary rates. (Note: Starting in 2016, the state will begin to give residents a break on Social Security taxes.) The state sales tax is 7%.

On the bright side, the above-average incomes for older residents can make those burdensome costs a bit more bearable.

6.  Massachusetts

Population: 6.7 million

Share of population 65+: 14.4%

Cost of living: 17% above the U.S. average

Average income for 65+ households: $61,436

Average health care costs for a retired couple: Above average at $413,007

Massachusetts's tax rating for retirees: Not Tax Friendly

The Bay State harbors some heavy costs for retirees. On top of the high overall living costs, the total a couple can expect to pay for health care throughout their retirement is the second-highest in the country, trailing only Alaska.

And though the average household income for seniors is high, taxes can take a big bite out of those earnings. Social Security benefits are exempt, but effective in 2016 most other retirement income is taxed at the state's flat rate of 5.1%.

5.  Illinois

Population: 12.9 million

Share of population 65+: 13.2%

Cost of living: 4% above the U.S. average

Average income for 65+ households: $51,079

Average health care costs for a retired couple: Above average at $398,927

Illinois's tax rating for retirees: Mixed

The Prairie State's fiscal standing has been sliding downward for years. Illinois has weighty long-term debts, large unfunded pension liabilities and big budget imbalances. All this puts it squarely at the bottom of the state rankings for fiscal soundness, according to George Mason University's Mercatus Center. In October 2015, ratings agency Fitch downgraded the state's credit rating to near-junk status.

On the plus side, the state doesn't tax distributions from a variety of retirement income sources, including 401(k) plans and individual retirement accounts. For now, that is. Given such a poor fiscal state, tax breaks are hardly assured, and higher taxes are on the table. Already, state and local sales taxes rise above a combined 10% in some areas, and they will be even higher effective July 1, 2016.

4.  Connecticut

Population: 3.6 million

Share of population 65+: 14.8%

Cost of living: 29% above the U.S. average

Average income for 65+ households: $63,726

Average health care costs for a retired couple: Above average at $402,594

Connecticut's tax rating for retirees: Least Tax Friendly

The Constitution State does little to promote the general welfare of its resident retirees. In fact, Connecticut ranks among the 10 tax-unfriendliest states for retirees. Real estate taxes are the second-highest in the country. Some residents face taxes on Social Security benefits, and most other retirement income is fully taxed, with no exemptions or tax credits to ease the burden. Because Connecticut ranks 47th out of all states for fiscal soundness, state taxes are not likely to go down any time soon.

All those taxes come on top of high living costs, the second-highest in the country, tied with New York and behind only Hawaii. One plus: Connecticut residents can often afford the costs. The state's average household income for seniors is the fourth-highest in the U.S., and its poverty rate for residents age 65 and older is a low 7.1%, compared with 9.4% for the U.S.

3.  California

Population: 38.1 million

Share of population 65+: 12.1%

Cost of living: 15% above the U.S. average

Average income for 65+ households: $62,003

Average health care costs for a retired couple: Above average at $394,831

California's tax rating for retirees: Least Tax Friendly

Another one of the 10 Worst States for Taxes on Retirees, the Golden State could be fool's gold as a retirement choice. Except for Social Security benefits, retirement income is fully taxed, and California imposes the highest state income tax rates in the nation (the top rate is 13.3% for single filers with $1 million incomes and joint filers with incomes above $1,039,374). The state sales tax combined with additional local levies can reach as high as 10%.

Everything seems bigger in California, including high living expenses. Indeed, plenty of older residents are unable to bear it: 1 in 10 Californians age 65 and over are living in poverty.

2.  New Jersey

Population: 8.9 million

Share of population 65+: 14.1%

Cost of living: 22% above the U.S. average

Average income for 65+ households: $66,409

Average health care costs for a retired couple: Above average at $403,420

New Jersey's tax rating for retirees: Least Tax Friendly

Retirees planning to plant themselves in the Garden State might want to reconsider. Both living costs and taxes in New Jersey take a big bite out of retirement nest eggs. The combined state and local tax burden is the second-highest in the nation. And it doesn't ease up after you die—the money you leave behind is subject to both an estate tax and inheritance tax (though there are exemptions for spouses and some others). Plus, with the second-worst ranking for fiscal soundness, behind only Illinois, the tax picture is unlikely to improve soon.

More bad news: New Jersey's living costs are the fourth-highest in the country, with retiree health care costs ranking third-highest in the nation. Still, residents seem to bear the burden well. The average income for 65-and-up residents is the third-highest in the U.S., and the poverty rate for the age group is a low 7.9%.

1.  New York

Population: 19.6 million

Share of population 65+: 14.1%

Cost of living: 29% above the U.S. average

Average income for 65+ households: $63,174

Average health care costs for a retired couple: Above average at $397,107

New York's tax rating for retirees: Least Tax Friendly

One (pricey) Big Apple spoils the entire Empire State. Manhattan reigns as the most expensive place to live in the U.S., with costs soaring 127.4% above the national average, according to the Council for Community and Economic Research. New York sports the second-highest living costs of any state, behind only Hawaii.

Despite boasting an average income for residents age 65 and older that's among the top five in the country, the same age group suffers a poverty rate of 11.4%, worse than the national 9.4% rate.

Worst States for Retirement 2016

Our Methodology

To rank all 50 states, we weighed a number of factors:

Taxes on retirees, based on Kiplinger's Retiree Tax Map, which divides states into five categories: Most Tax Friendly, Tax Friendly, Mixed, Not Tax Friendly and Least Tax Friendly.

Cost-of-living, with data provided by FindTheData.com.

Average health care costs in retirement are from HealthView Services and include Medicare, supplemental insurance, dental insurance and out-of-pocket costs for a 65-year-old couple who are both retired and are expected to live to 87 (husband) and 89 (wife). With a national average of $387,731, the average couple can expect to spend about $8,400 per person per year in retirement on health care costs. Note: Some of the worst states for retirees have less than average costs in this category, a positive factor for most retirees, but other factors drove the lower rankings.

Rankings of each state's economic health are provided by the Mercatus Center at George Mason University and are based on various factors including state governments' revenue sources, debts, budgets and abilities to fund pensions, health-care benefits and other services.

Rankings of the health of each state's population of residents 65 and over are from the United Health Foundation and are based on 35 factors ranging from residents' bad habits (smoking and excessive drinking) to the quality of hospital and nursing home care available in the state.

Household incomes and poverty rates are from the U.S. Census Bureau. While many of the worst states for retirees in our rankings have above-average household incomes, high average living costs in those states tend to offset the higher incomes.

Final note: Population data, including the percentage of the population that is age 65 and older, is also provided by the Census data. They are highlighted in these rankings, but were not a factor in our methodology for ranking the states. We provided this additional information for readers to decide for themselves whether they are important factors. Some retirees may want to live in states with higher-than-average retiree populations. For others, this isn't important.


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 This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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10 Worst States for Taxes on Your Retirement Nest Egg

Here is a nice article provided by Sandra Block of Kiplinger:


Retirees have special concerns when evaluating state tax policies. For instance, the mortgage might be paid off, but how bad are the property taxes—and how generous are the property-tax breaks for seniors? Are Social Security benefits taxed? What about other forms of retirement income—including IRAs and pensions? Does the state impose its own estate tax that might subtract from your legacy? The answers might just determine which side of the state border you’ll settle on in retirement.

These 10 states impose the highest taxes on retirees, according to Kiplinger’s exclusive 2016 analysis of state taxes. Three of them treat Social Security benefits just like Uncle Sam does—taxing as much as 85% of your benefits. Exemptions for other types of retirement income are limited or nonexistent. Property taxes are on the high side, too. And if that weren’t bad enough, some of these states are facing significant financial problems that could force them to raise taxes, cut services, or both.

10.  Utah:

State Income Tax: 5% flat tax

Average State and Local Sales Tax: 6.69%

Estate Tax/Inheritance Tax: No/No

The Beehive State joins our list of least tax-friendly states this year, replacing Rhode Island (which no longer taxes Social Security benefits for residents with adjusted gross income of as much as $80,000/individual, $100,000/joint).

Utah offers few tax breaks for retirees. Income from IRAs, 401(k)s, pensions and Social Security benefits is taxable at the 5% flat tax rate. The state does offer a retirement-income tax credit of as much as $450 per person ($900 for a married couple). The credit is phased out at 2.5 cents per dollar of modified adjusted gross income over $16,000 for married individuals filing separately, $25,000 for singles and $32,000 for married people filing jointly.

On the plus side, property taxes are modest. Median property tax on the state's median home value of $223,200 is $1,480, 11th-lowest in the U.S.

9.  New York:

State Income Tax: 4.0% (on taxable income as much as $8,450/individual, $17,050/joint) – 8.82% (on taxable income greater than $1,070,350/individual, $2,140,900/joint)

Average State and Local Sales Tax: 8.49%

Estate Tax/Inheritance Tax: Yes/No

New York doesn’t tax Social Security benefits or public pensions. It also excludes as much as $20,000 for private pensions, out-of-state government pensions, IRAs and distributions from employer-sponsored retirement plans. New York allows localities to impose an additional income tax; the average local levy is 2.11%, per the Tax Foundation.

The Empire State also has some of the highest property and sales tax rates in the U.S. Food and prescription and nonprescription drugs are exempt from state sales taxes, as are greens fees, health club memberships, and most arts and entertainment tickets.

The median property tax on the state's median home value of $279,100 is $4,703, the 10th-highest rate in the U.S.

While New York has an estate tax, a law that took effect in 2015 will make it less onerous. Estates exceeding $4,187,500 are subject to estate tax in fiscal year 2016–2017, with a top rate of 16%. The exemption will rise by $1,062,500 each April 1 until it reaches $5,250,000 in 2017. Starting Jan. 1, 2019, it will be indexed to the federal exemption. But if you’re close to the threshold, get a good estate lawyer, because New York has what’s known as a "cliff tax." If the value of your estate is more than 105% of the current exemption, the entire estate will be subject to state estate tax.

8.  New Jersey:

State Income Tax: 1.4% (on as much as $20,000 of taxable income) – 8.97% (on taxable income greater than $500,000)

Average State and Local Sales Tax: 6.97%

Estate Tax/Inheritance Tax: Yes/Yes

The Garden State's tax policies create a thicket of thorns for some retirees.

Its property taxes are the highest in the U.S.The median property tax on the state's median home value of $313,200 is $7,452.

While Social Security benefits, military pensions and some retirement income is excluded from state taxes, your other retirement income could be taxed as high as 8.97%. And New Jersey allows localities to impose their own income tax; the average local levy is 0.5%, according to the Tax Foundation.

Residents 62 or older may exclude as much as $15,000 ($20,000 if married filing jointly) of retirement income, including pensions, annuities and IRA withdrawals, if their gross income is $100,000 or less. However, the exclusion doesn’t extend to distributions from 401(k) or other employer-sponsored retirement plans.

