Let’s take a look at some of the beneficiary rules of retirement accounts and how those beneficiary designations impact our beneficiary’s distribution options and responsibilities where a lump sum or rapid depletion of the account might not be desired.

The Retirement Equity Act of 1984 requires that should any beneficiary named on a ‘qualified’ retirement account be that of someone other than the account holder’s spouse, the spouse would have to sign off on that beneficiary designation. Other than that you are free to name any beneficiary you wish or you could legally have no ‘designated beneficiary’.

Now before I move into beneficiary rules and distribution options you should be aware that there are tax laws and there are contract laws. Your retirement account has a custodial agreement which operates by contract law. So, I cannot stress this enough – be sure to read your custodial agreement to see what the contract beneficiary (default) rules are. You will want to understand, what would happen by operation of the agreement if you didn’t have a contingency beneficiary named, for example, and you and your spouse simultaneously lost your lives in a car accident and she was the primary beneficiary without a contingent named. Would the contract default rules not be what you would have liked to see happen with your retirement account? State laws might be the default. Check the custodial agreement just so you know.

Designated and No-Designated Beneficiary Distribution Requirements.

There are special rules where the retirement account owner failed to name a designated beneficiary, like naming an estate as beneficiary, for example. In this case, the rules differ depending upon whether the retirement account owner died before or after his or her ‘required beginning date’. The ‘required beginning date’ (the RBD) is April 1 of the year following the year in which the retirement account owner reaches age 70 ½ unless the decedent had continued to work and was not a ‘more-than-5%-owner’ of the business. For those who continue to work beyond age 70 ½, required minimum distributions (RMDs) can be delayed for qualified retirement accounts (such as 401(k), 403(b) accounts, etc.). This ability to delay does not apply to IRAs.

If you die after the RBD and have no designated beneficiary, then the distribution period is the retirement account owner’s life expectancy calculated in the year of death, reduced by one for each subsequent year. If the retirement owner dies before the RBD and there is no designated beneficiary, then the retirement account must be distributed within 5 years after death.

In all cases, whether there is a designated beneficiary must be determined by September 30 of the year after the retirement account owner’s death. If there is a a designated beneficiary, payouts from the account must begin no later than December 31st the year after death in order to keep open the ‘life expectancy option’. Failing to do so puts an IRA with a designated beneficiary into the five year rule meaning that the account must be liquidated no later than 12/31 five years after the year of death.

Beneficiaries who are individuals.

Spousal Beneficiaries. If you are a surviving spouse who is the sole beneficiary of your deceased spouse’s retirement account, you may elect to be treated as the owner and not as the beneficiary. If you elect to be treated as the owner, you determine the required minimum distribution (if any) as if you were the owner beginning with the year you elect or are deemed to be the owner. If you do not make that election and hold the account open in the decedent’s name, distributions must begin under the rules for the age of that deceased spouse. So, for example, if the deceased spouse was younger than the survivor, the survivor spouse might not want to roll over, or elect or deem, the account into his or her name because he or she would have to take distributions under the 70½ rule. If the monies were left in the younger decedent spouse’s IRA, they would not have to be distributed until that younger deceased spouse would have turned 70½. That would allow those monies that would then not have to be distributed earlier, the benefit of continued tax deferred growth!

Non-Spousal Beneficiaries. If you are an individual and a designated beneficiary figuring your first distribution, you would use your age as of your birthday in the year distributions must begin. This is usually the calendar year immediately following the calendar year of the owner’s death. After the first distribution year, reduce your life expectancy by one for each subsequent year.

Beneficiaries who are NOT individuals.

If the beneficiary is not an individual, you would have to determine the required minimum distribution for 2012 depending on when the death occurred in relation to the RBD.

Death on or after required beginning date. Divide the account balance at the end of 2011 by the appropriate life expectancy Table (Single Life Expectancy) in Appendix C of Publication 590. Use the life expectancy listed next to the owner’s age as of his or her birthday in the year of death, reduced by one for each year after the year of death.

Death before required beginning date. The entire account must be distributed by the end of the fifth year following the year of the owner’s death. No distribution is required for any year before that fifth year.

Concluding Comments.

