Personal Finance and Tax Tips

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What is a Fixed Annuity ?

By Donn J. Sinclair, MBA     May 2, 2020

Insurance Professional Donn Sinclair

Fixed annuities are essentially fixed rate savings/investments issued by insurance companies. Fixed annuities pay guaranteed rates of interest, in many cases higher than available from other financial institutions.  

Fixed annuities can be deferred or immediate. The deferred variety accumulate regular rates of interest and the immediate kind make fixed payments – determined by your age and size of your annuity – during retirement.

The convenience and predictability of a set payout makes a fixed annuity a popular option for retirees who want a known income stream to supplement their other retirement income.

What Are The Advantages ?

Fixed annuities pay guaranteed rates of interest, which makes them appealing to investors wary of the stock market’s ups and downs. What also makes them appealing are their low investment minimums – usually $1,000 to $10,000 – and the fact that the interest they pay escapes taxation until you pull it out.

What Are The Disadvantages ?

Their rates can also be fixed for a limited period, and then drop say, after the first year. If you don’t like the new rates and want to withdraw your money early, heavy surrender charges could kick in and cut into your returns.

Plus, if you decide to opt for fixed lifetime payments, those payments will not rise to keep pace with inflation. As a result, the value of the money you receive will decline over time as inflation erodes the purchasing power of each dollar. So for example, if you retire young and plan to keep collecting annuity payments for a longer period of time, the purchasing power of your money could be a big concern.

How Do I Know if One is Right for Me ?

If you’re worried about coming up short, a fixed annuity can help you sleep at night. Because of their stability, fixed annuities might be well suited to those who want to make sure their money will be enough to carry them through retirement, and at least cover the bare minimum of fixed expenses.

Updated in Rock Hill SC and Charlotte NC

by Donn J. Sinclair, MBA

(803)329-0609      May 2, 2020

@Sinclair Financial Solutions is independently owned and operated.  Donn J. Sinclair, MBA is SC insurance licensed in CT, GA, IL, NC, SC, and VA (NIPR NPN#1722815).  Investment Advisory Services offered through Prosperity Wealth Management, Inc., 2333 San Ramon Valley Boulevard, Suite #200 – San Ramon, CA 94583.  Securities offered through Fortune Financial Services, Inc., 3582 Brodhead Road, Suite #202 – Monaca, PA 15061; branch office of record located at 948 Myrtle Drive Rock Hill, SC 29730, Member FINRA/SIPC.  Sinclair Financial Solutions, Prosperity Wealth Management, and Fortune FinancialServices, Inc are separate entities.   SC Real Estate License #76530, and NRDS #554027312.

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Your Home Showcasing Strategy

by Donn J. Sinclair, MBA   March 14, 2020

Curb to Door Appeal

The first impression that your home makes on prospective buyers as they approach your home should entice them to step out of their car and enjoy the upcoming showing. Clean, or have someone clean the gutters so they are free of any visible leaves and debris. Your roof should not look like it is need of imminent replacement. You or someone should hose down the exterior, plus use a soft brush or sponge mop to clean hard to reach soffit and fascia, plus the doors, windows and frames. Your front entryway should sparkle. Thoroughly clean the doors, replace any tarnished hardware, and replace any dingy or burnt out lighting. A new front doormat might be just the final touch.

Do your window and door frames need a quick coat of paint ? Brighter more current trim colors can definitely update your home’s curb appeal.   Fertilize your lawn to bring out the green ! Plant bright vibrant flowers in beds and planters. Trim back shrubs and trees to make your home and yard appear larger. All fencing, lawn ornaments, porch furniture should look like new. Fresh mulch is always a plus to accentuate colorful plants and flowers.

Your Rooms Set the Stage

Your #1 objective in staging is to have prospective buyers imagine that your home is their next home. Start in your main living areas and thoroughly clean, polish, and de-clutter every room in your home. This is a great time to start the process of eliminating those items that will not make the move with you. Sell, pass on, or pitch those items that no longer serve your needs. If it looks worn to you, then it probably will to buyers and needs to move on. Maximize your floor and visual space when you clear high traffic areas of excess furnishings. More space and light allow prospects to imagine the possibilities. Less is more, and visually expands and brightens your home.

This definitely applies to cabinets and closets. Once again, if the item is not going to make the move, then move it out now. Your closets, cabinets, and drawers should be a third to one half empty. This makes them appear larger and more spacious. Besides, do you really need to keep those broken toys and mismatched socks ?

Also start to pack up your family photos, trophies, posters, etcetera throughout your home. You want buyers to envision their special photos and memorabilia in your rooms. Set the stage for buyers to envision your rooms as their rooms. Your home as their home. Visualize their furnishings in your home. Now clean and clear your way back through your home so that your home really sparkles and shines.

Repair and Maintenance

Most buyers are not looking for a fixer-upper. Rather buyers want to bring their stuff, move in, and have friends and family over and show off their new home. They want to close on their loan and start the next chapter in their life. From light bulbs to the sink disposal, everything that should work – everything must work. Your buyer should be visualizing enjoying themselves in your home – not making a projects to do list. Send a positive message that your home has been well maintained and there are no deferred maintenance items. First tackle the least expensive and easiest repairs to whittle down your list. Know your limits and acquire or hire help for those projects beyond your abilities. Very very important – this is repair and maintenance – not remodel and renovate. Why spend time and money to update for your tastes. Your buyers will have their own tastes. Let them make those choices.