New Jersey is one of only a couple of states that impose an inheritance and an estate tax. (An estate tax is levied before the estate is distributed; an inheritance tax is paid by the beneficiaries.) In general, close relatives are excluded from the inheritance tax; others face tax rates ranging from 11% to 16% on inheritances of $500 or more. Estates valued at more than $675,000 are subject to estate taxes of up to 16%. Assets that go to a spouse or civil union partner are exempt.

Proposals to increase the state’s estate-tax threshold—the lowest in the U.S.—to levels that would ensnare fewer estates have been derailed by the state’s financial woes. George Mason University’s Mercatus Center ranks New Jersey 48th in its analysis of states’ fiscal health.

7.  Nebraska:

State Income Tax: 2.46% (on taxable income as much as $3,060/individual, $6,120/joint) – 6.84% (on taxable income greater than $29,590/individual, $59,180/joint)

Average State and Local Sales Tax: 6.87%

Estate Tax/Inheritance Tax: No/Yes

The Cornhusker State taxes Social Security benefits, but new rules that took effect in 2015 will exempt some of that income from state taxes. Residents can subtract Social Security income included in federal adjusted gross income if their adjusted gross income is $58,000 or less for married couples filing jointly or $43,000 for single residents.

Nebraska taxes most other retirement income, including retirement-plan withdrawals and public and private pensions. And the state’s top income-tax rate kicks in pretty quickly: It applies to taxable income above $29,590 for single filers and $59,180 for married couples filing jointly.

Food and prescription drugs are exempt from sales taxes. Local jurisdictions can add an additional 2% to the state rate.

The median property tax on the state's median home value of $133,800 is $2,474, the seventh-highest property-tax rate in the U.S.

Nebraska's inheritance tax is a local tax, ranging from 1% to 18%, administered by counties. Assets left to a spouse or charity are exempt.

6.  California:

State Income Tax: 1% (on taxable income as much as $7,850/individual, $15,700/joint) – 13.3% (on taxable income greater than $1 million/individual, $1,052,886/joint)

Average State and Local Sales Tax: 8.48%

Estate Tax/Inheritance Tax: No/No

California exempts Social Security benefits, but all other forms of retirement income are fully taxed. That’s significant, because residents of the Golden State pay the third-highest effective income tax rate in the U.S.

Early retirees who take withdrawals from their retirement plans before age 59½ pay a 2.5% state penalty on top of the 10% penalty imposed by the IRS.

At 7.5%, state sales taxes are the highest in the country, and local taxes can push the combined rate as high as 10%.

The median property tax on the state's median home value of $412,700 is $3,160.

5.  Montana:

State Income Tax: 1% (on as much as $2,900 of taxable income) – 6.9% (on taxable income greater than $17,400)

Average State and Local Sales Tax: None

Estate Tax/Inheritance Tax: No/No

You won’t pay sales tax to shop in the Treasure State, but that may be small comfort when you get your state tax bill.

Montana taxes most forms of retirement income, including Social Security benefits, and its 6.9% top rate kicks in once your taxable income exceeds a modest $17,400.

Montana allows a pension- and annuity-income exemption of as much as $3,980 per person if federal adjusted gross income is $35,180 ($37,170 if filing a joint return) or less. If both spouses are receiving retirement income, each spouse can take up to the maximum exemption if the couple falls under the income threshold. Montana also permits filers to deduct some of their federal income tax.

The median property tax on the state's median home value of $196,800 is $1,653, below average for the U.S.

4.  Oregon:

State Income Tax: 5% (on taxable income as much as $3,350/individual, $6,700/joint) – 9.9% (on taxable income greater than $125,000/individual, $250,000/joint)

Average State and Local Sales Tax: None

Estate Tax/Inheritance Tax: Yes/No

...
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10 Things That Will Soon Disappear Forever

Here is a nice article provided by David Muhlbaum and John Miley of Kiplinger:


Ten years ago, thousands of Blockbuster Video stores occupied buildings like this all over the country, renting DVDs and selling popcorn. Today, all but a handful are closed. The company’s shares once traded for nearly $30. Now Blockbuster is gone, scooped up (and then erased) by the DISH Network in a bankruptcy auction.

Obsolescence isn’t always so quick or so complete, but emerging technologies and changing practices are sounding the death knell for other familiar items. Check out these 10 that we’ll be saying goodbye to soon.

1.  Keys: Keys, at least in the sense of a piece of brass cut to a specific shape, are going away. At the office, most of us already use a card with a chip embedded to get access. But for getting into your house (and your car), the technology that will kill off the key is your smart phone. Connecting either via Bluetooth or the Internet, your mobile device will be programmed to lock and unlock doors at home, at the office and elsewhere. The secure software can be used on any mobile device. So if your phone runs out of juice, you’ll be able to borrow someone else’s device and log in with a fingerprint or facial scan. Phone stolen? Simply log in and change the digital keys. Kwikset, a brand of Spectrum Brands (SPB), offers the Kevo, and lock veterans Yale have partnered with Nest, now owned by Alphabet (GOOGL), to create the Yale Linus.

For the car, a variety of "connected car" services such as Audi Connect and GM's OnStar already let you unlock and lock the car remotely and even start it with a phone app — but you still need your keyfob to drive off. Next up: Ditching the keyfob entirely. Volvo says it plans to implement this in 2017.

2.  Blackouts: Frustrating power outages that leave people with fridges full of ruined food are on their way out as our electrical grid becomes increasingly intelligent – and resilient.

Two factors are at work: slow, incremental “smart grid” improvements to the system that delivers electricity, and the rapidly expanding use of solar energy in homes and business.

The breakthrough product here is the home battery. Developed by electric-car maker Tesla (TSLA) and others, by 2020, batteries will be cheap enough to store surplus solar power during the day and discharge it overnight, helping to better balance electricity supply and demand – and run a home for up to days during a blackout. LED lighting and more efficient appliances are helping, too, by reducing load on the system, whether the grid is or a backup system is running.

Utilities are also deploying huge banks of batteries, from suppliers like AES (AES), in storm-prone areas to make sure the power stays on for everyone.

3.  Fast-Food Workers: Burger-flippers have targets on their backs as fast-food executives are eager to replace them with machines, particularly as minimum wages in a variety of states are set to rise to $15.

Diners will notice reduced staffing up front as outlets such as Panera (PNRA) turn to touch-screen kiosks for order placing. Behind the scenes in the kitchen, industry giants like Middleby Corp. (MIDD) and boutique startups like San Francisco's Momentum Machines are all hard at work for devices that will take on tasks like loading and unloading dishwashers, flipping burgers, and cooking french fries.

Humans won't be totally out of the picture — the machines will require supervision and maintenance, and dissatisfied customers will need appeasing. But jobs will plummet.

4.  The Clutch Pedal: very year it seems that an additional car model loses the manual transmission option. Even the Ford F-150 pickup truck can’t be purchased with a stick anymore.

The decline of the manual transmission (in the U.S.) has been decades in the making, but two factors are, ahem, accelerating its demise:

Number one: Automatics, developed by firms such as Borg-Warner (BWA), ZF Friedrichshafen and Aisin, are getting more efficient, with up to nine gear ratios, allowing engines to run at the lowest, most economical speeds. Many Mazdas and some BMWs, among others, now score better fuel mileage with an automatic than with a stick.

Number two: Among high-performance cars, such as Porsches, “automated” manual shifts are taking hold. They use electronics to control the clutch instead of your left foot. You can select the gears with paddles, or just let the computer take care of that, too. The result: Shifting is faster than even for the most talented clutch-and-stick jockey, improving the cars' acceleration numbers. Plus, the costs on these are coming down, and they can now be found in less-expensive sporty cars, such as the Golf GTI.

Even the biggest of highway trucks are abandoning the clutch and stick for automatics, for fuel-efficiency gains and to attract drivers who won’t need to learn how to grind their way through 18-plus gears.

Some price-leader economy models, such as the Nissan Versa and Ford Fiesta, will list manuals on their cheapest configurations (though few will actually sell), and a segment of enthusiast cars, such as the Ford Mustang and Mazda Miata MX-5, will continue to offer the traditional three-pedal arrangement for some years to come. “It will be reserved for the ‘driver’s vehicle,’” says Ivan Drury, an analyst for Edmunds.com. But finding one will be a challenge — those holdout drivers had better be prepared to special-order their clutch cars.

5.  College Textbooks: By the end of this decade, digital formats for tablets and e-readers will displace physical books for assigned reading on college campuses, The Kiplinger Letter is forecasting. K–12 schools won’t be far behind, though they’ll mostly stick with larger computers as their platform of choice.

Digital texts figure to yield more bang for the buck than today’s textbooks. Interactive software will test younger pupils’ mastery of basic skills such as arithmetic and create customized lesson plans based on their responses. Older students will be able to take digital notes and even simulate chemistry experiments when bricks-and-mortar labs aren’t handy.

This is a mixed bag for publishers. They’ll sell more digital licenses of semester- or yearlong usage of electronic textbooks as their customers can’t turn to the used-book marketplace anymore. On the other hand, schools are seeking free online, open-source databases of information and collaborating with other institutions and districts to develop their own content on digital models, cutting out traditional educational publishers such as Pearson (PLO), McGraw-Hill and Scholastic (SCHL).

6.  Dial-Up Internet: If you want to hear the once-familiar beeps and whirs of a computer going online through a modem, you will soon need to do that either in a museum or in some very, very remote location.

According to a study from the Pew Foundation, only 3% of U.S. households went online via a dial-up connection in 2013. Thirteen years before that, only 3% had broadband (Today, 70% have home broadband). Massive federal spending on broadband initiatives, passed during the last recession to encourage economic recovery, has helped considerably.

Some providers will continue to offer dial-up as an afterthought for those who can’t or don’t want to connect via cable or another broadband means. But a number of the bigger internet service providers, such as Verizon Online, have quit signing up new dial-up subscribers altogether.

7.  The Plow: Few things are as symbolic of farming as the moldboard plow, but the truth is, the practice of “turning the soil” is dying off.

Modern farmers have little use for it. It provides a deep tillage that turns up too much soil, encouraging erosion because the plow leaves no plant material on the surface to stop wind and rain water from carrying the soil away. It also requires a huge amount of diesel fuel to plow, compared with other tillage methods, cutting into farmers' profits. The final straw: It releases more carbon dioxide into the air than other tillage methods.

Deep plowing is winding down its days on small, poor farms that can't afford new machinery. Most U.S. cropland is now managed as "no-till" or minimum-till, relying on herbicides and implements such as seed drills that work the ground with very little disturbance. Even organic farmers have found ways to minimize tillage, using cover crops rather than herbicides to cut down on weeds. Firms like John Deere (DE) offer a range of sophisticated devices for these techniques.