As you might well imagine, this is just the tip of the iceberg in discussing retirement plan distribution rules. Do you have charitable intentions? Do you have a special needs individual that you want to provide for or protect? How might disclaiming a ‘beneficiary right’ to a retirement account benefit family planning? How does a Trust named as a beneficiary work?

Do yourself a favor … Get a Plan Check – Review your beneficiary choices and make sure they are in line with your testamentary intentions and needs!

David Bergmann, CFP®, EA, CLU, ChFC
Managing Principal
The David Bergmann Group
Marina Del Ray, CA

It’s no secret that our relationship with money has always and likely will always revolve around fear and greed, risk and reward. It is frustrating to scrimp and save only to see no short term fruit born for our efforts. That all said, it seems that, in our quest to earn a bit more of our hard-earned dollars, some are starting to get a little loose with the definition of the word substitute.

Suggesting moving some of your cash or short-term, high quality bonds to dividend paying stocks, high-yield (a.k.a. junk) bonds or emerging market bonds may sound promising at first glance. I’d argue that’s the greed side of the equation playing with your mind. That’s not to say that there aren’t situations where taking more risk to earn higher returns than cash is currently offering don’t exist, they certainly do. The irresponsible part is anyone proclaiming, or any investor believing, that this is a “substitution” for cash or cash like investments.

No, the equation hasn’t changed. If you wish to earn an expected return greater than that being offered in cash, you must accept the additional corresponding risk. In other words, moving some of your safety net into riskier investments, even if only slightly so, should be carefully evaluated, preferably with a trusted advisor. Everyone has different long term needs, wants, wishes and abilities to tolerate risk. Some may be able to stay on track sitting on their current cash reserves through this continuing low-rate environment while others are falling further behind on their hopes to meet their goals. If you do choose to make some adjustments and go it alone, make sure, at a minimum, you at least . . .

1. Maintain your emergency fund in cash. Make your first savings priority to have at least six months of living expenses available in cash, possibly more if you’re self-employed or a single income home.
2. Avoid investing in anything other than cash and short term, high quality bonds for any cash you might need in the next five years. The stock market is a place for long term investing. If you’re going to need the money soon or there’s a high probability you might, leave it on the sidelines.
3. Dividends are nice, but so is preserving your capital. There’s nothing wrong with making dividend paying investments part of your investment strategy. Just make sure you understand how volatile they can be to your principal. Also keep in mind that when the value of a stock goes down, so might the amount of dividend you receive. When the market went south in 2008 and 2009, many companies suspended dividends right when their stock values are at their lowest. Can you afford to have your income stream and the value of your portfolio impacted that dramatically all at once?

With some thoughtful strategizing, your plan can include all the safety and security you need in the short term, with an eye towards growth with those investments slated for the long term. Just make sure you aren’t moving things from one category to another without understanding the risk. Often times when it comes to cash, there’s just no substitute.

Chip Workman, CFP®, MBA
Lead Advisor
The Asset Advisory Group
Cincinnati, OH

The decision to keep or sell the marital home should be part of an overall financial plan. Prior to agreeing to a settlement, the following financial aspects need to be evaluated:

Actual Costs of Staying in the Home: While you may be able to afford the monthly mortgage payment, remember to also evaluate the additional costs that come along with the home. These include items such as property taxes, homeowner’s association dues, maintenance, home owner’s insurance, repairs, monthly utility expenses, and lawn and pool services. Do you have funds available to cover these costs? If the total expenses will stretch your budget too thin, it may be best to consider alternative options.

Proceeds from the Sale of Marital Home: Be sure to get a current appraisal of the home and then evaluate what proceeds would be available net of transaction fees and commissions. Could the proceeds be used towards a smaller home or monthly rent payments?

Capital Gains Exclusion: If you’ve lived in your home as a primary residence for 2 of the 5 years prior to selling, you will be able to exclude up to $250,000 of capital gains on the transaction, and will owe taxes on any appreciation above that amount. However, if you choose to sell the home while your ex-spouse is still on the title, you could each utilize the exclusion for a total of $500,000. This is important to keep in mind if your home has appreciated by more than $250,000. Be sure to understand if you can afford the taxes on any excess appreciation.

