Buy Diapers and Soap… With Your Smart Phone

Their goal is nothing less than reshaping the retail industry. And with the growing popularity of smart phones and other mobile computing devices, tech-savvy retailers may wind up doing just that.

Whereas previous generations thought of shopping as requiring a trip to the local mall, buyers in recent years have become increasingly comfortable making their purchases online: letting their “fingers do the walking” via keystrokes on a computer. But now, e-commerce innovators – such as the online drugstore Well.ca – are taking that idea one step further.

By strategically locating so called pop-up stores in key commuter hubs, retailers are finding new ways to bring goods to shoppers. Using their smart phones, busy commuters simply scan the quick response (QR) codes (those black-and-white square patterns you’re seeing everywhere these days) on images of products, such as brand-name diapers or detergent, to place their orders. Purchases are delivered to their homes as early as the following day.

Shopping by smart phone while on the go may be a relatively new notion for many, but the appeal of such a system is obvious. With the ease of pressing a button on their pocket-sized device, time-pressed commuters can cross off items on their to-do lists that otherwise would have required a far more time-consuming trip to the local store.

And with PC World reporting earlier this year that smart phones “are already more popular than PCs,” such e-commerce innovations are sure to be around for a long time.

You Can Defer Taxes by Purchasing an Annuity

A major benefit of choosing an annuity as a retirement savings vehicle is tax deferral, which is simply the means by which the payment of taxes on certain assets can be delayed until some future date. Here’s why tax deferral can be beneficial.

Tax-deferred assets, such as investments in annuities, grow untaxed, meaning that interest earned on the investments in the annuity appreciates until they are withdrawn.

That’s called compounding. Compounding is the process by which the money you make from an investment can be reinvested to make even more money. As a hypothetical example, let’s say you have invested $10,000 and it earns interest of 10% per year. In the first year, you will earn $1,000 in interest. But in the second year, you will earn $1,100 in interest. Why? Because not only does your initial investment of $10,000 accrue interest, but so does the additional $1,000 you earned in the first year.

Because your investment isn’t reduced by income taxes every year, you experience potentially higher overall returns in your annuity’s accumulation phase.

It’s also important to note that through tax deferral you may receive a lower tax rate upon withdrawal. Since you probably will not withdraw the assets you’re accumulating in your annuity until later in life (when you may be in a lower tax bracket), you also may minimize the taxes you have to pay when you withdraw your investment.

Your advisor can help you determine if an annuity is a good tax-deferred investment vehicle for you.

The legal and tax information contained in this article is merely a summary of our understanding and interpretation of some current provisions of tax law and is not exhaustive. Consult your legal or tax counsel for advice and information concerning your particular circumstances. Neither we nor our representatives may give legal or tax advice.

When Does a More Expensive Home Cost Less?

While it may seem counterintuitive, it’s true; purchasing a more expensive home in an urban neighborhood could actually wind up costing you less than a home with a smaller price tag in the suburbs.

In more ways than one.

That’s largely because of the high cost of transportation. When shopping for a home, many people who choose to live far from the core and commute to city jobs often neglect to factor in transportation costs.

The ever-increasing price of gas is not the only consideration. Regular maintenance, higher car insurance rates due to the longer drive, simple wear and tear, and vehicle replacement costs all need to be considered when calculating the cost of living far from where you work.

Given that suburban living also typically requires the use of a vehicle for everything from taking the kids to school to quick trips to the grocery store, you could also be looking at adding a second vehicle.

Whereas city dwellers – who benefit from better transit options and from being within walking distance of  many amenities – may get by with one car or none at all.

Something else to consider if you’re weighing the pros and cons of urban versus suburban living: according to research, health benefits – such as lower rates of obesity, hypertension and diabetes – are associated with the increased physical activity (primarily walking) that comes with being a city dweller. And that could translate into both lower medical costs and a longer, healthier life, which we’d all agree are priceless.

Are You a Procrastinator? Find Out How to Change

There are more distractions today than ever before, thanks to the influence of the Internet. Facebook, Twitter and Pinterest are among the online time wasters that lure us from the task at hand. But here’s the disconnect: even as the opportunities for procrastination grow, so does the demand for fast, creative, motivated workers.

So why do we procrastinate? Some experts, like Joseph Ferrari, associate professor of psychology at Chicago’s DePaul University, believe we procrastinate because we were overregulated as children or because we feel anxious about a task. But virtually all authorities on the subject agree that procrastinators are made, not born. Procrastination is a learned behavior that can be changed.

Making a to-do list can be a great first step in managing procrastination. Cross each item off as you complete it.

Knowing what your biggest distractions are can help you avoid them. If you check email every five minutes, try to reduce it to a few times an hour. If you feel compelled to read and reply to every text message you receive, put your phone out of reach.

Look at your work environment. Get rid of clutter, hang or post items that inspire you, and find a spot to keep your to-do list in plain sight. If you find yourself procrastinating regularly, you might want to consider talking to a therapist. Professional advice can help you determine what’s at the root of your procrastination and eliminate it.

Eat Wisely: Skip the Marketing Claims

Eating well used to be pretty easy; just eat lots of fruits and vegetables. But today’s on-the-go lifestyle has resulted in a plethora of processed and packaged food – with huge opportunities for on-package marketing.

Food producers know that consumers regularly scan packaging to find out what’s inside – so they litter it with phrases like “fat free” and “high source of fiber.” Yet fat free products may be packed with sugar, and fiber sources may be heavy on salt and other nutritional no-no’s.

