Asset Planning, Inc Blog

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Call 714-827-5794  to make a free consulation with Erin 

Erin Nelsen, CFP® is a fee-only fiducary Financial Advisor that manages portfolios & conducts hourly financial planning for Asset Planning.  Erin holds the CERTIFIED FINANCIAL PLANNER ™ & Registered Investment Advisor Representative professional designations.  Erin has expertise in...

Call 714-827-5794  to make a free consulation with Erin 

Erin Nelsen, CFP® is a fee-only fiducary Financial Advisor that manages portfolios & conducts hourly financial planning for Asset Planning.  Erin holds the CERTIFIED FINANCIAL PLANNER ™ & Registered Investment Advisor Representative professional designations.  Erin has expertise in various financial planning areas such as investments, taxes, estate divisions, public and private pension options, Social Security, real estate, insurance analysis, recent widow planning, and many other complex financial issues that arise.  Erin has been with Asset Planning since April 2007. Erin is thankful to have found her perfect forever firm. Asset Planning holds a high standard of care for both its clients and staff, and everyone is truly valued as family. 

An Orange County native, Erin earned her Bachelor of Arts in Business Administration with a concentration in Finance from Cal State Fullerton. Erin completed the Personal Financial Program at CSUF. Erin is an active member of the Orange County Financial Planning Association and has been a volunteer teacher of personal finance to elementary kids through the community outreach program Junior Achievement. 

Erin Nelsen is a Fee-Only Financial Advisor and a member of NAPFA, the largest Fee-Only Network Financial Planners. Fee-Only means Erin is only compensated directly by her clients & does not sell products nor accept commissions for the investments she recommends. Erin is proud to have built her career solely on the independent Fee-Only side of the Wealth Management industry. Erin is among an elite group of Financial Advisors held to the Fiduciary Standard. As a Fiduciary, she is required to put a client's interest above her own. Ethical, appropriate, & skilled professional care is our solid promise to all clients. 

When Erin is not at the job she loves, she is busy tending to her garden, caring for her family, attending concerts, traveling, floating in her pool, or scouting out new restaurants to try with her husband/college sweetheart of 18 years. Erin's  household is blessed with a son, daughter (both in college), two  nephews (orphaned), a Sheltie dog, & two royal cats that rule her household. 

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ETFs VS. Mutual Funds: What Are They & Why Use Both?

A blend of using both ETFs and mutual funds is beneficial for many reasons as each provides its own special advantages.
Mutual Funds are managed by investors who use the invested cash to purchase the holdings in the fund. Often there are fees and expenses that must be paid and the capital gain distributions are passed down to the investors. This is called an "in cash transaction". With this, all taxable capital gains are spread amongst all investors in the fund. When you purchase a mutual fund you are transacting directly with the fund and those trade just once per day after market close with all investors getting the same share price. The uniform treatment of mutual funds is the reason you never see ETFs in company 401k plans as regulations deemed employees must get the same share price & costs.
When ETFs (Exchange Traded Funds) are purchased, the money goes to the market maker, not a fund manager. The market maker then buys the securities the ETF manager allocates for that ETF. This is called an "in kind transaction". This type transaction is advantageous tax-wise as the ETF manager can exchange shares to the market marker without creating capital gains. ETFs are traded like regular stocks during the market hours. Their prices change during the day based on the supply and demand. Buying an ETF intraday could be better if prices are lower than at the close of the market. As well, when purchasing ETFs there is no minimum investment amount, whereas with a mutual fund there may be a minimum monetary investment required.
As your advisors we determine in what scenario it is best to use a mutual fund or ETFs in your accounts. For example, we might use an ETF in a taxable account to mitigate capital gains and a mutual fund in an IRA. Conversely, we might choose to use a mutual fund when superior investment strategies or fund managers are not offered as an ETF. While both have tradeoffs, using both ETFs and mutual funds can be a useful long term strategy.
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Proposition 19 Passed in California

If you or a family member have an inherited property in California or expect one in the future, you would benefit from the information found in California’s newly passed Proposition 19, “The Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act”.

Previous laws such as Proposition 13 allowed homeowners who were disabled or over the age of 55 to transfer their property tax basis one time to a new home under the condition of their replacement residence being valued equal or less than the original home. Furthermore, children could inherit their parents and grandparents properties and keep the same tax basis. However, with Proposition 19 the child must use the home as a primary residence to keep the same property tax basis. The added benefit of the new law is seniors, disabled, and those affected by wildfire and other natural disasters can transfer property tax basis to a home even if it is more expensive than their current residence. As well, property tax transfer may be done up to three times. It is important to note that if you buy a more expensive property, the transfer is prorated, meaning there will be a calculation to adjust the basis .