Lifestyle Change: How will your life be different once the divorce is finalized? Would downsizing or moving to a different location make sense? How will your expenses change and where will your free time be spent?

Refinancing the Home: In order to lower monthly payments, a refinance of the mortgage may be discussed. Ensure that the spouse taking over the payments can qualify for the new loan based on their own income.

Trade-offs: What assets are you giving up in exchange for keeping the home? If you are giving up cash or retirement assets, what plans do you have in place to build your reserves back up? Keep in mind that the home is not a liquid asset and that you are not guaranteed any one price for it in the future. Ensure that you have a well thought out plan in place for funding your retirement and sustaining your day to day needs.

Overall, emotions will always play a part in the decision of whether or not to stay in the marital home. However, it is the financial aspects which must be the focus. By evaluating the above items, taking steps to put a detailed transition plan in place, and seeking out professional advice from an attorney or financial advisor, you’ll ensure that your own financial security is taking precedence, while preventing the stress of over extending yourself.

Mary Beth Storjohann, CFP®, CDFA
Senior Financial Planner
HoyleCohen
San Diego, CA

Watch Your Weight

Most investors use mutual funds to diversify and gain exposure to well known indexes such as the S&P 500 or NASDAQ. Nearly all large cap funds boast having Apple as one of their top 10 holdings. It is true that these indexes offer the opportunity for diversification because of their broad based holdings, but because these indexes are market-cap weighted, their exposure (and your risk) to Apple grows every time Apple stock rises. Indexes are created in one of three ways: price weighted, market-cap weighted, or equal weighted. A price weighted index (i.e. Dow Jones Industrial Average) is heavily influenced by the highest priced stock in the index; a market-cap weighted index is heavily influenced by the largest company in that index; and an equal weighted index is adjusted periodically so that each component has an equal weight.

Many mutual funds and Exchange Traded Funds (ETF) that track the S&P 500 or NASDAQ have seen their exposure to Apple grow over time because most are market-cap weighted. For example, the Fidelity Contrafund (FCNTX) has seen its exposure to Apple grow from 6.9 percent in 2011 to 9.4 percent in 2012; the SPDR S&P 500 (SPY) went from having 2.7 percent of its assets in Apple to 4.4 percent in 2012; and PowerShares NASDAQ (QQQ) has nearly 18 percent of its assets in Apple, up from 15 percent in 2011. If you think you have sufficiently diversified by owning these large cap funds and have a few shares of Apple on the side, you may have too many Apples in your proverbial basket.

Don’t Follow the Herd

Investors and actively managed mutual fund managers alike are known to follow the herd. Fund managers that do not have Apple stock in their top 10 holdings saw their judgment questioned by the fund’s shareholders, similar to when Warren Buffett was questioned by shareholders as to why he would not buy dot.com stocks in the 1990s; Buffett was later vindicated for having avoided the dot.com bubble. During the dot-com era, it seemed everyone was investing in internet stocks. It wasn’t uncommon to hear everyday investors at cocktail parties brag about their investments in Cisco, Lucent, AOL, and other venerable companies that subsequently lost tremendous value when the market collapsed. The people who lost the most in their retirement and investment accounts were those who became overly concentrated in a single sector or stock and failed to diversify out of those positions. They only realized after the fact that they were overexposed to technology stocks. Fast forward a few years, and these same individuals migrated to the next hottest investment – real estate. Many wrongly assumed that real estate would never lose value. After that came the gold craze, and most recently the Apple sensation. What’s next? Facebook?

Use the 5% Rule

While it’s a great feeling to see one of your stock picks skyrocket like Apple has, the reality is that not all of your stocks will be future winners. I always recommend that clients keep no more than 5 percent of their total portfolio in individual stocks because, while individual stocks can have tremendous growth potential, one bad stock can ruin your entire portfolio, especially if that one stock is a large part of your portfolio. No one expected such giant companies like Enron, Fannie Mae, General Motors, Lehman Brothers, AIG, Circuit City, Global Crossing, WorldCom, UAL Corp (parent of United Airlines), AOL, Lucent, etc. to either go bankrupt or completely wipe out their shareholders, but they did, and many people lost their entire life savings. Do not let yourself become overly exposed to one stock or sector of the market.