8.  Your Neighborhood Mail Collection Box: The amount of mail people are sending is plummeting, down 57% from 2004 to 2015 for stamped first-class pieces. So, around the country, the U.S. Postal Service has been cutting back on those iconic blue collection boxes. The number has fallen by more than half since the mid 1980s. Since it costs time and fuel for mail carriers to stop by each one, the USPS monitors usage and pulls out boxes that don't see enough traffic.

Some boxes will find new homes in places with greater foot traffic, such as shopping centers, public transit stops and grocery stores. But on a quiet corner at the end of your street? Better dump all your holiday cards and summer-camp mail in them, or prepare to say goodbye.

9.  Your Privacy: If you are online, you had better assume that you already have no privacy and act accordingly. Every mouse click and keystroke is tracked, logged and potentially analyzed and eventually used by Web site product managers, marketers, hackers and others. To use most services, users have to opt-in to lengthy terms and conditions that allow their data to be crunched by all sorts of actors.

The list of tracking devices is set to boom, as sensors are added to appliances, lights, locks, HVAC systems and even trash cans. Other innovations: Using Wi-Fi signals, for instance, to track movements, from where you're driving or walking down to your heartbeat. Retailers will use the technology to track in minute detail how folks walk around a store and reach for products. Also, facial-recognition software that can change display advertising to personalize it to you (time for a mask?). Transcription software will be so good that many businesses will soon collect mountains of phone-conversation data to mine and analyze.

And think of this: Most of us already carry around an always-on tracking device for which we usually pay good money — a smart phone. Your phone is loaded up with sensors and GPS data. Is it linked to a FitBit perhaps? Now it has your health data.

One reason not to fret: Encryption methods are getting better at walling off at least some aspects of our digital lives. But living the reclusive life of J.D. Salinger might soon become real fiction.

10.  The Incandescent Lightbulb: No, government energy cops are not coming for your bulbs. But the traditional incandescent lightbulb that traces its roots back to Thomas Edison is definitely on its way out. As of January 1, 2014, the manufacture and importation of 40- to 100-watt incandescent bulbs became illegal in the U.S., part of a much broader effort to get Americans to use less electricity.

Stores can still sell whatever inventory they have left, but once the hoarders have had their run, that’s it. And with incandescent bulbs burning for only about 1,000 hours each, eventually they’ll flicker out.

The lighting industry has moved forward with compact fluorescents, halogen bulbs, and most recently and successfully, bulbs that use light-emitting diodes (LEDs), and General Electric (GE) and Sylvania have found themselves sharing shelf space with newer firms like Cree (CREE) and Feit.

Soon, the only places you'll still see the telltale glow of a tungsten filament in a glass vacuum will be in three-way bulbs (such as the 50/100/150 watt), heavy-duty and appliance bulbs, and some decorative bulbs.


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 This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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The Power of Markets

Here is a nice article written by Dimensional Fund Advisors:


Markets do a remarkable job of allocating resources, and financial markets allocate a specific resource: financial capital. A classic economic story helps illustrate this concept and explains that investors would be well served in pursuing an investment strategy that harnesses the extraordinary collective power of market prices.  READ MORE HERE: 

The Power of Markets.pdf


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 This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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Your Plan's Vesting Schedule: Tailor It to Meet Your Needs

A retirement plan's vesting schedule, which establishes when employer contributions to the plan will be owned outright by the employee, plays a role in how effective the plan is in helping to attract and retain employees. Employers will want to carefully consider their goals and the available options when selecting a vesting schedule for their plan.

Common Vesting Schedules

The simplest schedule -- from an administrative perspective -- is to allow immediate vesting in 100% of the employer contributions allocated to the employee. However, immediate vesting offers little incentive for employees to stay with the company and therefore may become more counterproductive as the rates of employee turnover increase.

For this reason, sponsors concerned about employee retention often turn to a delayed vesting schedule. Instead of allowing 100% vesting up front, they seek to maximize employee retention by tying the vesting percentage to the participant's years of service.

Generally, for defined contribution plans, such as 401(k) plans, delayed vesting is available in two forms: "cliff" vesting and "graded" vesting. With cliff vesting, a participant becomes 100% vested after a specific period of service. With graded vesting, a participant becomes vested at a percentage amount that gradually increases until he or she accrues enough years of service to be 100% vested. (It should be noted that an employee's own contributions to the plan are always 100% vested, or owned, by the employee.)





Employers may choose a schedule that provides for vesting at a more rapid rate than those shown above, but they may not adopt a schedule that provides for less rapid vesting.

How do employers calculate years of service? A year of service is any vesting computation period in which the employee completes the number of hours of service (not exceeding 1,000) required by the plan. Typically, the vesting computation period is the plan year, but it may be any other 12-consecutive-month period.

Are all employer contributions subject to a vesting schedule? Several types of employer contributions must always be 100% vested. These include both non-elective and matching contributions in a SIMPLE 401(k) plan or a "safe harbor" 401(k) plan.

Can vesting schedules be changed? Generally, a vesting schedule may be changed, but the vested percentage of the existing participants may not be reduced by the amended schedule. Moreover, an employee with three or more years of service by the end of the applicable election period can choose to select the previous vesting schedule. The election period begins no later than the date of adoption of the amended schedule and ends on the latest of the following dates:

•  Sixty days after the modified vesting schedule is adopted;

•  Sixty days after the modified vesting schedule is made effective; or

•  Sixty days after the participant is provided a written notice of the change in vesting schedule.

What situations would cause vesting of an employee's entire balance? In certain circumstances, the participant's interest in a 401(k) plan is required by law to be 100% vested. These circumstances include attainment of normal retirement age (as defined in the plan), termination or partial termination of the plan, and complete discontinuance of contributions to the plan. Additionally, though not required by law, nearly all 401(k) plans provide for 100% vesting upon the participant's death or disability.


Required Attribution


Because of the possibility of human or mechanical error by Wealth Management Systems Inc. or its sources, neither Wealth Management 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 Wealth Management Systems Inc. be liable for any indirect, special or consequential damages in connection with subscriber's or others' use of the content.

© 2016 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 constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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What Can a Dollar Buy? Depends on Where You Live

You know that $25,000 car you've had your eye on? In just 10 years, it could cost almost $34,000, assuming prices rise by a mere 3% per year. That's the reality of inflation, which is commonly understood as the increase in the price of any product or service.

While the consumer price index (CPI), which is based on a monthly survey by the U.S. Bureau of Labor Statistics, serves as the standard measure of inflation nationwide, prices on all sorts of goods and services -- from a gallon of gasoline to a house -- can vary widely by region, state, and even within states.

Such variations are captured by Regional Price Parities (RPPs), which measure the differences in the price levels of goods and services across states and metropolitan areas for a given year.1 RPPs are expressed as a percentage of the overall national price level (gleaned from the CPI) equal to 100.2

For instance, if an area's RPP is greater than 100, it means that goods and services are more expensive than the national average; if an area's RPP is less than 100, goods and services are less expensive than the national average.2

In July the Bureau of Economic Analysis published RPPs for 2014. The data showed that the District of Columbia's RPP at 118.1 was greater than that of any state. States with the highest RPPs -- and lowest "real value" of a dollar -- were Hawaii (116.8), New York (115.7), New Jersey (114.5), and California (112.4).1 States with the lowest RPPs -- hence, the biggest bang for your buck -- were Mississippi (86.7), Arkansas (87.5), Alabama (87.8), South Dakota (88.0), and Kentucky (88.7).1

How do these price differences play out in real dollars and cents? The same gallon of regular gas that costs $2.74 in Hawaii might run you $1.82 in South Carolina.3 Or, viewed another way, if you had $100 to spend at a store offering a range of goods at national-average prices, in Hawaii, that $100 would feel more like $85.60, while in Mississippi the national-average $100 would be more like $115.30.3

The Bureau of Labor Statistics asserts that in areas where goods and services are more expensive, wages tend to follow suit -- but that is not always the case.2

Be a Savvy Shopper -- Wherever You Live

Regardless of where you live, consider some simple dollar-stretching tips.

•  Cut back on nickel-and-dime items. You might be surprised at how much you can save by reducing out-of-pocket expenses. Instead of indulging on a "designer" cup of coffee, purchase a regular coffee. The amount saved can add up fast.

•  Save on books, music, and movies. Visit your neighborhood library to check out books and music instead of purchasing your own.

•  Brown bag meals. Work days can be hectic, but instead of buying breakfast or lunch out, carry it in. If you spend $8 per day on lunch, you could free up $160 per month for your long-term financial goals.

•  Seek travel values. By traveling off-season or during the shoulder season -- the periods just before or after the peak tourist season -- you can receive discounted rates on lodging and airfares, which can cut your vacation expenses.

•  Practice energy efficiency. By turning the thermostat back in winter while you're at work or sleeping, you can save on your heating bills. Same for the air conditioner in hot summer months.

•  Be creative. Can't imagine skipping your daily trip to the vending machine? Don't fret. The main point is to look for effective ways to stretch a dollar -- and then do it. Over time, you might find that a little savings can make a big difference when it comes to funding your bigger ticket financial goals.

Sources:

1.  The Bureau of Economic Analysis, news release, "Real Personal Income for States and Metropolitan Areas, 2014," July 7, 2016.

2.  The Bureau of Labor Statistics, Monthly Labor Review, "Purchasing power: using wage statistics with regional price parities to create a standard for comparing wages across U.S. areas," April 2016.

3.  The New York Times, "What $100 Can Buy State by State," August 8, 2016.


Required Attribution


Because of the possibility of human or mechanical error by Wealth Management Systems Inc. or its sources, neither Wealth Management 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 Wealth Management Systems Inc. be liable for any indirect, special or consequential damages in connection with subscriber's or others' use of the content.

© 2016 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 constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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When Employees Leave, but Plan Accounts Stay

Work force reductions may leave some employers with low-balance plan accounts owned by former employees. These accounts can be expensive to maintain and burdensome to administer. Below, you will find answers to commonly asked questions about handling these small accounts.

Can we just distribute small accounts to the former employees? Check your plan's provisions. Under federal law, plans can provide that, if a former employee has not made an affirmative election to receive a distribution of his or her account assets or to roll those assets over to an IRA or another employer's plan, the plan can distribute the account - as long as its balance does not exceed $5,000. For accounts valued at $1,000 or less, the plan can simply send the former employee a check for his or her balance. Distributions of more than $1,000 must be directly transferred to an IRA set up for the former employee. Accounts valued at $1,000 or less may also be rolled over for administrative convenience.

Should non-vested assets be included when determining whether a mandatory distribution can be made? You only have to include the value of the former employee's non-forfeitable accrued benefit. If the employee was not fully vested in any portion of the account when he or she left your employ, you do not have to count the non-vested portion.

