Category Archives: Finance

Hired right professional legal advice to protect your estate asset

To make the separation of property as equal as possible, Phoenix embraces community property law like estate planning phoenix. This means you can be confident that you will receive your fair share of the property acquired during your marriage and with the right documentation, be able to easily maintain anything that you inherited or brought into your marriage. While community property law is in place to help you retain what is yours, know that your spouse may have other ideas about which property belongs to whom.

For questions on how your property will be divided or any other issues regarding the divorce process, always remember to consult with your divorce attorney and allow them to be your guide. In an effort to better inform you and to help ready you for property division, below we have prepared a list of ten tips that will help you protect your assets.

#1. You Can Rightfully Obtain Business Records 

You have every right to interest from a shared business. In order to determine the amount of interest you deserve, feel free to have your attorney obtain and make copies of financial documents and client records. Also, if you feel comfortable enough to do so, it is legal for you to access your spouse’s office.

#2. Keep Your Business Records Transparent After Your Separation

If you own a business, do not change anything concerning billing practices.

  • For instance, if you were to change the way that clients have paid in the past, you would only be asking for your records to be under intense scrutiny if you were unable to prove that specific work occurred before or after your separation.
  • Make sure that you stay honest and discuss common practice with your attorney. Any experienced divorce attorney should be able to let you know if your business files are accessible through attorney privilege.

#3. Make Copies of All Important Documents

You’ll need to have copies of all important documents before you leave your residence. While your attorney will be able to obtain them with subpoenas, it will be easier and faster for you to have this taken care of before the process begins.  Make copies of any important deeds:

  • Past three years of tax returns
  • Pension plan
  • Savings and investment account statements
  • If you are a business owner make copies of joint tax filings, profit and loss statements, balance sheets and make an effort to acquire a backup copy of computerized accounting records

1. Inventory all of your Valuables: These items are not just possessions. They mean the world to you and you want to make sure they are off limits and will remain with you after your divorce.

  • Any objects that have been given directly to you-not both you and your spouse- including jewelry or heirlooms that have been passed down to you, rightfully belong to you.
  • Be sure to list and photograph everything you were given.
  • After you have properly catalogued each of your valuables, move them to a safe place in a timely manner as it may be more difficult to go back and get them if you choose to leave your residence.

2. Get Proof of Inherited or Gifted Possessions: If you have written proof to verify that certain items were given solely to you it will be a lot easier to ensure that they will stay with you.

  • If possible, ask the family member that handed down the item for written proof.
  • Make sure that they mention as much information about the item as possible, including when the item was gifted to you.

#3. Rightfully Acquire your Property from your Home

If you have chosen to move out of your residence, do not worry. Unless there is a court order giving your spouse exclusive ownership, you can return to your home to retrieve your belongings. Even if your spouse has changed the locks, you are lawfully allowed to have a locksmith help you get inside.

#4. Know the Status of all Property

If you will retain possession of any big ticket items such as automobiles or real estate after the divorce, make sure that you obtain all of the records for those items.

  • You should know if your spouse placed any liens against property holdings or deposited money in alternate accounts.
  • You should also make sure that there aren’t any outstanding tickets or registration payments on your car.

#5. Hire an Appraiser

A good way to guarantee that all parties are compensated fairly is by hiring a professional to go over your real estate and other valuable assets.

  • Have them assess everything of value, including joint businesses and retirement plans.
  • If you own a business, consider a forensic accountant who will be of great value in interpreting your business records, helping you place a correct value on your business, and also making sure that all fiduciary concerns are properly handled.
  • If you need assistance, never be afraid to utilize your attorney’s experience. Allow them to suggest professionals that will be both frank and trustworthy.

#6. Photograph Joint Property and Take what you don’t want to Replace

With the exception of a business run by one spouse, you will both have equal rights to common assets from your marital residence.

  • All property will be evaluated at its current market condition price. For example, say you spent $50 on a toaster. While the market value for a used toaster is probably much less than this, it will still cost you $50 to replace it.
  • Take photos of all joint property and then take any hard to find items or things that you don’t want to replace.
  • Also, make a list and keep the photographs of the items of significant value that you did not take.

#7. Your Spouse Has the Same Rights

You should be aware that your spouse shares the same rights as you do concerning shared property. Unless you have a court order stating that you have exclusive ownership of the home, he or she may also hire a locksmith to gain entry if you have changed the locks.

  • In this situation, as stated above, if there are things that hold a special meaning to you or there are items that you do not want to replace, move them to a secure location to guarantee that they remain with you.

Choosing Profesional Tax Preparation For Your Business

You need your taxes done, you don’t want to do them yourself, and now you’re faced with choosing a tax preparer that you hope will do a good job, help you pay the least amount of taxes by law, and keep you out of trouble with the IRS. But how do you choose the best service such as tax preparation Phoenix when you don’t know anything about taxes?

Here are some tips and questions to consider when choosing your tax preparer.

1.) Chemistry  

Chemistry is also important when choosing a tax preparer. Even if everything else lines up, if your gut feeling is giving you indigestion, look for someone else. In the case of chemistry, your gut is always right.

2.) Fees and Timing

Your preparation fees for tax returns will vary depending on how complex your situation is. Most tax preparers charge a flat fee to prepare your return, and some still charge by the hour.

The later it is in tax season, the longer it will take to receive your completed return. Get your documents collected early, unless you love procrastinating and waiting until the last minute. But please be nice: A typical tax accountant has only about 10 weeks of each year to complete a year’s worth of work, so try your best not to pester or rush them. They are working 12-hour days and doing the best they can.