To avoid being a victim of on-package marketing, skip the claims and go straight for the Nutrition Facts section, which includes not only the calories and vitamins contained in the product but also the sodium and sugar content and the percentage of daily value. Sodium should be less than 500 milligrams per 250 ml serving, and sugar (in any form) should never be listed as one of the first four ingredients.

While it’s best to stay away from processed foods altogether, if that doesn’t work for you, ensure that you know what you’re buying. Read the labels.

Annuities May Help Skirt Retirement Risks

The purchase of a fixed annuity may be a hard sell, given today’s ultralow interest rates. But that doesn’t mean investors who are worried about the negative effect of a volatile market on their savings shouldn’t consider these investment vehicles.

When you buy an immediate income annuity, you essentially skirt two big retirement risks: first, that a market crash will destroy your savings, and second, that you'll outlive your money.

The problem is that insurers base monthly payments on current interest rates. If you buy now, when rates are low, you lock in a lower payout than you would if you bought when rates were higher. So the question is: will a fixed annuity pay you enough?

The answer depends on how much you've saved. While an annuity can protect you from running out of money, it isn't a solution if you haven’t saved enough.

If you are concerned about a market crash or fear you may outlive your money, one strategy is to use a portion of your retirement savings to purchase a fixed annuity that will generate sufficient income to cover your fixed monthly costs – such as housing and utilities.

It’s likely that annuities may soon become more available, thanks to rules proposed by the U.S. Treasury and Labor departments that encourage more employers to offer annuity options in retirement plans. So you may want to give them a second thought.

I or your advisor can help you determine if annuities are right for your and can explain your investment options.

Have You Heard of Pinterest?

If you've picked up a newspaper, surfed or watched TV recently, you've probably heard about Pinterest  -- the on-line photo pinboard and community.

The new social media kid on the block is growing so quickly that its popularity has been touted as "Pinsanity.”

The moniker for its success is well deserved; the site has more than 11 million unique visitors, and it's growing. It gets more referral traffic than YouTube, Linkedin and Google+. The demographics of the site are interesting too. Most of its users are young women.

But what's the appeal? Think of it as an online scrapbook or inspiration board – minus time spent rifling through magazines and newspapers and cutting and pasting. You can share pins, re-pin from others and organize your boards by themes such as food, travel, home decor and personal style. Users can pin items from websites they like using “Pin It” buttons on their browsers.

In the wake of Pinterest’s success, many large corporations are developing their own Pinterest presence. Nordstrom, HGTV, ModCloth, General Electric and Whole Foods Market are among the brands currently using the site. Small businesses also can make use of it to unveil new items or advertise a service.

There may be a fly in the ointment, however. Some web watchers have concerns over copyright violations, although the legal community believes Pinterest, like YouTube and Facebook, is protected by U.S. legislation, as long as it responds quickly to copyright complaints.

Is the Boom off U.S. Treasury Bonds?

U.S. Treasury bonds rallied in 2011, as a number of macroeconomic woes, including the European debt crisis, incited worries of a global market meltdown. Does that mean you should consider investing in them?  Yes, U.S. Treasuries are appealing. A portfolio of U.S. Treasuries with an average maturity of 20 years rose 28% in 2011, even better than its 26% jump in 2008, when we were in the midst of a financial crisis. The government securities haven’t seen a better year since 1995, according to Morningstar.

That doesn’t mean U.S. Treasuries are a sure thing.

No investment is.

The U.S. Treasury rally could wind down at any moment. In order to match the 2011 price rally, the 10-year U.S. Treasury yield would have to drop to about 1.05%, far below its record low of 1.72% in September 2011.

Are You Managing Your Finances Wisely?

Is your money being invested wisely? Are you nervous about the stock market right now?

If you are curious about how you could invest profitably right now, why not see if I can help you?

I will not try to push you into making any quick decisions and I will not waste your time.  I will just give you the honest facts about your financial situation.  And maybe I will help you earn a few dollars along the way! 

Just give my office a call at 804-897-3919 (Richmond area) or 757-223-0790 (Tidewater area) to arrange an appointment.

Factor Investing: Is It The Right Strategy or You?

The European debt crisis that arose late last year and has continued since is putting the best-laid investing plans to the test. The reason? Correlation. 

Correlation refers to how securities or asset classes perform in relation to each other and/or the market. A 1.0 correlation indicates that two security types move in exactly the same direction. A -1.0 correlation indicates movement in exactly opposite directions. A zero correlation implies no relationship.

Last year, the correlation between the stocks in the S&P 500 index and the index itself went from as low as 0.4 in February to as high as 0.86 in October, according to Birinyi Associates.

That level of correlation can make the diversification you’ve worked so hard to create in your portfolio ineffective. Never fear, though. One option for addressing highly correlated markets like today’s is factor investing.

Factor investing replaces traditional asset allocation with a focus on specific attributes that researchers say drive returns. These factors can include familiar attributes, such as small-cap or dividend yield. They can also include more complex attributes, such as economic sensitivity and volatility.

To utilize factor investing, you would look at your current factor exposure. To simplify things, you may want to consider just a few factors - such as the three most researchers agree on, which are beta, size and style. Next, decide whether that’s appropriate. Finally, tilt your portfolio toward the factors you think will outperform.

Factor investing isn’t new. It originated in academia 20 years ago, and now is finding favor among institutional investors.