Asset Planning, Inc Blog

The flowchart below covers important decision-making factors a client must consider when paying off their mortgage, such as:

• Thoroughly weighing the pros and cons involved in this big decision, and how they specifically relate to their financial situation.

• Recognizing what degree of flexibility they may or may not have after paying off the mortgage.

• Considering any tax implications that may result from paying off the mortgage.

• Identifying sound reasons for paying off the mortgage, and determining the best course of action if applicable.

Should-I-Pay-Off-My-Mortgage-2022.pdf

This year, large capital gains on mutual funds are expected. Usually when the market performs very well, higher capital gain distributions can be predicted. Capital gains are created through buy and sell activity during the year within the mutual fund's holdings. That activity creates capital gains which must be paid out to the mutual fund holders. Capital gain distributions are generally paid once a calendar year, usually in December.

For example, if you own mutual fund XYZ, and the fund holds Amazon stock at a gain and the fund manager needs to trim some of the Amazon holding, this will produce a capital gain. Your portion of the gain will be distributed to you as cash or shares reinvested. Often, fund managers start selling and buying in the portfolio to rebalance the fund.

Overall, these gains are good as they are either paid in cash or reinvested and you get more shares. However, if it is held in a taxable account, there will be taxes owed on the gain unless there are losses that can be netted. If the funds are in a qualified, tax deferred account such as an IRA or 401(k), your capital gains distributions will have no taxable impact.

You will notice many daily fluctuations. When the gain is paid, the fund will drop in value by the same percentage as the gain paid. The next day, the value of the fund will rebound.

Asset Planning advisors will be monitoring the gains and using tax loss harvesting to offset the tax liability as much as possible, if any.

If the shares were held over one year: you owe taxes at the lower, more favorable capital gains rate (0%, 15%, or 20% depending on your income tax bracket).

If the shares were held for less than one year: you owe the short-term capital gains rate which is the same as your marginal tax rate (10%, 12%, 22%, 24%, 32%, 35%, or 37% depending on your income tax bracket).

Please refer to the table for the average capital gain expected for the different Morningstar fund categories.

Erin Nelsen, a CFP with Asset Planning contributed to an article written on the NerdWallet website about the increase in people doing home improvements during the lockdown period. The article discusses the benefits and limitations for different forms of payment for home renovations/improvements. 

To read the NerdWallet article, "How to Finance for a Home Remodel without Tapping Your Equity", please click here. 

Our office will be closed on Monday, September 8th in observance of Labor Day.

We will resume our normal hours on Tuesday, September 9th.

We hope you enjoy your Labor Day!

In observance of 4th of July, our office will be closed Friday, July 3rd.

We will resume normal business hours on Monday, July 6th.

Wishing all of our clients a happy and safe 4th of July weekend!

The CARES Act suspended interest and payments for most student loans until September 30, 2020. This means that you will not be charged any interest or have to make your payments during that time. If you are fortunate enough to be able to continue to be able to make your student loan payments, you may want to do so. Any payments that you make now will be applied directly to the principal. If you had your student loan payments set up on autopay, these have all been suspended and no payments will be processed until September 30, 2020. You will need to pay your student loan payments directly each month.

The recently passed HEROES Act extends the suspension of interest and payments until September 30, 2021. It also expands the break to all federal student loans. In addition, the HEROES Act will cancel out $10,000 of student loan debt for federal and private loans. Though the HEROES Act has passed it still needs to go through the senate for negotiations. Expect the final legislation sometime in the fall.

We don’t want to add to the mass hysteria that is surrounding the COVID-19 virus and we’re not going to tell you to run to your local Costco to stock pile large amounts of toilet paper and water, but we are concerned for our clients and feel it was important to share some tips that were passed along to us by a pathologist. While not fool proof, taking these precautions may help you avoid not only the Coronavirus but the flu as well!

1) NO HANDSHAKING! Use a fist bump, slight bow, elbow bump, etc.

2) Use ONLY your knuckle to touch light switches. elevator buttons, etc.. Lift the gasoline dispenser with a paper towel or use a disposable glove.

3) Open doors with your closed fist or hip - do not grasp the handle with your hand, unless there is no other way to open the door. Especially important on bathroom and post office/commercial doors.

4) Use disinfectant wipes at the stores when they are available, including wiping the handle and child seat in grocery carts.

5) Wash your hands with soap for 10-20 seconds and/or use a greater than 60% alcohol-based hand sanitizer whenever you return home from ANY activity that involves locations where other people have been.

6) Keep a bottle of sanitizer available at each of your home's entrances. AND in your car for use after getting gas or touching other contaminated objects when you can't immediately wash your hands.

7) If possible, cough or sneeze into a disposable tissue and discard. Use your elbow only if you have to. The clothing on your elbow will contain infectious virus that can be passed on for up to a week or more!
What I have stocked in preparation for the pandemic spread to the US:

1) Latex or nitrile latex disposable gloves for use when going shopping, using the gasoline pump, and all other outside activity when you come in contact with contaminated areas.

Note: This virus is spread in large droplets by coughing and sneezing. This means that the air will not infect you! BUT all the surfaces where these droplets land are infectious for about a week on average - everything that is associated with infected people will be contaminated and potentially infectious. The virus is on surfaces and you will not be infected unless your unprotected face is directly coughed or sneezed upon. This virus only has cell receptors for lung cells (it only infects your lungs). The only way for the virus to infect you is through your nose or mouth via your hands or an infected cough or sneeze onto or into your nose or mouth.

2) Stock up now with disposable surgical masks and use them to prevent you from touching your nose and/or mouth (We touch our nose/mouth 90X/day without knowing it!). This is the only way this virus can infect you - it is lung-specific. The mask will not prevent the virus in a direct sneeze from getting into your nose or mouth - it is only to keep you from touching your nose or mouth.

3) Stock up now with hand sanitizers and latex/nitrile gloves (get the appropriate sizes for your family). The hand sanitizers must be alcohol-based and greater than 60% alcohol to be effective.

4) Stock up now with zinc lozenges. These lozenges have been proven to be effective in blocking coronavirus (and most other viruses) from multiplying in your throat and nasopharynx. Use as directed several times each day when you begin to feel ANY "cold-like" symptoms beginning. It is best to lie down and let the lozenge dissolve in the back of your throat and nasopharynx. Cold-Eeze lozenges is one brand available, but there are other brands available.

There will be NO drugs or vaccines available this year to protect us or limit the infection within us. Only symptomatic support is available.

With the craziness of the holidays we have decided to extend our pet donation drive. The last day to drop off items is Friday, February 14th.

Here is the information of what type of items we can accept:

The holiday season brings out a lot of good in most people but there are many that look to take advantage at this time of year as well. Here is an article from the FTC with things to remember when purchasing gift cards for family and friends.

Tips for holiday gift card shopping