3.) Services

The services you need should line up with the services that the firm offers. Here are some questions to think about when considering what type of help you need:

  • Do you need to e-file?
  • Do you need to meet them in person?
  • Can you do everything virtually?
  • What security and privacy do they provide for your data?
  • Are they familiar with your specific tax needs? Perhaps you have a farm, sold a house in another state or have a non-profit; find out if they can handle your circumstances.
  • Will they provide you with options and the related risks of those options?
  • Will they explain your return?
  • Do you need help adjusting your tax payments for next year? (If you incurred penalties, you may be able to avoid them next year.)
  • Do you need help with tax planning?
  • Do you need advice related to your retirement account?
  • Do you want them to represent you if the IRS contacts you?

Make sure each item you need is offered by the tax preparer you choose.

4.) The Gold Standard

The first thing to ask a tax preparer is what certifications they hold. The CPA is the gold standard, but not all CPAs offer tax preparation.

The size of the CPA firm has very little to do with quality. However, the larger the firm is, the higher the price is, usually due to quality-control issues and layers of management. I’ve seen some excellent one-CPA and two-CPA offices; in fact, I’ve seen many industry awards go to small CPA firms recognizing their excellent tax work.

Each CPA is licensed by their state’s board of accountancy, so make sure the CPA you hire can practice in the state you need tax expertise and is holding a current active license.

An alternative would be an Enrolled Agent (EA). Enrolled Agents are federally licensed tax practitioners who specialize in taxation and have unlimited rights to represent clients before the IRS. Whereas a CPA is tested in a wide range of accounting, auditing and tax knowledge, the EA exam is not as difficult as the CPA exam and is limited in scope to tax problems. The greatest value in EAs is their ability to represent their clients to the IRS if needed, and they are often a lower-cost alternative to a CPA.

If your tax preparer does not have either of these certifications, you can expect to pay much less, but you might not be getting the highest-quality job.

5.) Experience Matters

It’s a fair question to ask your tax preparer roughly how many business returns they do each year. A good tax preparer making their sole living from taxes should be doing at least 100 total returns a year, and most solid full-time tax preparers will do 300 to 500 per year, depending on how complicated each return is and how many support staff they have. About a third of these will be business returns.

6.) Lifelong Learners

Tax preparation and the laws and deductions behind it change every single year. In any one year, hundreds of new pieces of legislation can affect your income tax return, so it’s imperative that you hire someone who has completed a tax update course within the last six months.

The key and be success on personal finance Tips

1.Creat a financial calendar

If you don’t trust yourself to remember to pay your quarterly taxes or periodically pull a credit report, think about setting appointment reminders for these important money to dos in the same way that you would an annual doctor’s visit or car tune-up. A good place to start? Our ultimate financial calendar.

2. Check Your Interest Rate

Q: Which loan should you pay off first? A: The one with the highest interest rate. Q: Which savings account should you open? A: The one with the best interest rate. Q: Why does credit card debt give us such a headache? A: Blame it on the compound interest rate. Bottom line here: Paying attention to interest rates will help inform which debt or savings commitments you should focus on.

3. Track Your Net Worth

Your net worth—the difference between your assets and debt—is the big-picture number that can tell you where you stand financially. Keep an eye on it, and it can help keep you apprised of the progress you’re making toward your financial goals—or warn you if you’re backsliding.

4. Set a Budget, Period

This is the starting point for every other goal in your life. Here’s a checklist for building a knockout personal budget.

5. Consider an All-Cash Diet

If you’re consistently overspending, this will break you out of that rut. Don’t believe us? The cash diet changed the lives of these three people. And when this woman went all cash, she realized that it wasn’t as scary as she thought. Really.

6. Take a Daily Money Minute

This one comes straight from LearnVest Founder and CEO Alexa von Tobel, who swears by setting aside one minute each day to check on her financial transactions. This 60-second act helps identify problems immediately, keep track of goal progress—and set your spending tone for the rest of the day!

7. Allocate at Least 20% of Your Income Toward Financial Priorities

By priorities, we mean building up emergency savings, paying off debt, and padding your retirement nest egg. Seem like a big percentage? Here’s why we love this number.

8. Budget About 30% of Your Income for Lifestyle Spending

This includes movies, restaurants, and happy hours—basically, anything that doesn’t cover basic necessities. By abiding by the 30% rule, you can save and splurge at the same time.

9. Draft a Financial Vision Board

You need motivation to start adopting better money habits, and if you craft a vision board, it can help remind you to stay on track with your financial goals.

10. Set Specific Financial Goals

Use numbers and dates, not just words, to describe what you want to accomplish with your money. How much debt do you want to pay off and when? How much do you want saved, and by what date?

11. Adopt a Spending Mantra

Pick out a positive phrase that acts like a mini rule of thumb for how you spend. For example, ask yourself, “Is this [fill in purchase here] better than Bali next year?” or “I only charge items that are $30 or more.”

12. Love Yourself

Sure, it may sound corny, but it works. Just ask this author, who paid off $20,000 of debt after realizing that taking control of her finances was a way to value herself.

13. Make Bite-Size Money Goals

One study showed that the farther away a goal seems, and the less sure we are about when it will happen, the more likely we are to give up. So in addition to focusing on big goals (say, buying a home), aim to also set smaller, short-term goals along the way that will reap quicker results—like saving some money each week in order to take a trip in six months.

