Browsing Category: Investing

Optimize Your Investments with Personal Capital

personal capital investment tool review

Many my friends want to get their investments squared away without having to track every small dip and tick of the market. They are living busy lives and they don’t have the time (or really the desire) to nitpick their investments. They’re also tired of all the crazy fees that seem to be tacked on.

I feel the say way and I think you probably do too. (After all, that’s why you’re here – to save time and money, right? )

Free Financial and Investment Tools with Personal Capital

If you are looking at optimizing your accounts, Personal Capital has some wonderful tools to get you ready. One of our goals is to retire early. I’ve been using them because I was looking for a more robust tracking tool to gauge how our investments were doing. We have several accounts between the two of us and I wanted one place I could log into to get a snapshot of our progress.

We also wanted to see if there were some ways we can optimize our portfolio so we could minimize fees and instead use that money to grow our net worth.

I first heard about Personal Capital from Financial Samurai and I’ve been pleased with their service so far.

Portfolio Check-Up

Even if you think things are going well, it’s also handy to do a check up on your portfolio to make sure things are truly squared away. Besides making sure that your asset allocation meets your plan, you should also see if there is a way you can lower your fees. Personal Capital offers a free portfolio review so you can eliminate excess fees from your 401(k) like us.

Personal Capital will review your portfolio to make sure your investments are reaching their potential. You have the flexibility of tracking your portfolio by account or asset class.

401(k) Fee Analyzer and Mutual Fund Fee Calculator

Nobody wants to their hard earned money working for someone else when it could be put to better use (like growing for your retirement). Besides typically having fewer investment options than an IRA, 401(k)s can sometimes have higher expenses with their funds. That’s a double whammy.

The money comes from you, so you’re the one losing out. If you have a 5.75% front load instead of investing $500 a month, you’re investing $471.25. That might not sound like a lot, but it adds up over time. There is also no proven advantage into getting a loaded fund versus a no load fund with the same performance level. How can you avoid such a waste?

Personal Capital will also benchmark your 401(k) for free so you have a clear idea of whether or not, you need to update your holdings. It’ll be a change that will speed up your portfolio’s growth as the years pass.

Stay in the Loop with Personal Capital

You can set it up so Personal Capital can give you helpful and informative weekly updates on your finances, allowing you to know right away if you need to make any adjustments.

We’ve been using them for about a year now and I enjoy how easy it is to get a snapshot of our finances with them. With the free tools that they offer, it has been a great solution for us. Since most of our financial system is automated, Personal Capital is a tool that keeps us in the loop without having to log on everyday. If you’re in a similar boat, I recommend checking them out and signing up today.

For those who have already tried out their service, please share your feedback in comments.

An Investor’s Take on Gold’s Price Drop

gold coins

gold coinsThe recent economic crisis has shown that even a relatively stable investment such as gold is not excused to market changes. For several years now, investors and critics alike have debated over gold’s reliability and strength, especially during financial crises.

Gold is said to protect an investor’s purchasing power. According to an infographic published by Mining.com, gold helps mitigate financial risks by reducing the portfolio’s volatility. But despite gold’s credibility, like other stocks and commodities, gold too isn’t immune to price changes.

“Gold’s status as a hedge against inflation and a storer of wealth has taken something of a knock this year with inflation staying low in developed markets despite the constant money printing,” the website said. However, it adds that gold prices are still to benefit from monetary expansion.

As prices continue to dip, pessimistic investors are looking to drop gold from their portfolio. Meanwhile, the optimists took the low price of gold as a chance to buy more, and eventually earn more when gold regains its luster. But are we going to find gold back in shape in a few months?

According to a report by the Telegraph, the demand to buy gold is on the rise, especially when it comes to online gold trading. Bullion Vault , the world’s largest online market for buying physical bullion, said its index – which measures the balance of customers adding to their gold holdings over those who reduce them – rose to 54.3 last month from 53.0 in September,” the website claimed.

Historically, gold is seen as an alternative store of purchasing power. “When the world is being flooded with cheap money, Economics 101 tells you the prices of all tangible assets — including gold and silver — will eventually increase. And that’s why this could be a great buying opportunity,” MSN Money reported.

But as to when the prices will get back, analysts can only speculate. Investors reported earlier this year that gold might see an increase by the last few months. Although this may not be the present case, investors can only cling to the fact that gold has been an investor’s friend for centuries now.
Photo Credit:  motoyen

Keeping It Simple for Your Retirement Portfolio with Target Funds

One of the biggest hurdles for people looking to invest in their retirement is time. They worry that they have to pore over every detail and have to constantly track every rise and fall of the stock market. That can be discouraging, but if you had n option that allowed you to have a diversified portfolio with minimal effort? What if you want an investment that will take care of asset allocation automatically? Target date funds can give you all of that.

What is A Target Date Fund?

A target date mutual fund is a mutual fund consisting of a mix of assets, such as stocks and bond, that shifts and becomes more conservative as the retirement date draws closer. Most target date funds you see on sites like Vanguard are listed by estimated date of retirement in 5 year increments. So you’ll see Vanguard have a Target Retirement 2055 fun available for those around the age of 21 to 25. Re-balancing is automatic with these target fund  and they are handled by the fund’s manager.flexible spending accounts save money

One concern is the one size fits all approach. Everyone in the fund has the same stocks, bonds, etc. The assumption is that all people planning to retire in 2030 (or whatever date) want the same allocations.  The way around this problem is to select the fund with the desired balance instead of by date.

