Top Year-End Investment Tips

Investment-Tips (002)

Just what you need, right? One more time-consuming task to be taken care of between now and the end of the year. But taking a little time out from the holiday chores to make some strategic saving and investing decisions before December 31 can affect not only your long-term ability to meet your financial goals but  also the amount of taxes you’ll owe next April.

Look at the forest, not just the trees

The first step in your year-end investment planning process should be a review of your overall portfolio. That review can tell you whether you need to rebalance. If one type of investment has done well–for example, large-cap stocks–it might now represent a greater percentage of your portfolio than you originally intended. To rebalance, you would sell some of that asset class and use that money to buy other types of investments to bring your overall allocation back to an appropriate balance. Your overall review should also help you decide whether that rebalancing should be done before or after December 31 for tax reasons.

Also, make sure your asset allocation is still appropriate for your time horizon and goals. You might consider being a bit more aggressive if you’re not meeting your financial targets, or more conservative if you’re getting closer to retirement. If you want greater diversification, you might consider adding an asset class that tends to react to market conditions differently than your existing investments do. Or you might look into an investment that you have avoided in the past because of its high valuation
if it’s now selling at a more attractive price.

Diversification and asset allocation don’t guarantee a profit or insure against a possible loss, of course, but they’re worth reviewing at least once a year.

Know when to hold ’em

When contemplating a change in your portfolio, don’t forget to consider how long you’ve owned each investment. Assets held for a year or less generate short-term capital gains, which are taxed as ordinary income. Depending on your tax bracket, your ordinary income tax rate could be much higher than the long-term capital gains rate, which applies to the sale of assets held for more than a year.

For example, as of tax year 2015, the top marginal tax rate is 39.6%, which applies to any annual taxable income over $413,200 ($464,850 for married individuals filing jointly). By contrast, the long-term capital gains rate owed by taxpayers in the 39.6% tax bracket is 20%.

For most investors–those in tax brackets between 25% and 35%–long-term capital gains are taxed at 15%; taxpayers in the lowest tax brackets–15% or less–are taxed at 0% on any long-term capital gains. (Long-term gains on collectibles are different; those are taxed at 28%.)

Your holding period can also affect the treatment of qualified stock dividends, which are taxed at the more favorable long-term capital gains rates. You must have held the stock at least 61 days within the 121-day period that starts 60 days before the stock’s ex-dividend date; preferred stock must be held for 91 days within a 181-day window. The lower rate also depends on when and whether your shares were hedged or optioned.

Make lemonade from lemons

Now is the time to consider the tax consequences of any capital gains or losses you’ve experienced this year. Though tax considerations shouldn’t be the primary driver of your investing decisions, there are steps you can take before the end of the year to minimize any tax impact of your investing decisions.

If you have realized capital gains from selling securities at a profit (congratulations!) and you have no tax losses carried forward from previous years, you can sell losing positions to avoid being taxed on some or all of those gains. Any losses over and above the amount of your gains can be used to offset up to $3,000 of ordinary income ($1,500 for a married person filing separately) or carried forward to reduce your taxes in future years. Selling losing positions for the tax benefit they will provide next April is a common financial practice known as “harvesting your

Example: You sold stock in ABC company this year for $2,500 more than you paid when you bought it four years ago. You decide to sell the XYZ stock that you bought six years ago because it seems unlikely to regain the $20,000 you paid for it. You sell your XYZ shares at a $7,000 loss. You offset your $2,500 capital gain, offset $3,000 of ordinary income tax this year, and carry forward the remaining $1,500 to be applied in future tax years.

Time any trades appropriately

If you’re selling to harvest losses in a stock or mutual fund and intend to repurchase the same security, make sure you wait at least 31 days before buying it again. Otherwise, the trade is considered a “wash sale,” and the tax loss will be disallowed. The wash sale rule also applies if you buy an option on the stock, sell it short, or buy it through your spouse within 30 days before or after the sale.

If you have unrealized losses that you want to capture but still believe in a specific investment, there are a couple of strategies you might think about. If you want to sell but don’t want to be out of the market for even a short period, you could sell your position at a loss, then buy a similar exchange-traded fund (ETF) that invests in the same asset class or industry. Or you could double your holdings, then sell your original shares at a loss after 31 days. You’d end up with the same position, but would have captured the tax loss.

If you’re buying a mutual fund or an ETF in a taxable account, find out when it will distribute any dividends or capital gains. Consider delaying your purchase until after that date, which often is near year-end. If you buy just before the distribution, you’ll owe taxes
this year on that money, even if your own shares haven’t appreciated. And if you plan to sell a fund anyway, you may minimize taxes by selling before the distribution date.