14. Banish Toxic Money Thoughts

Hello, self-fulfilling prophecy! If you psych yourself out before you even get started (“I’ll never pay off debt!”), then you’re setting yourself up to fail. So don’t be a fatalist, and switch to more positive mantras.

15. Get Your Finances and Body in Shape

One study showed that more exercise leads to higher pay because you tend to be more productive after you’ve worked up a sweat. So taking up running may help amp up your financial game. Plus, all the habits and discipline associated with, say, running marathons are also associated with managing your money well.

Best Financial Tips For Colalge Student

Managing money is generally not taught in elementary school. About 17 states require students to take a personal finance course in high school, but only a handful require testing on the topic, according to the Council for Economic Education.

When it comes to money, it’s better to learn from other people’s mistakes than to make your own. Follow these tips when you’re young to avoid financial hardship in life.

1. Go to college

You may want to do something that doesn’t require a college degree, such as playing professional golf. But give serious consideration to enrolling in college anyway. Yes, it’s a major investment, but if your parents are unable to help you pay for it, make it happen yourself, even if it means taking out loans. Just don’t get in over your head; try to borrow no more than the amount you expect to earn the 1st year after graduation. That way you can pay off the loans within 10 years. One way to save on costs: Go to a community college first; then transfer to a 4-year university after 2 years.

It’s easier to get a degree when you’re young than when you have a home, family and all the attendant adult responsibilities. Your earnings potential increases significantly with a college degree — which will come in handy if your other dreams don’t materialize. Plus, you will likely experience a love of learning that you will never outgrow.

2. Find your purpose

If you’re having trouble figuring out what you want to do with your life, look within. You were born with certain talents and natural abilities. You know which subjects you excel in and which ones you struggle with. Choose a career that enables you to maximize your gifts in a way that fulfills you or helps others. As you grow, your career may change along with your desires. But for now, gravitate toward a field that feels like home.

3. Begin retirement planning with your 1st job

This tip is so important. If the company you work for offers a 401(k) plan, sign up at your 1st opportunity. If there’s no such plan, divert some of your paycheck into an IRA. Believe it or not, if you’re lucky, one day you’ll find you are older, so it’s best to be prepared. Setting up automatic contributions to either one of these retirement vehicles at a young age will help you build wealth painlessly.

Naturally, the more you earn, the more you can stash. Sock away at least 7% of your earnings in the beginning, and increase it each year until you’re diverting 15% a year.

4. Place a value on money

It doesn’t buy happiness, but it can certainly make you comfortable. Just understand what it’s worth. Money is what you earn in exchange for your time in some productive pursuit. Let’s say you earn $20 an hour at your job, and you’re considering purchasing a TV for $500. You may calculate that you spend 25 hours, or about 3 days, earning that money. It’s worth it, you may think. But that’s not an accurate value estimate. If you’re single, you’re in the 25% tax bracket, so you actually spend about 33 hours earning the net income required to make the purchase. It still may be worth it, but there may be competing demands for that money, such as rent and car payments, not to mention your retirement fund. Each purchase represents a trade-off. Make these decisions wisely.

5. Use the credit card sparingly

This tip is also really vital. It’s easy to spend now with plastic and much harder to pay later. Use credit responsibly. Comparison-shop for your card. Remember that you’ll be relying on your future earnings to pay for today’s credit card purchases. And if you keep a running balance, you’ll also be paying interest, sometimes at usurious rates. Don’t fall into this trap. Instead, save money to meet financial goals.

6. Follow the golden rule

Contrary to popular belief, the duplicity and craftiness of Machiavellian tactics won’t really help you survive. Instead, they’ll engender mistrust in your relationships. Treat others fairly, the way you wish to be treated. No one looks good when trying to make others look bad. When you’re on the job, avoid gossip. Beware that when someone takes you into his or her confidence to point out someone else’s foibles, it’s only a matter of time before your foibles come to light.

7. Select your partner wisely

Choose someone whose values match your own — not just where money is concerned, but more importantly, ethical and moral values. Get to know your soul mate over the course of at least a year. Passion is important, but trust even more so. Make sure you are free to be yourself. If you hook up with an angry or overly critical partner, you will be subjected to hostility and may lose your sense of self. Conversely, if you’re the one with anger issues, resolve them before they poison a perfectly good relationship. Learn to make decisions with your heart, along with your head.

8. Be prepared for the unexpected

Someday you may lose a job through no fault of your own. Prepare today by stashing money into an accessible emergency fund. The easiest way to do this is to automatically divert a portion of your earnings into a savings account in addition to the amount you’re contributing to a 401(k) plan or IRA.

Try not to use that 401(k) money for emergencies. It will cost you plenty, between income and penalty taxes. For instance, if you have $10,000 in your account and you’re in the 25% tax bracket, you’ll lose $2,500 to taxes, plus pay another $1,000 penalty for breaking into the money before you reach age 55. (For IRAs, the early withdrawal penalty applies up to age 59 1/2, with certain exceptions.) Bottom line: Your $10,000 dwindles to $6,500. Worse, you will have lost the opportunity for that money to compound and build wealth for your retirement.

Teenage finance tips

Unfortunately, personal finance has not yet become a required subject in high school or college, so you might be fairly clueless about how to manage your money when you’re out in the real world for the first time.

To help you get started, we’ll take a look at eight of the most important things to understand about money if you want to live a comfortable and prosperous life.

