Your Year-End Portfolio To-Do List

by Gerri Willis

The holidays are a good time to take a long, hard look at your retirement portfolio and make sure you are on track for a successful retirement. “The key question to ask yourself is, ‘In relation to my personal financial goals, is my portfolio helping me achieve them?’ Most investors say they want the most money they can (get). But, ultimately, what matters is if your money helps you get what you want and lets you sleep at night,” says Derrick Kinney, president, Derrick Kinney and Associates. 

  • Step No. 1, says Chris Cordaro, a certified financial planner, is to rebalance your portfolio to make sure that the run in stocks hasn’t inadvertently left you with a higher stock allocation than you planned. He advises rebalancing anytime your balances are 20 percent from your target allocation. He says emerging markets offer the most opportunity as the most undervalued asset class currently.
  •  As you evaluate actively managed mutual funds, watch for managers that “window dress” their portfolios, or change holdings to improve the appearance of the portfolio by selling losers and buying winners. Problem is, says Cordaro, window dressing hurts returns and tax efficiency.
  • Now is also a great time to make sure you’ve contributed the max to your 401(K). Limits for 2014 are $17,500 and $18,000 for 2015. If you are 50 or over, you can add catch up contributions of $5,500. If you are aged 70 and ½ or older, you are required to take minimum distributions from your IRA. Financial advisors say one of the most common mistakes retirees make is forgetting to take distributions or taking too little. If you just hit this milestone, you can delay taking the payment until April 1 of the following year. The end of the year is also a good time to review the beneficiary designations of your retirement plans and make sure everything is as you want it.

 Taking some time and reviewing your retirement accounts isn’t just good planning, it’s also peace of mind. 

Getting The Most From Your Charitable Giving

by Gerri Willis

If you’re like me, most of your charitable contributions are made online moments before the ball drops on New Year’s Eve. And, to be sure, giving before year-end pays benefits come April 15 because donations to qualified organizations are deductible from your taxable income.

Having said that, making contributions that qualify may be more difficult than it appears at first. For example, you can’t deduct contributions to individuals or non-qualified organizations, like country clubs or chambers of commerce. Likewise, appraisal fees are not deductible.

However, there are plenty of donations you can deduct to reduce your tax bill next year, says Clare Levison, a CPA and the author of, “Frugal Isn’t Cheap: Spend Less, Save More and Live Better.” Even plain old cash can be tricky unless you keep a copy of your bank record or get a receipt from the charity. You’re best off contributing money by cash, check, electronic funds transfer, debit card, credit card or even payroll deduction.

You can also give household goods like clothing. Just be sure the clothes are in decent condition. Cars, boats and airplanes can be deducted for the smaller of the gross proceeds from their sale by the organization or their fair market value when they are contributed. Follow the letter of the law, though, because the IRS sees auto contributions as a red flag.

Stocks, bonds, jewelry and coin or stamp collections can also be contributed. Typically for tax purposes, you deduct the fair market value of the property. Giving stock or real estate can be tricky. Consult a tax pro to make sure you get it right.

About 70 percent of Americans will contribute this year, and most of them will be doing it this month. Stretch your charitable dollars by giving to philanthropies that have good management. Check out www.charitynavigator.org to find the best run charitable organizations. 

Five Smart Year-End Tax Moves

by Gerri Willis

Right now is the best time to lower your tax bill for your 2014 filing next April. In fact, after today, you only have 17 days to reduce your tax liability.

"Once you pop the champagne bottle, scream happy new year and give your significant other a kiss at midnight, almost all of your tax planning strategies are lost, if you haven't already implemented them," says John Vento, president of Comprehensive Wealth Management and author of "Financial Independence, Getting to Point X."

The best way to plan is to consider ways to reduce your 2014 taxable income. Here are five ideas for doing just that:

1.)    Sell your losers. If you invest in individual stocks outside a retirement plan and have enjoyed widespread gains, analyze your portfolio to identify any losers you have. If you sell those losers you can use the capital losses to offset your capital gains, plus you can take an additional $3,000 in losses against your other income. You can buy back those losers next year if you plan to hold them for the long term. Avoid tripping IRS wash sales rules by buying the same securities 30 days after when you sold them.