What about rollovers? A plan may provide that any amounts that a former employee rolled over from another employer's plan (and any earnings on those rolled over assets) are to be disregarded in determining the employee's non-forfeitable accrued benefit. Thus, you may be able to cash out and roll over accounts greater than $5,000. Note that rolled over amounts are included in determining whether a former employee's accrued benefit is greater than $1,000 for purposes of the automatic rollover requirement.

What requirements do we have to meet when rolling over a small account? To fulfill your fiduciary duties as a plan sponsor, the following requirements must be met:

•  The rollover must be a direct transfer to an IRA set up in the former employee's name.

•  The IRA provider must be a state or federally regulated financial institution, such as an FDIC-insured bank or savings association or an FCUA-insured credit union; an insurance company whose products are protected by a state guaranty association; or a mutual fund company.

•  You must have a written agreement with the IRA provider that addresses appropriate account investments and fees.

•  The IRA provider cannot charge higher fees than would be charged for a comparable rollover IRA.
(Other fiduciary responsibilities apply.)

Are there rules for investing the rollover IRA? The investments chosen for the IRA must be designed to preserve principal and provide a reasonable rate of return and liquidity. Examples include money market mutual funds, interest-bearing savings accounts, certificates of deposit, and stable value products.

Do we have to provide disclosures? Yes. Before you cash out an account, you must notify the former employee in writing, either separately or as part of a rollover notice, that, unless the employee makes an affirmative election to receive a distribution of his or her account assets or rolls them over to another account, the distribution will be paid to an IRA. As long as you send the notice to the former employee's last known mailing address, the notice requirement generally will be considered satisfied. In addition, you must include a description of the plan's automatic rollover provisions for mandatory distributions in the plan's summary plan description (SPD) or summary of material modifications (SMM).

"For accounts valued at $1,000 or less, the plan can simply send the former employee a check for his or her balance."


Required Attribution


Because of the possibility of human or mechanical error by Wealth Management Systems Inc. or its sources, neither Wealth Management 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 Wealth Management Systems Inc. be liable for any indirect, special or consequential damages in connection with subscriber's or others' use of the content.

© 2016 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 constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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Millennials: On Investing and Retirement

Move over Baby Boomers. These days all eyes are on Millennials, those young adults between the ages of 18 and 34 who are now America's largest living generation.1 According to the U.S. Census Bureau, Millennials in the United States number more than 75 million -- and the group continues to expand as young immigrants enter the country.1

Due to its size alone, this generation of consumers will undoubtedly have a significant impact on the U.S. economy. When it comes to investing, however, the story may be quite different. One new study found that 59% of Millennials are uncomfortable about investing due to current economic conditions.2 Another study revealed that just one in three Millennials own stock, compared with nearly half of Generation-Xers and Baby Boomers.3

On the Retirement Front

How might this discomfort with investing manifest itself when it comes to saving for retirement -- a goal for which time is on Millennials' side? According to new research into the financial outlook and behaviors of this demographic group, 59% have started saving for retirement, yet nearly two-thirds (64%) of working Millennials say they will not accumulate $1 million in their lifetime. Of this group, half have started saving for retirement -- 37% of which are putting away more than 5% of their income -- despite making a modest median $27,900 a year.2

As for the optimistic minority who do expect to save $1 million over time, they enjoy a median personal income that is about twice that -- $53,000 -- of the naysayers. Three out of four have started saving for retirement and two-thirds are deferring more than 5% of their income; 28% are saving more than 10%.2

So despite their protestations, their reluctance to embrace the investment world, and a challenging student loan debt burden -- a median of $19,978 for the 34% who have student loan debt -- Millennials are still charting a slow and steady course toward funding their retirement.2

For the Record …

Here are some additional factoids about Millennials and retirement revealed by the research:

•  The vast majority (85%) of Millennials view saving for retirement as a key passage into becoming a "financial adult."

•  A similar percentage (82%) said that seeing people living out a comfortable retirement today encourages them to want to save for their own retirement.

•  Those who have started saving for retirement said the ideal age to start saving is 23.

•  Those who are not yet saving for retirement say they will start by age 32.

•  Of those who are currently saving for retirement, 69% do so through an employer-sponsored plan.

•  Three out of four said they do not believe that Social Security will be there for them when they retire.

•  Most would like to retire at age 59.
 
Source(s):

1.  Pew Research Center, "Millennials overtake Baby Boomers as America's largest generation," April 25, 2016.

2.  Wells Fargo & Company, news release, "Wells Fargo Survey: Majority of Millennials Say They Won't Ever Accumulate $1 Million," August 3, 2016.

3.  The Street.com, "Only 1 in 3 Millennials Invest in the Stock Market," July 10 2016.
 

Required Attribution


Because of the possibility of human or mechanical error by Wealth Management Systems Inc. or its sources, neither Wealth Management 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 Wealth Management Systems Inc. be liable for any indirect, special or consequential damages in connection with subscriber's or others' use of the content.

© 2016 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 constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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Identity Theft and Taxes

Identity theft is one of the fastest growing crimes in America affecting millions of unsuspecting individuals each year. A dishonest person who has your Social Security number can use it to obtain tax and other financial and personal information about you.

Identity thieves can get your Social Security number by:

•  Stealing wallets, purses, and your mail.

•  Stealing personal information you provide to an unsecured website, from business or personnel records at work, and from your home.

•  Rummaging through your trash, the trash of businesses, and public trash dumps for personal data.

•  Posing by phone or email as someone who legitimately needs information about you, such as employers or landlords.

Tax-related identity theft occurs when a thief uses your Social Security number to file a tax return and claim a fraudulent tax refund. In 2015 alone, the IRS stopped 1.4 million confirmed identity theft tax returns, protecting $8.7 billion in taxpayer refunds.1 The IRS has become increasingly diligent in its efforts to thwart identity theft with a program of prevention, detection, and victim assistance. The "Taxes. Security. Together." program is aimed at building awareness among taxpayers about the need to protect personal data when conducting business online and in the real world.

Stay Vigilant

By remaining vigilant and following a few commonsense guidelines, you can support the IRS in keeping your personal information safe. Here are a few tips to consider:

•  Protect your information. Keep your Social Security card and any other documents that show your Social Security number in a safe place.

•  DO NOT routinely carry your Social Security card or other documents that display your number.

•  Monitor your email. Be on the lookout for phishing scams, particularly those that appear to come from a trusted source such as a credit card company, bank, retailer, or even the IRS. Many of these emails will direct you to a phony website that will ask you to input sensitive data, such as your account numbers, passwords, and Social Security number.

•  Safeguard your computer. Make sure your computer is equipped with firewalls and up-to-date anti-virus protections. Security software should always be turned on and set to update automatically. Encrypt sensitive files such as tax records you store on your computer. Use strong passwords and change them routinely.

•  Be alert to suspicious phone calls. The IRS will never call you threatening a lawsuit or demanding an immediate payment for past due taxes. The normal mode of communication from the IRS is a letter sent via the U.S. postal service.

•  Be careful when banking or shopping online. Be sure to use websites that protect your financial information with encryption, particularly if you are using a public wireless network via a smartphone. Sites that are encrypted start with "https." The "s" stands for secure.

•  Google yourself. See what information is available about you online. Be sure to check other search engines, such as Yahoo and Bing. This will help you identify potential theft sources and will also help you maintain your reputation.

Fear You Have Been Scammed?

If you feel you are the victim of tax-related identity theft - e.g., you cannot file your tax return because one was already filed using your Social Security number - there are several steps you should take.

•  File your taxes the old-fashioned way -- on paper via the U.S. postal service.

•  Print an IRS Form 14039 Identity Theft Affidavit from the IRS website and include it with your tax return.

•  File a consumer complaint with the Federal Trade Commission (FTC).

•  Contact one of the three national credit reporting agencies -- Experian, Transunion, or Equifax and request that a fraud alert be placed on your account.

If you have been confirmed as a tax-related identity theft victim, the IRS may issue you a special PIN that you will use when e-filing your taxes. You will receive a new PIN each year.

For more information on tax-related identity theft visit the IRS website, which has a special section devoted to the topic.


Source:

1.  The Internal Revenue Service, "How Identity Theft Can Affect Your Taxes," IRS Summertime Tax Tip 2016-16, August 8, 2016.


Required Attribution


Because of the possibility of human or mechanical error by Wealth Management Systems Inc. or its sources, neither Wealth Management 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 Wealth Management Systems Inc. be liable for any indirect, special or consequential damages in connection with subscriber's or others' use of the content.

© 2016 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 constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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When Planning, Focus More on Goals Less on Numbers

Financial planning is a complex, lifelong process that people tend to approach with a numbers orientation. What rate of return do I need to reach my goal? How much insurance do I need? Can I afford a bigger house? How much money do I need to save for retirement?

To support their pursuit of the "right numbers," people often use separate advisors -- for instance, a banker, a financial planner, an insurance agent, a tax professional, and an estate planning attorney -- to oversee the various components of their household wealth. But can too many cooks spoil the broth?

This "siloed" approach to financial planning can easily lead to redundant investment strategies that could create exposure to unnecessary levels of risk. It may also result in multiple, random investment accounts in need of consolidation. Furthermore, such an approach may inadvertently overlook crucial tools, leaving entire planning areas to chance.

Unlocking Financial Synergies

When viewing their financial goals -- such as buying a home, paying for a child's education, or saving for retirement -- individuals typically think in terms of what those goals cost rather than how achieving them might affect their lives. If, however, they were to re-engineer the planning process and assess their current life issues and future aspirations prior to selecting investments and asset allocation strategies, they may be in a better position to achieve satisfactory outcomes. Perhaps equally important, by putting life circumstances at the center of financial decision-making, individuals may find more meaning in their actions with regard to money.

Indeed, values have a significant role to play in determining how individuals manage their assets. This is one way in which a holistic approach to "financial life planning" enables individuals to better assess their wants and needs, establish meaningful priorities, and avoid misguided investments. And, as life circumstances and priorities change -- as they inevitably will -- so too do financial goals. In this way, individuals employing a holistic approach to planning can easily identify and address those areas of their financial lives that are still working well and those that may be hindering their financial well-being.

Crafting a Plan

Crafting a plan that reflects your unique situation and that ties your life aspirations to your financial goals is part art, part science. To achieve this level of planning you need to rely on the guidance of a single skilled advisor -- someone who will take the time to get to know you and your circumstances and who will put together an appropriate combination of vehicles, strategies and, where appropriate, additional planning professionals to help achieve your goals -- whatever they may be.


Required Attribution


Because of the possibility of human or mechanical error by Wealth Management Systems Inc. or its sources, neither Wealth Management 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 Wealth Management Systems Inc. be liable for any indirect, special or consequential damages in connection with subscriber's or others' use of the content.

© 2016 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 constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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What Motivates Your Investment Moves?

When the stock market falls sharply as it did following the recent Brexit Referendum in the United Kingdom, it is not unusual for investors to react emotionally -- to act on impulse before thinking through the potential long-term consequences. Why does emotion sometimes cloud your judgment when it comes to making investment decisions? The answer may be found in the study of "behavioral finance."