I am not attempting to predict the future price of Apple or advising against owning individual stocks altogether. I am simply reminding investors of the clear, but sometimes not-so-easy decision to review your portfolio periodically. Make sure you are not overly exposed to any segment of the market, and that you’re not taking on more risk than you can handle.

Ara Oghoorian, CFP®, CFA
Founder and President
ACap Asset Management
Los Angeles, CA

When you graduate from high school you will only go to college if you see the long term benefits. Certainly, most high school graduates make more money over the next four years than their college bound peers. Ten years from high school the balance has shifted to college graduates.

People who live paycheck to paycheck would be just fine if their expenses were the same each paycheck. The problem comes in when the car breaks down or their child becomes sick, expenses that were not in the budget and throw off their pattern. Someone with a longer term perspective might understand that the car will need work each year and the family will have some health expenses.

Small businesses that are structured to generate a profit, profit that will be used to grow, will not grow as fast as small businesses that create the infrastructure for growth on day one. Thinking forward to envision the business you want to create speeds the process of getting there.

Career growth will be sped by understanding where you are going. It is often stated that you should dress at work for the position you want, not the position you have. That is also true with education, experience and attitude. Get the education, get the experience and demonstrate the attitude you need to reach your career goals.

It is not easy to shift from a paycheck to paycheck focus to a financial independence focus. You can begin by shifting the focus from the next paycheck to the second one. If you already have a year-long focus, start to make a five year plan. If you have a five year plan, consider planning your legacy.

This forward thinking process can help you become wealthier but it can help you achieve other goals as well. Your vacation will be better planned, your hobbies more smoothly enjoyed, your retirement less fretful if you apply forward thinking to start sooner and consider the opportunities and potential obstacles more carefully.

John Comer, CFP®
Consultant
Comer Consulting, LLC
Plymouth, MN

This was not necessarily a question directed at the tax rates currently in effect (I try to stay away from the politically charged discussions) but rather to the actual taxes that the client was seeing on their return.

In many cases, the answer lies in that the client is not taking full advantage of contributing to tax-deferred programs that would reduce their taxable income. This would include the 401k, 403b and 457 type programs that are available to wage earners who receive a W-2 to report their income from their employer. It would also include the SEP_IRA, Keogh, and self-employed 401k plans available to individuals who get a 1099-MISC reporting of their income because they are independent contractors and are responsible for their own payment of self-employment taxes and for contributing to their own retirement programs. And, finally, it would include the Retirement Savings Credit that is available to certain wage earners who contribute to traditional IRAs and Roth IRAs. Each of these programs provides ways of lowering your tax burden and maybe increasing your tax refund. So let’s look at these in more detail.

401k, 403b and 457 Programs

These programs allow you to enroll through your employer to contribute to employer sponsored programs which will reduce your taxable income, increase the money available to you when you retire, and (when the employer provides a match to what you contribute) to increase the amount going to your retirement portfolio.

For example, if you contribute $100 to these programs each pay period, your take-home pay will be reduced by somewhere between $70 and $85 (depends on your tax bracket). The difference represents the federal and state taxes that you will not pay on the amount being withheld on your contribution. If you are in a high income tax state, the difference may be even greater. If your employer was matching 50% of your contribution, there would be an additional $50 going into your account. So for that $70 reduction in pay, you would have a total of $150 in your account. Now that is a great start towards your retirement!

The contribution limit on these programs is $17,000 per year and if you are 50 years old you can put an additional $5,500 into these programs. If your employer is matching, the total that can be contributed is $50,000. These limits may go up in the future, based on what happens to future inflation.

Simple 401k Program
Some employers provide a Simple 401k program for their employees. In this instance the contribution limit for the employee is $11,500 per year with a $2,500 catch-up provision for those who reach age 50 during 2012.

