Developed in conjunction with Ext-Joom.com

Amat Victoria Curam

Financial Information for Senior Military Officers

Liquidity Risk...Do You Consider It When Making Investment Decisions?

Liquidity Risk...Do You Consider It When Making Investment Decisions?

I read an email the other day from an acquaintance.  He had some stock in a closely held corporation and was trying to sell it to "pursue other opportunities".  A month or so later, I received another email from him about the stock.  It was now "on sale" with greater discounts for buying larger lots.  Made me think...this individual didn't think about liquidity risk when he purchased the stock.

Just what is liquidity risk?  My CFP® textbook defines liquidity risk as follows:

The degree of uncertainty associated with the time it takes to sell an investment with a minimum of capital loss from the current market price.

In other words, "Will you be able to sell your investment quickly and at full price?"

...
Continue reading
1089 Hits
0 Comments

Employer Stock in Your 401(k)? Check This Out

Employer Stock in Your 401(k)?  Check This Out

Do you have employer stock in your 401(k) (or other qualified plan)?  Did you know that you are eligible for special tax treatment concerning that stock?  You are.  Employer stock is eligible for what is called Net Unrealized Appreciation (NUA).  NUA is a little complicated, but understanding it can significantly affect your tax bill...normally in a good direction.

Here is how it works...

  • When you leave the company you have the option of taking a distribution of the employer's stock without selling it.  In other words, you get the stock certificates (well, you would if anyone received stock certificates anymore).
  • You will owe taxes (taxed as ordinary income) on the basis of the distributed stock, not the fair market value.  As a reminder, the basis is what you paid for the stock.  Also, remember, if you withdraw the money before 59 1/2 you will owe penalties as well (under most circumstances)
  • When you sell the stock, the difference between the selling price and the basis will be taxed as a capital gain and the capital gain will be considered long term.
  • As of this writing, long-term capital gains are taxed at 0%, 15% or 20% (plus ObamaCare Surtaxes if applicable).  Those tax rates will be lower for the taxpayer than if the gain were taxed as ordinary income.

Now, like always, there is at least one way you can mess up and here is the big one.

...
Tags:
Continue reading
1194 Hits
0 Comments

Understanding Your Investment Options: REITs

Understanding Your Investment Options: REITs

One of the asset classes you might want to consider in your overall asset allocation is Real Estate.  One of the ways you can access Real Estate in your portfolio is through Real Estate Investment Trusts also called REITs (pronounced like beets).

What are REITs?

REITs, like many other investment options are a basket.  In the case of REITs the basket holds real estate and normally it holds commercial real estate.  REITs can also hold mortgages.  The REITs then collect income in the form of rent and capital gains if the property appreciates or in the case of REITs that hold mortgages the income will include interest payments.

...
Continue reading
1419 Hits
0 Comments

Some Money Talk for Your Graduate

b2ap3_thumbnail_college-student_20140702-015050_1.jpgI passed by my first Graduation party this weekend. And so it begins…. For the next few weeks high school and college seniors will celebrate moving to the next stage of their life. Here are a couple of ideas/thoughts for your grad (You might find a nugget too).

Start Now! The number one determinate of how much your grad will have to spend in retirement is when the he/she starts investing/saving. There are a lot of different examples of how waiting to start investing for retirement limits funds available. Here is another one. Let’s assume your grad can invest $2,000 per year and will earn 7% throughout his/her earning years (until age 65). What are the results if the grad delays?

Continue reading
1160 Hits
0 Comments

Increase Investment Returns by 3%…Interested?

b2ap3_thumbnail_market.jpg

If you could potentially increase the return on your investments, would you be interested? A White Paper recently published by Vanguard postulates that a Financial Advisor can add up to 3% to your portfolio’s return. This is significant as Vanguard has always been a champion of the Do It Yourself investor. But, Vanguard remains true to its roots and doesn’t imply that Advisors can pick investments with any great ability. Vanguard predicts the increase based on things you may not have thought of. Here are the amounts and areas where Advisors can increase your return

Continue reading
998 Hits
0 Comments

Disclaimer

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by C.L. Sheldon & Company, LLC ), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from C.L. Sheldon & Company, LLC . To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. C.L. Sheldon & Company, LLC is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the C.L. Sheldon & Company, LLC ’s current written disclosure statement discussing our advisory services and fees is available for review upon request. DISCLAIMER OF TAX ADVICE: Any discussion contained herein cannot be considered to be tax advice. Actual tax advice would require a detailed and careful analysis of the facts and applicable law, which we expect would be time consuming and costly. We have not made and have not been asked to make that type of analysis in connection with any advice given in this blog post. As a result, we are required to advise you that any Federal tax advice rendered in this blog is not intended or written to be used and cannot be used for the purpose of avoiding penalties that may be imposed by the IRS. In the event you would like us to perform the type of analysis that is necessary for us to provide an opinion, that does not require the above disclaimer, as always, please feel free to contact us.

Read Our Blog

 

Understanding TSP RMDs
      You can't leave your money in TSP forever.  Find out what happens if you don't take it out...

 

Read More

Access Your Accounts

 

Sign-up for Newsletter