Scholars of behavioral finance believe that investors are too often influenced by psychological or emotional impulses that run contrary to the fundamental principles of long-term planning. But the study of behavioral finance involves more than pointing fingers at past mistakes. Its proponents encourage investors to develop skill in recognizing situations that may lead them to make emotionally driven errors, so those errors may be avoided in the future.

Investor, Know Thyself

Behavioral psychologists have identified several common behaviors that may be exhibited by investors. See if you recognize yourself in any of these examples.

Fear of Regret/Risk Aversion -- The threat of a potential disappointment or a short-term loss is a powerful force that often inspires second-guessing of portfolio strategies. Common responses are to avoid investing altogether, to hold on to a losing stock for far too long in the hopes that it will bounce back one day, or to sell winners too soon -- before they may have reached their full potential.

Overconfidence -- Some investors tend to overestimate their knowledge and skills. For instance, they may overload their portfolio with stocks of a certain sector or geographic region they know well, because they are confident of their ability to understand and track these investments. As a result, they may tend to trade more actively than is in their best interest.

In addition, overconfidence may lead to irrational expectations and, ultimately, to a financial shortfall. For example, the Employee Benefit Research Institute's 2016 Retirement Confidence Survey revealed that a majority (63%) of workers are "very" or "somewhat" confident that they will have enough money to live comfortably throughout retirement, even though fewer than half have actually tried to calculate how much money they would need.1 In other words, many people may have a false sense of security based on incomplete knowledge of their situation.

Anchoring -- This behavior involves reading too much into recent events, despite the fact that those events may not reflect long-term realities or statistical probabilities. For example, investors who believe that a market surge (or downturn) will continue indefinitely may be anchoring their long-term expectations to a short-term perception. Anchoring causes investors to hold on to their investments even after an extended period of poor performance. As we all know, things change. Mental anchoring prevents us from adjusting to those changes.

Today's investor needs a plan of action to help maintain a disciplined strategy and resist making common mistakes. Work with your financial advisor to construct a fully integrated financial plan that reflects your needs and risk tolerance. Such a plan will help you avoid potential pitfalls and stay focused on the long term.
 

Source:

1.  Employee Benefit Research Institute's 2016 Retirement Confidence Survey, March 2016.


Required Attribution


Because of the possibility of human or mechanical error by Wealth Management Systems Inc. or its sources, neither Wealth Management 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 Wealth Management Systems Inc. be liable for any indirect, special or consequential damages in connection with subscriber's or others' use of the content.

© 2016 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 constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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Back to School Bonus

Families with students heading off to college this fall take note: The interest rates on all newly-issued federal loans have been reduced for the coming academic year -- but those reductions are much more pronounced for student borrowers than for their parents.1

 

For instance, the interest rate on Stafford subsidized and unsubsidized loans for undergraduates will decline to 3.76% from 4.29% last year.1 For graduate students, the Stafford loan rate will fall from 5.84% to 5.31% for the coming academic year.1 In contrast, the rate on Federal PLUS loans for parents is a full percentage point higher at 6.31%.1

 

That rate is down from 6.84% for PLUS loans issued for the 2015-2016 academic year, but it still will nearly double the cumulative interest paid on a $50,000 loan over 20 years when compared with an undergraduate Stafford loan.1 (Note that rates are set each year for new loans, but those rates remain fixed for the life of the loan.)

...
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Business Owner or Corporate Exec: Are You On Track to Retire (Someday)?

If you are a business owner, corporate executive or similar professional, “success” often means at least two things. There’s the career satisfaction you’ve worked your tail off for. Then there’s that question that starts whispering in your ear early on, growing louder over time:

Am I on track to retire on my own terms and timeline? (And if not, what should I do about it?)

While every family’s circumstances are unique and personalized retirement planning is advised, the ballpark reference below can help you consider how your current nest eggs stack up. It shows the savings you’ll want to have accumulated, assuming the following:

•  You’re saving 10–16% of your salary (or equivalent income) and receiving an annual raise of 3%.

•  Your annual investment return is 6%.

•  At retirement (age 65) you want to spend 40% of your final salary (with Social Security making up an additional 20–40% of the same).

•  You plan to withdraw 4% annually from your portfolio.

Salary vs. Age vs. Desired Savings Today (To Retire at 65)



Still feeling a little overwhelmed by the size of the chart? Let’s look at some plausible scenarios.

Let’s say you are a 40-year-old couple earning $100,000 annually. The table suggests you should have saved about $317,000 by now. If you continue to save 10–16% of your salary every year and the other assumptions above hold true as well, you should be on track to retire at age 65 and replace 40% of your final paychecks by withdrawing 4% of your portfolio each year. If you’re already 50 and pulling in $200,000, your savings should be right around $1.067 million to be on track in the same manner.

Do your numbers not add up as well as you’d like? No need to panic, but it’s likely you’ll want to get planning for how you can make up the gap. That may mean saving more, retiring later in life, investing more aggressively or employing a judicious combination of all of the above.

If you’re not sure how to get started, I recommend turning to a professional, fee-only advisor who you’re comfortable working with. He or she should be able to offer you an objective perspective to help you decide and implement your next steps. In the meantime, here is one tip to consider.

How To Channel Your Salary Increases Into Retirement Assets

As you approach retirement, many business owners’ or corporate executives’ salaries tend to increase, while some of their expenses (such as the mortgage) remain level. If that’s the case and you’re behind on your retirement savings, you may be able to direct your annual salary increases into increased saving.

For example let’s say you’ve been saving 7% of your salary, or $10,500/year, and you receive a 3% raise.  Take that extra 3% ($4,500) and direct it into savings. Without having to alter your current spending, you’re now saving 9.7% of your salary or $15,000 total.  If you get another 3% raise the following year, do it again and you’ll be saving $19,635 or about 12.3% of your $159,135 salary.

And so on. If you can’t allocate all of every raise every year to increased savings, do as much as you’re able and the numbers should start adding up, without having to significantly tighten your belt. Who knows, as you and your spouse see the numbers grow, you may even begin to enjoy the exercise.

One repeated caveat before we go: Remember that the table above offers only rough saving guidelines. It’s certainly not the final word, and should not be taken as such. In addition to saving for retirement, you’ll want to ensure that the rest of your financial house is in order, so your plans won’t be knocked off course by life’s many surprises.

Again, a financial professional can assist. He or she can help ensure that your investment portfolio is well diversified (to manage investment risk), your estate plan is current, your advance directives and insurance policies are in place, and your tax strategies are thoughtfully prepared. 

So, start with the chart, and give us a call if we can tell you more.


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 This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.



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Presidential Elections and the Stock Market

Here is a nice article written by Dimensional Fund Advisors:

 

Making investment decisions based on the outcome of presidential elections is unlikely to result in reliable excess returns for investors. At best, any positive outcome will likely be the result of random luck. At worst, it can lead to costly mistakes.  CLICK HERE TO READ:

 

Presidential Elections and the Stock Market.pdf

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Defined Benefit Plans

The defined benefit plan is a powerful tax strategy for high income individuals with self-employment income. It's great for small business owners who want to catch-up on their retirement saving and save a tremendous amount on taxes.

Click here, or in the image below, to view our latest webinar on Defined Benefit Plans.




Click here to read a case study.
 
Why is a defined benefit plan a powerful tax strategy for high income individuals with self-employment income and small business owners?

The small business defined benefit (DB) plan is an IRS-approved qualified retirement plan that allows independent professionals and consultants, individuals with self-employment income and small business owners to make large contributions and accumulate as much as $1-2 Million in just 5-10 years. The contributions are deductible and can potentially reduce income tax liability by $40,000 or more annually. To read more about examples where a defined benefit plan would be beneficial click here The Defined Benefit Plan.pdf
 
New Flexibility in Defined Benefit Plans
 
Independent professionals and consultants, small business owners, and individuals with self-employment income often are so busy with their day-to-day responsibilities that they don't take the time to think about preparing for the day they finally retire. Since they aren't thinking about the future - at least not one that includes life beyond their daily work - they may not accumulate retirement savings sufficient to maintain their pre-retirement lifestyle. Business owners are also more likely to put the needs of their business ahead of their well-being... to read more click here New Flexibility in Defined Benefit Plans.pdf


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 i This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.
 
 

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Predictions About The Future

“I don't read economic forecasts. I don't read the funny papers.” — Warren Buffett

“One day, the world will indeed end. The sun will run out of hydrogen fuel, turn into a red giant star, and expand until it engulfs the earth. That is about 5 billion years in the future. In the meantime, you can safely ignore all other forecasts.” — Barry Ritholtz

It's just amazing how long this country has been going to hell without ever having got there. — Andy Rooney

It is very hard to ignore predictions about the stock market, especially when the forecast calls for rain. To make matters worse, the financial press often preys on our “fight or flight” instincts by featuring the forecasters’ doom-and-gloom predictions. After all, it’s what sells their stream of stuff.

As we’ll describe today, the more urgently a financial pundit is pressing you to buy this or sell that based on imminent past or future events, the more reasons you’ve got to fight your impulse to react. As Dimensional Fund Advisors’ Jim Parker wrote about here, confusing fleeting trends with permanent conditions is like mixing up the difference between the weather and the climate.

What the Talking Heads Aren’t Telling You
If you think about hot financial predictions in a logical fashion, why would these prognosticators have to work at all if they could accurately predict the future? Why wouldn’t they use their insights to enrich themselves rather than tipping their cards to us?

Someone with forecasting talent could implement financial instruments to leverage their assets for something like a 20:1 payoff. If they really did see a 20% correction coming, they could easily use leveraging to earn a 400% return, just as a few lucky souls did in the movie, “The Big Short.” They would only have to do this a few times before they could get rich quick and call it a day. (Of course, as we saw in “The Big Short,” you only have to be wrong once – or even not right soon enough – to be wiped out by leveraging!)

Chicken Little Forecasting
Think of it this way: I could predict every blizzard in Boulder by forecasting that a blizzard is about to fall every time I saw a cloud in the sky. Similarly, a plucky prognosticator could predict an impending 10% market decline whenever there’s a hint of bad news on the horizon. Mind you, there’s no substantial evidence that every appearance of bad news causes a market decline, but because the markets tend to drop at least 10% about every 7 months for all sorts of reasons, our “sky is falling” Chicken Little faces not-bad odds of being correct now and then through random chance.

The Track Records of an “Etch A Sketch”
By now you might be thinking: “But won’t a false prophet eventually be found out?” Unfortunately, the answer is, probably not. Are you familiar with the classic Etch A Sketch? No matter how big a mess you make, you can wipe your slate clean in seconds.

Financial forecasters seem to enjoy similar treatment. It seems as if there is little to no penalty when they’re wrong, because no one monitors their predictions or seriously calls them to task when they lead their followers astray.
 