Trash or Treasure

Because this is Soooo Very Important, let’s return to those cabinets, closets, drawers, built-in shelves, attics, basements, and garages. They all look and feel much larger and more spacious with less stuff. Larger and more spacious with less stuff sells faster. The fastest, easiest, and nearly painless way to de-clutter is to sort to five classifications: move, maybe move, donate and pass down, and trash.

The easiest place to start is to “Trash the Trash and Don’t Look Back”. Place the donated items in your vehicle and immediately donate these items. Phone today to schedule pickups for larger donated items. Start to pack both the non-essential move and maybe move items. It would be great if they can they be stored for a short while with family, friends, or at a self-storage facility. Just the thought of storage may shift some items from your move or maybe move lists. Remember that less is more, and the object is to stage and showcase your home, and not yesteryear’s treasures. Merry Moving to You and Yours !!!

 

Cleaned, Cleared and Closing from Charlotte NC and Rock Hill SC

by Donn J. Sinclair, MBA   (803)329-0609

March 14, 2020

 

 

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Long Term Care and Home Health Care

by Donn J. Sinclair, MBA   March 12, 2020

Long Term Care (LTC) is the help people require to perform the basic activities of daily living.  These activities include bathing, dressing, eating, transferring to and from bed and chairs, toileting, and maintaining continence.  The need for Long-Term Care typically arises as part of the normal aging process.  A serious injury or  illness such as multiple sclerosis, stroke, rheumatoid arthritis might also trigger a need for LTC.  Early onset cognitive impairments including dementia and Alzheimer’s disease often trigger a Long Term Care need.

What is Home Health Care ?

A wide range of health care services that can be given in your home for an illness or injury make up Home Health Care (HHC).  HHC can be less expensive, more convenient, and just as effective as care you might receive in a hospital or Skilled Nursing Facility (SNF).  

Skilled Home Health Care services include:

  • Wound care that treats pressure sores or a surgical wound
  • Education for patients and care givers  
  • Intravenous and/or nutrition therapy
  • Injections and medicine monitoring
  • Serious illness and unstable health status that needs to be monitored

Home Health Care’s goal is to provide treatment for an illness or injury.  HHC should help you get better and regain your independence.  Thus you should become as self-sufficient as possible.

Who Needs Long Term Care ?

70% of people turning age 65 can expect to need some form of Long Term Care in their lifetime.  This estimate is from the U.S. Department of Health and Human Services (HHS).  Women on average outlive men by five years.  When you outlive your spouse and live alone then you are far more likely to need paid care.  This explains why women make up more then 60% of HHC users.  Note that 75% of assisted living residents are women !

Where Can You Receive Long Term Care ?

LTC settings are adult day-care, assisted living centers, board and care homes, continuing care retirement communities, and skilled nursing facilities.   Note that most Long Term Care is provided at home.  We all seem to prefer the comfort and convenience of care at home.  Home Health Care should promote the individual returning to independence and their normal daily routine.  Home Health Care should provide high level care, and at a cost considerably less than many other settings.  More details and information on Long Term Care settings and costs is available at www.LongTermCare.gov.

Home Health Care Insurance and/or Long Term Care Insurance

These plans can provide peace of mind today that you should be able to pay for Long Term Care expenses in the years ahead.

 

Updated by Donn J. Sinclair, Winthrop MBA

in Charlotte NC and Rock Hill SC

March 12, 2020      (803)329-0615

DJS: More information is available at Medicare.gov.

See Publication 590-A and Publication 590-B.  

What is Term Life Insurance?

by Donn J. Sinclair, MBA   February 21, 2020

Term insurance is the most basic form of life insurance, and term life insurance is normally the least expensive and best value for your life insurance dollar.  Term life insurance provides life insurance coverage for a specific period of time or term.  This term period might be a 1-year term, 10-year term, and as long as a 30-year term life insurance policy.  

The policy owner makes a premium payment either monthly, quarterly, semi-annually, or annually.  As long as the insured makes the premium payments on time, then the life insurance policy is in effect until at least the end of the term.    

The length of the term life insurance period should be selected long enough to provide life insurance coverage for the years when the insurance proceeds would be needed to replace money or income lost due to the insured’s death.  If the insured(s) dies during the term life insurance period, then the insurance amount or beneficial proceeds are paid to the beneficiaries.  After the term period expires, if the term life insurance was not extended, then there is no longer any insurance, and no beneficial proceeds to be paid.  

Most term life insurance policies have maximum issue ages.  If you are in your sixties or early seventies, then plan ahead with a term life insurance period to match or exceed your insurance needs.  

