The One Quality Your Financial Professional MUST Possess

The One Quality Your Financial Professional MUST Possess

When selecting a financial professional to help you plan for your retirement future, you should view it as a lifelong relationship. People generally do – and should – consider various attributes when deciding the financial professional they will hire. After working in the finance industry for some years, I want to make you aware of the one MUST-HAVE quality you should seek in whomever you decide to hire as your financial counselor. Of course, I recognize that this is America, so you are free to make your decision based on whichever criteria are important to you.

Before we get to this MUST-HAVE quality, you first want to make sure you hire a person, not a firm. You may like a firm’s name, logo, advertisements, or feel confident in them because a trusted friend or family member has recommended them to you because he or she had an awesome experience. There is nothing wrong with that. Laser Financial Group cherishes referrals, too, and thanks all who have referred clients to us and those who will do so in the future. BUT, you are a completely different person, so you must make sure that YOU feel comfortable and like the firm as much as the person who referred you. More likely than not, what they were looking for is quite different from your needs and desires.

Just the other day, I ran into a man at the barber shop who highly recommended a particular professional (non-financial) office to me. The reason? He thinks the female receptionist is “hot.” While this may be an extreme instance, after interviewing people over the course of several years about their choice of financial professionals, you'd be amazed at some of their reasons for choosing them. I occasionally have to struggle to keep my composure listening to some of their peculiar logic.

As I alluded to earlier on, there are several factors to consider in hiring a financial advisor, but the NUMBER ONE thing the person you hire must posses at all costs is incredible ability to provide CLARITY. By that, I mean that when they speak, you are always able to follow and understand exactly what they mean. You understand where they are coming from and, in most cases, can figure out where they are headed. This is HUGELY important, folks.

On an almost daily basis, I talk to people who pursued strategies that literally amounted to setting a time bomb on themselves; yet all they can tell me by way of explanation is, “My advisor said it was a good idea,” or “My advisor told me that was what I needed.” These are adults who have invested in financial products/strategies that have been earmarked for their retirement futures, but they do not know exactly why the product/strategy is good for them!

If everything is not crystal clear to you, don’t hire that person, period! If you cannot understand every step along the way, you run the risk of letting your advisor talk you into what they think you need. I view this as dictatorship, which in my opinion is an extremely dangerous cancer that will surely ruin your financial future. Now let me make myself clear here: I am not suggesting that you must understand every technical intricacy of the specific products, because that’s not your area of expertise. But you MUST understand, in a general sense, why the heck you are making particular choices, especially as they relate to your future retirement.

Whenever I review feedback/comments from our seminars, my own client meetings or those from the other financial professionals I oversee, I pay particular attention to what the audience/clients say about their level of understanding. I give higher marks for “I understand clearly” than “You are very smart.” The kinds of comments that make my month are: “You make it very simple to understand” and “I never really understood it this way before.”

My usual response? It does not have to be complex to be right, right?

Please call us today at 301-949-4449 or visit our website to schedule your complimentary consultation. We guarantee we'll make things easy for you to understand.

Exercising Your Freedom of Choice Around Retirement Income and Taxes

Exercising Your Freedom of Choice Around Retirement Income and Taxes

Did you know that the U.S. tax code gives you ABSOLUTE AND COMPLETE CHOICE AND CONTROL over how YOUR tax dollars are allocated? By that, I mean that Uncle Sam initially gives all of us the opportunity to decide how to allocate our payable income taxes. Then, once we are done exercising that choice, OR if we decide to waive that control, we must turn over those dollars to the Department of the Treasury, at which point we completely lose any say over how those funds are used.

Sadly and unfortunately, the majority of taxpayers fall into the latter category – relinquishing their choice and control – either due to ignorance and/or poor financial advice. This is one of the little understood concepts in the field of personal finance, but I am confident that you’ll grasp the concept after reading this post.

