I keep hearing about “alternative” investments. How are they different from stocks, bonds or mutual funds?Alternative investments typically refer to investment options that up until recently had not been readily available to the everyday retail investor. They normally include real estate, oil and gas, precious metals, venture capital and commodities. Alternatives often required large initial capital investments and were designed for institutions, endowments and hedge funds. That said, the market tends to adapt and now alternative investment options have become more main stream and more readily available to everyday investors. As an independent advisory firm we are uniquely positioned to work with many investment companies specializing in the alternative space.
Brokerage & Banking
What other options do I have for excess cash in my bank account that is not earning much interest?
Utilizing a Cash Management/Brokerage account (CMA) might be a good solution for managing some of this extra cash. You can maintain liquidity by utilizing check writing and debit card features. You have a full range of investments available including CDs and money markets to mutual funds or individual stocks and bonds. We can customize the holdings based upon many factors such as your objectives, suitability, time horizon and risk concerns.
How can we save for our child’s or grandchild’s college expenses?
There is a tax-advantaged investment program designed specifically for helping with higher education expenses, known as a 529 plan. A 529 plan allows for generous gift or investment opportunities that may grow tax-free if used for qualified higher education expenses. You maintain ownership of the account and designate your child/grandchild as beneficiary.
What types of retirement plans are available to offer to my employees?
There are many different retirement plans that an employer can offer to its employees. Many factors such as the size of the company, number of employees, whether or not there will be matching contributions, annual limitations, pre-tax or after-tax (Roth) options, as well as annual filing requirements need to be discussed and thought out. The more common plans are 401k, 403b and 457 (for non-profits) and Defined Benefit plans. For smaller or one person organizations there are Simple, SEP, Keogh, and Profit sharing plans. After a thorough review of your needs and objectives we can assist in selecting, setting up and managing a plan that best suits you and your employees. Alternately, if you have had the same retirement plan for several years we highly suggest you compare different plan options to see if your plan is still competitive or if a change would be beneficial.
What is Estate Planning?
Estate planning means different things for different families, but basically the concerns are how your assets will be distributed and taxed – how your beneficiaries will take receipt and what is their potential tax liability on inherited assets. Planning strategies can be as simple as making sure your beneficiary designations are up to date, to the complexities of creating a life insurance trust. Engaging in conversation early and periodically with investment and legal professionals regarding this aspect of your long term plan is essential as the strategies are numerous and the potential ramifications can be dramatic.
How do I know if I need insurance and what kind of insurance is appropriate?
Insurance products can be complex and difficult to understand. Creating an insurance needs analysis should be the first step. Having an understanding of the two basic types of life insurance, permanent and term, is important prior to implementing a strategy customized to your interests, needs and resources. We will work with you to determine the right solution.
IRA & Roth IRA
What are the different types of IRAs and how are they used?
An IRA is an account that allows for annual contributions that may be deductible on your tax return. Funds inside an IRA grow tax-deferred and can be invested in many different types of investments (stocks, bonds, funds, ETFs and more). When funds are distributed after age 59 ½ they are treated as ordinary income and subject to federal and state taxes. An annual required minimum distribution kicks in at age 70 ½. A ROTH IRA is similar to an IRA except in its tax treatment. The principal (i.e. contributions) in a ROTH has already been taxed and in certain circumstances may be available without tax or penalty prior to age 59 ½. Any growth/appreciation derived from a ROTH comes out tax free at retirement. You may “convert”, in part or total, funds from a traditional IRA to a ROTH, pay the current tax liability and create a tax free account going forward. There is no required minimum distribution from a ROTH at age 70 ½ (unless inherited).
If I have changed jobs what should I do with my 401k/retirement account from my previous employer(s)?
A rollover IRA is the often the best answer. A rollover IRA is an account funded from retirement assets moved from a previous employer and can be completed when you leave or retire. There is no maximum amount that can be rolled over and the assets maintain their tax-deferred status. Assets within a rollover IRA are accessible at age 59 ½ and a required minimum distribution (RMD) applies starting at age 70 ½. Many people simply cash out their accounts when they leave an employer, paying the tax and an early distribution penalty. In doing so this may dramatically reduce the long-term goal of achieving some financial security. Multiple retirement accounts can be consolidated into one rollover IRA allowing for simplicity and ease of management while gaining greater control and increased flexibility on what often is a large component of your long-term strategy.