Learn Self Control
If you’re lucky, your parents taught you this skill when you were a kid. If not, keep in mind that the sooner you learn the fine art of delaying gratification, the sooner you’ll find it easy to keep your finances in order. Although you can effortlessly purchase an item on credit the minute you want it, it’s better to wait until you’ve actually saved up the money. Do you really want to pay interest on a pair of jeans or a box of cereal? (To learn more about credit, check out Understanding Credit Card Interest and our Debt Management feature.)

If you make a habit of putting all your purchases on credit cards, regardless of whether you can pay your bill in full at the end of the month, you might still be paying for those items in 10 years. If you want to keep your credit cards for the convenience factor or the rewards they offer, make sure to always pay your balance in full when the bill arrives, and don’t carry more cards than you can keep track of.

Take Control of Your Own Financial Future
If you don’t learn to manage your own money, other people will find ways to (mis)manage it for you. Some of these people may be ill-intentioned, like unscrupulous commission-based financial planners. Others may be well-meaning, but may not know what they’re doing, like Grandma Betty who really wants you to buy a house even though you can only afford a treacherous adjustable-rate mortgage.

Instead of relying on others for advice, take charge and read a few basic books on personal finance. Once you’re armed with personal finance knowledge, don’t let anyone catch you off guard – whether it’s a significant other that slowly siphons your bank account or friends who want you to go out and blow tons of money with them every weekend. Understanding how money works is the first step toward making your money work for you. (To find out how to have fun and still save money, see Budget Without Blowing Off Your Friends.)

Know Where Your Money Goes
Once you’ve gone through a few personal finance books, you’ll realize how important it is to make sure your expenses aren’t exceeding your income. The best way to do this is by budgeting. Once you see how your morning java adds up over the course of a month, you’ll realize that making small, manageable changes in your everyday expenses can have just as big of an impact on your financial situation as getting a raise.

In addition, keeping your recurring monthly expenses as low as possible will also save you big bucks over time. If you don’t waste your money on a posh apartment now, you might be able to afford a nice condo or a house before you know it. (Read more on budgeting in our Budgeting special feature.)

Start an Emergency Fund
One of personal finance’s oft-repeated mantras is “pay yourself first”. No matter how much you owe in student loans or credit card debt, and no matter how low your salary may seem, it’s wise to find some amount – any amount – of money in your budget to save in an emergency fund every month.

Having money in savings to use for emergencies can really keep you out of trouble financially and help you sleep better at night. Also, if you get into the habit of saving money and treating it as a non-negotiable monthly “expense”, pretty soon you’ll have more than just emergency money saved up: you’ll have retirement money, vacation money and even money for a home down payment.

Don’t just sock away this money under your mattress; put it in a high-interest online savings account, a certificate of deposit or a money market account. Otherwise, inflation will erode the value of your savings.
Start Saving for Retirement Now
Just as you headed off to kindergarten with your parents’ hope to prepare you for success in a world that seemed eons away, you need to prepare for your retirement well in advance. Because of the way compound interest works, the sooner you start saving, the less principal you’ll have to invest to end up with the amount you need to retire and the sooner you’ll be able to call working an “option” rather than a “necessity.”

Company-sponsored retirement plans are a particularly great choice because you get to put in pretax dollars and the contribution limits tend to be high (much more than you can contribute to an individual retirement plan). Also, companies will often match part of your contribution, which is like getting free money. (To learn more, see Understanding The Time Value Of Money and Retirement Savings Tips For 18- To 24-Year-Olds.)

Get a Grip on Taxes
It’s important to understand how income taxes work even before you get your first paycheck. When a company offers you a starting salary, you need to know how to calculate whether that salary will give you enough money after taxes to meet your financial goals and obligations. Fortunately, there are plenty of online calculators that have taken the dirty work out of determining your own payroll taxes, such as Paycheck City. These calculators will show you your gross pay, how much goes to taxes and how much you’ll be left with, which is also known as net, or take-home pay.

For example, $35,000 a year in New York will leave you with around $26,430 after taxes without exemptions in 2015, or about $2,032 a month. By the same token, if you’re considering leaving one job for another in search of a salary increase, you’ll need to understand how your marginal tax rate will affect your raise and that a salary increase from $35,000 a year to $41,000 a year won’t give you an extra $6,000, or $500 per month – it will only give you an extra $4,129, or $344 per month (again, the amount will vary depending on your state of residence). Also, you’ll be better off in the long run if you learn to prepare your annual tax return yourself, as there is plenty of bad tax advice and misinformation floating around out there. (To learn all about your taxes, visit our Income Tax Guide.)

Guard Your Health
If meeting monthly health insurance premiums seems impossible, what will you do if you have to go to the emergency room, where a single visit for a minor injury like a broken bone can cost thousands of dollars? If you’re uninsured, don’t wait another day to apply for health insurance; it’s easier than you think to wind up in a car accident or trip down the stairs.
You can save money by getting quotes from different insurance providers to find the lowest rates. Also, by taking daily steps now to keep yourself healthy, like eating fruits and vegetables, maintaining a healthy weight, exercising, not smoking, not consuming alcohol in excess, and even driving defensively, you’ll thank yourself down the road when you aren’t paying exorbitant medical bills.

Guard Your Wealth
If you want to make sure that all of your hard-earned money doesn’t vanish, you’ll need to take steps to protect it. If you rent, get renter’s insurance to protect the contents of your place from events like burglary or fire. Disability insurance protects your greatest asset – the ability to earn an income – by providing you with a steady income if you ever become unable to work for an extended period of time due to illness or injury.