Instead, whenever someone does get lucky and makes an important prediction or two that happens to come true, they are heralded as a guru and people flock to hear what they have to say next … at least until the next guru comes along and the last one is forgotten. 

Luck or Skill?
If you’re up on your financial forecaster lore, you may remember Elaine Garzarelli, who predicted the 1987 stock market crash. Her seemingly prescient prediction allowed her to start her own mutual funds, which were eventually folded into other mutual funds or liquidated due to poor performance.

We could cite countless other illustrations of yesterday’s financial superstars fading fast. Bottom line, when the talking heads on TV get a prediction right, we can’t know at the time whether it was due to luck or skill. What we do know is that, in markets that are highly efficient, it’s far more likely to be luck, as appears to be the case for Garzarelli.

Our “What Have You Done for Me Lately?” Bias
We also need to consider your own biases, especially recency bias. Behavioral finance informs us that investors tend to assume that recent market trends are more likely to happen again or to keep happening. This too can aggravate your tendency to give a financial forecast greater weight than it deserves.

For example, whenever one corner of the market has underperformed for a while, we see forecasters predicting continued pain. “It’s the new normal,” they proclaim, wherever a downturn has lingered. We also see investors fleeing that holding and piling up on whatever has recently been doing well.

Then the forecasts and the fund flows reverse when the tables turn.

This is recency bias in action.  For example, as “Advisor Insights” blogger Matthew Carvalho described in April 2016, there were a host of dire market predictions in the beginning of the year. Some investors likely exited or remained out of the market as a result. Carvalho observed: “One prediction that was spot on came on January 1 from the Associated Press: Expect less and buy antacid. Looking backward, that was apt advice for daily market spectators; however, if you took a 3-month vacation and didn’t check your balance, you’d return thinking the first quarter was normal — no antacid needed.”

Perfect Timing … or Else
Another problem with fleeing the market in response to gloomy forecasts is that you must correctly time both your exit and reentry points. It may be tempting to sell when the market is down, but you’re selling low, incurring trading costs and potentially facing taxable gains. Then you have to determine when it’s time to jump back in. Most investors end up buying back in when prices are high, incurring another round of trading costs.

Trying to successfully repeat this process over and over is expensive, frustrating and likely fruitless. According to this DALBAR study of investor behavior, market timing caused average investors to realize only a fraction of the stock market gain that would have been available to them. For the 20-year period ending December 2014, the average equity fund investor earned 5.19% annually while the S&P 500 Index returned 9.85% annually. It was even worse for the 30-year period with the average equity fund investor earning 3.79% annually and the S&P 500 returning 11.06% annually.

What’s an Investor To Do?
We believe in the Efficient Market Hypothesis, which says that all available information is incorporated into the market very quickly. The markets aren’t perfectly efficient, but they’re efficient enough that your best chance to enjoy a successful investment experience is to forget the forecasts and focus on far more timeless advice:

Invest for the long-term. Capture available market returns within your risk tolerances and according to the best available evidence. Aggressively manage the factors you can expect to control and disregard the ones that you cannot.

These principles guide the actions we’ve advised all along. We will continue to embrace them unless compelling evidence were ever to inform us otherwise. They are the ones that serve your highest financial interests, which is our highest priority as your advisor. 


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 This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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How Survivorship Bias Can Skew Your Views on Mutual Fund Performance

It’s important to avoid treating the market like a popularity contest by chasing out-performers or running away from the underdogs. But neither do most investors want to go into the market entirely blind. For that, there are database services that track and report on how various fund managers and their offerings have performed.

Besides ample evidence that past performance does not predict future returns, there is another reason we advise investors to proceed with caution when considering past performance: Many returns databases are weakened by survivorship bias.

With respect to mutual funds and similar investment vehicles, survivorship bias creeps in when only the returns from surviving funds are included in the historical returns data you are viewing.

Here is what happens: As you might expect, there is a tendency for outperforming funds to survive, and for under-performers to disappear. When a fund is liquidated or merged out of existence, if its poor returns data disappears as well, overall historic returns tend to tick upward.

As such, you may end up depending on past performance data that is optimistically inaccurate.

Here is an article that further explains how survivorship bias works. In addition, consider the following illustration from Dimensional Fund Advisors’ report, The US Mutual Fund Landscape 2016. It illustrates how survivorship bias can skew your view on fund performance. This video also explains their research report.






In the beginning – in this case January 1, 2001 – there were 2,758 US equity mutual funds. Now fast-forward 15 years to December 31, 2015. By then, only 43% of those funds (roughly 1,186 funds) had survived the period. Out of the survivors, only 17% (about 469 funds) had both survived and outperformed their benchmark over the 15-year time-frame.1

In the illustration above, you can readily see that the small blue box in the lower-right corner represents relatively low, less than 1:5 odds that any given fund in January 2001 went on to outperform its peers by the end of the 15 years.

If a database instead eliminates the “disappeared” funds from its performance data, the larger gray box disappears from view as well, as in the illustration below. Without this critical larger context, you may conclude that those 469 outperforming funds only had to compete against the 1,186 survivors, versus the actual universe of 2,758 funds. While it may seem as if nearly half of the fund universe has done well, in reality, the less than 1:5 odds have remained unchanged.




But wait, maybe you could “take a look at the past performance, pick the funds that have outperformed after the first 10 years, and pile up on those seeming winners. Dimensional’s report also shares the results from that exercise:




The left-hand side of this diagram shows the funds that outperformed (in blue) and under-performed (in gray) during the first 10 years of the 15-year analysis.2 You can see that 20% outperformed their respective benchmark then. The right-hand side of the diagram shows what happened to that outperforming subset during the next five years. Only 37% of the initial “winners” continued to outperform. This demonstrates that is it is extremely hard to predict “winning” mutual funds based on past performance. Your odds are even worse than what you can expect from a basic coin toss!

So let’s take a moment to reinforce our ongoing advice: Invest for the long-term. Instead of fixating on past performance, focus on capturing future available returns within your risk tolerances and according to the best available evidence. Aggressively manage the factors you can expect to control (such as managing expenses) and disregard the ones that you cannot (such as picking future winners based on recent past performance).

These principles guide the actions we’ve advised all along. We will continue to embrace them unless compelling evidence were ever to inform us otherwise. They are the ones that serve your highest financial interests, which is our highest priority as your advisor. 


1.  Beginning sample includes funds as of the beginning of the 15-year period ending December 31, 2015. The number of beginners is indicated below the period label. Survivors are funds that were still in existence as of December 31, 2015. Non-survivors include funds that were either liquidated or merged. Out-performers (winners) are funds that survived and beat their respective benchmarks over the period. Past performance is no guarantee of future results. See Mutual Fund Landscape paper for more information. US-domiciled mutual fund data is from the CRSP Survivor-Bias-Free US Mutual Fund Database, provided by the Center for Research in Security Prices, University of Chicago.

2.  The graph shows the proportion of US equity mutual funds that outperformed and under-performed their respective benchmarks (i.e., winners and losers) during the initial 10-year period ending December 31, 2010. Winning funds were re-evaluated in the subsequent five-year period from 2011 through 2015, with the graph showing winners (out-performers) and losers (under-performers). The sample includes funds at the beginning of the 10-year period, ending in December 2010. The graph shows the proportion of funds that outperformed and under-performed their respective benchmarks (i.e., winners and losers) during the initial periods. Winning funds were re-evaluated in the subsequent period from 2011 through 2015, with the graph showing the proportion of out-performance and under-performance among past winners. (Fund counts and percentages may not correspond due to rounding.) Past performance is no guarantee of future results. See Data appendix for more information. US-domiciled mutual fund data is from the CRSP Survivor-Bias-Free US Mutual Fund Database, provided by the Center for Research in Security Prices, University of Chicago.


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 This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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History on the Run

Here is a nice article provided by Jim Parker of Dimensional Fund Advisors:

When news breaks and markets move, content-starved media often invite talking heads to muse on the repercussions. Knowing the difference between this speculative opinion and actual facts can help investors stay disciplined during purported “crises.”  CLICK HERE TO READ MORE:

 

History on the Run.pdf



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 This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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Negative Real Returns

Here is a nice article written by Dimensional Fund Advisors:

Even when the inflation-adjusted return on Treasury bills is negative, a relatively common occurrence, bond investors may still achieve positive expected real returns by broadening their investment universe.  CLICK HERE TO READ MORE:

 

Negative Real Returns.pdf


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 This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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Back to School

Here is a nice article written by Dimensional Fund Advisors:

Education planning is a complex issue. A disciplined approach to saving and investing can help remove some of the uncertainty from the planning process.  CLICK HERE TO READ MORE:

 

Back to School.pdf




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 This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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Buying a Car

A new car could be the most expensive purchase you make apart from housing. Before you go off with the first vehicle that catches your eye, you should think about how you plan to use and pay for the car. Here's a checklist.

The basics

•  Determine how many passengers you may carry on a regular basis. The typical new sedan seats four or five adults. Larger vans, crossovers and SUVs typically seat seven adults. Some smaller crossovers, SUVs and station wagons can seat four or five adults and two or three children.

•  Assess how much power you'll need. Generally speaking, a vehicle's standard engine should be adequate for most normal driving. However, if you routinely carry a full load of passengers or cargo, or drive in hilly areas, you may want to consider larger engines, if available. Keep in mind that larger engines typically cost more and aren't as fuel efficient as smaller engines.

•  Estimate potential yearly fuel cost. In a world of high fuel prices, a car that gets 40 miles per gallon on the highway could save thousands per year over an SUV that gets 20 miles per gallon. Hybrid and clean diesel models often burn less fuel than their conventional counterparts, but they may also cost more up front.

•  Determine your needs for carrying things in addition to people. Crossovers, SUVs, station wagons and hatchbacks tend to be easier to load and generally carry more than sedans of similar size. Fold-down rear seats can expand storage space considerably.

•  Plan for your boat or camping trailer. Manufacturers often promote towing packages on vehicles they think might be especially suitable for towing. They often also designate models they think are unsuitable for towing. Check the vehicle manual or ask the sales representative about the capabilities of any vehicle you might be considering. Also be sure that any vehicle you consider is properly equipped for towing.

•  Consider how frequently you might need to drive in mud, sand and snow. All-wheel drive and four-wheel drive systems are popular but potentially costly features. If you don't live in areas with significant snowfall and don't drive on dirt roads, you may not benefit much from these systems.

Features you may want to include

•  Collision mitigation braking, adaptive cruise control, cross-traffic and lane-departure warning, and blind-spot monitoring can warn of hazards and even sometimes apply the brakes automatically in an emergency. The Insurance Institute for Highway Safety's list of top safety picks offers a list of cars with active front crash prevention systems.