First, though, let me be crystal clear that I am in no way, shape, or form joining the – in my view – completely misinformed school of thought that perpetuates the idea that there is no federal law requiring Americans to pay income taxes. That is simply not true! Section 1 of Title 26 (otherwise known as the Internal Revenue Code or Tax Code) REQUIRES Americans to pay federal income taxes. If you are not convinced, ask Wesley Snipes.

Meet Peggy

Let me illustrate this exercising of choice and control with the story of Peggy, one of our clients. I have this fireball of a lady’s permission to give you a glimpse of what I believe is preventing millions from enjoying their retirements.

Peggy finally began to realize that after all these years, the advice she’d been following from her so-called financial advisor/CPA landed her exactly where she did not want to be – with an increased income tax liability that was worsening each year. At precisely the same time, she seemed to be losing control over when she could withdraw her own money.

Peggy had been led to believe that since her income would potentially be lower in retirement, her taxes would be lower, too. It took her, in her own words, “less than 10 minutes to find the cure to [her] tax woes.” After reading one of my books – 5 Mistakes Your Financial Advisor Is Making – Peggy realized that her income had certainly been reduced in retirement, but her taxes had remained about the same as the pre-retirement level. The reason? Under the direction of her genius financial advisor and CPA – did I say genius? – she had eliminated the options that reduced her taxable income.

Peggy had sold her house in order to move back to her hometown and buy a very nice condo to enjoy all her years of hard work. She’d had a $250,000 IRA that she intended to leave to her only child, but she suddenly noticed that in addition to her already huge yearly income tax bill, she would be forced to take the IRS-mandated RMD (required minimum distribution) that comes with turning age 70½.

Her Financial Advisor/CPA’s Solution?

Take the $400,000 from the sale of her home to pay cash for her new condo, take the RMD since she really had “no choice,” and reinvest the yearly after-tax funds in a different account.

My Solution for Peggy

Put only 20 percent ($80,000) down on her new condo and take a mortgage for $320,000, which we found at 6 percent interest ($1,600 per month, or $19,200 per year). Peggy would then withdraw $19,200 each year from her $250,000 IRA to make her mortgage payments.

Here is the choice part: Peggy has a $19,200 yearly income, but also a $19,200 yearly deductible mortgage interest payment on her Schedule A Form, meaning she’s got a zero taxable income. Yes! Just like that, she has exercised her choice and control by mortgaging her condo.

Remember the $320,000 she was going to use to buy the condo for cash? If she could gain a return of more than 4.2 percent per annum (which is the true cost of her 6 percent mortgage at her combined 30 percent federal and state marginal tax bracket), she would turn a profit.

Peggy would now place her investment in a non-qualified vehicle – one whose withdrawal schedule cannot be dictated by the IRS because it’s completely income-tax free. If that is yielding her just 6 percent interest, her account would accrue $573,071 in 10 years. If she then CHOSE to eliminate her mortgage and give those dollars to the treasury via another path, she’d have made an income-tax free gain of $253,071.

You Don’t Know What You Don’t Know

That old axiom is true: You just don’t know what you don’t know – and what you don’t know really matters. Peggy’s so-called advisors stuck her with no flexibility and a decision that could have continued to cost her thousands of dollars each year. Remember, you do have a choice, and sometimes it pays quite handsomely to think outside the box.

For your free consultation and advice about how to make the best choice for your financial situation, call Laser Financial Group today at 301-949-4449 or visit us on the Web.

GOLD: To Buy or Not to Buy, That Is the Question

GOLD: To Buy or Not to Buy, That Is the Question

As a retirement planning firm, we are used to being asked about the hottest investments of the season, but lately those requests have skyrocketed. On an almost daily basis, we get inquiries ranging from whether they should or should not buy gold, silver, options, no-load mutual funds, bonds, annuities, you name it. And just so we are clear, these queries are coming in from new callers, NOT from our existing clients.