These rules will not affect transfers of property occurring before February 15, 2021. If you or someone you know is planning on passing a property, it is recommended you consult your tax professional soon. Note that when you pass the property, you also pass the unrealized gain in the property since it is considered a gift as opposed to inherited properties where the realized gain is removed since the cost basis is updated at death. The lifetime gift limit is above $11 million, so it may not be as large of an issue for most.

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Mortgage Rates Hit Historic Lows

Mortgage rates hit historic lows today. I am in the process of refinancing my own home mortgage and thought I'd share how I go about shopping for rates. http://www.mortgagenewsdaily.com/ is the website I check to get an idea of what the lowest zero cost rates are in the marketplace. Mortgage News Daily publishes a daily mortgage rate survey collected from various loan orginators.  Today's survey shows 3.04% for 30 year, 2.67% for 15 year, 2.75% for FHA 30 year, and 4.18% for Jumbo 30 year. Then I look at various websites online to see who is advertising rates at or below what Mortgage News Daily survey shows. I find Bank Rate, Zillow, Nerd Wallet, & Mortgage News Daily are the best website to comparision shop. I'll submit about 3 requests online to get quotes. I usually pick the loan orginator that is the cheapest and most responsive. Please feel free to reach out to me if you want the contact information of the loan agent I'm using.  

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CARES Act Stimulus Summary

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020. This is a $2 trillion emergency fiscal stimulus package to help reduce the economic damage caused by the virus and “stay at home” policies. The following is a summary of the main provisions for individuals.

Recovery Rebates:

  • The CARES Act provides for recovery rebate checks of up to $1,200 for individuals with adjusted gross income (“AGI”) up to $75,000 ($2,400 for joint filers with AGI up to $150,000) plus an additional $500 for each child under the age of 17 for US taxpayers through an advance refundable tax credit against 2020 income taxes. There is a phase out of the rebate, which causes a $50 reduction in the rebate for every $1,000 of AGI above these thresholds. For example, individuals with no children having an AGI of more than $99,000 and married couples with no children filing jointly having an AGI of more than $198,000 would be phased out completely and receive no recovery rebate check. The advanced payment of the recovery rebates will be based on the AGI reported on tax returns filed for 2019, and if no such tax return has been filed for 2019, the AGI reported on the 2018 filed tax returns will be used.
    • The rebate check will be sent directly to the bank account on file with the IRS for your 2019 or 2018 tax return. If the account is closed or there is no account on-file then a check will be mailed.
    • You can receive the rebate if you are retired and receive social security or a pension as long as your AGI is within the limits listed above.

Retirement Accounts:

  • Required Minimum Distributions are waived in 2020 for all retirement type accounts (401K, 403B, 457, IRA and Beneficiary IRAs). If you already took part or all of the RMD you might have the option of returning them except for beneficiary IRA distributions.
    • We are waiting to hear more details on the charitable contributions that are paid with RMD funds and we will be in contact with those clients that make charitable contributions from their RMDs to let them know their options for 2020.
  • Individuals under age 59 ½, may take coronavirus-related distributions from qualified retirement plans (IRA, 401K) of up to $100,000 without the distributions being subject to the 10% early distribution tax. The distributions are still subject to federal income tax, but the tax owed can be spread over three years.
    • In order to get these favorable terms, you will have to prove that you were adversely affected by the coronavirus.

Unemployment:

  • Regular unemployment payments, which are about 55% of your normal pay are increased by $600 per week for a maximum of 4 months. The benefit period is also extended by 13 weeks. It is normally 26 weeks maximum in California, so it can now go to 39 weeks.

There are also several small business and self-employed benefits provided by the CARES Act. We recommend that you discuss with your accountant or business manager the different options and if you should apply and take advantage of them.

Hope you are staying safe, sane, and healthy!

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Market Update

The coronavirus has returned volatility to the markets.  Last week the major stock indices were either up or down 2-3% daily. Price declines in oil over the weekend rattled the markets on Monday with a historic 2,000 point drop on the Dow but we recovered more than half those losses on Tuesday. We certainly empathize with our clients’ natural worry over this . As your advisors, our job is to remain objective and not panic in regards to making portfolio decisions.

At this time the technical data is pointing to this being a correction as the strength of current economic data shows no sign of a recessionary bear market. There will be some economic fallout from the virus, but we must keep in mind that our economy is robust and diverse.  Some sectors were hit very hard by the virus such as travel while other areas are benefiting due to the stock piling of consumer goods.  Over the coming days and weeks we will be monitoring the economic data very closely and we will make changes to the portfolio if risks increase or buying opportunities emerge.