•  GPS navigation is a common but potentially costly option. Weigh the convenience of a built-in system against less costly portable GPS units and smartphone apps. Consider the costs and procedures for updating the maps stored in built-in units.

•  Roof racks or rails are common options or built-ins for crossovers, SUVs, station wagons and hatchbacks. Consider whether the original equipment racks will accommodate your needs; they may not be compatible with bicycle and kayak carriers or those extra-large boxes used for skis and other cargo.

•  Other common convenience features include power door lifts for rear doors, convertible seats that can be readily switched between child and adult use, and built-in rear-seat entertainment systems.

•  Anti-lock brakes, traction control, power windows, Bluetooth connectivity, parking assist and backup cameras have become more common; expect a new vehicle to have some or most of these features.

 

Financing

•  Leasing generally gives you the use of a new car over a limited period of time for a relatively small monthly payment. But over the long haul, leasing tends to cost significantly more than outright ownership in many cases. Make sure your lease realistically anticipates the number of miles you expect to drive during the term of the lease. Excess mileage charges can raise the final cost of the lease significantly.

•  Buying may require a larger down payment and a higher monthly outlay up front, if you plan to finance your car. But the payments generally end while the car is still usable, potentially offering many additional years of service. As a result, buying tends to be significantly less expensive over time if you hold on to the car and drive it to the limits of its useful service life.


Required Attribution


Because of the possibility of human or mechanical error by Wealth Management Systems Inc. or its sources, neither Wealth Management 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 Wealth Management Systems Inc. be liable for any indirect, special or consequential damages in connection with subscriber's or others' use of the content.

© 2016 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 constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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Paying Off Student Loans

Actively managing your debt is an important step, and your student debt may be one of the biggest financial obligations you have. There are many strategies that could help you manage student loans efficiently. Here is a checklist.

•  Choose a federal loan repayment plan that fits your circumstances:

o  The Standard Repayment Plan requires a fixed payment of at least $50 per month and is offered for terms up to 10 years. Borrowers are likely to pay less interest for this repayment plan than for others.

o  The Graduated Repayment Plan starts with a reduced payment that is fixed for a set period, and then is increased on a predetermined schedule. Compared to the standard plan, a borrower is likely to end up paying more in interest over the life of the loan.

o  The Extended Repayment Plan allows loans to be repaid over a period of up to 25 years. Payments may be fixed or graduated. In both cases, payments will be lower than the comparable 10-year programs, but total costs could be higher. This program is complex and has specific eligibility requirements. See the Extended Repayment Plan page on the U.S. Department of Education website for details.

o  The Income-Based Repayment Plan (IBR), the Pay as You Earn Repayment Plan, the Income-Contingent Repayment Plan (ICR) and the Income-Sensitive Repayment Plan offer different combinations of payment deferral and debt forgiveness based on your income and other factors. You may be asked to document financial hardship and meet other eligibility requirements. See the U.S. Department of Education's pages on income-driven repayment plans and income-sensitive repayment plans for more information.

•  Take an inventory of your debt. How much do you owe on bank and store credit cards? On your home mortgage and home equity credit lines? On car loans? Any other loans? Consider paying extra each month to reduce the loans with the highest interest rates first, followed by those with the largest balances.

•  Free up resources by cutting costs. Consider eating out less, reducing snacks on the go, and carpooling or using mass transit instead of driving to work. You may also be able to cut your housing costs, put off vacations and reduce clothing purchases.

•  Think about enhancing your income. A second job? A part-time business opportunity?

•  Consider jobs that offer opportunities for subsidies or debt forgiveness.

o  Federal civil service employees may be eligible for up to $10,000 a year for paying back federal student loans. See the U.S. Office of Personnel Management's Student Loan Repayment Program for more information.

o  Nurses working in underserved areas may be eligible for loan assistance through the U.S. Department of Health and Human Services' NURSE Corps Loan Repayment Program.

o  Service members in the U.S. Armed Forces are eligible for support. Check out the service-specific programs offered by the Air Force, the Army, the National Guard and the Navy.

o  Teachers can consider programs such as Teach for America and the Teacher Loan Forgiveness Program.

•  Sign up for automatic loan payments. Many loans offer discounted interest rates for setting up automatic electronic payments on a predetermined schedule. A reduction of 0.25% per year may look small, but over the life of a 20-year loan, it can reduce your total interest cost by hundreds or even thousands of dollars.

•  A last resort is seeking loan deferment or forbearance. Students facing significant financial hardship may be able to put off loan interest or principal payments. To see whether you might qualify, look to the U.S. Department of Education's information on Deferment and Forbearance.


Required Attribution


Because of the possibility of human or mechanical error by Wealth Management Systems Inc. or its sources, neither Wealth Management 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 Wealth Management Systems Inc. be liable for any indirect, special or consequential damages in connection with subscriber's or others' use of the content.

© 2016 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 constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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Growth vs. Value: Two Approaches to Stock Investing

Growth and value are two fundamental approaches, or styles, in stock and stock mutual fund investing. Growth investors seek companies that offer strong earnings growth, while value investors seek stocks that appear to be undervalued in the marketplace. Because the two styles complement each other, they can help add diversity to your portfolio when used together.

Growth and Value Defined

Growth stocks represent companies that have demonstrated better-than-average gains in earnings in recent years and that are expected to continue delivering high levels of profit growth, although there are no guarantees. "Emerging" growth companies are those that have the potential to achieve high earnings growth, but have not established a history of strong earnings growth.

The key characteristics of growth funds are as follows:

•  Higher priced than broader market. Investors are willing to pay high price-to-earnings multiples with the expectation of selling them at even higher prices as the companies continue to grow.
•  High earnings growth records. While the earnings of some companies may be depressed during period of slower economic improvement, growth companies may potentially continue to achieve high earnings growth regardless of economic conditions.
•  More volatile than broader market. The risk in buying a given growth stock is that its lofty price could fall sharply on any negative news about the company, particularly if earnings disappoint on Wall Street.

Value fund managers look for companies that have fallen out of favor but still have good fundamentals. The value group may also include stocks of new companies that have yet to be discovered by investors.

The key characteristics of value funds include:

•  Lower priced than broader market. The idea behind value investing is that stocks of good companies will bounce back in time if and when the true value is recognized by other investors.
•  Priced below similar companies in industry. Many value investors believe that a majority of value stocks are created due to investors' overreacting to recent company problems, such as disappointing earnings, negative publicity or legal problems, all of which may raise doubts about the company's long-term prospects.
•  Carry somewhat less risk than broader market. However, as they take time to turn around, value stocks may be more suited to longer-term investors and may carry more risk of price fluctuation than growth stocks.

Growth or Value... or Both?

Which strategy -- growth or value -- is likely to produce higher returns over the long term? The battle between growth and value investing has been going on for years, with each side offering statistics to support its arguments. Some studies show that value investing has outperformed growth over extended periods of time on a value-adjusted basis. Value investors argue that a short-term focus can often push stock prices to low levels, which creates great buying opportunities for value investors.

History shows us that:

•  Growth stocks, in general, have the potential to perform better when interest rates are falling and company earnings are rising. However, they may also be the first to be punished when the economy is cooling.
•  Value stocks, often stocks of cyclical industries, may do well early in an economic recovery but are, typically, more likely to lag in a sustained bull market.





When investing long term, some individuals combine growth and value stocks or funds for the potential of high returns with less risk. This approach allows investors to, in theory, gain throughout economic cycles in which the general market situations favor either the growth or value investment style, smoothing any returns over time.
 

Required Attribution


Because of the possibility of human or mechanical error by Wealth Management Systems Inc. or its sources, neither Wealth Management 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 Wealth Management Systems Inc. be liable for any indirect, special or consequential damages in connection with subscriber's or others' use of the content.

© 2016 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 constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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Own a Retirement Account? Keep Your Beneficiary Designations Up to Date

Many investors have taken advantage of pretax contributions to their company's employer-sponsored retirement plan and/or make annual contributions to an IRA. If you participate in a qualified plan program you may be overlooking an important housekeeping issue: beneficiary designations.

An improper designation could make life difficult for your family in the event of your untimely death by putting assets out of reach of those you had hoped to provide for and possibly increasing their tax burdens. Further, if you have switched jobs, become a new parent, been divorced, or survived a spouse or even a child, your current beneficiary designations may need to be updated.

Consider the "What Ifs"

In the heat of divorce proceedings, for example, the task of revising one's beneficiary designations has been known to fall through the cracks. While (depending on the state of residence and other factors) a court decree that ends a marriage may potentially terminate the provisions of a will that would otherwise leave estate proceeds to a now-former spouse, it may not automatically revise that former spouse's beneficiary status on separate documents such as employer-sponsored retirement accounts and IRAs.

Many qualified retirement plan owners may not be aware that after their death, the primary beneficiary -- usually the surviving spouse -- may have the right to transfer part or all of the account assets into another tax-deferred account. Take the case of the retirement plan owner who has children from a previous marriage. If, after the owner's death, the surviving spouse moved those assets into his or her own IRA and named his or her biological children as beneficiaries, the original IRA owner's children could legally be shut out of any benefits.

Also keep in mind that the law requires that a spouse be the primary beneficiary of a 401(k) or a profit-sharing account unless he/she waives that right in writing. A waiver may make sense in a second marriage -- if a new spouse is already financially set or if children from a first marriage are more likely to need the money. Single people can name whomever they choose. And nonspouse beneficiaries are now eligible for a tax-free transfer to an IRA.

The IRS has also issued regulations that dramatically simplify the way certain distributions affect IRA owners and their beneficiaries. Consult your tax advisor on how these rule changes may affect your situation.

To Simplify, Consolidate

Elsewhere, in today's workplace, it is not uncommon to switch employers every few years. If you have changed jobs and left your assets in your former employers' plans, you may want to consider moving these assets into a rollover IRA or your current employer's plan, if allowed. Consolidating multiple retirement plans into a single tax-advantaged account can make it easier to track your investment performance and streamline your records, including beneficiary designations.

Review Your Current Situation

If you are currently contributing to an employer-sponsored retirement plan and/or an IRA contact your benefits administrator -- or, in the case of the IRA, the financial institution -- and request to review your current beneficiary designations. You may want to do this with the help of your tax advisor or estate planning professional to ensure that these documents are in synch with other aspects of your estate plan. Ask your estate planner/attorney about the proper use of such terms as "per stirpes" and "per capita" as well as about the proper use of trusts to achieve certain estate planning goals. Your planning professional can help you focus on many important issues, including percentage breakdowns, especially when minor children and those with special needs are involved.

Finally, be sure to keep copies of all your designation forms in a safe place and let family members know where they can be found.

This communication is not intended to be tax or legal advice and should not be treated as such. Each individual's situation is different. You should contact your tax or legal professional to discuss your personal situation.


Required Attribution


Because of the possibility of human or mechanical error by Wealth Management Systems Inc. or its sources, neither Wealth Management 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 Wealth Management Systems Inc. be liable for any indirect, special or consequential damages in connection with subscriber's or others' use of the content.