I have always been a proponent of having a comprehensive retirement plan – one that is based on your actual information, as well as proven, time-tested strategies that actually work – and then reviewing it at least annually without fail so that you can make any necessary adjustments. I still hold fast to this position, because over the years it has worked and is still working perfectly for all of our clients.

The Real Problem

Far too many investors have allowed the financial media to turn them into what I call “financial jellyfish.” In essence, these investors have no sense of direction of their own; they simply willingly go whichever direction the media tells them to. The thing is, no one can or ever will achieve meaningful financial well-being if they don’t know with crystal clarity where they are headed and why, notwithstanding the myriad options and choices which have always been and will likely continue to be available to them well into the foreseeable future.

 Specifically, the Gold Rush

One thing I feel compelled to point out is that the individuals making these inquiries always have one thing in common: their portfolio lost money when the stock market declined. It’s natural and rational that when you are losing money and someone points to the fact that gold is gaining, you’ll want to switch. But that’s exactly the problem, and my point: Those who do not have a realistic plan that is based on proven, common-sense, time-tested strategies will always experience instability when reality happens. NONE of Laser FG’s clients made a change to their strategies during the recent market upheaval, for two reasons:

1. Their expected retirement income did not change.
2. The market’s decline did not threaten their retirement goals.

That’s correct: not a single Laser FG client lost a dime of their portfolio’s values, so they are not looking to gold or anything else to rescue their retirement. They are actually calling and sending tons of referrals our way, and we very much appreciate them for such positive feedback.

Gold marketers know that the absolutely best time to pick up “financial jellyfish” is when the stock market dips, and that’s exactly what they are doing now. And there’s nothing wrong with that.

But have you wondered at all why these gold marketers want you to invest only 10 percent of your total portfolio in gold? Our clients usually want to maximize their wealth and will aggressively go for the kill on anything they believe will tremendously increase their wealth. Why would anyone go only 10 percent in on something that is going to make them wealthy?

The Cure

Be mindful of the fact that we live in a very noisy financial environment. Here’s the best advice I can offer you, and all the random callers of late: Get a real plan. And by that, I mean one that is developed exclusively for you, a plan you’ve discussed extensively, a plan with realistic assumptions that keeps your expectations in mind.

Call us at 301/949-4449 today or visit our site to set up your complimentary, no-obligation consultation with an expert strategist who will help you determine how to best leverage all the financial tools at your disposal.

Protect Your Family from U.S. Census Scams

Protect Your Family from U.S. Census Scams

The U.S. Census Bureau has begun the 2010 Census process which also – unfortunately – means that scam artists posing as Census workers/officials just added to their arsenal of dubious ways. Today, I would like to share with you some quick facts and tips on how to protect yourself from falling prey to these sometimes sophisticated and shrewd individuals.

Census forms are being mailed and/or delivered to your household right about now, with the request that you complete and return it promptly – mine arrived last week.

According to the Census Bureau: “If you fill out the form and mail it back, no census taker will need to come to your residence.” Then, between April and July, census takers will visit ONLY those households that did not return a form by mail. The good news seems to be the Bureau’s claims that this form is “one of the shortest forms in history – 10 questions in 10 minutes.”

Should you find yourself in the position of having a census taker knock on your door, here’s the least you should know. A legitimate U.S Census Bureau worker MUST have an identity badge, a handheld device, a confidentiality notice, a Census Bureau canvas bag, and the telephone number of their Census Bureau offices. It is recommended that you match their badge with their driver’s license and call their office to verify their legitimacy.

You ABSOLUTELY MUST NOT Fall for Any of These Gimmicks!

Email. No census official – even if it is your spouse – is authorized to or should contact you by email. Please remember this – NO emails from the Census people, period!

Online forms. There is no filling of any forms online. The Census Bureau has clearly stated that they will NOT ask you to complete any forms or provide any information whatsoever online.