2.)    Delay taking your bonus. One easy way to reduce your 2014 income is to get your boss to delay giving you your bonus until 2015. That way your bonus won't show up as 2014 income. If you are self-employed, don't send out invoices until after the first of the year.

3.)    Set aside more for retirement. Most people don't contribute the maximum they are eligible for to their workplace retirement fund. According to the IRS, contribution limits are $17,500 for 2014 and $18,000 for 2015. Catch up limits for workers 50 and older are $5,500 for 2014 and $6,000 for 2015. Check the rules for contributing to your 401(k) to make sure you can modify contributions at any time. Remember, money to your 401(k) or an IRA comes out before you pay taxes (as long as you are within contribution limits). Why not pay yourself before paying Uncle Sam?

4.)    Give to charity. If you are already planning to give money to your favorite charity, now is the time to do it. In addition to cash, you can also give household goods, clothing, even a car. But before you send that old junker off, talk to a tax professional to  make sure you are doing it the right way. Vehicle contributions are often scrutinized by the IRS.

5.)    Pay your tuition bill early. If you've got a child in college, your spring semester bill isn't likely due until January, but it may be worthwhile to pay it now. Early payers can claim the American Tax Credit on their 2014 return. The credit is worth up to $2,500 and up to 40 percent of it is refundable, which means you could get back as much as $1,000 as a tax refund if you don't owe taxes. You can claim tuition, fees and course materials.

6.)    Finally, don't leave any money on the table. Be sure to use any money you've set aside in your flexible spending account at work. Like a 401(K), FSA money goes into the account before taxes, but if you fail to use the money in the same year as it is contributed, you could lose it. Plan ahead and make April 15 the best it can be!

Best Tech Gifts Under $200

by Gerri Willis

Let’s face it; inevitably there is always someone on your Christmas shopping list who is a tech geek. And, whether you are a geek or not, you may be forced to find them the perfect gizmo. For that reason, we turned to our friends at Consumer Reports, who test hundreds of products, including tablets, TVs and cameras. Here are their top 5 picks for the season.

No. 1: If you’re looking for a TV, the Samsung UN28H4000 if great for the college student or child. The 28-inch LCD TV has good high definition picture quality and excellent color. Cost: $200.

No. 2: Bose FreeStyle earbuds. This in-ear model works for IPods, iPads and cellphones delivering good overall sound quality. Cost: $130.

No. 3: Sonos Play: 1: Wireless speakers are everywhere but the Sonos speakers deliver good sound at a reasonable price. There’s no remote. They just play music directly from your phone, tablet or computer. Cost: $200.

No. 4: Samsung Gear Fit: An activity monitor and a watch. You can receive phone calls and text messages but the product also has a built-in heart rate sensor. The folks at Consumer Reports note that the device is only compatible with Samsung smart phones. Cost: $150.

No. 5: Amazon Kindle Fire HDX: Wi-Fi 16 GB. This portable, 7-inch tablet has a super clear screen. The Amazon app market isn’t as big as Apple’s but Amazon Prime members get access to plenty of free movies and music. Cost: $180.

Consumer Reports December issue has more picks in its December issue. Join us tonight on The Willis Report when associate electronics editor Terry Sullivan gives us even more ideas.

The Dirty Little Secrets of Gift Cards

by Gerri Willis

It’s hard to ignore the convenience of gift cards. No muss. No fuss. No messy wrapping paper and tape. Plus you get the ultimate flexibility because the recipient actually makes the hard choices.

But there is a big debate out there about whether gift cards are an overdone trend or the hottest thing since sliced bread. According to a survey conducted by the Consultancy Deloitte LLP, the proportion of people who say they will buy gift cards this holiday season – 43 percent – is down sharply from a peak of 69 percent set back in 2007. Yet, the vast majority of Americans – 72 percent – say they have given gift cards in the past, and according to Mercator Advisory Group, Americans spent $6 billion on gift cards last year.

Retailers, for their part, are adding bells and whistles to the old-fashioned gift card to make them even easier to use. Nearly 60 percent are now offered over the web adding to their appeal.

Keep in mind, though, that gift cards have downsides. All general-purpose gift cards – and by that we mean ones issued by banks and other financial institutions – carry a purchase fee ranging from $3.95 to $6.95, that’s according to a survey by Bankrate. Only 7 percent of store cards carry purchase fees. Losing a gift card or having the store you bought it from go out of business is something to think about as well.