If you want help managing your money, find a fee-only financial planner to provide unbiased advice that’s in your best interest, rather than a commission-based financial advisor, who earns money when you sign up with the investments his or her company backs. You’ll also want to protect your money from taxes, which is easy to do with a retirement account, and inflation, which you can do by making sure that all of your money is earning interest through vehicles like high-interest savings accounts, money market funds, CDs, stocks, bonds and mutual funds. (Find out all you need to know about insurance in Understand Your Insurance Contract, Five Insurance Policies Everyone Should Have and Insurance 101 For Renters.)

The Bottom Line
Remember, you don’t need any fancy degrees or special background to become an expert at managing your finances. If you use these eight financial rules for your life, you can be as personally prosperous as the guy with the hard-won MBA.

Tips for Long Life and Happiness

images (13)Buying life insurance for the first time can be overwhelming. You’ll run into a lot of terms that you may not understand at first. The good news is those terms are not very difficult to figure out once you do a little research. These tips are designed to help you create an organized approach toward investigating life insurance so that you can find the policy you need without the hassle.

Know Why You Need Life Insurance

Life insurance is a serious investment that shouldn’t be made on the spur of the moment. Don’t buy a policy just because someone says you should. Many people hear ads about life insurance so many times that they begin to feel an instinctive concern about needing life insurance. The truth is, however, not everyone needs life insurance.

The purpose of life insurance is to provide financial support for yourdependents if you are no longer around to do it yourself. If you don’t have any dependents, you probably don’t need to spend money on life insurance. If you are contributing significantly to the financial well-being of someone in your life, you think about protect from any financial gaps that might occur if you no longer able to provide the same support. The key is to understand why you need life insurance before you begin shopping for a policy.

Understand the Type of Policy You Need

There are two basic types of life insurance policies: life and whole life.Term life insurance policies last for a specified period of time. Term life is less expensive than whole life because it usually expires before the benefits are used.

Whole life insurance lasts from the day you the policy until the day you die, no matter. A whole life policy is more expensive because the coverage could last a few years or several decades. Whole life policies can be borrowed against at a high interest rate, while term life policies.

Know When to Choose Term

If you are in a situation your dependents will not rely on you financially forever, your best bet is probably a term life policy. For example, many parents choose term life policies that are in effect until their children move out and become financially independent. Once kids are, there is no reason to continue paying for life insurance. Your beneficiaries will rely on your contributions.

Know How Much to Buy

Understanding the potential needs of your beneficiaries can also help you decide how much insurance you should have. Don’t follow any “rule of thumb” guidelines you may read. Your needs are specific to you. Your decision will depend on the math.

How much money do your dependents need each year and for how long? Because your children are likely different ages, that number is different for each beneficiary. Calculate the needs of each dependent annually, multiple times the number of years support is needed and then add those numbers together so all dependents have what they need.

Tips to manage your money so carefully

Federal or state securities laws require brokers, investment advisers, and their firms to be licensed or registered, and to make important information public. But it’s up to you to find that information and use it to protect your investment dollars. The good news is that this information is easy to get, and one phone call or web search may save you from sending your money to a con artist, an unscrupulous financial professional, or a disreputable firm.

Before you invest or pay for any investment advice, make sure your brokers, investment advisers, and investment adviser representatives have not had disciplinary problems or been in trouble with regulators or other investors. You also should check to see whether they are registered or licensed.

This is very important, because if you do business with an unregistered securities broker or a firm that later goes out of business, there may be no way for you to recover your money — even if an arbitrator or a court rules in your favor.

Brokers and Brokerage Firms

The Central Registration Depository (CRD) is a computerized database that contains information about most brokers, their representatives, and the firms they work for. For instance, you can find out if brokers are properly licensed in your state and if they have had disciplinary problems with regulators or received serious complaints from investors. You’ll also find information about the brokers’ educational backgrounds and where they’ve worked before their current jobs.

You can ask your state securities regulator or the Financial Industry Regulatory Authority (FINRA) to provide you with information from the CRD. Because your state securities regulator may provide more comprehensive information from the CRD than FINRA, especially when it comes to investor complaints, you may want to check with your state securities regulator first. You’ll find contact information for your state securities regulator on the website of the North American Securities Administrators Association. To contact FINRA, either visit FINRA’sBrokerCheck website or call FINRA’s toll-free BrokerCheck hotline at (800) 289-9999.

Investment Advisers

People or firms that get paid to give advice about investing in securities generally must register with either the SEC or the state securities agency where they have their principal place of business. As discussed in greater detail below, the rules governing the registration of certain investment advisers have changed.

On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd- Frank Act”) was signed into law. The Dodd-Frank Act amends certain provisions of the Investment Advisers Act of 1940 by delegating generally to the states responsibility over certain mid-sized investment advisers – i.e., those that have between $25 million and $100 million of assets under management (“AUM”).

The Dodd-Frank Act and SEC rules increased the threshold above which all investment advisers must register with the SEC from $30 million to $110 million of AUM. Prior to July 2011, an investment adviser regulated by the state in which it maintained its principal office and place of business generally was prohibited from registering with the SEC unless the adviser had at least $25 million of AUM, and was required to register with the SEC once it had at least $30 million of AUM. Now, investment advisers with less than $110 million of AUM may be prohibited from registering with the SEC, depending on the size of the adviser’s AUM and whether the adviser meets other requirements.