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We're Growing!

Joey Akanksha

Asset Planning continues to grow and now our managed assets are just under 310 million dollars.

We deeply appreciate our clients referring new friends and family members to us. To keep up with our growth, we added two new team members.


Meet Joey Gonzales, our operations manager. Joey has over 10 years’ experience in the financial services industry working for both boutique and large RIA firms. As an Operations Manager, he enjoys building processes that help drive efficiency making the most of technology for the firm. He will also be working as a wealth manager research analyst. When Joey is not streamlining workflows, he enjoys traveling to Japan and perfecting his 10k run. Joey earned his bachelor degree from Azusa Pacific University and is currently pursuing his CFP® certification.


Our newest team member is Akanksha Arora and she is in her senior year at California State University, Fullerton as a Financial Planning student. She is focused on the financial planning process and helping clients reach their financial goals. She will be learning planning and observing in client meetings with all of us. Her ultimate goal is to take the CFP® exam next summer. While at CSUF she became president of the Finance Association and the Indian Student Association. In her free time, she loves to dance, cook new vegetarian recipes, and spend time with loved ones and her puppy by the beach.

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Medicare: Traveling Abroad is Not Covered

If you're currently on Medicare and are planning a trip out of the country it is important to know that basic Medicare does not cover and health care services or supplies while you are out of the U.S. There are a few exceptions, like if you have a supplemental plan, Medicare Advantage or another Medicare plan. You can read all about what is and what isn't covered by your plan by clicking here.

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Do You Have a Plan for Your Aging Parents?

It’s a known fact that people are living a lot longer than they used to. Do you have a plan in place for your aging parents? I came across an interesting article in Financial Advisor Magazine about the toll being a care taker for your aging parents can put on you financially and emotionally. If you are facing the prospect of being the caretaker for your parents as they get older, the time is now to start having the important conversations with your family about getting an action plan together for their care.

Click here to read the full article

 

 

 

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Internet Security

Padlock

When browsing the internet and logging into certain sites, it's become almost habit to look for the little green padlock to make sure that you are entering a secure website. well, unfortunately a lot of phishing sites have started using the green padlock as well to try to fool the average user. These phishing sites try to copy a legitimate site, pose as an online retailer or other trusted site. Their goal is for you to trust them and enter your personal information, so it can be sold on the dark web and used for identity theft. It's important to always remember to look for the https:// displayed in front of the web address. The padlock by itself means nothing.

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Changes to TD Ameritrade's advisorclient.com

Dear Clients with TD Ameritrade accounts

Please read the below announcement from TD Ameritrade detailing the changes to advisorclient.com especially the part about the new two-step security log in option.  

Please be aware the updates to the website have caused some log in problems. TD Ameritrade technical support is aware and working on correcting the issues. You may not be able to log in temporarily.

  

 
 

 

New Login Page

The login page has been redesigned. You will continue to access the site using the same web address, www.AdvisorClient.com. Once logged in, the experience will remain unchanged for now.

TD Ameritrade Institutional

 

New Two-Step Security Feature

The new two-step security feature will allow you to replace your security questions with either a text-based alert or phone call in order to validate your identity. To set this up, you will need to access the new AdvisorClient site by clicking the "Try the new AdvisorClient site now" banner on the current site. Once on the new site, all you have to do is click your name on the top right of the website, and select My Profile. Under the Security and Preferences section, you can click Two-Step Verification and then follow the instructions.

Streamlined Client Enrollment Process

If you do not already have a login, you can enroll at www.advisorclient.com/getstarted. All you need is your account number and access to the phone number we have on file at TD Ameritrade Institutional.


Try Out the New AdvisorClient Experience

If you already have a log in for advisorclient.com, you can try out the new AdvisorClient experience by clicking the "Try the new AdvisorClient now" banner once logged in to the current website. New features include:

 

Upcoming cash activity: Provides details on upcoming cash disbursements and deposits

 

Retirement information: Contributions, distributions, and RMD information are easily found on the landing page

 

Position level gain/loss information: Sourced directly from our cost basis engine, Gainskeeper

 

Tax document e-delivery enrollment: Clients have the ability to opt into electronic delivery of tax statements in lieu of receiving a paper mailing

 

Balance history chart: Provides a historical depiction of the clients account value over time

 

The new AdvisorClient site can be set as your default view by clicking "Set as default" from the green banner on top of the screen.

Let us know if you have any questions about the new AdvisorClient website. Just call TD Ameritrade Institutional Technology Services at 800-400-3500 option 3 and they'll be able to help.

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