It’s beginning to “cost” a lot like Christmas!

 

6th-year-holiday-costs-2.jpg

 

It’s beginning to “cost” a lot like Christmas! It’s a fun play on the popular holiday song, “It’s beginning to look a lot like Christmas”, originally written by Meredith Wilson in 1951. Though times have certainly changed since the 1950s, the spirit of gifting and giving during the holidays has always remained the same. According to the National Retail Federation, the average American spends an average of $1,000 during the holiday season!

It’s not uncommon, as we approach the holiday season, that you might find yourself feeling grateful, compassionate and more charitable than any other time of the year. Now is the time people eagerly give to their loved ones and generously give back to those in need. Here’s a look into new and exciting ways people are giving and gifting in 2018:

529 College Savings Plans

As the total student loan debt in the U.S. approaches the $1.5 trillion mark, 529 college saving plans have grown in popularity. Unlike ordinary gift checks, a 529 savings plan can an act as an investment in a child’s future that has the ability to grow, tax-free, for the use of qualified educational expenses (K-12 tuition included under the new tax law). While college savings may not be the most riveting gift for a young child to receive at the time, the potential to alleviate the future burden of student loans, all or in part, will be one gift they won’t soon forget.

Custodial Investment Accounts

There are two main forms of custodial investment accounts, UGMA (Uniform Gifts to Minors Act) and UTMA (Uniform Transfers to Minors Act) accounts. They are virtually identical aside from the ability of UTMA accounts to hold real estate. Custodial accounts can be a great way to teach children about investments while limiting their access to investment funds. Depending on your state, access to custodial accounts is limited to minors until the child has obtained ages 18-21.

In 2018, individual gifts are limited to the annual $15,000 gift-tax-exemption limit ($30,000 for married couples). Family and friends can contribute directly to custodial accounts of another person. If these accounts are properly titled as retirement accounts, such as a Custodial Roth Account, contributions must be made indirectly, limited to $5,500 for 2018, and the donee must have earned an income equal to or greater than the contribution made.

Charitable Gifts

Did you know you can complete charitable gifts in the name of a friend or family member and still capture the tax deduction? Assuming you itemize, funds given to charity can come from any taxable account (or qualified, see below) of your choosing and may list a donor of your choosing. For example, one can give to St. Judes Children’s Hospital using their own personal funds, receive a tax deduction for doing so, and list the donor as someone other than themselves, like a grandson or other relative. So long as you can prove the funds used came from you, i.e. your name is listed on the account used, you should receive a deduction for these forms of charitable contributions.

There are several ways to give back to charity, one of the more tax efficient ways is by way of Qualified Charitable Distributions (QCDs). This is an alternative to Required Minimum Distributions (RMDs) that you are required to take from your IRA upon obtaining age 70 1/2. A QCD allows you to give a portion or all of the amount that you otherwise would be required to take from your IRA to charity. The benefit of doing so is to exclude these funds from your taxable income. This process can be especially beneficial if, under the new tax reform, you will be using the new increased standard deduction, $12,000 for individuals and $24,000 for married filing jointly, as opposed to itemizing.

There are many forms of giving. Integrating both charitable giving and family giving can be an intricate part of your overall plan, and it doesn’t always have to “cost you an arm and a leg.” Ensuring your gestures are both sustainable and tax-efficient are good questions to ask. At DWM we are always looking for new ways to give back to our clients and friends by assisting in these areas. Please, never hesitate to reach out to us in regards to new ways to give back to your family, friends and charitable organizations.

Happy Labor Day: Fun Facts!

Labor Day in the 21st century means time for beaches, BBQ, ballgames and quality time with family and friends. For many, Labor Day signifies the last days of summer. But don’t worry, the official end of summer is September 21st so you still have some time to catch some waves and rays. Although Labor Day always falls on the first Monday of every September, there is a lot more to this holiday weekend than an extra day off from work and great sales. From a survey done by WalletHub, here are 10 facts about Labor Day that you may not know:

  1. 133 million Americans will enjoy a BBQ this Labor Day

 

  1. The average Labor Day shopper will spend $58

 

  1. 25% of Americans plan to get out of town

 

  1. The top three Labor Day destinations include New York City, Chicago, and Las Vegas

 