This means that state securities authorities will have primary regulatory authority over a substantial number of investment advisers that previously were subject to primary regulation by the SEC. Larger investment advisers, generally, those with over $100 million of AUM, will continue to be registered with the SEC and will be subject to federal regulation (state investment adviser laws requiring registration, licensing, and qualification have been preempted for these advisers).

Some investment advisers employ investment adviser representatives, the people who actually work with clients. In most cases, these people must be licensed or registered with your state securities regulator to do business with you. So be sure to check them out with your state securities regulator.

To find out about an investment adviser and whether it is properly registered, read its registration form, called “Form ADV.” Form ADV has two parts. Part 1 contains information about the adviser’s business and whether the adviser has had problems with regulators or clients. Part 2 sets out the minimum requirements for a written disclosure statement, commonly referred to as the “brochure,” which advisers must provide to prospective clients initially and to existing clients annually. The brochure describes, in a narrative format, the adviser’s business practices, fees, conflicts of interest, and disciplinary information. Before you hire an investment adviser, always ask for and carefully read both parts of the Form ADV.

Where applicable, each brochure provided to clients must be accompanied by a “brochure supplement” that includes information about the specific individuals, acting on behalf of the adviser, who actually provide investment advice and interact with the client. An adviser must deliver the brochure supplement to the client before or at the time that the specific individual begins to provide investment advice to the client.

You can view an adviser’s most recent Form ADV online by visiting the Investment Adviser Public Disclosure (IAPD) website. You can also obtain copies of Form ADV for individual advisers and firms from the investment adviser, your state securities regulator, or the SEC, depending on the size of the adviser. You’ll find contact information for your state securities regulator on the website of the North American Securities Administrators Association.

If the investment adviser is registered with the SEC, you can get a copy of Form ADV (Part 1 only) by accessing information on “How to Request Public Documents”In addition, at the SEC’s headquarters, you can visit our Public Reference Room from 10:00 a.m. to 3:00 p.m. to obtain copies of SEC records and documents.


Once you’ve checked out the registration and record of your financial professional or firm, there’s more to do. For example, if you plan to do business with a brokerage firm, you should find out whether the brokerage firm and its clearing firm are members of the Securities Investor Protection Corporation (SIPC). SIPC provides limited customer protection if a brokerage firm becomes insolvent — although it does not insure against losses attributable to a decline in the market value of your securities. If you’ve placed your cash or securities in the hands of a non-SIPC member, you may not be eligible for SIPC coverage if the firm goes out of business.

The advantage of Income Statement

The most recent installment of the Finance Professor kicked off our look at how to start analyzing the financial statements of public companies. We covered where to locate a company’s financial information and reports, and what to look for once you find this data. Now we’re going to take the next step in this series of lessons and focus in on how to read a company’s income statement (or profit and loss statement, the P&L).

Mind the GAAP

Income statements will vary from company to company and industry to industry. As such, the statement might seem like one big salad of information that we must learn how to sift through to better understand a company’s operating results. However, there is one constant that always guides us in the preparation and understanding of financial statements such as the income statement. This constant is the application of generally accepted accounting principles, or GAAP.GAAP is a standard that must be followed by all companies (public and private) in order to receive the unqualified independent auditor’s report that I discussed last time. We rely on the auditor’s report to confirm a company’s adherence to GAAP or alert us as to the deficiencies of its financial statements in terms of accounting standards. Accounting standards are quite complex and in the United States are the responsibility of the Financial Accounting Standards Board (FASB). For the individual investor, it is more important to be assured that the company you hold in your portfolio is in compliance with GAAP than to understand the intricacies of the accounting standards.

A Look at McDonald’s

With the aforementioned in mind, I will start by using a rather simple form of income statement from a company that I know quite well: McDonald’s. Below, I have included a copy of McDonald’s income statement, which I extracted from the company’s 2006 annual

Let’s first start in the top section of this income statement, with revenue (or income). Please note that within revenue you have two different classifications: sales (e.g., “Sales by Company –operated restaurants”) and revenue (e.g., “Revenues from franchised and affiliated restaurants.”) While sales and revenue might seem like identical terms and are frequently used interchangeably, there are some subtle differences to be aware of.

Sales vs. Revenue

Some companies act as direct sellers to the public and, concurrently, as suppliers to wholesalers or other distributors. Other companies use franchisees to distribute their product. Sales represent direct sales to the public or distributors. In McDonald’s case, these are sales that McDonald’s makes at company-owned restaurants. Revenue represents income streams from nondirect or ancillary sources. For McDonald’s, this would be fees earned from franchisees that operate their own McDonald’s branded restaurants.For another take on the difference between sales and revenue, let’s take a quick look at BJ’s Wholesale Club. BJ’s direct sales to customers would be viewed as sales, while the fees it earns from its members’ annual membership dues would be viewed as a revenue item.

Operating Costs and Expenses

The next section of the income statement deals with a majority of the costs and expenses associated with the operation of a company’s business. The description of such expenses will vary from company to company, but we can divide them into several general categories:

Cost of Sales:

This line item represents the expenses incurred by the company to produce and deliver the product or service to the customer. For McDonald’s, this would include, but is not limited to, the cost of its hamburgers, French fries, beverages, labor, utilities, occupancy (rent and depreciation) and paper goods. A retailer such asCVS Caremark describes these costs as “costs of goods sold, buying and warehousing costs.”