SEP-IRA, Keogh, and Self-employed 401k programs

Each of these programs have different limitations related to annual contributions but the key issue is that you are able to contribute to these plans as the employer and the employee for your self-employed income received on the 1099-MISC income reporting form. For the solo 401k plans the taxpayer can contribute a total of up to $50,000 if under age 50 and up to $55,000 if age 50 or older. The limitation will be further limited by the amount of net income from the business you operate and report on Schedule C or on the S Corp or C Corp tax return you file. In most cases the paper work to open this account needs to be done by December 31, 2012, but the actual calculation of the contributed amount will be done when you determine the amount of net income after expenses when you complete the tax return for 2012 sometime in early 2013.

Savers Credit
For certain taxpayers there is a Savers Credit (formally called the Retirement Savings Contributions Credit) that will reduce the tax liability for eligible taxpayers. This credit applies to individuals with a filing status and 2012 income of:

• Single, married filing separately, or qualifying widow(er), with income up to $28,250
• Head of Household with income up to $42,375
• Married Filing Jointly, with incomes up to $56,500

To be eligible for the credit you must be at least 18 years of age, you cannot have been a full-time student during the calendar year and cannot be claimed as a dependent on another person’s return.

If you make eligible contributions to a qualified IRA, 401(k) and certain other retirement plans, you may be able to take a credit of up to $1,000 ($2,000 if filing jointly). The credit is a percentage of the qualifying contribution amount, with the highest rate for taxpayers with the least income.

The Savers Credit is in addition to other tax benefits you may receive for retirement contributions. For example, most workers at these income levels may deduct all or part of their contributions to a traditional IRA. Contributions to a regular 401(k) plan are not subject to income tax until withdrawn from the plan. To claim the credit use Form 8880, Credit for Qualified Retirement Savings Contributions. For more information, review IRS Publication 590, Individual Retirement Arrangements (IRAs), Publication 4703, Retirement Savings Contributions Credit, and Form 8880.

As one example of the potential tax savings, a taxpayer with a filing status of single and income of $25,000 contributes $2,000 to an IRA. This taxpayer could deduct that amount from her taxable income. This would reduce her federal taxes by $300. In addition she would be able to claim the Savers Credit which would reduce her taxes by another $200. Total savings in taxes would be $500 from this $2,000 contribution to the IRA.

In my next blog, I will focus on the types of issues that a taxpayer should be cognizant of when deciding where to invest their money as it relates to whether they are earning interest, dividends, or capital gains as well as how much they are earning of each will influence their tax liability.

Francis St. Onge, CFP®
President
Total Financial Planning, LLC
Brighton, MI

•  I’m worried about what’s going on in the world, I want to sell out of international stocks.
• International stocks have been down more than domestic, I feel like it’s a great time to buy.

Both clients have valid reasons to think what they do. So, who is right and who is wrong?

I don’t know enough about the market to tell them what will happen with stocks over the next week, month, or year. I do know however that the above messages include underlying perceptions of investing that are rarely productive, and never consider an individuals goals.

In a recent TED talk titled Perspective is Everything (warning: an instance of foul language is used), advertising guru Rory Sutherland discussed this idea of perception, and specifically how economists (and likely the ones my above clients take their cues from) have the wrong perception of how to assist people in making the best decisions. He points to an often ignored school of economic thought (economics of the Austrian school) that instead of studying mathematical models, places its focus on psychology to determine why people act in order to find solutions to economic problems.

Most investors have bought into an investing paradigm that involves beating something or someone (neighbors, family, etc.), or maximizing yield. It makes sense why so many people equate this idea to investing since this is the exact paradigm they hear from so called ‘experts’ of investment management – “I best the markets.” The piece of their reasoning that doesn’t always translate is that they need to beat the markets to justify their jobs; that doesn’t mean what they offer is what you need.

As an advisor I rarely talk to clients about performance or winning investing as if it is a game. While it may be in an investment managers interests to take gambles with your money, it is not in yours.

Rather, I encourage investors to focus on the reasons for investing, and pick the best investments that meet those objectives, rather than starting with the objective of ‘winning.’ I use the acronym GPS to describe the starting point investors should have to qualify an investments usefulness.

Growth. All investors seek growth, and historically growth is best achieved by participating in the profits earned by successful businesses.

