A letter from our President: a look back at 2014

CTC-logo

As we look back at 2014 we can say there were many bright spots, including an extended bull market and new highs on the Dow and S&P 500. The “home country bias” (the preference for US stocks and bonds) CTC portfolios maintain served our clients well as the domestic markets outperformed the developed world and emerging markets. The US economy continued its steady, upward growth, the labor market continued expanding with solid job creation numbers and unemployment fell to 5.6%. Congress agreed to step away from fiscal cliff and government shut-down threats. All of this paints a nice rosy picture.

If you look a little closer at the year, however, other things become apparent. Russia annexed Crimea and stirred unrest in Ukraine.  Japan has fallen into a recession, and Eurozone growth has faltered. With oil prices falling to lows not seen since 2009, oil dependent economies of Russia and Venezuela risk political unrest. Economic growth in China has slowed to just over 7%. Hacking, spying and troubling activity in the Middle East also made headlines in 2014.

All this is to say that we begin the new year in familiar territory. There are rationales for optimism and arguments for hunkering down. There are forecasts calling for a correction (“the market is overvalued”) and forecasts predicting double digit returns (“the market is undervalued”). As our investment team looks forward, we believe the US economy will continue to grow. We believe other parts of the world are poised for growth. We believe that there will be economic surprises ahead both on the upside and the downside, and that the way forward will not be smooth or uneventful. As prudent investors, however, we will stay invested, looking at the best research and data available. We can neither predict nor time the day-to-day market fluctuations, but instead will focus our attention on creating the most optimal portfolios we can to provide a high probability of success for you – the achievement of your goals.

Blessings to you, family and friends, as we begin 2015!

GOBankingRate’s 10 best savings accounts for 2015

Bank

GOBankingRate recently reviewed over 120 financial institutions to create a top-ten list of the best savings accounts for 2015. The banks on the list are ranked according to their minimum deposit to open, minimum deposit to avoid a fee, monthly service fees, and the annual percentage yield (APY).

GE Capital Bank Online Savings and MySavingsDirect MySavings Account are tied at the top of the list: both have low fees (including no monthly maintenance fees) and offer the highest APY at 1.05%. In other words, if you deposited $100 into either savings account and had no further contributions, you would gain $1.05 in interest after a year. This might not seem like much, but to put things in perspective: the average savings account APY is 0.17%, which would net only $0.17 in interest on a $100 deposit.

You can see the rest of GOBankingRate’s top-ten savings accounts list here.

With savings account interest rates so low, you may want to consider investing to reach your financial goals. If you’re new to investing, start by asking yourself these investment questions to help you learn who you are as an investor and identify your investment needs. If you have questions of your own that you would like to ask us, feel free to leave us a comment below, or send us a message.

SMART New Year’s resolutions

Goals

Are you considering a financial new year’s resolution for 2015? According to Statistic Brain, 34% of New Year’s resolutions are money-related. For 2014, saving more money and spending less was the third most popular resolution. Unfortunately, only eight percent of the people surveyed were successful with their resolution (financial or otherwise).

While there are many different factors that can affect the success of your resolution, starting out with a well-thought-out goal can boost your chances. So when you set your financial goals for the new year, make sure that they are SMART: Specific, Measurable, Achievable, Rewarding, and Timely.

Specific

A specific goal is easier to plan for. “Create an emergency fund” is a well-intentioned goal, but there’s no way to determine when you’ve achieved it. Instead, try something like: by the end of the year, I want to save three months’ worth of necessary expenses to use for emergencies.

Measurable

Are you on track to meet your financial goal? If your goal is too vague, you might not have any way of knowing. Create a goal that allows you to track your progress. This will help you know when you must make adjustments to your spending and saving habits to reach your goal.

Achievable

You don’t want your goals to be too easy, but you don’t want them to be impossible, either. Set a goal that challenges you to make realistic changes in your life to attain something worthwhile. If the goal isn’t worthwhile, you might not be motivated; if the challenges aren’t realistic, you might be discouraged by your lack of progress.

Rewarding

Achieving your goals should have an impact on your life; they should encourage personal growth and/or bring a satisfying change in your life.

Timely

Your goals should be set within a specific time frame. Decide not just what you want to save for, but also know when you want to have that money saved. Without a target date, it can be easy to drift along. Sure, you might eventually achieve your goal, but you might have been able to do so sooner and more efficiently had you set a specific end date.

Your financial goals

So, what do you want to do with your money in 2015? Do you want to pay off all of your credit card debt? Or max out your IRA contributions? Whatever your financial goals might be, making them SMART will help you manage your money and make sound financial decisions.

IRA Charitable Rollover extended to 12/31/14

Giving a Gift

On December 16th, Congress passed a bill that included an extension for the IRA Charitable Rollover. This provision expired at the end of 2013 but has now been extended to December 31st, 2014, retroactive to January 1st, 2014.

The IRA Charitable Rollover allows individual taxpayers older than 70½ years to donate up to $100,000 to charities and ministries from their Traditional or ROTH IRA. This donation goes straight from the IRA to the charity – it is not first distributed to the IRA owner. Because the money goes directly to the charity, distributions made in this manner are not considered taxable income. Thus, by transferring part or all of your RMD to charity, you can effectively reduce your income tax while supporting your favorite ministries.

The IRA Charitable Rollover will expire in less than two weeks; as of right  now, it will not be available in 2015. If you would like to learn more about the charitable IRA rollover, please contact your local Financial Service Representative or send us a message.

Claiming tax deductions on gifts

Hands-gift

Did you participate in #GivingTuesday? Or are you planning on make a donation before the end of the year? If so, here are five things to know about claiming a tax deduction on your donations.

  • Not every organization qualifies you for a tax deduction. Donations to churches and government agencies are deductible; to find out if other organizations are, you can contact them or use the IRS’s Select Check tool.
  • Cash donations, or donations made by check, electronic funds transfers, credit cards, and payroll deductions are all considered monetary donations. To deduct these donations, you must have a bank record (such as a canceled check) or a payroll record (a W-2 Form or a pay stub) where appropriate, or a written statement from the charity, regardless of the amount of the donation.
  • Household items such as furniture, furnishings, electronics, appliances and linens must be in good condition to claim a tax deduction. If you claim a deduction of over $500 for an item, it can be in less-than-good condition if you provide a qualified appraisal of the donation with your tax return.
  • For each deductible donation of $250 or more, you must have an acknowledgement from the charity; this is in addition to the records for deducting monetary donations. One statement with all of the required information can meet both requirements.
  • Lastly, you can claim charitable deductions in the year you make the donation. So, if you charge a donation to a credit card before the end of December, it will be considered a 2014 donation even if you don’t pay off the credit card balance until 2015. Similarly, if you make a donation via check this month, it will count for 2014 so as long as it is mailed before the end of the year, regardless of when the check clears.