Note: Before buying a mutual fund or ETF, don’t forget to consider carefully its investment objectives, risks, fees, and expenses, which can be found in the prospectus available from the fund. Read the prospectus carefully before investing.

Know where to hold ’em

Think about which investments make sense to hold in a tax-advantaged account and which might be better for taxable accounts. For example, it’s generally not a good idea to hold tax-free investments, such as municipal bonds, in a tax-deferred account (e.g., a 401(k), IRA, or SEP). Doing so provides no additional tax advantage to compensate you for tax-free investments’ typically lower returns. And doing so generally turns that tax-free income into income that’s taxable at ordinary income tax rates when you withdraw it from the retirement account.

Similarly, if you have mutual funds that trade actively and therefore generate a lot of short-term capital gains, it may make sense to hold them in a tax-advantaged account to defer taxes on those gains, which can occur even if the fund itself has a loss. Finally, when deciding where to hold specific investments, keep in mind that distributions from a tax-deferred retirement plan don’t qualify for the lower tax rate on capital gains and dividends.

Be selective about selling shares

If you own a stock, fund, or ETF and decide to unload some shares, you may be able to maximize your tax advantage. For a mutual fund, the most common way to calculate cost basis is to use the average cost per share. However, you can also request that specific shares be sold–for example, those bought at a certain price. Which shares you choose depends on whether you want to book capital losses to offset gains, or keep gains to a minimum to reduce the tax bite. (This only applies to shares held in a taxable account.) Be aware that you must use the same method when you sell the rest of those shares.

Example: You have invested periodically in a stock for five years, paying various prices, and now want to sell some shares. To minimize the capital gains tax you’ll pay on them, you could decide to sell the least profitable shares, perhaps those that were only slightly lower when purchased. Or if you wanted losses to offset capital gains, you could specify shares bought above the current price.

Depending on when you bought a specific security, your broker may calculate your cost basis for you, and will typically designate a default method to be used. For stocks, the default method is likely to be FIFO (“first in, first out”); the first shares purchased are considered the first shares sold. As noted above, most mutual fund companies use the average cost per share as your default cost basis. With bonds, the default method amortizes any bond premium over the time you own the bond. You must notify your broker if you want to use a method other than the default.



Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information presented here is not  specific to any individual’s personal circumstances.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

*Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. NASA Federal Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members.

What If Your Car Gets Totaled?


Each year, auto insurance companies declare millions of vehicles to be “totaled,” meaning it’s not worth the cost to repair them. It doesn’t matter whether the car was damaged in a collision, during a flood or after a thief’s joyride went bad.

It’s hard to argue with such an assessment if your car was wrapped around a telephone pole or the gas tank exploded. But what if the damage was more cosmetic, such as major dents on the roof and hood from a hailstorm?

A vehicle is considered a total loss if the insurance company determines that the total cost to repair your car to pre-accident condition, plus fees for storage, salvage and a replacement rental car (if included in your policy), is more than a certain percentage of car’s retail value. Insurers set their own allowable percentage, within state-mandated guidelines (typically around 60 to 75 percent), and use their own formulas to determine a car’s value and estimated repair costs.

Thus, if your $4,500-valued 2002 Honda Civic sustains $1,800 worth of damage – moderate bodywork and repainting these days – it might be deemed totaled, even though the engine still runs fine. On the other hand, a late-model Mercedes could sustain far greater damage and still be considered salvageable.

What’s worse, if the accident was your fault, or you must otherwise tap your own insurance (e.g., it was caused by an uninsured driver), you would only receive that $4,500 minus your deductible. Good luck finding a comparable car for that amount.

Other big losers when a car is totaled are people still paying off their auto loan. Since the lender technically owns the car, they’ll get first crack at any insurance payment; and you’ll still be responsible for paying off the loan balance.

As a preventative measure, you may want to purchase gap insurance if you owe more than the car’s retail value – or if you rolled past debt into the new car loan. It will pay the outstanding loan balance if your car is totaled or stolen. Most insurers will let you add gap insurance at any time.