  1. Labor Day is America’s third favorite holiday behind Christmas/Chanukah and Memorial Day

 

  1. There are approximately 89 running races held over Labor Day weekend

 

  1. The number one hardest working city in America is San Francisco with an 8 hour average work day, and the laziest city in America is Columbia, SC with an average work day of 7.3 hours

 

  1. Labor Day is the unofficial end of hot dog season in America. From Memorial Day to Labor Day there are 818 hot dogs eaten per second

 

  1. Most Americans believe Labor Day is only an American holiday when really it was started in Canada

 

  1. Last but not least, yes, you really can wear white after Labor Day!

From everyone here at DWM, have a great Labor Day Weekend and enjoy some time with the family!

The End of Signing on the Dotted Line

What-Counts-As-An-Esignature-.png

 

 

We all lead busy lives, so it’s important to save time and maximize efficiency whenever we can. The new eSignature feature from Charles Schwab allows you to review, electronically sign, and send back eligible forms to us, making a variety of processes quicker and easier than ever before.

At DWM, we always stay up to date with the latest technology and keep you informed, so we can ensure the best possible experience for our clients. As we learn more about today’s changing technology and the need to stay on top of cybersecurity, going digital allows sensitive client material to remain safely guarded, as well as providing an easier, less burdensome and more accurate onboarding process for everyone.

eSignature is accepted on many new account applications, maintenance forms, and managed account forms, such as:

  • Schwab One Personal accounts
  • Schwab One Trust Accounts
  • Company Retirement Accounts (CRA/Pension Trust)
  • Custodial/Minor IRA Applications
  • Account Closure Forms
  • Designated Beneficiary Plan Agreements
  • Investor Checking Accounts
  • IRA Distribution Forms
  • MoneyLink Applications
  • Transfer Your Account (Into or Out of Charles Schwab)

For a full list of eligible forms, click here. This time-saving eSignature feature is extremely efficient, and it’s easy to use, too! Simply follow the steps below and you’ll be well on your way to mastering electronic signatures.

1)When expecting a form for eSignature, keep an eye out for an email from Charles Schwab that states “Documents for Your Electronic Signature.”

2)Click “Review Documents” at the bottom of that email.

Review

 

3)Log into your Schwab account using your Schwab Alliance when prompted. If you don’t know your account information, let us know or contact Schwab Alliance at 1-800-515-2157.

4)Click “Agree/Continue” to agree to the eSignature terms and conditions.

5)Review the document and ensure that it is accurate before signing.

6)When you are ready, choose from two signing options: automatic signature or draw, in which you digitally “draw” your own signature.

Capture222

 

7)Click “Sign” in all places where signature or initial is needed.

8)Click “Finish” to complete the process. DWM will be notified promptly and you will then receive a confirmation email.

 

We could all use some time back in our day, so if you’d like to learn more about eSignature, reach out to us at any time or contact Schwab Alliance at 1-800-515-2157 for more information.

Rates keep going up! Should I Still Buy That McMansion I’ve Been Dreaming of??

BMIFeature-Rising-Rates-Minimal.pngThe ultra-inexpensive era of mortgage rates is coming to an end, and quickly. Mortgage rates have reached unprecedented 7-year highs. The average 30-year mortgage this week will cost consumers 4.7%, up nearly a full 1% from 2016.

While a 1% increase may not seem like the end of the world, it is important to realize the effect this may have over the course of a mortgage. Consider a consumer who purchased a home with a $200,000 mortgage in 2016. Assuming a 3.7% interest rate, this would amount to a principal and interest monthly payment of $921. In today’s environment, the same consumer may have a monthly payment of $1,037. Over the life of a conventional 30-year mortgage, today’s consumers may pay $41,760 more than those who locked in a rate in 2016.

Reviewing rates in today’s environment may leave some consumers discouraged. However, in comparison to many historical rates, today’s rates are actually relatively low. Take 1981, for example, when the average 30-year mortgage rate was 16.64%. Using a 16.64% interest rate, a $200,000 mortgage in 1981 would cost the consumer $2,793 per month, or, over the course of 30 years, $632,160 more than a consumer today.

For those looking to purchase a new home, the question remains: Is now a good time to buy? The answer is not so simple. There are a few factors to consider before determining if it’s the right time to buy for you.

