| About Roger A. Kahan CPA | Back Issues |
 
+ + + + + + + + + + + + + + + ++ + TOPICS COVERED IN THIS ISSUE: Are
all your eggs in one basket?
+ + + + + + + + + + + + + + + ++ + ARE ALL YOUR EGGS IN ONE BASKET? What’s the single determinant of investment performance? Many financial advisors will tell you it’s an asset allocation plan. An asset allocation plan is a valuable tool that may help you achieve your financial goals. Without a plan, you’re gambling with your life savings-and your future. Asset allocation, simply put, means that you’re not putting all your eggs in one basket. Instead, when you use asset allocation, you actually distribute portions of your investment into different asset classes: stocks, bonds and money markets. The money market and bond classes are two vehicles that help you preserve your capital, since they involve the least amount of investment risk. Stocks on the other hand, present greater investment risk; however, they also offer the potential for growth. Generally speaking, the younger you are, the more risk you can afford to take with your investments. Younger investors, with a long time to recover from market setbacks, may choose to focus almost exclusively on the stock market. As you approach retirement age, preserving capital will most likely become more of a priority for you, so you may want to put less money into the stock market and a greater percentage of your assets in bonds and money markets. Choosing the right investment mix will not only provide you with the potential for return on your investment-if one class does not perform as well as you hoped, you’ll likely be more protected from loss. It’s wise to review and rebalance your portfolio from time to time. However, rebalancing too often may do you more harm than good. Most experts recommend an annual review of your holdings. Your advisor may alert you if it’s advisable to adjust your mix. Keep in mind that it’s never too late to establish or revise an asset allocation plan. Begin by scheduling an appointment with a qualified financial advisor. He or she will assess your goals, risk tolerance, and the time frame in which you’re hoping to achieve your goals-and suggest an asset allocation strategy that may well work for you. IT PAYS TO DEDUCT IT! Keep more money in your pocket (and send fewer dollars to the IRS) by taking advantage of all allowable tax deductions you may be eligible for. Here are some tax-saving ideas you may benefit from this year. Check your filing status. If you have dependents and are unmarried or a surviving spouse, you may be able to file as “Head of Household,” which may significantly reduce your tax liability. IRA contributions. If you are single, or are married and file jointly and neither you nor your spouse contributes to an employer-sponsored retirement plan, you may be eligible to deduct your entire IRA contribution. If you (or your spouse) do contribute to an employer-sponsored retirement plan, the amount you may be eligible to deduct depends on your adjusted gross income. The IRS 1040 instruction booklet has a worksheet that can help you determine eligibility for this deduction and how much you can deduct. Home ownership expenses. The mortgage interest and property taxes you pay on your primary residence are generally deductions you can claim on IRS Schedule A. You may also deduct interest paid on home equity loans in most instances. Medical and dental expenses. If more than 7.5% pf your adjusted gross income is spent on medical and dental expenses, the excess may be deductible. State and local taxes. State and local taxes may be deductible in the year in which you pay them. If you pay a fee to the state to register and license your car, you may deduct the part of the fee related to the vehicle’s value. Several states have state disability funds. If you pay into these funds (check your W-2), you can deduct them as well. Occupation-and finance related expenses. If you spend more than 2% of your adjusted gross income on job-related education, job search/career counseling/job-related moving, unreimbursed job expenses and/or investment and tax-related expenses, you may be able to take the amount that exceeds 2% of your income as a deduction. See the IRS instruction booklet for more details or consult with us, your trusted tax advisor for detailed information on how you can reduce your tax liability. + + + + + + + + + + + + + + + + + + “Planning for the future is a lot like planting a tree. You’ve got to do it today if you want your family to enjoy it tomorrow.” + + + + + + + + + + + + + + + ++ + ARE SMALL STOCKS WORTH THE TROUBLE The returns may be very high with small stocks (those stocks that sell for less than $5 per share). However, the level of risk can be higher also. So before investing, be sure to do your homework or consult an