Tax reform is here and 2018 brings many changes to the tax code. One of the major changes is a near doubling of the standard deduction. What is a standard deduction? Every taxpayer gets to deduct from income a certain amount of money which lowers their tax bill. Taxpayers can subtract a flat "standard" deduction, OR "itemized" deductions. Examples of itemized deductions in 2017 include medical expenses (subject to a 7.5% of income threshold), state income taxes, real estate taxes, auto excise taxes, mortgage interest, charitable contributions and certain miscellaneous deductions (subject to a 2% of income threshold). Taxpayers subtract whichever is LARGER, a standard …
Thou Shalt Diversify – A Commandment For All Investors
Having a diversified portfolio is easy to understand. As illustrated nearby it essentially means "Don't put all your eggs in one basket!" I set aside my deep dislike of chickens to use this illustration. Being diversified means that at any given time there is something in your portfolio that is lagging and something in your portfolio that is doing well. This is where the emotions can get in the way. It is human nature to look at whatever is on fire and think "I gotta get more of that!" Conversely it's natural to look at the laggards and think "I gotta get rid of that!" But here's the thing - every dog has its day and what goes up is almost certainly going down …
Donor Advised Funds – a Tax Efficient Way to Give to Charity.
What is a Donor Advised Fund? (DAF) A Donor Advised Fund is like a charitable investment account, for the sole purpose of supporting charitable organizations you care about. Step 1: Contribute to a Donor Advised Fund You can contribute cash, shares of stocks or mutual funds, or other kinds of assets to a DAF and get an immediate tax deduction for the whole amount. Under the new tax law, far fewer people will be itemizing their deductions. But if you contribute a large amount (say several years of your usual charitable donations) to a Donor Advised Fund you might still itemize your deductions in the year you contribute. A Donor Advised Fund can be an especially useful tool if …
A Tale of Two Tax Returns
This year I will spend a lot of time with my clients analyzing their individual tax situation under the new law. New withholding tables go into effect in February 2018 and wage earners may have to adjust to make sure they don't have either a huge refund or a huge bill at tax time. No, you do not want a big refund! One of the big changes in this law is the doubling of the standard deduction. Each year you are allowed to subtract from income a deduction. You subtract whichever is larger for you, the standard deduction or itemized deductions. Many people who used to itemize will now take the standard deduction. But it's difficult to make blanket statements about who will and won't itemize …
The Efficient Market Hypothesis, Your Neighbors, and You
The Efficient Market Hypothesis (EMH) is the underpinning of my investment philosophy. This philosophy informs the investment strategy I use personally as well as for clients. But just what is it? Today I define EMH and explain it with the story of Sylvia, Fred and Nora. (Based on a story told by Weston Wellington, a Dimensional Fund Advisor executive.) The Efficient Market Hypothesis states that the current prices of publicly traded securities incorporate all available information and expectations. Publicly traded securities are those you buy on the stock exchange. Traditional stock pickers attempt to make money by identifying "mispriced" securities and buying those deemed …