First of all, as the economy improves overall, mortgage rates are likely to continue to increase. The culprit behind increased mortgage rates is actually surging wage growth. According to the Census and Bureau of Labor Statistics, average household income is at an all-time high, while mortgage rates have been laying low—until now. As wage growth continues to increase the money supply to consumers, consumer spending power increases. Unfortunately, increased consumer spending also increases demand for goods and will ultimately raise the price of goods–inflation.

With the expectation of rising inflation comes a steady increase in the yield of the 10-year Treasury note. The yield on the 10-year Treasury note, which usually affects the 30-year mortgage rate, has risen to its highest close since 2011, ending up at just over 3.1%.

In addition, the Federal Reserve has indicated that it will be raising short-term rates at least three to four times this year alone, and potentially several more times in the coming years.

Current home owners should also not expect to refinance anytime soon. As rates rise, the group of homeowners who would benefit from or be eligible for mortgage refinancing has decreased drastically by 46% this year, according to Black Knight Inc.—the smallest group since 2008.

But with mortgage rates trending upward and no sign of lowering again in sight, many people are choosing to strike while they still have the chance.

Overall, your decision depends on if you want to wait it out and hope that mortgages rates will decrease again, or if you want to buy now while the rates are still relatively low, even with the 1% jump. One effective tip to help counteract for the increase in mortgage rates is to lower your price range accordingly and look for a house priced lower than what you would have pursued had mortgage rates remained at their lowest point.

Of course, there are many other factors besides mortgage rates which may affect a consumer’s decision to purchase a home. For example, economic factors such as rising rents, home appreciation, and predictable monthly housing payments.

Bottom line: Rising rates are expected to continue for some time, so it is important to weigh all factors at play and make the decision that’s right for you today and in the future.

The Money Talk

It’s no secret that today’s standard high school and college curriculums are missing a few very important details. One of the most overlooked areas is basic financial education. Discussing finances with your children can be a difficult topic to broach, but it is critical to their success in the long run.

One common misconception of having “the money talk” is the idea that kids must be sheltered from financial issues. In some instances this is absolutely true, but having a basic discussion about finances and instilling good values in your children is important. “The money talk” shouldn’t be seen as taboo, but rather as an opportunity to guide your kids and help them navigate potentially tricky financial issues and decisions that arise.

Here are some tips to help as you approach “the money talk.”

 

1.Be honest.

 

Chances are that at some point in your life, you’ve experienced highs and lows in your finances. No need to hide it! These experiences provide a learning opportunity for your kids and allow you to be open and frank about the reality of financial decisions—they can handle it.

If you ran up debts in your past and had difficulty paying these back, this serves as an excellent teaching moment. Learning from those you respect can be just as effective as learning the lesson on your own.

Also, this may go without saying, but be careful not to spread falsehoods about your current financial situation. Remember, your kids can handle it and will almost always know when you’re not being completely honest with them.

 

2. Talk in values, not figures.

 

If you’re hesitant to share your financial situation with your children, that is normal. You are certainly not alone on this, but it doesn’t have to be scary. The good news is your kids don’t always want to know (or need to know) every detail of your financial life. Don’t sweat the small stuff—instead, focus on teaching them the basics. Ask yourself, what do they need to know, and what is often missed in standard education? Children should have a solid understanding of concepts such as saving, budgeting, paying down debt, developing healthy spending habits, and compounding interest.

 

3. Use real-world experiences.

 

Life is full of sporadic but important financial lessons that can be found in everyday experiences. It’s up to you to look for these opportunities and expand on them with your children.

If you’re going to the bank, you may consider taking your children with you. This is a great time to demonstrate how transactions work and, if applicable, how an ATM works. To take it a step further, you may even begin the discussion on how money can generate interest.

When your children start their first jobs and start receiving paychecks, this is a convenient time to discuss the importance of budgeting, paying bills, and taxes. Talk through what their goals are for each paycheck and how much they may need to save in order to accomplish these goals.

If you are planning a family trip, consider letting them in on the budgeting. Showing them your budget, planning activities you want to accomplish with this budget, and building a trip around this information will help make financial planning seem tangible to them. This may also be a good time to remind your kids that goals often require sacrifice, and not every trip activity will be accomplished.