Identifying information. Also, do NOT release any identifying information such as your Social Security number, bank or credit card information, salary/income, citizenship/immigration status, or make a donation to any cause – however noble and legitimate it may sound – to ANY census taker. Even if they are married to you, the Census Bureau has NOT authorized them to do anything that even resembles this.

While adhering to the above-mentioned cautions will help protect you, I must point out that this is not an exhaustive list. You should always pay attention to your local officials, as most of these scams change as quickly as the seconds tick away on a clock.
________________
Schedule your free, no-obligation consultation today! Call (301) 949-4449 or visit LaserFG.com.

How Well Do You Know the SPECIFICS of Your Employer-Sponsored Retirement Plan?

How Well Do You Know the SPECIFICS of Your Employer-Sponsored Retirement Plan?

Virtually anyone who has an employer-sponsored qualified retirement plan, like a 401K, 403B or the like, is aware of these general IRS rules:

• Your pre-tax contributions accumulate tax-deferred.
• Once you have reached age 59½, you’ll be taxed on your withdrawals as ordinary income.
• However, if those funds are withdrawn before age 59½, there is a 10 percent “early withdrawal penalty tax” in addition to the “regular” income tax on the funds withdrawn.

While it’s a great idea to know these general rules, our firm has always cautioned investors to, more importantly, zero in on the specific rules of their employers’ plans. The reason is that whenever your plan’s rules differ from general IRS rules, the specific rules of your plan prevail.

For example, let’s say you are younger than age 59½ and would like to withdraw money from your 401K. You are aware of the fact that under IRS rules, you’ll have to pay an additional 10 percent penalty tax. Although the IRS general rules allow such withdrawal – and I’ll bet the IRS would be happy for the additional 10 percent revenue – if your employer’s plan does not allow you to access those funds early, you cannot make the withdrawal.

Over the years, many folks who have consulted our firm for their retirement planning needs – which, by the way, is an extremely smart move – have been surprised to discover what they did not know about their plan’s specific rules. Just this past week, a lady who had recently retired came to us for retirement planning help. (Like I always say, it’s never too late to contact Laser FG when it comes to retirement planning!)

This lady told us that she’d been told by all the other advisors she had consulted with prior to coming to us, as well as the websites she’s read, that since she’s older than 60, she can access her employer-sponsored TIAA-CREF retirement funds “whenever she wishes.” The Laser FG strategist she worked with explained that while this is “generally” true, we’d need her permission to discuss the specifics of her plan with the current custodian (TIAA-CREF). She probably thought the strategist was ridiculous, wondering to herself, Does this guy know what the heck he’s doing?

To her amazement, the specifics of her employer’s plan read this way: Regardless of how long she’s held the account OR her age – notice the key word here is regardless – she is limited to withdrawing 10 percent of her account’s value per year, over nine years. So although she wanted to, needed to, and absolutely has to roll over her funds to a more advantageous vehicle in order to maximize her income, it will take her nine years to accomplish that.

The woman insisted that her best friend, who retired a few years ago from a different employer, was allowed to transfer her account in its entirety. The simple and only answer we could give her about the different allowances between the two plans was that the specifics of her friend’s plan allowed it.

More and more people fall prey to similar situations on a daily basis, simply because of an illness called generalization. Here’s some important advice: When it comes to YOUR retirement, please make sure you understand the specifics.

________________

Schedule your free, no-obligation consultation today and get the help you need to understand the specifics of YOUR employer-sponsored retirement plan! Call (301) 949-4449 or visit LaserFG.com.  

Does Tax Preparation Software Really Get You More Money Back?

Does Tax Preparation Software Really Get You More Money Back?

Each year, right about this time, I receive quite a few inquiries from people asking which tax preparation software will get them the largest refund.

Just the other day, I had to referee an emotional exchange between two siblings who were having a very passionate discussion – to put it lightly – about this particular issue. Sibling A would have received a larger refund if she had utilized Sibling B’s recommended software. Or was it the other way around? Regardless of who was “right,” I must tell you, it was quite interesting and amazing to hear their contrasting views.