Here are a few additional points you should know about when and why a car is declared totaled, and precautions you can take ahead of time to lessen the impact:

  • Make sure the insurance appraisal includes the value of all extra features and aftermarket accessories, like heated seats, custom wheels or an upgraded audio system.
  • Be prepared to show documentation of any major repairs or upgrades you made that might boost the car’s value – say you recently replaced the engine or bought new tires.
  • Do your own research. Use independent pricing sites like Kelly Blue Book or Edmunds to determine your car’s worth, factoring in its mileage, added features and overall condition before the accident.
  • If your estimate is far off from the proposed settlement, ask whether your policy includes the right to hire your own appraiser for a second opinion. Most states have a procedure for settling such disputes. Understand, however, that no matter the arbitration outcome, you’ll still have to pay your appraiser, and likely, a portion of arbitration costs.
  • Make sure the insurer’s totaled car value includes estimated sales tax to replace the car, as well as registration and title costs, since you wouldn’t have incurred these costs if you didn’t need to replace the car.

Let’s hope your car is never totaled, but it pays to know in advance what to do if it is.


By Jason Alderman


Train Like Rocky Balboa: The 90-day Financial Fitness Program

rockyRemember the training sequence in “Rocky?” He starts with a short run and small weights, then heavier weights, then there’s the climactic moment when he runs up the steps, with kids cheering in the background.

Each of us can be our own financial Rocky, beginning with relatively easy things like defining goals and making a budget, working up to heavy lifting like balancing a checkbook and investing. (It’s unlikely, however, that crowds of children will be screaming, “Go!” when you open your 401(k).) Here’s your own fiscal training program – 90 days to financial fitness.

Step One, Week One: Set specific goals
Rocky Balboa wanted to win a professional boxing match. What do you want to accomplish? Would you like to take your family to Disney World for a vacation? Or maybe you dream of buying a house. Decide what you would like to achieve, and find out how much it will cost.

Step Two, Week Two: Make a budget
Now it’s time to make a budget. Once you know how much you have coming in and how much you must spend every month, you can see how much is left for saving. You already know how much you need to meet your goal. This step will help you figure out how much you can save every month.

Write down your expenses and your income, using this budget worksheet. Now, see which expenses you might be able to reduce or eliminate. For example, you could lose the daily $4 mocha grande cappuccino and just drink the free office coffee. Or bring your lunch to work.

Step Three, Weeks Three and Four: Living Within Your Budget
Now, here’s how to see if your budget is practical. Write down everything you buy in one week. You can use this handy form. You may be surprised at how much you spend on things that don’t really matter that much to you.

Step Four, Week Five: Putting Money in Savings
Now you have a better idea how much money you can save. Armed with this knowledge, decide how much to save every month.

Most employers can set up an automatic withdrawal from your paycheck into a savings account. That way, the transfer happens automatically and you never even have to worry about it. Here’s a rundown on different types of savings accounts.

Step Five, Week Six: Balancing Your Checkbook
By now, you’re cruising along like Rocky, making gain after gain. If you haven’t already, celebrate with friends and family. And now that your confidence is high, grab your checkbook, your monthly statement and a calculator for the next step, balancing your checkbook.

In this process, you’re comparing the monthly reconciliation worksheet your financial institution sends you against your check register. That worksheet often has instructions on how to balance your checkbook; or for a more detailed, step-by-step guide, click here. One of the easiest, quickest ways to manage your checking account is online – you can do all your checkbook balancing without the bother of paper and pencil.

Weeks Seven, Eight, Nine: Stay Balanced
Keep balancing your checkbook, and don’t hesitate to ask for help if you run into problems. You can get assistance from your financial institution, or contact BALANCE at (888) 456-2227.

Week Ten: Take Stock
It’s entirely understandable if you hit a few snags along the way. In fact, it would be surprising if you didn’t.

Take a good look at things that you have not been able to achieve on a regular basis, and figure out if it is realistic to think you can achieve them in the future. If not, then do what the GPS unit always says when you miss an exit: “Recalculate.” For more tips, click here.

Week Eleven: Investing in a 401(k)
Now it’s time to take advantage of your employer’s tax-deferred investment plan. These accounts, known as 401(k) or 403(b), are a good deal. No taxes are due on your contributions or earnings until you retire and begin withdrawing the funds. Tax-deferred savings means that your investments can grow much faster than they would otherwise.

The same is true of IRAs, although the maximum amount you can invest annually in an IRA is substantially less than what you can put in a 401(k) or 403(b). So if your employer doesn’t offer a tax-deferred plan, open an IRA or a Roth IRA and reap the tax benefit come April 15.

Week Twelve: Congratulations!
Pat yourself on the back, Rocky – and take a run up those steps if you like. You did it. Take a moment to look back on all you’ve learned, and keep up the good work!