Bottom line, gift cards work for that person on your list that is hard to buy for, but I’d try to find out where they shop and buy the store card rather than pay a fee to a bank for the privilege of buying one. 

How to Get The Most From Online Holiday Shopping

by Gerri Willis

The proportion of holiday shoppers who will buy from their laptop or mobile device is growing. Nearly half or 44 percent of shoppers will stay close to home to shop. And, that brings its own set of issues.

The Internet savvy know that web merchants change prices on high-demand goods nearly constantly, which means the onus is on you to get the best deal. What’s more, after last year’s Target debacle over the holidays, consumers are concerned that retailers – online or otherwise – will be hit by hackers, and customer financial information will go to the bad guys.

Fortunately, there is a good side to online shopping. It’s convenient and fast. And, even if you worry that the item you are buying isn’t just right, you can often chat with a live sales associate to ask questions. What’s more, many merchants will offer some of their best prices, especially for electronic equipment on the web.

To combat the downsides, Kinoli consumer analyst Andrea Woroch suggests comparing prices with apps like PriceGrabber, Google Shopping and The Find. Also, clear your browser’s cookies. By doing that, you can stop retailers who track your purchasing and browsing patterns so they can target you with higher prices.

Get the promotions by following your favorite store brands on social media, where you’ll be offered exclusive coupons and can track prices. You can even Tweet a brand or send a Facebook message to get a coupon extended.

To keep your private information just that, private, be sure to use different passwords for every shopping site you use. Check your credit card website frequently – and I mean daily during the holiday season – to make sure someone isn’t using your card without your knowledge. And, keep the debit card in your wallet. Fraud on your debit card is a far more serious matter than fraud on your credit card.

Bottom line; keep track of your purchases. Remember, when you are roaming around online it can be difficult to remember exactly what you purchased and for how much.

The Best Strategies for Holiday Shopping

by Gerri Willis

Christmas shopping used to be so simple. Wait until the very last possible minute and score the best deals. But a shift in trends is underway. After two years of less-than-stellar results, retailers are priming the pump by offering deals earlier than ever. According to Adobe, the steepest discounts during last year’s holiday season actually came on the Sunday before Thanksgiving. Adding to shopper woes, some retailers ran out of the most popular products by Black Friday.

And, this year, retailers are getting even more aggressive. Forget Black Friday. As we’ve reported, JCPenney, Macy’s, Best Buy, and Sears are among the many stores opening on Thanksgiving Day. Kmart is setting a record by staying open 42 consecutive hours starting at 6 a.m. Thanksgiving. And, according to research from Adobe Systems, the biggest prices cuts online may well come before Black Friday. In other words, get shopping now.

But, of course, the devil is in the details. Part of when you shop depends on what you are shopping for. Shop for cheap electronics on Black Friday rather than Cyber Monday, according to Matthew Ong, a senior retail analyst for NerdWallet. Others say that clothing deals will emerge on Cyber Monday.

To score the best prices, you’ll have to comparison shop. Keep in mind, online retailers change prices continuously on the most popular items. For example, the fitness band Jawbone Up24, was on sale in October for as little as $110.05 at Amazon, but the price also bounced up to $129 on the same website in the same month. Walmart’s website showed similar price moves, and at Sears, the price for the same product climbed as high as $149.

In other words, prices are a completely flexible thing and you simply can’t count on prices staying the same. For that reason, personal finance expert Vera Gibbons suggests using price comparison apps like ShopSavvy or PriceGrabber.

Finally, late shoppers may do well at the very end of the season when retailers attempt to clear inventory though it may be difficult to find the exact item you’re searching for. Flexibility is key for late shoppers. If there is a specific retailer you plan to patronize, follow the stores on social media where you can track sales. Ask about return policies in advance and whether the store matches lower prices from competitors. The trends shaping up now indicate a good year for shoppers, if not store operators.

           

Medicare Open Enrollment: What You Need To Know

by Gerri Willis

Medicare Open Enrollment is on and there are big changes underway recipients need to know. Bottom line: Many seniors will see higher costs and fewer options. For example, according to the Kaiser Family Foundation, there are fewer Medicare Advantage plans for 2015. In fact, 320,000 enrollees are enrolled in plans that are exiting the market.