Try giving your kids an allowance and taking them to the grocery store. The grocery store can be a clear example of “needs” vs. “wants.” Your children need nutrients but most certainly would like to have a few candies as well. However, with a set allowance, they won’t be able to afford them all!

In closing, whether you realize it or not, you play an important role in your children’s financial future. In their early years, they rely heavily on you for financial advice to help them form healthy financial habits (and the occasional $20 bill for the movies). At DWM, we feel it is essential to educate your children about finances early on, so they can be better prepared for the future. That’s why we created our new Emerging Investor program to help younger folks invest early on and get started on the path to financial freedom! To learn more about this exciting new program, check out the full description here: http://dwmgmt.com/blogs/123-2017-11-29-20-49-47.html.

Data Breach Deja Vu

facebook-data-dislikeSocial media behemoth Facebook landed itself in hot water this week when it was revealed that the company allowed a third-party firm to gain access to user data. This latest scandal comes amid a slew of serious data concerns and shows just how careful we need to be with our information in this digital age. In the world of mobile devices, social media, and the cloud, it can be disconcerting to think that your personal information might just be floating around out there.

The data firm, Cambridge Analytica (CA), accessed information from tens of millions of Facebook users without their permission and “improperly” stored this data for years, despite CA’s claim that the sensitive data had been destroyed. Furthermore, CA, who is known for supplying marketing data for political campaigns, is believed to have harvested this information for political campaigns after 2013.

According to the Wall Street Journal, Facebook bears a huge amount of blame for allowing CA to get its data to begin with. However, reports calling CA’s data harvesting a “leak,” a “hack,” or a serious violation of Facebook policy are all, unfortunately, incorrect. All of the information collected by the company was information that Facebook had freely allowed app developers to access.

Now, an investigation is being launched to find out exactly who knew about this large-scale improper data usage and when they knew about it. According to Facebook, this serious slipup should not be considered a data breach, because the data firm abused user data that was openly shared with third parties. However, I think we can all agree that sharing user data with third-party firms opened up the floodgates for illegal data breaches and abuse of personal information – as seen by Equifax in June of 2017. While Facebook’s stock takes a nosedive and the company tries desperately to get out in front of this PR nightmare, the rest of us are left reflecting on how our sensitive data is being handled and what measures are being taken to protect it.

As a common rule of thumb, it should be noted that you should never keep sensitive information on any social media platform. This includes but not limited to phone numbers, addresses and even email addresses. While your email address, and sometimes phone numbers, are needed for the account setup in many social media platforms, this information should never be made viewable by friends or followers on any social media platform

With DWM, you don’t have to spend any sleepless nights wondering about how your personal and financial information is being handled. Our firm and our preferred custodian, Charles Schwab, would never jeopardize our clients’ information by handing out data to third parties. You can feel confident knowing that your information will never be released to any outside parties for any reason (except with your explicit permission).

You may want to consider deactivating your Facebook account, but you can rest assured that your financial information with DWM is safe and secure.