There are three basic types of term life insurance.  Annual renewable term insurance premium rise as you age; however, these policies normally have the lowest early year premiums.  These policies are best suited to provide a large amount of insurance coverage at low premiums in the early years; with the expectation that you will have increased income or lower other expenses in the years ahead.  Another consideration is that you purchase a 20-year annual renewable term life insurance policy, expecting to need the coverage for less than the full term.  Should the insurance need continue longer than expected, then you still have coverage years remaining.

 

The second type is level premium term life insurance.  Here both the insurance amount and the premium are locked in for the life of the term life insurance period.  You have the peace of mind of the term life insurance, and are guaranteed your premiums will not rise during the term period.  

 

The third type is decreasing term life insurance.  This type of term life insurance is quite popular for providing mortgage protection for a surviving spouse.  The premiums stay level, and the insurance amount decreases to reflect a decreasing mortgage balance.  If the insured dies during the term life insurance period, then the beneficiary receives insurance proceeds which should be sufficient to payoff the mortgage balance.  

 

Decreasing term life insurance may also be beneficial for those with no mortgage, yet child(ren) responsibilities.  As children grow and the accompanying financial responsibility decreases, the term life insurance coverage decreases to reflect lower financial responsibilities.  

Donn J. Sinclair, MBA   (803)329-0609
February 21, 2020

Updated in Charlotte NC and Rock Hill SC

 

 

 

 

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Asset Allocation in Your IRA

by Donn J. Sinclair MBA  – March 12, 2020

Asset allocation refers to the mix of investments you choose for your IRA. More specifically, what percentage of your IRA portfolio do you have invested in stocks, bonds, cash, and other asset classes. The IRA could be a Traditional IRA, IRA Rollover, Roth IRA, SEP-IRA, or SIMPLE-IRA. Your asset allocation should always consider your temperament for risk.

 

Finding Your Mix

The concept behind asset allocation is very simple: Don’t put all your eggs in one basket. But the implementation may be somewhat more complex. The mix of assets you choose for your IRA depends largely on your personal financial situation, your time horizon, and your risk temperament.  Personal financial considerations include: will you and/or your spouse continue to work seasonally or part-time during retirement; how much have you saved to date for retirement; whether your retirement savings are post-tax or pre-tax(IRA, 401k, etcetera).  Your time horizon is the length of time you have to invest before you need your retirement funds.  Several financial goals may require that an IRA portfolio have several time horizons; and these different goals may actually be in conflict.

Your Risk Temperament or Tolerance

This is your financial ability and emotional willingness to take risk in pursuit of reward with your IRA.  Calculating your risk tolerance requires you to examine your income, your assets, your responsibilities, and your ability to cope with stock and bond markets ups and downs.  When you pursue IRA financial goals as a household, then you must also consider your spouse’s risk tolerance.  

 

Rebalance Your IRA Portfolio

Once you calculate an IRA asset allocation that feels right for you, then periodically you should monitor your allocation.  A portfolio that starts out with 60% stock funds and 40% bond funds may shift to 70% stock funds and 30% bond funds, if your stock funds outperform your bond funds for a length of time.  Conversely, if bond funds outperform stock funds, then your asset allocation portfolio may be overweight in bond funds.   You should establish regular time periods to review your IRA portfolio, and rebalance your asset allocation as necessary. Should your IRA get out of alignment, then you may rebalance your portfolio by selling or exchanging assets in one category, and buying or exchanging assets in another.  Pay attention to any rebalancing costs.    

Changing Times and Course

As you get closer to your financial goal and you time horizon shortens, then your ideal IRA asset allocation could change.  Generally you should pursue a more conservative asset allocation when you have less time to reach your financial goals.  Life changes including: having children, caring for aging parents, loss of employment, and adverse health may also impact your financial goals and risk tolerance.   Your IRA asset allocation should change accordingly.  

 

A Few Words About Risk and Reward in Your IRA

You should carefully consider any savings and investment vehicle’s objectives, risks, expenses, and rewards.  Not all savings and investment vehicles may be appropriate for everyone.  Every individual is unique, has their own set of financial circumstances, and comfort level with saving and investment risk.  Also, prior to any IRA decisions or IRA investing, you should carefully read the available material to better understand the specifics of your selected IRA savings or IRA investment vehicle.  

You should consult your tax advisor or www.IRS.gov for more information.  The above information is intended as educational information and not as investment advice.  This is a great time to check and update the beneficiary designations on your Traditional IRA, Roth IRA, and any IRA Rollover.

 

 

Donn J. Sinclair, MBA   (803) 329-0609   March 12, 2020

@Sinclair Financial Solutions is independently owned and operated. Donn J. Sinclair, MBA is insurance licensed in NC & SC (NIPR NPN#1722815). Investment Advisory Services offered through Prosperity Wealth Management, Inc., 2333 San Ramon Valley Boulevard, Suite #200 – San Ramon, CA 94583. Securities offered through Fortune Financial Services, Inc., 3582 Brodhead Road, Suite #202 – Monaca, PA 15061; branch office of record located at 948 Myrtle Drive Rock Hill, SC 29730, Member FINRA/SIPC. Sinclair Financial Solutions, Prosperity Wealth Management, and Fortune Financial Services, Inc are separate entities. SC Real Estate License #76530, and NRDS #554027312.

 

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