Selling, General and Administrative Expenses (SG&A):

These are expenditures related to the management of the overall company, which cannot be directly linked to product sales or the delivery of services. This will include items such as corporate overhead, legal, accounting,Sarbanes-Oxley compliance, management, stock based compensation, advertising, marketing, travel, entertainment and licensing expenses.


This represents the expensing of asset costs over a prolonged period of time. For example, McDonald’s might build or buy a structure to house a company-owned restaurant. That cost is first capitalized and then expensed in piecemeal fashion over a period of time. Some companies, such as McDonald’s, might actually consider this a cost of sales. Other companies might break this out separately as another line item under operating expenses.


This cost is similar to depreciation except that it relates to the expensing of intangible items over a period of time. Intangible items include goodwill and intellectual properties, such as trademarks or licenses. Goodwill represents the excess of the purchase price over the book value of a company when one company acquires the other.

Operating Income

When we subtract total income (revenues plus sales) from total operating expenses, the difference represents operating income. This amount tells us how successful or not a company has been in executing its business plan to profitably sell its products and services.


Next to be presented in the income statement is the interest section. There are two types of interest: revenue and expenses. Most companies will net these two interest streams together and present them as “net interest.” On the other hand, some companies, including banks, broker-dealers and financial institutions such asCitigroup and Merrill Lynch, which rely on interest as one of their core revenue streams, will present net interest as a part of revenue, thus incorporating those items within their operating income.When we take operating income and subtract net interest (or other items), we will arrive at earnings before income taxes (or EBIT, which should not be confused with EBITDA). As I mentioned in an earlier article, Ben Franklin was quoted as saying, “In this world nothing can be said to be certain, except death and taxes.” This holds true for the corporate world as well. Thus, we must next calculate the provision for income taxes and present it in the income statement. This leads us to another aspect of the real world that must be explained.

Provision for Income Taxes

Under GAAP, a company must make a calculation or provision of the amount of income taxes owed based upon the company’s GAAP results. This amount may differ from the actual taxes paid to federal and local governments. For the purposes of the income statement, the provision is presented. In terms of cash flow and balance sheet statements, taxes owed or paid are factored in relative to the provision. (The cash flow and balance sheet statements will be covered in the upcoming weeks.)

The Bottom Lines: Net Income and EPS

When we subtract taxes from EBIT we arrive at net income. If we divide net income by the total diluted outstanding share count of the company, we get earnings per share (EPS).

Other Wrinkles and Their Impact on EPS

There are two additional financial wrinkles that we need to consider when looking at EPS: discontinued operations and nonrecurring items.

Discontinued Operations:

From time to time, a company will sell or spin off a business or close down a subsidiary. When this occurs, the company will segregate the net income attributed to these divisions or products as income or as a loss from discontinued operations.The impact to EPS for discontinued operations is separated from net income to arrive at net income from continuing operations.

Nonrecurring Items:

On occasion, one-time nonrecurring items, which benefit or negatively impact the company’s results, are incurred. These items are typically highlighted and separated because they do not represent an aspect of continuing operations of the company.The impact of nonrecurring items is not separated on the income statement but is frequently disclosed in press releases, conference calls and notes to financial statements. Why? To help the income-statement reader filter out these items, which may materially impact the company’s EPS but are not as relevant to the continuing operation of the company for comparative purposes.This week’s homework:

  • Obtain an income statement from two of the companies discussed in this lesson (McDonald’s, BJs, CVS Caremark, Citigroup, Merrill Lynch) and an income statement from one of your own current (or potential) individual stock holdings.
  • Compare and contrast the financial presentations from company to company and industry to industry.
  • Become familiar with the unique line items presented in the income statements per company and per industry.
  • Understand what is driving the EPS for each company.
  • Ascertain the source of discontinued operations or nonrecurring items.

Tips for Home Insurance

Many people think of home insurance as a necessary evil. The truth is that it might feel like that, but only until you need it. At that point, it will feel like a savior. You’ll definitely be very glad you have home insurance when you get your financial life back.

Home insurance is meant to protect what’s very likely your biggest and most valuable asset.

You’ve worked hard for what you have. You put in much time to be able to afford your home, and you now put in much time and effort in keeping up with that home. Therefore, it only makes sense that you you need to protect it from the myriad of things that can cause it harm.

The big problem is that most people are confused when it comes to insurance in general, much less something as important (and sometimes complicated) as home insurance. There are things that you need to understand about home insurance ahead of time, before an instance occurs where you end up needing it.

So in this post, we’re going to give you…

7 Tips to Buying Home Insurance, Getting the Best Bang for Your Buck, and Being Ready to Use It If Needed…

Tip #1 – Know the Exact Value of Your Home and How Much Home Insurance You Need…

One of the most important things to understand from the very beginning is how much insurance you’ll need. First you’ll need to know the actual value of your home. If your home is damaged or destroyed, you’re going to need to know what it will cost to replace the entire structure… or that portion of the structure which is damaged.

A home builder or assessment company should be able to give you the truest value.

This is not a time to guess. Establishing your home’s value is not a do-it-yourself project. Nor is it a good idea to allow your insurance agent to be the one to solely establish that value. Again, this is your biggest asset and you’ll want to be sure you’ve got the fairest value.

Tip #2 – Understand the Risk Factors That Your Premium Will Be Based Upon…

It’s important that you realize your premium is based around the risk that the insurance company is taking by selling you the policy. In other words, the higher the risk that something will happen and they’ll have to pay you for damage, the higher the premium will be.