Copyright © 2011 BALANCE

Mobile Banking Trojans Increase 400% in 2015 Q3


trojan-virus-crosswordWe love our mobile devices and it’s hard to imagine not having them nearby sometimes.  The cybercriminals know this too. That is why they develop mobile malware to steal money. According to Kaspersky Labs’ Threat Evolution Report for the third quarter of the year, mobile malware is on the rise, particularly in countries where mobile banking is gaining popularity.

The report stated that in Q3, over 1.6 million malicious mobile installation packages were found to be in circulation and 2,500 of those were mobile banker Trojans. This is four times what was found in Q2 of this year and is the fastest growing category of mobile threats found in the wild (this means that it is active out in the general public in day-to-day situations, as opposed to in a controlled laboratory environment). In addition, there were over 5.5 million registered notifications regarding attempted malware infections. These were specifically geared toward stealing money from customers who use online banking.

This is why it is important that all consumers are aware of the dangers and learn to practice safe mobile security at all times. Knowledge is truly power and it will dramatically lower your chances of being a victim of cybercrime.

Here are a few basic things to remember when using your device:

  • Don’t click on links or open attachments in email unless you are certain they are safe. This is how malware is mainly delivered, so it is largely in your control to stay malware free.
  • Make sure anti-malware is installed on your mobile devices, regardless of the OS being used. Keep it updated.
  • Update or patch all software when notified. In most cases, updates sent by major software companies are fixes to vulnerabilities that will keep you safe from malware targeting the very same software issues.
  • Avoid using unsecured public Wi-Fi. Often hackers will sit in wait and hijack connections to steal login credentials.
  • Be aware even when using password-protected public Wi-Fi, such as in cafes and coffee shops. These can also be risky. Therefore avoid performing financial transactions on these connections.
  • If necessary to log in to a secured connection when in public, your work network for example, use a VPN from your mobile device. Alternatively use your device’s data network connection. There are still risks, but they are lower.
  • Make sure the password to your internet connection access point, and all network devices such as routers and switches, are changed from the default that comes on them when they are first installed. Make them strong passwords and change them regularly.
  • Keep anti-malware software updated on all devices in your home network that can have it. Remember that when you are at home, all of your internet connected devices (TV, thermostat, refrigerator, music system, etc.) are likely connected to each other also (unless you specifically separate them). Anything that penetrates your desktop can also get to your mobile devices no matter where you are in the house.

Malware is not going away any time soon. New varieties increased nearly 11% in the last quarter and the number of unique malicious URLs found in that three month period was nearly 75.5 million, according to the same report. Mobile devices are great tools, but the numbers show they will continue to be targeted. It’s up to us to learn what we need to do to keep our information safe when using them. Isn’t that better than not using them at all?

© Copyright 2015 Stickley on Security

The Steps of Spearphishing and the Value of Stolen Data

Spear Fisherman With Speargun near coral bottom

In a survey conducted by the Identity Theft Resource Center (ITRC) of identity theft victims in 2014, only 16.4% of respondents completely trust their health insurance provider to use personal information they provide in a responsible manner. Most people only moderately trust them (29.7%).  Possibly, they have good reason.

There have been several data breaches involving health insurance companies over the past year including Excellus, Anthem, and Premera. These three breaches have affected approximately 100 million people so far. Another 18 million who were not customers may also have been affected by these. Tack on another 14 million if you add the UCLA Health System breach of this past summer.

Information has started to rise up as to how the breaches of at least two of these (Anthem and Premera) happened. Both lead to phishing and more precisely spearphishing. The latter is a type of phishing where employees or those “in the know” about a particular company or industry are specifically targeted by cybercriminals. Spearphishing may be more time consuming due to needed research, but it usually will result in a more lucrative payload.

If you know the steps of a spearphishing scam, you are much more likely to not make your information readily available to the hackers and hopefully implement some internal policies to better identify legitimate internal emails containing links or attachments.

Step 1 – Criminals research a company’s organizational structure. With all the information available on social media, a quick search on LinkedIn or Google will produce most of the data very quickly.

Step 2 – Once a criminal has the company structure, they now need to know what the executive’s email looks like. Criminals set up a Gmail or Yahoo account and send a nice email over to the executive. All the criminal is trying to accomplish is to get a reply email to be able to replicate the look and feel.

Step 3 – Now that the criminal has the company structure and can mimic the executive’s email, they send out emails to people in their direct food chain with a malicious link or attachment. Because the victims believe this is an urgent matter from their “boss”, they are normally anxious to fulfill the request very quickly.