investment professional who may be able to assist you. Look for a strong balance sheet. Be sure to check the company’s annual report or quarterly reports. You may also access a company’s financial information through the Securities and Exchange Commission’s Web site at www.sec.gov . The balance sheet may provide a little more insight into the company’s total debt versus its total assets. And by checking the company’s earning per share, you may determine whether the firm is actually making any money. An earnings-per-share level of 10% or higher may be one indication that a company is financially stable. Investing in smaller stocks takes a little more time and effort but it may be worth it in the long run. Don’t rule them out! + + + + + + + + + + + + + + + + WHEN IS IT TIME TO PARTNER WITH A CPA? The Massachusetts Society of CPAs recommends that you partner with a CPA in 2008, particularly if you:
+ + + + + + + + + + + + + + + + NEGOTIATE WITH SUPPLIERS By negotiating special terms with suppliers, you can improve your company's cash flow. For instance, if you turn over your inventory every month, pay for it every two months. In return, do more business with those suppliers willing to accept your terms for better profits all around. + + + + + + + + + + + + + + + ++ + INSURANCE REVIEW TIME????? When was the last time you reviewed your liability and catastrophic insurance coverages? You know you should review both coverages and premiums at least every three years. This risk and its related cost is usually the least item looked at by a businessperson, but is normally a big cost item on the P&L. Since you have not looked at it in a while, now is the time to call in your insurance agent or broker to review coverages and quote the renewal or change of existing coverages. It would also be wise to ask two other insurance agents or brokers to review coverages and offer a quote. You may be very pleasantly surprised to see what is wrong with your existing coverage or premium costs. Be sure to tell your current insurance agent that you will be soliciting two other quotes so he or she knows where he or she stands. We can take care of your life, health and long-term care insurance coverages. + + + + + + + + + + + + + + ++ + 10 TIPS TO SAVE YOURSELF FROM BEING A FRAUD VICTIM Credit card fraud is becoming a large problem. Fraud victims may spend months or longer restoring their good credit. And we all pay the costs of fraud through higher prices, higher interest rates and increased inconvenience. 1. Sign your new credit card as soon as it arrives 2. Minimize the number of credit cards you carry in your wallet or purse. Store any cards you don't carry in a safe place. Treat all of your cards like cash. 3. Install a locked mailbox at your home to guard against mail theft. If this is impossible, consider using a post office box. 4. Remember to get your card and receipt after you buy something, and be sure they’re yours. 5. Never give your credit card number over the phone unless you initiate the call or you already have a relationship with the company. 6. Take care with credit card receipts, monthly statements a pre approved credit care offers. Never throw them or anything else with an account number in the trash without first shredding them 7. Keep a list of all your credit cards along with their account numbers, expiration dates and consumer assistance phone numbers. Store this list in a safe place. In the unlikely event of fraud, quickly notify all of your credit grantors. 8. Don’t write your account number or Social Security number on a post card or the outside of an envelope. 9. If your billing statement is wrong or your cards are lost or stolen, call your card issuers immediately. 10. Check your credit report at least once per year. Check for any fraudulent use of your accounts. If you don’t recognize a company or bank listed on the report, contact that company and the credit bureau immediately. Someone may have applied for credit in your name. + + + + + + + + + + + + + + + ++ + Roger A. Kahan is a Certified Public Accountant, a Tax, Business and Financial Advisor serving the tax and financial needs of individuals and small to medium sized businesses primarily in eastern Massachusetts (as well as almost anywhere in the United States). Roger is always seeking additional clients and other professional’s clients to advise and improve their personal or business life. Do you know of someone that could use our professional services? Please let us know if we can use your name in an introductory letter or phone call. We do offer a referral fee to those that join our ever-increasing list of tax clients. Call for more details. Thank you. + + + + + + + + + + + + + + + ++ +
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e-mail:
kahan@RAK-1.com
About
Roger A. Kahan CPA | Back
Issues |