© 2016 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 constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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College Planning -- It's About More Than Money

Choosing a way to save for your child's education expenses may be your family's first college planning decision, but it certainly won't be the last. From making that first deposit, to selecting a college, to choosing a course of study, you and your child will be making choices that can have a financial impact for years to come.

How Will You Save Enough?

Starting to save for college when your child is young may give you the best chance for accumulating a significant amount of money. Section 529 plans -- prepaid tuition plans designed to lock in today's tuition rates at eligible institutions -- and college savings plans, which permit contributions to an investment account set up to pay qualified education expenses, are popular tax-favored options. 1Coverdell Education Savings Accounts also offer tax advantages, although contribution limits are relatively low.2 Custodial accounts set up under the Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) are another option to consider.

The Financial Aid Game

By the time college gets close, your family's life may seem to be ruled by deadlines. There are different deadlines for college applications, scholarship applications, and the FAFSA (Free Application for Federal Student Aid) submissions. Applying well in advance of the deadlines can boost your child's chances of getting accepted to the school of his or her choice and receiving a favorable financial aid package. If you wait too long, spots may already be filled and aid money given to students who applied earlier.

Dissecting Aid Packages

Typically, aid packages consist of grants, loans, work study, and an expected family contribution. When reviewing aid offers, compare apples to apples. Start with the cost of tuition at each school. Then look at how much of the aid package consists of loans that will have to be repaid. Make sure non-tuition costs, such as room and board, books, equipment, transportation, and fees, are included in the school's cost estimates. It's a good idea to do your own cost estimate and use that as your basis for comparing offers.

The Right Fit

As important as it is, money shouldn't be the only criterion used when choosing a college. Lower cost of attendance or generous financial aid is most valuable if the college is a good fit for your child's abilities, personality, and goals. Choosing the wrong college could cost a bundle in lost opportunities if your child is unhappy or doesn't feel sufficiently challenged by the curriculum.

Look Toward the Future

A college education is an investment in the future, so parents may want to discuss choosing a course of study that will lead to a career. Talk to your child about the importance of preparing for life beyond college by obtaining the practical skills and knowledge needed to land a job after graduation. By planning ahead, your child may turn his or her interests into a successful career.
 

Sources:

1.  Certain benefits may not be available unless specific requirements (e.g., residency) are met. There also may be restrictions on the timing of distributions and how they may be used.

2.  Internal Revenue Service. The annual contribution limit is $2,000. Taxpayers with modified adjusted gross incomes (MAGIs) of more than $220,000 (for married couples filing a joint tax return) and $110,000 (for singles) may not contribute. For most taxpayers, MAGI is the adjusted gross income as figured on their federal income tax return.


Required Attribution


Because of the possibility of human or mechanical error by Wealth Management Systems Inc. or its sources, neither Wealth Management 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 Wealth Management Systems Inc. be liable for any indirect, special or consequential damages in connection with subscriber's or others' use of the content.

© 2016 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 constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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The DOL Revisits Conflict of Interest Rules

Over the past several decades, there has been a significant shift in the retirement savings landscape away from employer-sponsored defined benefit pension plans to defined contribution plans, such as 401(k)s. At the same time, there has been widespread growth in assets in IRAs and annuities.

One consequence of this change, according to the U.S. Department of Labor -- the governmental body that oversees pensions and other retirement accounts -- is the increased need for sound investment advice for workers and their families.

The DOL says its so-called "conflict of interest" rules are intended to require that all who provide retirement investment advice to employer-sponsored plans and IRAs abide by a "fiduciary" standard -- putting their clients' best interest before their own profit.

Originally proposed more than a year ago, the "final" rules -- introduced in April 2016 -- have been revised to reflect input from consumer advocates, industry stakeholders, and others. Following are some of the key takeaways from the DOL's final regulatory package.

The Role of the Fiduciary

According to the DOL's definition, "a person is a fiduciary if he or she receives compensation for providing advice with the understanding that it is based on a particular need of the person being advised or that it is directed to a specific plan sponsor, plan participant, or IRA owner. Such decisions can include, but are not limited to, what assets to purchase or sell and whether to roll over from an employment-based plan to an IRA. 1 In this capacity, a fiduciary could be a broker, registered investment adviser, or other type of adviser.

The Best Interest Contract Exemption

The DOL's final rules include a provision called the Best Interest Contract Exemption (BICE). This exemption is intended to allow firms to continue to use certain compensation methods provided that they "commit to putting their client's best interest first, adopt anti-conflict policies and procedures, and disclose any conflicts of interest that could affect their best judgment as a fiduciary rendering advice" -- among other conditions.2

How does the BICE affect you? The contract provisions of the BICE are slated to go into effect January 1, 2018. At that time, IRA clients entering into a new advisory relationship should expect to sign the contract either before or at the time that a new recommended transaction is executed. IRA clients already working with an investment adviser as of January 1, 2018, may receive a notice from their adviser describing their new rights, but they should not be required to take any action unless they object to the terms of the notice.

Clients receiving advice about investments in an employer-sponsored retirement plan should receive the same general protections and disclosure, but should not expect to receive a contract to sign.

Education vs. Advice

The DOL's final rules clarify its position that education about retirement savings is beneficial to plan sponsors, plan participants, and IRA owners. As such, the DOL said that plan sponsors and service providers can offer investment education without becoming investment advice fiduciaries.

Further, the DOL stated that communications from plans that identify specific investment alternatives can be considered "education" and not a "recommendation" because plans have a fiduciary who is responsible for making sure the investment offerings in the plan are prudent. Since there is no such responsible fiduciary in the IRA context, references to specific investment alternatives are treated as fiduciary recommendations and not merely education.

Time to Get on Board

The new regulations are expected to take effect in the spring of 2017 (at the earliest) to allow all affected parties to adapt to and incorporate the changes.

To learn more about the new regulations and how they may affect you, visit the Department of Labor website.
 

Source:

United States Department of Labor, "FAQs About Conflicts of Interest Rulemaking."


Required Attribution


Because of the possibility of human or mechanical error by Wealth Management Systems Inc. or its sources, neither Wealth Management 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 Wealth Management Systems Inc. be liable for any indirect, special or consequential damages in connection with subscriber's or others' use of the content.

© 2016 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 constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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Consider the "Autopilot" Option for Your Plan

These days, it is vitally important for individuals to set money aside for retirement during their working years. Unfortunately, not every employee thinks so. Which explains why some employer-sponsored retirement plans have low participation rates. If your company's retirement plan participation rate disappoints you, there may be an easy fix. Why not put your plan on autopilot?

The Nuts and Bolts

Putting a retirement plan on autopilot simply means introducing an automatic enrollment feature. In other words, employees are automatically enrolled in the retirement plan unless they elect otherwise. A specific percentage of the employee's wages will be automatically deducted from each paycheck for contribution to the plan unless the employee opts out.

Once enrolled in the plan, employees can change their contribution rate and choose how to invest their contributions from the plan's investment menu. If they don't make their own investment selections, their contributions are automatically directed to a qualified default investment alternative (QDIA), which is typically a target date fund, a balanced fund, or an account managed by an ERISA-qualified investment manager. Employees whose contributions are invested in the default option can later switch into another plan investment, if desired.

Does It Work?

According to recent research, approximately 75% of employees participate in their employer's retirement plan.1 The same study found that 62% of plan sponsors offer an auto-enrollment feature, 97% of those offering auto enrollment are satisfied with their program, and that 88% of sponsors believe auto enrollment has had a positive impact on their plan participation rates.2

A Win-Win

Many employees are confused about retirement planning. Many want guidance. Automatic enrollment makes the tough decisions for them and starts them on the path to a more secure financial future. Having a robust retirement plan usually helps businesses attract and keep talented employees. Automatic enrollment may be just the enhancement you need to get more employees to participate in -- and appreciate -- the benefits of working for you.
 

Source:

1. & 2.  Deloitte Consulting, LLP, the International Foundation of Employee Benefit Plans, the International Society of Certified Employee Benefit Specialists, "Annual Defined Contribution Benchmarking Survey, 2015 Edition."


Required Attribution


Because of the possibility of human or mechanical error by Wealth Management Systems Inc. or its sources, neither Wealth Management 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 Wealth Management Systems Inc. be liable for any indirect, special or consequential damages in connection with subscriber's or others' use of the content.

© 2016 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 constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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Avoid These Financial Traps -- They May Be Hazardous to Your Wealth

Money. It's hard to get and easy to lose. It doesn't take long for the wealth you've accumulated to disappear if you don't manage your money well or have a plan to protect your assets from sudden calamity.

Snares like the ones mentioned below could easily threaten your financial security. Planning ahead can protect you and your loved ones from getting caught.

Undisciplined Spending

The more you have, the more you spend -- or so the saying goes. But not paying close attention to your cash flow may prevent you from saving enough money for your future. Manage your income by creating a spending plan that includes saving and investing a portion of your pay. Your financial professional can help identify planning strategies that will maximize your savings and minimize your taxes.

High Debt

With the easy availability of credit, it isn't hard to understand how many people rack up high credit card balances and other debt. Short-term debt will become long-term debt if you're paying only the minimum amount toward your balances. If you can't pay off your credit card debt all at once, consider transferring the balances to a card with a lower interest rate.

Unprotected Assets

Your life, your property, and your ability to work should all be protected. Life insurance can provide income for your family if you die. Homeowners and automobile insurance can help protect you if your home or car is damaged or destroyed and provide liability coverage if someone is injured. Disability insurance can protect your income if you're unable to work.

Unmanaged Inheritance

A financial windfall is great, but it also can be dangerous. Without solid advice on managing and investing the money, you could find that your inheritance is gone in a much shorter time than you would have thought possible. Your financial professional can help you come up with a plan for managing your wealth. Setting aside a portion of the money to spend on a trip or other luxury while investing the rest may be one way to reward yourself and still preserve the bulk of your assets.

Neglected Investments

Reviewing your investments to make sure they're performing as you expected -- and making changes in your portfolio if they're not -- is essential. But it's also essential to periodically review your investment strategy. You may find that your tolerance for risk has changed over time. You'll also want to assess the tax implications of any changes you plan to make to help minimize their impact.

Retirement Shortfall

If you're not contributing the maximum amount to your employer's retirement savings plan, you're giving up the benefits of pretax contributions and potential tax-deferred growth. Maximizing your plan contributions can start you on your way to a comfortable retirement -- hopefully with no traps along the route.


Required Attribution


Because of the possibility of human or mechanical error by Wealth Management Systems Inc. or its sources, neither Wealth Management 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 Wealth Management Systems Inc. be liable for any indirect, special or consequential damages in connection with subscriber's or others' use of the content.

© 2016 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 constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail This email address is being protected from spambots. You need JavaScript enabled to view it. .

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.

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