But, while most stock mutual funds fail to beat the markets, most investors with a ‘win at all costs’ mentality get burned, or waste countless hours jumping from one hot fund to the next in search of an extra percent return. The activity of buying into one hot fund at a high, and moving out of it after it falls on tough times often leads to a significantly lower portfolio returns than what would have been achieved by staying put.

Stability. Investors also want safety, but the question they rarely ask is – “How safe is this investment?” I hear far more often – “How much does it earn?”

The rule to remember here is don’t sacrifice safety for yield. Instead of thinking about what often amounts to a few extra dollars a year, ask yourself – “What are the chance of this money being there for me when I need it?”

Principal preservation is another goal of investors; to have their money not only stay stable, but increase as prices rise. I typically talk about it out of GPS order because a combination of Growth and Stable investments may provide the right mix to achieve a portfolio that keeps up with inflation. These may be real assets like real estate, precious metals, currency, or real goods. Think about these investments as providing diversification benefits first over providing winning returns.

Instead of pouring over funds and worrying about what fund or investment will outperform the others, a less stressful and far more productive strategy for individuals is to figure out how much you need to have invested for each category, select investments based on how well they match category criteria and not on returns, monitor those investments, and control the factors you can (avoid investing with companies with poor stewardship, poor performance, and excessive costs). This activity of determining how much you need in each category aligns your investment selection to your individual goals.

Invest today in a changed perception, from trying to win the highest return, to following a purposeful investment selection plan which will ease your stress, align your portfolio with your personal goals, and likely increase your returns.

Robert Schmansky, CFP®
Financial Advisor
Clear Financial Advisors, LLC
Royal Oak, MI

Ben Bernanke, Chairman of the Federal Reserve, dubbed the expiring stimulus measures a “fiscal cliff.” Chairman Bernanke urged Congress to put government debt on a long-term sustainable path, but should not do so at the expense of short-term growth. There is fear that Congress will be engaged in grid lock due to the upcoming elections and that the financial measures will expire at year-end. Should the U.S. economy fall over the fiscal cliff, the pain won’t be felt until the economy comes to a sudden stop.

The programs set to expire are the Bush Tax Cuts from 2001, 2003 and the more recent 2009, 2010 stimulus measures that created the Employee Payroll Tax Reduction and Emergency Unemployment Compensation programs. The estimate by Ned Davis Research on fiscal drag ranges from $72 billion to $388 billion in lost output. Should the loss be toward the higher end of the range, the sudden stop may come sooner than many of the pundits are predicting.

Congress may decide to “punt” like they did last year and extend the financial measures. The risk of this tactic is that while it may spare short-term growth, the long-term debt burden may become unbearable. The Congressional Budget Office projects that the ratio of government debt to Gross Domestic Product would increase to 93%. A larger debt burden may slow the economy by requiring the government to spend more on interest payments on the debt instead of spending on Social Security, Medicare, defense and other important areas. Over half of the interest payments could be going overseas as foreign investors currently hold more than half the U.S. debt.

The U.S. Government will also face increased funding pressures from the near depletion of the Social Security and Medicare Trust Funds. The 2012 Trustees report showed the Social Security Trust fund will be depleted in 2033, three years sooner than last year’s estimate. After 2033, the Trust will only be able to support 75% of benefits promised. Medicare is projected to face the same fate in 2024 with revenues sufficient to cover only 87% of costs.

Social Security and Medicare outlays currently account for a combined 34.5% of government spending, the largest combined spending of any other government program. These entitlements are going to become more burdensome as the Congressional Budget Office estimates that Social Security and Medicare will account for 43% of all U.S. government expenditures in just ten short years.

The burden of these programs will also be felt as entitlements become a larger percentage of the United State’s Gross Domestic Product (GDP). In 1970, Social Security and Medicare were approximately 3.9% of GDP where today it is nearly 9% of GDP. In 2022 the Social Security Administration estimates that the two programs will be nearly 10% of GDP and upwards of 12% in 2033. While these appear to be small incremental gains in terms of percentages, perspective must be kept on the sheer dollar size of the U.S. GDP.