Based on Vanguard’s guide, here are some target funds  dates to examine based on age:

  • Age 18-20 : 2060
  • Age 21-25: 2055
  • Age 28-32: 2050
  • Age 33-37: 2045
  • Age 38-42: 2040
  • Age 43-47: 2035
  • Age 48-52: 2030
  • Age 53-57: 2025
  • Age 58-62: 2020

As you get closer to retirement, the fund should adjust and become more conservative. Even though investing your money into a target date fund can make things easier, that doesn’t mean you just forget about it. Setting up semi-annual check ups on your calendar can help you make sure the fund is meeting expectations. If not, you just have to tweak and adjust your portfolio accordingly.

Automating Retirement Contributions

The easiest way to stay on target for your investment goals is to go ahead and automate your IRA contributions. It has certainly helped me avoid skipping deposits.  Even if  you are limited on what you can contribute now, you should plan ahead for when you can increase your deposits.

In time, you’ll be able to start maxing out your IRA each year. Currently annual contribution limits to IRAs are $5,500. The advantage of starting early is the benefit of compound interest. The two most important factors for obtaining the benefit of compound interest are the interest rate and the length of time your money earns interest. The latter is the most important; your investment will grow slowly at first, but over the long term you will see dramatic improvements.

Thoughts on Investing

How about you? How are your investments doing?

Changing Tax Rates And How They Will Affect 2013 Investing

investing and taxes

The fiscal-cliff compromise brokered by Congress and the President has changed how investors, particularly those in the medical field, are taxed in various arenas. Capital gains, defined as the increase in value of investment or real estate assets at the time of sale, are now taxed at higher rates for virtually every investor. Several provisions of the Affordable Care Act (aka “Obamacare”) also kicked in on January 1, which has left many physicians and medical instrument makers adjusting their 1040 forms. The following breaks down how the new laws affect your small business or medical practice. investing and taxes

Medical Excise Tax

The Medical Device Excise Tax (MDET) took effect on December 31, 2012, and caught several Americans and one large sporting good retailer completely off guard. A 2.3 percent “medical excise” charge showed up on a Cabela’s customer receipt and made its rounds online. The company blamed the tax on a “glitch” and promptly refunded everyone who was effected. But the tax is no glitch for doctors and device manufacturers. According to the IRS website, the 2.3 percent tax applies to “the sale of certain medical devices by the manufacturer or importer of the device.” Wheelchairs, artificial knees and hips; dental devices, pacemakers, imaging technology, and even surgical gloves are just some of the many items subject to the tax. Eyeglasses, hearing aids, contact lenses, and “any other medical device that the public generally buys at retail for individual use” are exempt from the tax. The 10 largest medical device manufacturers, including Johnson and Johnson and Medtronic, will account for 86 percent of the effected sales, according to Medcitynews.com. Medical providers will have to decide whether to pass these costs to their patients, or find some other way to make up for the shortfall.

Short Term Gains

Any profitable investment sold less than one year after purchase is a short-term capital gain. This is also referred to as unearned income. The tax rate for short-term capital gains remains the same for your current tax bracket. For example, the 2013 tax rate for an individual making $8,925 to $36,250 is 15 percent. Therefore, profits on investments sold less than a year after the initial purchase will be taxed at 15 percent. Smaller businesses and medical practices (those earning less than $400,000 per year) can offset any potential capital gain taxes by charging day-to-day expenses on a small business credit card and using their statements to keep track of expenses incurred for that year.

Long Term Gains

A long-term capital gain is profit made from an investment held for more than one year. The fiscal-cliff compromise ended a zero percent long-term capital gains rate for the $0 to $36,250 income brackets, which was in effect from 2008 to 2012. There was previously a 15 percent long-term rate for all earners above the aforementioned threshold. All long-term investments, including property, are now taxed at a 20 percent rate. The Affordable Care Act also tacks on an additional 3.8 percent Medicare surtax on capital gains for those making over $400,000 as individuals. The 23.8 percent rate, including the surtax, is the highest rate on capital gains since the Clinton Administration. It is also somewhat of a double-dip into the pockets of many medical professionals. The 2.3 percent MDET, the 8.8 percent long-term capital gains increase on $400,000 per year or more earners, and the 35 percent to 39.6 percent increase on income taxes, all effect a vast majority of the aforementioned individuals.

The Precious Metal Exception

The Internal Revenue Service requires everyone to report all capital gains, including winnings from lotteries and other forms of gambling. The one type of investment exempted from any and all capital gains by federal law is precious metals. The caveat here is that the actual gold, silver or platinum bullion is exempt, while precious metal ETFs and funds are not. For instance, if you owned 20 ounces of gold in the form of ETF shares in 2003, you will turn a 500-plus percent profit on the investment today. The 20-23.8 percent tax will apply to the shares, but not on physical gold bars and coins that you purchased at the same time. It behooves those who have been most effected by tax increases (medical practitioners) to diversify and avoid as many taxes as possible.