The Other Side of the Bitcoin

With the rise of new technologies, each one more advanced than the last, a new form of electronic payment has emerged.
Bitcoin is a decentralized digital currency created for efficient electronic payments. It is run and controlled by what is known as a ‘blockchain’, a public ledger of all transactions in the bitcoin network. A ‘blockchain’ is essentially a company-wide spreadsheet that can be accessed by all. The purpose of the ‘blockchain’ is to determine legitimate transactions and deter attempts to re-spend coins that have already been spent.
Bitcoin works similarly to a check in that there are two different numbers per transaction: your personal private key (or account number) and a signature that confirms your transaction on the above mentioned ‘blockchain’. The digital currency can be spent in a number of different ways, but can only be held in two forms. A bitcoin user can hold an electronic wallet (e-wallet) via a web wallet or a software wallet by using a downloadable software. An e-wallet is essentially an online bank account that allows you to receive bitcoins, store them, and send them to others. A software wallet is a downloadable software that allows the consumer to be the custodian of their bitcoins. Often the latter leads to more liability for the consumer.
It all sounds pretty enticing, and maybe you are wondering if you should jump into this next innovative technological trend. But the rapid growth of bitcoin has many people concluding that it’s just another bubble waiting to burst.
Markets have seen many different financial bubbles over the years, and none of them have ended particularly well. A financial bubble occurs when market participants drive prices above market value. This investment behavior can be attributed to herd mentality, where people think that because everyone else is investing in a certain entity and seeing short-term success, that means it’s a good investment. Inevitably, these financial bubbles can’t be sustained long term and they burst.
The first documented economic bubble in history occurred in the 17th century, when Dutch tulips were all the rage. The contract prices of the newly introduced and popular bulbs grew to an outrageous high, eventually leading to a dramatic collapse or “burst” in February of 1637. Today this is known as “tulipmania.” More recent examples include the dot-com bubble of the late ‘90s and the housing bubble in the 2000s. I’m sure we all remember how those financial bubbles ended, and the repercussions that followed those bursts.
Looking back on all of these events, it’s easy to see now how these bubbles formed, so we can use these prior experiences to better predict financial bubbles. Today, the cause for concern is bitcoin, and it’s more the question of when the bubble will burst rather than if it will.
Bitcoin got its humble start six years ago at $2. Three years later it was at $300 and last week it topped off at $11,000. With a 1000% increase so far this year alone, it’s easy to see why many people are raising the alarm or joining the frenzy, depending on the person!
With its frequent surges and sharp price moves, bitcoin is as volatile as they come. In other words, if you think you want to give bitcoin a shot, it’s best to assume that you’ve already lost that money. Everything we’ve learned about financial bubbles over the past four centuries points to an imminent burst in this digital currency’s future, and you and your money don’t want to be caught in a tight spot when it does.
There is also speculation that regulators will step in at some point because of the potentially disastrous economic consequences associated with the runaway bitcoin prices. The first concern is as we’ve outlined above, the bubble will burst and cause devastating losses. Additionally, future contracts are opening bets for bitcoin, and some funds are set to take form in early 2018 to pitch bitcoin to more mainstream investors. The more bitcoin gets wrapped up in our financial system, the worse it will be for everyone when it bursts.
The other major consequence presents the other side of the “bitcoin”: what if the bubble doesn’t ever burst, and bitcoin becomes an alternative, or worse, a replacement for standard U.S. currency? We cannot see regulators allowing what to happen, so it’s safe to say that even if this bubble miraculously doesn’t burst, it will most likely lose traction one way or another.
As many of you know, at DWM we don’t try to time the markets, and when it comes to speculative investments that require you to do so, it’s best to avoid them altogether.

DWM SAYS THANKS – LAST WEEKEND AT THE SWEETGRASS PAVILLION

This past Saturday, many clients/family/friends attended our annual Charleston Friends of DWM Appreciation Event at Sweetgrass Pavillion in Mt. Pleasant, SC. Although the sun evaded us, the room was filled with bright faces!

A great time was had by all!

thumb_IMG_5017_1024.jpg

 

Marilyn Dingle, the resident sweetgrass basket weaver, educated us on the history of sweetgrass baskets.

thumb_IMG_3858_1024.jpg

And some even participated!

IMG 1059

Everyone learned a thing or two about Marilyn and the art of sweetgrass basket weaving!

IMG 5007

And had lots to talk about!

 thumb IMG 3861 1024 thumb IMG 3860 1024

Many thanks to all who waded through the rain and joined us for our appreciation event! And to both those that did attend and to those that couldn’t make it, let us reiterate that we are honored to have you all as our friends and look forward to a continued great relationship! Thank you!!!

thumb IMG 3876 1024IMG 1100

 

 

How Much do You Know About Labor Day?

We are all aware that Labor Day signifies the end of a summer filled with backyard BBQs, family and sunshine. It is the one long weekend of the year when families come together to say goodbye to summer, unwind and prepare for the changing seasons ahead. However, many of us don’t take the time to consider the true origin of Labor Day.

The concept of Labor Day dates back all the way to the Industrial Revolution in the U.S. during the late 1800s. The typical work day was 12 hours long, and the typical work week was seven days. Working conditions were far from ideal, and even children as young as four or five years old were commonly seen working in mills and factories to help their struggling families scrape by.