Gross domestic product (GDP) refers to the market value of all officially recognized final goods and services produced within a country in a given period. The U.S. Nominal Gross Domestic Product as of March 31, 2012 was nearly $15.5 trillion dollars. Over a 20-year period, the rise in Social Security and Medicare spending as a percent of GDP will equate to approximately $465 billion dollars. The ability for the United State to avoid a “Greek Tragedy” is to keep our debts and entitlements to a manageable percentage of GDP. As the percentages continue their unabated rise, our Nation’s capacity to shoulder these burdens becomes more and more strained.

There is a definite “fiscal cliff” ahead. The challenge is we don’t know if it is 12 months or 12 years in front of us. The job of the Federal Reserve and our elected officials is to minimize the height of the fall from the top of the cliff. We can sustain a slow down, not a sudden stop.

Edward Gjertsen II, CFP®
Vice President
Mack Investment Securities, Inc.
Glenview, IL

1. Bloomberg Mobile. This business news app is free, and users go to it for real-time financial market data, company descriptions and the latest market news and stock quotes. Advisors can use the “my stocks” feature to create personalized portfolios of stocks to follow for themselves or clients
2. Nest Egg Estimator. This is one of Android’s top 10 apps. It’s a great retirement tool because it projects finances into future years showing income, taxes, assets and debt. It also allows you to try different scenarios such as purchases, expenses, job changes and more.
3. Flipboard Pages. This iPad app delivers content from a number of publications, including ABC News, All Things Digital, Bon Appétit, Lonely Planet, SB Nation, SF Gate, Uncrate and The Washington Post Magazine. When an article from one of those publishers is shared on Twitter or Facebook, a Flipboard user selects “Read Article,” and can thus stay up to date on the latest news and magazine content in the financial industry.
4. Hootsuite. “Hootsuite is king when it comes to social media convenience and efficiency. Instead of shifting back and forth between social media platforms, Hootsuite allows admins to oversee and access all of their social operations in one convenient place.
5. Mint Mobile Apps. Easy organization of your finances—automatic categorization of your transactions—plus active, zoom able charts and graphs.
6. Droid PDF Scan. A document scanner wherever you are.
7. CamCard can capture business card images with a phone-based camera, recognize the card image content, and automatically save the contact info in the phone’s address book and Card Holder. In addition, CamCard contains many useful features, such as email signature recognition and QR code generation and recognition.
8. Visual Records has made it quick and simple to track and manage your vehicle mileage for tax/business purposes. This app can track and manage Vehicle Types, Trip Types and Mileage information; duplicate previous mileage records; add specific notes for each record; and export mileage information, which can be saved and sent via e-mail.
9. Pixetell allows you to quickly add voice, screen recordings and video to e-mail or documents, giving you the opportunity to go beyond written text when explaining forms, proposals and designs verbally. Pixetell allows you to combine voice, screen recordings and webcam delivered through a URL in your e-mail.
10. Mavenlink is an online collaboration solution that allows you to manage projects from start to finish, including communications, docs, tasks, scheduling, time tracking, invoicing and payments. Mavenlink integrates with Google Docs, Calendar, and Contacts. Your networks, communications, project notifications, due dates, and deliverables related to your working world are captured in one place: your Mavenlink dashboard.
11. Vlingo. Tell your phone what to do! The Vlingo Virtual Assistant turns your words into action. Vlingo combines voice to text technology with its “intent engine” to help you quickly complete your desired action. Simply speak to your phone or type a command through the ActionBar to get just about anything done while on the go.
12. Barcode Scanner. Scan barcodes on products then look up prices and reviews. You can also scan Data Matrix and QR Codes containing URLs, contact info, etc.
13. Lookout Mobile Security helps you protect your phone and includes Anti-Virus, Backup and Find My Phone. The app allows you to block viruses, malware and spyware by scanning every app you download. Backup allows you to back up your contacts and photos, as well as restore data to a new or existing phone. Find My Phone can help you pinpoint your phone on a map, activate a loud alarm to find your phone, and if necessary remotely wipe your data if your phone is lost or stolen.
14. Seek Droid allows you to locate your lost or stolen device anywhere in the world. See your device on a map, set off an audible alarm, wipe the device, and more.
15. Wallet allows you to safely store all your sensitive data such as bank account details and passwords on your phone. Wallet is also useful for remembering all those bits and pieces of information in one place from frequent flier numbers to contact lens prescriptions.
16. Spotlight Six Software makes it easy to track your billable hours as you are working and then transfer the data into a spreadsheet to create your invoices. This app calculates hours worked and wages. Users can create customizable reports that can be exported via e-mail and view and edit time records within the app, among other things.
17. Long Term Care. The Genworth Cost of Care App provides a convenient way to view long-term care cost details in today’s dollars across various care settings, compare costs across multiple locations and estimate future long-term care costs. The App allows users to: (1) View long-term care costs on a daily, monthly and annual basis for 437 regions across the United States (2) View care costs in different care settings, including in-home care, Adult Day Health Care, Assisted Living Facility, and Nursing Home Care (3) Estimate future costs up to 30 years out (4) Compare care costs across multiple locations and (6) Use geo-locate functionality to automatically locate an area within the U.S.
18. Mortgage Calculator. Choose four calculators (1) rent or buy, (2) debt to income calculator, (3) monthly payment calculator, (4) refinance calculator and (5) the ability to search for homes.
19. Morningstar. The content for this application is provided by Morningstar.com – helping investors reach their financial goals – with comprehensive investment research and tools covering U.S. and Canadian stocks, mutual funds, ETFs, options, hedge funds, commodities and portfolio management.
20. Kiplinger. For more than 50 years, Kiplinger has been giving readers practical advice on investing, saving, budgeting, credit, spending and more. Now you can enjoy the same money-smart advantage with this convenient interactive app for your iPad.