Step 4 – When the link is clicked or attachment opened, the malware is delivered to the company network. Once on the network, it will connect with the criminal’s server and wait for instructions.

The hacker will target your company’s sensitive data to steal and sell it on the Dark Web. This is a multi-billion dollar industry and all trends point to this as one of the fastest growing and most lucrative crimes in the world.

Each data record stolen has a price tag and that price is driven by how it can be used and the current supply and demand. Credit card numbers used to be the main target, but there is a glut of them and it is pretty simple to get a new card and end the usefulness of the stolen number. Social Security numbers and health care records are much bigger scores. A SSN stays with a person for life. Even if a person can prove to the US Government that their life has been ruined due to identify theft, the new number the victim is given ties directly to the old compromised number. Therefore the new number is of no help at all.

Data Price List (this is estimated):

  • Financial Institution Account Record: $80 (usually contains SSN)
  • Heath Care Record: $80 (usually contains SSN)
  • Social Security Number: $40
  • Credit Card Number: $7
  • User Name & Password to any Website: $2

In the case of health insurance companies, it is the identity theft motherlode. Health insurance companies store social security numbers, payment details, health histories, information on family members, and other data that is extremely valuable to cyber thieves.

More importantly, think about your company and what data is worth stealing. And then ask yourself if your company could survive if that data was stolen. Making a few changes in the process and taking an extra few seconds to ensure the link or attachment is legitimate may be all you need to prevent an attack.

© Copyright 2015 Stickley on Security

Over 70 ½? Don’t Forget Mandatory IRA Withdrawals



With final holiday preparations looming, the last thing anyone wants to think about is next April’s tax bill. But if you’re over 70 ½ and have any tax-deferred retirement accounts (like an IRA), put down the wrapping paper and listen up: IRS rules say that, with few exceptions, you must take required minimum distributions (RMDs) from your accounts by December 31 of each year – and pay taxes on them – or face severe financial penalties.

Here’s what you need to know about RMDs:

Congress devised IRAs, 401(k) plans and other tax-deferred retirement accounts to encourage people to save for their own retirement. Aside from Roth plans, people generally contribute “pretax” dollars to these accounts, which means the contributions and their investment earnings aren’t taxed until withdrawn after retirement.

In exchange for allowing your account to grow tax-free for decades, Congress also decreed that minimum amounts must be withdrawn – and taxed – each year after you reach 70 ½. To ensure these rules are followed, unless you meet certain narrowly defined conditions, you’ll have to pay an excess accumulation tax equal to 50 percent of the RMD you should have taken; plus you’ll still have to take the distribution and pay regular income tax on it.

You can delay or avoid paying an RMD in certain cases, including:

  • If you’re still employed at 70 ½, you may delay starting RMDs from your work-based accounts until you actually retire, without penalty; however, regular IRAs are subject to the rule, regardless of work status.
  • Roth IRAs are exempt from the RMD rule; however, Roth 401(k) plans are not.
  • You can also transfer up to $100,000 directly from your IRA to an IRS-approved charity. Although the RMD itself isn’t tax-deductible, it won’t be included in your taxable income and lowers your overall IRA balance, thus reducing the size of future RMDs.

Another way to avoid future RMDs is to convert your tax-deferred accounts into a Roth IRA. You’ll still have to pay taxes on all pretax contributions and earnings that have accrued; and, if you’re over age 70 ½, you must first take your minimum distribution (and pay taxes on it) before the conversion can take place.

Ordinarily, RMDs must be taken by December 31 to avoid the excess accumulation tax. However, if it’s your first distribution you may wait until April 1 the year after turning 70 ½ – although you’re still must take a second distribution by December 31 that same year.

Generally, you must calculate an RMD for each IRA or other tax-deferred retirement account you own by dividing its balance at the end of the previous year by a life expectancy factor found in one of the three tables in Appendix C of IRS Publication 590:

  • Uniform Lifetime Table if your spouse isn’t more than 10 years younger than you, your spouse isn’t the sole beneficiary or you’re unmarried.
  • Joint and Last Survivor Table when your spouse is the sole beneficiary and he/she is more than 10 years younger than you.
  • Single Life Expectancy Table is for beneficiaries of accounts whose owner has died.

Although you must calculate the RMD separately for each IRA you own, you may withdraw the combined amount of all RMDs from one or more of them. The same goes for owners of 403(b) accounts. However, RMDs required from other types of retirement plans must be taken separately from each account.

To learn more about RMDs, read IRS Publication 590 at


By Jason Alderman