Many workers began organizing protests and strikes across the U.S. Unfortunately, many of these demonstrations turned violent and, in some cases, deadly. In 1894, Eugene V. Debs, with the support of the American Railroad Union, organized a strike and boycott of the Pullman Palace Car Company in Chicago. This strike effectively crippled all railroad traffic in the U.S., leading then President Grover Cleveland to deploy 12,000 troops to the area to dissolve the strike.

The use of military force on behalf of the U.S. government essentially poured gasoline on the already burning fire of discontent with current labor wages and conditions. Several people were killed during the Pullman strike altercation, and although the strike did come to an end, American workers were still unhappy and began to condemn President Cleveland’s aggressive response.

Meanwhile, union workers in New York City had been organizing and going on strike one day of the year in support of the idea of a national Labor Day that had been circulating around the U.S.

Later in 1894, which happened to be an important election year, President Cleveland decided to implement a nationally recognized annual celebration of American workers to appease his critics – and thus Labor Day as we know it was born.

Fast forward to 2017, where we at Detterbeck Wealth Management are fortunate enough to do what we are passionate about everday in a constructive and collaborative environment. We choose to use this year’s Labor Day as an opportunity to reflect on and appreciate how far the U.S. economy and workforce has come since those historic strikes in 1892.

From everyone here at DWM, have a great Labor Day Weekend and enjoy some time with the family!

Digital Legacy

With all of the various accounts, passwords and files that make up our digital identity today, it is easy to see why organization of this information is essential. While this is a subject that many do not like to discuss, it brings up the interesting concept of digital legacy and how important it is to maintain and preserve your digital identity in the event of incapacity or death.  

It is becoming a more and more common practice for financial advisors, including DWM, as well as estate planning attorneys, to advise their clients on a plan to preserve their digital legacy. According to a survey conducted by NAPFA, two-thirds of NAPFA members said that they do in fact advise their clients on digital legacy.

As part of our DWM “Total Wealth Management” process, we provide our clients with an “Estate Flow.”  This has three parts. First, a concise and easy to read recap of all of their estate documents to make it easier to review so that they can assess whether their documents outline their current wishes or if changes need to be made.  Second, a review of titling and beneficiary designations, to make sure the disposition of the estate is as desired and its administration is as hassle-free as possible.  And, third, our recommendations. We have recently added a review of our clients’ digital legacy as part of this process.

It is vital that all information is stored in one designated place to ensure that your entire estate is transitioned smoothly and easily.    There are many applications and services that can help you store passwords to preserve digital legacy. Having a password manager for your passwords so that someone can log in to your accounts in the event of your incapacity or passing and take care of your digital assets is essential. Many cloud-based digital services will actually wipe your data after an account is closed, so it is imperative that your loved ones have a way to access this information before that occurs. Some of the more useful password tools that enable the user to assign heirs include PasswordBox and Zoho Vault.

Aside from password protection, there are other steps individuals can take to ensure their digital legacy is properly handled, such as the introduction of “digital heirs.” As digital legacies begin to become a common hindrance in postmortem estate processes, more companies, such as Google’s Gmail, are instituting ways to improve the flow of digital legacies. Through Gmail’s Inactive Account Manager, found in your account settings page, you can now specify what you would like to have done upon account inactivity. After three, six, nine, or twelve weeks, the user can choose to have his or her data automatically deleted or have a notification email sent to trusted contacts. By enabling a contact email to be sent, the user is allowing this contact to access his or her account, which may contain sensitive information, so it is important to choose this contact selectively. 

The bottom line is this: It is necessary to develop and implement a plan to preserve your digital legacy and ease the transition for your loved ones, making it as simple as possible for them to take care of your digital assets, including financial accounts.  Specifically, at DWM, we would recommend three key components:

  1. Take and record an inventory of all of your digital assets including your user names and passwords and store that information in a secure place.
  2. Work with your estate planning attorney to make sure that digital asset provisions are included in your estate documents. These provisions should allow your successor Trustees or executor/executrix the power to access, view, modify and make use of any electronic accounts including online financial accounts.
  3. Consider providing your successor trustee or executor/executrix now with information about your digital assets.

At DWM we believe your digital assets are a very important part of your legacy.  Getting things in order now can significantly help your loved ones in the future.