What do you think of these ‘apps’? Got a better one you would like to share?

David Bergmann, CFP®, EA, CLU, ChFC
Managing Principal
The David Bergmann Group
Marina Del Ray, CA

You might be a pizza lover, but let me assure you from my own experience that a few weeks of full time work at a pizza shop will lessen that craving quite a bit. The same feeling can be had with any profession you may love from the outside, but find that having access to too much of whatever it is lessens the allure.

I imagine that this feeling can be the same with executives of corporations, though they tend to not only have a great job and perks in their businesses, but also have access to company stock in ways the average employee does not.

When I look at how successful executives invest in their own companies – these individuals that have stock options, stock grants, restricted stock, and a myriad of other plans that incentivize them to be owners and have a stake in the company’s success – it can be somewhat surprising to watch their behavior towards owning stock and how it can be different than the average employee.

They own stock (and often times lots of it), but perhaps it’s similar to having ‘too much’ of something that makes you appreciate what ‘it’ is in different ways.

I find executives who own stock in the many ways they do often exhibit the opposite behavior of regular employees when it comes to holding stock in the company they work for.

Regular employees often:

• Hold too much of their company stock as a percent of their investments,
• Have a tendency to think the stock will do better than other similar companies,
• Hold onto it based on emotion both during goods times and bad, and
• Generally want more rather than less.

While it’s true many executives have minimum stock ownership requirements that can result in their holding a substantial amount of company stock, they don’t often go out of their way to buy substantial amounts, or gamble on where the stock may or may not go. Many look for opportunities to sell and diversify their holdings. The first move many make at retirement is to sell stock they previously were restricted from doing so and creating a diversified portfolio. \

We want to feel like the stock of company that provides us with an income and our benefits will do well, but attaching those feelings to any stock can be a HUGE investing mistake! Investors who do this carry significant risk, as not only is their income and company benefits based on the company, but so is the success of their investment plans!

Executives that already have more company stock also seem to appreciate diversification over many companies other than just their own. While we often think we have great knowledge about how a new product will impact a company’s stock performance, business leaders that have been around know it’s not what they think they know that will determine the stock price, but it is what they don’t know about the event that can drive the stock price up or down.

If you are an investor in stock of the company who employs you, think as if you are investing like those that are successful and diversifying your risks, or if you have a tendency to invest in your company based on emotion.

A rule of thumb to invest by: Never allow any investment to be more than 10% of your total portfolio.

Robert Schmansky, CFP®
Financial Advisor
Clear Financial Advisors, LLC
Royal Oak, MI