Author: simonpayn13

Historically, gold has been considered a “safe haven” in times of economic and geopolitical instability as well as inflationary environments – meaning it might be an option to consider today.
Gold’s greatest potential advantage may be its tendency to perform differently from other assets.
As a result, it can help diversify a portfolio of traditional investments, such as stocks, bonds and real estate.
Of course, diversification cannot guarantee a profit or protect against a loss.
One potential pitfall when investing in gold is volatility. Gold prices can fluctuate widely.
For example, the price of gold declined from more than $800 per ounce in the 1980s to $250 per ounce in the 1990s. It is now higher than $1,000 per ounce.
Gold investments come in many forms, namely bars, coins, exchange-traded funds that track the price of gold and stocks of companies that mine and process gold.
Indeed, many investors seeking exposure to gold do so through mutual funds that invest in such stocks.
The idea is that if gold prices rise, so, too, could the profits of gold-related companies.
Of course, this isn’t guaranteed, as there are many factors that influence the price of a gold-related company’s stock, the price of gold being just one of them.
One strategy for investing in gold is dollar cost averaging, which entails investing a fixed amount of money in gold every month regardless of the price.
This strategy, while not guaranteed to be effective, could potentially spread risk out over time.
While investing in gold may be appealing in today’s economic environment, there are many things to consider before doing so.
Your financial advisor can help you determine if gold investments are suitable for you based on your individual situation and financial goals.

Almost 44 million Americans care for someone 50 years or older, spending about $5,500 a year providing that care. If you’re one of them, you may be entitled to a tax break by claiming the care recipient as a dependent on your tax return. However, there are some eligibility requirements:

• The recipient must be either a relative (living with you or alone) or a nonfamily member who has lived with you for the past year.
• The recipient must have an annual gross income, excluding Social Security benefits, of less than $3,650.
• You must provide more than half of the care recipient’s annual financial support.

If the care recipient lives with you, you can include in your financial support calculation that person’s share of your mortgage, utilities and other housing-related expenses. If several people in your family together provide more than half of the care recipient’s financial support for the year, you may be able to file a “multiple support declaration” on IRS Form 2120 so one person can claim the entire dependent exemption. Caregivers who are not eligible due to the $3,650 income requirement may be eligible for a dependent-care credit of as much as $1,050 via IRS Form 2441.
The legal and tax information contained in this article is merely a summary of our understanding and interpretation of some current provisions of tax law and is not exhaustive. Consult your legal or tax counsel for advice and information concerning your particular circumstances. Neither we nor our representatives may give legal or tax advice.

The “invest in what you know” school of investing was popularized by legendary mutual fund manager Peter Lynch in his best-selling book One Up on Wall Street.

In that book, Lynch wrote about buying the stock of Dunkin’ Donuts because he liked the coffee and Hanes because his wife wore the company’s L’eggs pantyhose.

Today, many investors still follow this strategy, buying the stocks of companies they like because they assume others will like them as well.

As interesting as that concept is, however, it may not be a good strategy – at least not for the bulk of your investments.

One reason is the tendency individual investors have to simplify the strategy.

Lynch didn’t just buy Dunkin’ Donuts and Hanes. He thoroughly researched them first. In fact, in One Up on Wall Street he writes that “finding the promising company is only the first step. The next step is doing the research.”

Indeed, the ability to research stocks – not great taste in coffee, pantyhose and other products – is what made Lynch such a great investor.

That’s because even if a company makes a great product, it may not have the quality of management, solid balance sheet or other qualities to grow and increase stock value.

Understanding these ideas takes some financial knowledge and skill.

That’s not to say individual investors can’t research stocks. Many can and many do with success.

But do you really want to spend your time poring over balance sheets and financial projections?

If not, that’s where a financial advisor is helpful.

A financial advisor can help you analyze stocks and mutual funds and decide which ones work for you.

You get the benefit of solid financial knowledge without expending the effort and time to do all the research.

The massive tax bill passed by Congress in December brought good news for many Individual Retirement Account (IRA) investors. It resurrected an expired provision that allows special charitable donations of IRA assets.

The provision allows taxpayers who are 70½ years or older to contribute a total of $100,000 in IRA assets to one or more qualified charities.

Qualified charities include schools, churches and public charities, but not private donor-advised funds or foundations. The contribution must pass directly from the IRA sponsor to the charity.

The good news is that the charitable contribution can satisfy your required minimal distribution so you don’t have to report the payout as income. In fact, it bypasses tax calculations altogether.

The bad news is that donating in this way means you get no tax deduction for your donation, which means it isn’t necessarily the most tax-efficient way to donate while you are alive.

One strategy is to donate appreciated assets such as a long-held stock during your lifetime and donate other assets such as IRAs after your death. Donating appreciated assets when you are alive allows you to qualify for a full-market-value deduction, allowing you to avoid capital gains tax on growth.

Your financial advisor, who is familiar with your individual financial circumstances and goals, can help you decide which strategy might be right for you.

Steep losses from the market meltdown of 2008 and 2009 have many financial advisors recommending that investors consider alternative investments. But what are these so-called alternatives and how do they fit into a portfolio?

Alternatives, in general investing terms, comprise portfolios that hedge their positions, invest in commodities through futures contracts or even trade currencies.

These portfolios may take long positions, which involve buying a security in the hope it will increase in value, or short positions, which involve selling a borrowed security in the hope it will decrease in value and can be purchased and returned to the lender at a lower price.

These strategies have long been used by institutional investors but are now available to retail investors through mutual funds and exchange-traded funds (ETFs) – and they’re increasing in popularity. A survey by investment firm Rydex/SGI found that 71% of financial advisors advocate alternative investments, and 19% already have at least half of their clients using them.

The potential benefit? Alternatives may have a low correlation to traditional investments like stocks and bonds, and that can increase diversification potential. Although diversification cannot ensure a profit or protect against a loss, more than 75% of financial advisors surveyed by Rydex/SGI said the primary reason they use alternative investments is to further diversify their clients’ portfolios.

But alternative investments aren’t for everyone. The performance of alternative mutual funds and ETFs can vary as widely as their strategies.

You may want to consider if alternatives are right for you. However, it’s wise to consult your financial advisor before jumping in. You may already have some exposure to alternatives, because traditional mutual fund managers might invest more in companies that benefit from rising commodity prices when commodity prices rise.

In today’s volatile market environment, a lot of investors are turning to dividend stocks. They have increased in popularity as the stock market has tumbled, in part because they offer some indication of corporate management’s confidence in the future of the business.

However, the stocks that pay the biggest dividends may be outside the United States.

To start, the international equity markets provide a broader universe of high-dividend-yielding stocks. While there are 116 U.S. stocks with market capitalizations greater than $1 billion that have dividend yields greater than 5%, 530 international stocks met those criteria as of Aug. 31, 2010, according to Morningstar.

Moreover, many foreign companies pay bigger dividends than U.S. companies do. That’s because a number of foreign countries, both developed and emerging, have a more dividend-friendly culture that encourages paying cash to shareholders rather than keeping it as retained earnings and reinvesting it in the business.

One way to take advantage of the potential for higher dividends abroad is to invest in an international equity mutual fund that emphasizes income.

Keep in mind, however, that there are downsides to investing internationally, including less transparent markets and currency fluctuations. Moreover, many foreign companies link their dividends to a percentage of their earnings, so dividends can fall when earnings do.