Contact Us

Play the Social Security Waiting Game and Improve Your Retirement

Social Security gives you a broad range of options: Take the monthly payment as early as age 62, wait until “full” retirement age (age 66 for those retiring in the next few years), or wait until as late as age 70 to claim your benefit. The factor that makes this decision tough is the size of the benefit: Take it early and it will be reduced by as much as 25% from your full retirement age benefit (again, for most retirees now, at age 66). Delay the benefit until age 70 and get a payment that is 76% higher than the age 62 benefit. A good part of the claiming decision depends on your definition of the purpose of Social Security. Some workers see it as extra play money that is a reward for living to age 62. Others see it as an endangered benefit that could be reduced or eliminated in...

Read More

Charitable Giving in the Wake of Tax Reform – Part 2

If you missed the first installment of my three-part series on efficient giving strategies, you can read it here:  Part 1.  Once you are up-to-speed, keeping reading here to learn about an absolute home run of a giving strategy for those who have an IRA and are at least 70 ½ years old. As mentioned in Part 1 of this series, recent tax reform is going to significantly reduce the number of people that itemize their tax deductions.  This means that many people who donate money to qualified charities will no longer be able to recognize the tax benefit of their gift.  If you fall into this camp, have an IRA, and are at least age 70.5, then you should consider the advantages of a Qualified Charitable Distribution (QCD). A QCD is achieved when you distribute money from your IRA or inherited IRA to a public charity.  The donor must be at least...

Read More

Chasing Investment Winners: Good intentions, Bad outcome

We often hear some variation of the following question: “Some of my investments outperformed all the others; why don’t I put more of my money in the investments that did really well?” For example, if we look at 2017, we see that large company growth stocks, especially those in the technology sector, performed exceptionally.  So why wouldn’t we overweight our portfolio with these types of investments? The Answer Is: if we could accurately predict this in advance and then concentrate all or more of our investments into the best performing investment type with a sufficient probability of success, we would.  But we can’t.  Lots of people try, but the historical evidence is clear.  It can’t be done in an efficient and predictable manner.  And here, with a minimum of investment jargon, is why: The investment performance of each type of investment (or asset class), relative to all the other types, is purely...

Read More

Charitable Giving in the Wake of Tax Reform – Part 1

The Tax Cuts and Jobs Act (TCJA) passed in December 2017 is the largest overhaul to tax law in over 30 years.  Tax experts and the IRS are still sorting out all of its implications and how to apply the new law, but it is clear the TCJA will have a significant impact on taxation of both individuals and businesses. Due to the effective doubling of the standard deduction and the elimination of many popular itemized deductions, The TCJA has reduced tax incentives for making charitable donations for many people.  Over my next few blogs I am going to explain the basics of three strategies that we are using much more often when discussing charitable gifting with our clients here at Level Financial Advisors.  These strategies all have unique benefits over simply gifting cash. Gifting of Long Term Appreciated Property One of the first tax-saving strategies we consider when we find out a...

Read More

Cost Basis: What is it and Why Do I Need to Know?

Cost basis is certainly not something we think about on a regular basis, but it is critical to understand what it is when a loved one passes away.  Here are answers to common questions about cost basis rules and implications. What is cost basis? Simply put, the cost basis is the purchase price of your stock, bond, or mutual fund investment. For example: If you purchased ABC mutual fund for $10,000 in a brokerage (non-retirement) account, this purchase price becomes your cost basis. Why does this matter? When you later sell your mutual fund, the cost basis helps determine your gain or loss on your investment, and subsequently, your potential tax liability. For example: if you sold ABC mutual fund 2 years later for $12,000, your gain on the fund would be $2,000 and would be taxed at capital gains rates. Other items that effect the cost basis include stock splits, reinvested dividends, and return...

Read More

VIDEO: Does a Declining Number of Stocks Affect the Size Premium?

Marlena Lee, PhD, Co-Head of Research – Dimensional Fund Advisors

Over the past two decades, the number of US-listed, publicly traded companies has decreased by half.1 There are many theories about what might be driving the change, such as increasing mergers and acquisitions activity, competition from global exchanges for listings, or changes in public policy and the regulatory environment for listed companies.

Historically, small cap stocks have had higher average returns than large cap stocks. This return difference between small cap stocks and large cap stocks is known as the size premium. Investors may wonder whether fewer listed companies might impact the size premium.2 Our latest research shows that, historically, neither the existence nor magnitude of the size premium have been related to the number of listed stocks.3Moreover, we believe investors should continue to expect a positive size premium over the long term.

Don’t Get Distracted (or Greedy)

The stock and bond markets have had a bumpy start to 2018.  But one area of the stock market in particular is having a wonderful year so far: technology stocks.  The tech-heavy Nasdaq 100 is up 13.22% year to date (as represented by QQQ).  Meanwhile, the S&P 500 is only up 3.81% and the international stock market (represented by MSCI ACWI ex US) is down -3.52% for 2018. So what exactly is lifting the Nasdaq 100?  Big tech names we all know are crushing it so far this year: Amazon up 47.95% Apple up 10.39% Microsoft up 19.22% Google up 11.02% Facebook up 14.19% Netflix up 116.42% An investor with a diversified portfolio may be hearing this for the first time or, even worse, may have already heard/read about it from their co-worker, neighbor, or in-law.  It’s common for people who are overweight in an investment that is doing great to make sure everyone around them knows it. ...

Read More

Tuning Out the Noise

For investors, it can be easy to feel overwhelmed by the relentless stream of news about markets. Being bombarded with data and headlines presented as impactful to your financial well-being can evoke strong emotional responses from even the most experienced investors. Headlines from the ”lost decade”[1] can help illustrate several periods that may have led market participants to question their approach. May 1999: Dow Jones Industrial Average Closes Above 11,000 for the First Time March 2000: Nasdaq Stock Exchange Index Reaches an All-Time High of 5,048 April 2000: In Less Than a Month, Nearly a Trillion Dollars of Stock Value Evaporates October 2002: Nasdaq Hits a Bear-Market Low of 1,114 September 2005: Home Prices Post Record Gains September 2008: Lehman Files for Bankruptcy, Merrill Is Sold While these events are now a decade or more behind us, they can still serve as an important reminder for investors today. For many, feelings of...

Read More

Who Does Your Financial Advisor Work for?

While driving around the city I live in, I often see a particular license plate frame from a local car dealership that boasts the tagline “We worked it out!”  Every time I see those words on the rear of a vehicle, I find myself wondering if that is the best way to market yourself.  The tagline implies that there is conflict when dealing with that car dealership; which is not something I would want to advertise if I was in the business of selling cars. Maybe I should give that dealership more credit, because, let’s be honest, we all expect at least some conflict during the car buying process.  This is primarily because we understand that the car salesperson has one overarching goal, to maximize their profit, not yours. Similarly, many financial consumers mistakenly think their advisor is working for them, when in reality they are very much working for themselves.  Financial...

Read More