Things like the crime rate in your neighborhood, your living habits, where on the block your home is located, how close you are to highways and busy areas, trees around or near your home…

everything that you can think of will be assessed and will take part in the factoring of your premium.

Going into it with this knowledge will actually help you and we’ll better explain how in Tip #3…

Tip #3 – Know and Utilize All of the Things That Can Actually Save You Money on Your Premium…

While there are tons of risk factors that can drive up the cost of your home insurance premium, there are also many factors that can save you money on your policy, too. It’s important to know this so that you get all the discounts available to you.

For instance some things that might earn you a discount include:

•   A home burglary alarm system
•   Dead bolt locks
•   Fire alarms and sprinklers
•   Updated heating systems
•   Updated wiring and electrical system for the home
•   A home near a fire hydrant or fire department
•   A home located near a police department
•   Well-structured and maintained stairs, sidewalks, driveways, and entrances (less chance of injury),

Basically… anything you can think of that might make your home safer, and less likely to catch fire or injure a guest or passerby can give you a discount on your premium. Furthermore, having good credit can save you money as well.

Tip #4 – Take Inventory Of Your Possessions and the Dollar Amounts…

Your homeowner’s insurance covers the structure and dwelling of the home, as well as the home owner’s possessions.

This also is not a time to guess. You likely have about $20,000 worth of personal possessions in your home at any given time. Looking around your home you may not realize that, but it’s absolutely true.

So make a list of all your belongings and the value of those belongings based on receipts and purchase dates. This way if you ever need it you’ll have a concrete list, and not something constructed from memory, where things could get forgotten or undervalued because you have no proof.

You may even want to take photographs of the items on your list, and definitely keep receipts for all new items purchased.

Tip #5 – Keep Your Inventory List Safe…

One thing you don’t want to do is take the time to create an inventory list and then not have that list available when you need it.

If you leave it laying in a filing cabinet or shoebox inside the home, chances are in the case of a fire or some other tragedy you will no longer have that list. That’s why it is recommended to keep the list inside a fire-proof safe (along with your insurance policy, copy of your mortgage, and important papers for family members)…

Or you can keep it in your bank’s safety deposit box.

Tips to be a rich person

images (15)It has more to do with your attitude toward money.Just think of those who don’t fit the filthy-rich stereotype. People like Warren Buffett.As explained in the book The Millionaire Next Door by Thomas J. Stanley and William D. Danko, personal finance has as much to do with people’s traits as it does with money. Many millionaires, in fact, have frugal ways.Understanding how personal traits can influence your finances is an essential ingredient for building wealth.Here are 10 key traits:

1. Patience

Patience is one of the most important traits when it comes to saving money.This means waiting until the first wave of product hype has passed, keeping a car for an extra few years before getting another one and waiting until something you want fits into your budget instead of putting it on credit.Patience is often the difference between creating savings and being in debt. Having the patience to wait until you find a good deal is a cornerstone of good finances.

2. Satisfaction

When you’re satisfied, there is no reason to spend money on nonessentials. The sole purpose of commercials is to make you believe that buying a product or service will make you happier, wealthier, better looking or improve whatever isn’t bringing you satisfaction.People spend because they want to capture the excitement shown in advertisements. When you are satisfied with what you have and your life (not trying to live like those on TV), your finances will be in a lot better shape.

3. Organization

Being organized can make you more productive and ensure that all the many issues pertaining to personal finances are addressed.It means not paying late fees, not buying two of everything, knowing deadlines that can affect your finances and getting more done in less time. All these can greatly benefit your finances.

4. Discipline

You need the discipline to continue to save money for specific, long-term goals every month. Personal finance isn’t a way to get rich quick, but is a disciplined execution of your lifetime plans.

5. Reflectiveness

It’s important to be able to look at your financial decisions and reflect on their results. You’re going to make financial mistakes. Everyone does. The key is to learn from those mistakes so you don’t make them again, or recognize if you keep repeating them.

6. Creativity

The economy and our earnings don’t always match our expectations.Unexpected developments wreak havoc to elaborate financial plans. When this happens, changes are needed to deal with the new circumstances. Creativity is essential to accomplish this.Creativity allows you to make something last longer rather than purchasing it when you don’t have the money. It means juggling money to stay out of debt rather than simply paying with a credit card. It means finding a cheaper alternative when money is tight.In these ways, creativity plays a large role in keeping finances in order.

7. Curiosity

Having curiosity helps you learn, study and improve yourself.The curiosity of wanting to know more, to take the time to study and then take what is learned and put into practice is an important process that is driven by curiosity.

8. Risk-Taking

To build wealth, one needs to be willing to take risks. This doesn’t mean uncalculated risks. It means weighing all the options and taking calculated risks when appropriate.The stock market has risks involved, but over the long term, history shows that it provides good returns on money that is invested wisely. Those who fear risk altogether end up saving money in accounts that likely lose money to inflation in the long run.

9. Goal-Oriented

The importance of setting and working toward goals is obvious. If you don’t know where you are going, it’s difficult to get there. It helps your personal finances immensely if you have money goals and are motivated to reach the goals that you have set for yourself.Those who lack goals don’t have a road map to take them to the financial destination they want.

10. Hard- and Smart Working

Creating wealth and staying out of debt rarely comes about without a lot of hard work.Many people might hope that the lottery will solve all their financial problems. The true path to financial freedom, however, is to work hard to earn money while educating yourself to continue to have more value and increase your salary.You may not possess all of the above traits. But knowing them can help you make changes so that you nourish the ones that you have and obtain the ones you’re missing.