Throughout the Year Is What Matters

Tax law is tax law, PERIOD! So allowable deductions, exemptions, and/or credits will be the same, regardless of whether you use the latest software or do it the old-fashioned way, using a little piece of software I call a pencil. What is critical – and what I believe most are overlooking – is that once December 31st passes, there is absolutely nothing you can do that will get you a bigger refund than you are legally due. That’s right! No tax expert, guru, software, or CPA for that matter, can improve your refund after the fact.

In effect, if your tax guy or software company claims responsibility for your refund but does not instruct you in how to structure your affairs between January 1 and December 31 of the prior year – other than simply punching your information into a software program – you probably are not receiving any valuable tax assistance anyway.

No software has magical powers that enable it to pull more refund dollars out of thin air. The only possible way I can think of to get a bigger refund than you legally deserve is to cheat on your returns, and I’m sure you’re not interested in going that route.

What About the “Maximum Refund Guaranteed” Claims?

If you pay close attention to this claim that every software company makes, technically they are NOT saying that if you use something else – including a pencil – you’ll receive a lesser refund, even though your mind might interpret it that way. It’s simply an effective marketing technique. They know you’ll fall for the message, and they know they can get by with it, so they use it. Interesting, isn’t it?

The more fascinating part is that over the years, I’ve examined returns that were software prepared and spotted areas where money was being left on the table – missed credits or selecting a less favorable credit/deduction. In one such instance last year, the filer was able to improve her software refund by more than $1,000.

Give yourself a break and do your tax planning during the year, instead of after the fact. And to all the parties who may be debating the relative merits of one software package vs. another, relax! And to the software marketers creating the illusion of a magical refund, I have a one-word response: Puh-lease!
________________
Schedule your free, no-obligation consultation and discover how you can create retirement income that is completely and legally tax-free! Call (301) 949-4449 or visit LaserFG.com today.

Should You Convert to a Roth IRA? (Part 5)

Should You Convert to a Roth IRA? (Part 5)

In this final discussion on Roth Conversions – at least for now – I offer my professional opinion on two critical issues.

Why the sudden push for Roth Conversions?

As I have stated previously, these conversions are not entirely new: Roth IRAs have been around since 1997. Finding it was in their best interests, Laser FG has helped numerous clients do what we call Strategic Conversions for more than a decade!

For one thing, as long as your MAGI was less than $100,000, you did not need to wait until the new law that became effective on January 1, 2010 to do such a conversion.

Now, the much larger issue is that regardless of your MAGI, you could have achieved similar benefits by using what I call “Roth on Steroids,” if you were to max-fund a policy within the limits of the Internal Revenue Code sections 7702 and 7702A.

So financial professionals who really knew their business would never have advised you to wait for this "new" law.

Is it really a bad idea to pay taxes due on the conversion from the balance of your existing qualified plan?

Much of the literature I have seen on this topic completely frowns on this idea, when, in fact, I think that should not be the case at all. I believe if you are beyond the age where you’ll not incur penalties for early withdrawal, it may be worthwhile to pay the taxes due from your existing balance. People who consider these conversions believe that their future tax rates are going to be higher, so if you’ll have a decent enough return to warrant the conversion, why not?

If you go by what most so-called advisors are saying, and hold off converting – when, in fact, you could have benefited by doing so – and keep your money in qualified status, sooner or later you’ll voluntarily withdraw those funds or the IRS will force you to do so. When that happens, guess what you’ll have to pay? Taxes! And note that this will happen in the future, when most people believe tax rates will be higher.

As usual, it behooves you to consult a savvy advisor who also applies a ton of common sense to help you assess your specific situation. As I mentioned earlier, we have been doing these strategic conversions for over a decade, so this new law is no news at all to our clients.
______________________

Get a free, no-obligation review of your situation by calling (301) 949-4449 or visiting www.LaserFG.com.