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How To Ensure Accurate Capital Gains Reporting When Selling Securities
As we wrap up tax season, I’m reminded of a mistake I’ve seen multiple people fall victim to: incorrect reporting of cost basis. Cost basis is the adjusted value of the security when you originally acquired it. Basically, it’s the money you’ve likely already paid taxes on.
Occasionally, when assets transfer from one institution to another, something might get lost in translation. When this happens, financial institutions often default to a cost basis of $0. Some investors may view this as a minor thing, but when the financial institution reports your sales of securities to the IRS, the entire amount would then be viewed as a capital gain. This is an explanation of how gains are calculated, and how to make sure everything is filed correctly when your institution doesn’t have the most up-to-date information.
How To Determine The Best Financial Advisory Relationship For You
If you are thinking of working with a qualified financial advisor or planner, there are a few different ways the relationship can look. With those different methods come different availability of investment vehicles, care standards, and outputs. Here are some of the ways you can engage with a qualified financial advisor and how to figure out which method is going to make most sense for you.
You Should Be Including International Investments In Your Portfolio
Last week, I spoke with an investor who said, “I heard you’re supposed to have international investments in your portfolio, but the United States investments are just so much stronger performers, so I got rid of all my international stocks.”
Many people all over the world have what’s referred to as home bias, where a disproportionately high amount of their stock portfolio is in their home country. In the United States, this can often result in their portfolio containing 100% stocks from U.S. companies.
Recent history is not an indication of future returns and international investments can add diversification to enhance returns, reduce risk, and provide unique opportunities that aren’t available in the United States.
How Privatization Can Impact Individual Investors
Due to the high government deficit, the topic of privatizing certain government functions, like education and healthcare, have been increasingly discussed. Privatization essentially means moving from government ownership to private ownership. The idea behind pushing this is to lessen the financial burden on the government while promoting efficiency and economic growth. Here are the potential impacts of privatization and what a move toward privatization could mean to individual investors.
Why You Shouldn’t Leave Your 401(k) With A Past Employer
Consider the following: you leave your employer and opt to leave your 401(k) as is as you transition into your new role. Then, let’s say your employer updates their business name and transitions to a new investment provider over the course of a few years. As time goes on, let’s say you move to a new home.
This was a reality for one man, who then struggled for 10 subsequent years to gain enough information to get the plan transferred only for the new investment provider to say the check had to be sent to an old address. This struggle could have been avoided if he opted to move his 401(k) to an IRA or his new employer’s retirement plan. Here is why you shouldn’t leave your 401(k) with a past employer.
MY BOOK
I seek to make personal financial planning less scary.
This book provides a simple guide for working through life's biggest financial questions facing couples in their 20s, 30s, and early 40s today. It starts with goals-based planning around topics including retirement planning, education planning, and major purchase planning. It then walks through some basics of investment management, options for how to invest, behavioral finance, and pitfalls to avoid. Lastly, it discusses risk management and insurance.
If you are not sure where to start, this book may provide some clarity.