What’s more, enrollees in six of the 10 most popular plans this year will experience double-digit premium increases if they stay in the same plan for 2015.

The good news is this: The Part D “donut hole,” that is the coverage gap for prescription drug plans continues to shrink. Those who enter the coverage gap in 2015 will get a 55 percent discount on brand-name drugs and a 35 percent federal subsidy for generic drugs.

If you are considering keeping the same plan you have right now, be sure to check whether there are any changes in your plan. You may find a drug you need isn’t covered or not to the level you expect. Don't miss our User's Guide to Choosing the Best Health Insurance 5pmET on FOX Business.

Health Insurance: Workplace Enrollment

by Gerri Willis

It’s that time of year again. Companies are opening enrollment in health insurance plans, and if you haven’t gotten a peak at the 2015 changes, be advised, you may get sticker shock when you do. Deductibles will rise 7 percent this year as companies forecast higher healthcare costs.

Premiums and copays are likely to rise as well. If you work for a small company, watch out because your prices may rise even more than that 7 percent average.

The changes are more of the same. According to Kaiser, worker contributions to health care coverage have nearly doubled since 2003, from $2,412 to $4,565. Deductibles have jumped from $584 a decade ago to $1,217 today.

As you begin to compare plans, don’t assume your plan from last year is the same this time around. Plans are converging and looking more and more like each other. While HMOs, or health maintenance organizations, originated the co-pay, now PPOs or Preferred Provider Organizations are charging them as well.  Given that, you’ll want to think about what services you’ve used in the past and are likely to use again as you shop.

And, remember that premiums aren’t the sum total of everything that you will pay. Check out deductibles, co-pays, and whether you have to pay co-insurance even after paying your deductible.  If you are not a big user of health care, you might want to think about a high-deductible plan which will give you lower premiums. If you choose this route, consider setting aside money in a health savings account to cover your costs.

Don’t miss our User’s Guide to Choosing the Best Health Insurance tonight 5pmET on FOX Business

Ready or Not, Here Comes Round No. 2 of Obamacare

by Gerri Willis

Ready or not, here comes Round No. 2 of Obamacare. And, as much as I’d like to start this blog with an analysis of costs, details such as premiums for Obamacare 2015 policies won’t be made public until open enrollment starts Nov. 15, conveniently after the election. So forget getting your arms around price tags. At least for now.

To be sure, though, some details are already out. First off, there is a new website where you’ll go to enroll for the first time. Given the original healthcare.gov website’s glitch-plagued rollout a year ago, this could be a good thing. But, again, we don’t know because this website is still being tested. (Want to know how the testing is going? Again, forget it. That information isn’t being shared.) To their credit, the website designers have managed to shorten the number of screens in the online application from 76 on the original site to just 16 on the new site.

Unfortunately, if you bought Obamacare coverage last year, you’re stuck with the old website which is famously unreliable. Some of our sources maintain the backend of the website still isn’t complete a year after launch. And, re-enrollers will face a time crunch. They’ll have just one month – until Dec. 15 – to get on the site and update their financial information – a move that is required to have coverage beginning Jan. 1, 2015. You’ll want to have handy a 14-character identifier number to keep any current insurance policy. If you don’t re-enroll, you may be reassigned to your old plan, but you’ll also get this year’s subsidy amount, which may be smaller than they would be entitled to for 2015.

On top of all of this, it’s possible that several hundred thousand people across the country may face cancelled health insurance policies because those policies are not in compliance with Obamacare. Initially these policies were granted a reprieve, but break time is over. Thirteen states and the District of Columbia plan to cancel policies that don’t offer the level of services required by the Affordable Care Act. Federal law requires a 60-day notice of plan changes, so if you’re getting bad news in the mail, it will probably come no later than Nov. 1 (right before midterm elections.) 

So, truth be told, Obamacare Year 2 remains a mystery, though Health and Human Services Secretary Sylvia Burwell has already said that it won’t be perfect. That’s reassuring.

Don’t miss our User’s Guide to Choosing the Best Health Insurance all next week 5pmET on FOX Business         

 

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