The Internet Sales Tax: What to look out for.

May 6th has come and gone, and with it the passage of the internet sales tax through the US Senate. Getting an idea of how your investments may be affected by its passage is critical, particularly if you invest in companies with a distinct online retail element. It’s not too late to take a look and make some adjustments. The bill itself is a proposal to institute an across-the-board tax on all online sales for online retailers as a means of better regulating online sales and bringing retailers such as Amazon, back in line with their physical-store competitors who have been paying taxes on all their sales, while internet retail giants haven’t been shelling out anything of the sort since their inception.


This will also affect smaller businesses as well; the cutoff having been set at $1 million in gross margin, but many of the smallest businesses affected won’t be trading publicly regardless. Rather, the most distinct players will be the online retail giants, as well as big-box stores in the short-term future.  Keep an eye out for physical retailers such as Best Buy (who have been jokingly known for quite some time now as, “Amazon’s showroom”) playing a bit harder with some of their more expensive items. While companies such as Amazon and Wal-Mart have been proponents of this proposal, they’ll also be among those hit the hardest by it, though more often than not they have the funds to spare. Where it seems like it will be damaging in the short-term, it will hardly cause too much of a stir—rather, keeping an eye out for speculators and their impacts on the stock prices will be the larger factor. The most likely effect if this bill passes through the House, is driving prices up for smaller retailers who may let go of some of their more expensive merchandise, and thereby driving more customers to the larger retailers who can take the extra hit and who may end up with a better overall outlook.


While the internet sales tax may cause a bit of a dip in the short term for publicly traded online retailers, what this effectively accomplishes in the arena of the internet marketplace is, while hardly negligible, minimal. It’s not only important to know when to buy and when to sell, it’s also utterly imperative that you have an idea of when your stocks may be taking a temporary—or prolonged—dip, and how those factors will continue to affect their business well into the future. If your portfolio or your business has been hit by this, get in touch with an advisor or financial consultant to ensure that you’ll be able to not only keep your head above water, but to keep turning a steady profit.


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The Tax Season Cometh: Putting your refund to work for you.

With tax season just around the corner and the IRS having just released information that it plans to issue refunds about as quickly as it did last year (9 out of 10 refunds released in under 21 days (, now is the time to start considering what you’re going to do with your refund. While the promise of a big check from the government always comes with some temptations (a new grill for the summer, a gift you missed out on over the holiday season) you should always make sure you’re investing that money wisely. While it may seem like a gift, and an easily spent one at that, remember that it’s mostly money from your other sources of income that you were never able to collect on. Your tax return should be treated like any other money put away, safe from withdrawals for a long period of time; take your excitement at getting such a big break in the mail as incentive to be smart and save. Here are a few tips to get you thinking about putting some of your tax refund to work.

Save it! Invest it!: The importance of either putting some of your return into a savings account or investing it cannot be stressed enough. A good rule of thumb, at the bare minimum, is take ~10% of every check you get and put it into a savings account or towards your investments. Before you know it, you’ll have a tax return a few times over waiting for you whenever you need it that can be used anytime throughout the year.

It’s too much and you don’t know what to do with it!: If it seems like you’re getting too much back on your tax return, get in touch with either a tax preparation specialist or financial advisor.  In this case, you can see if there are any changes you can make to your tax documentation in order to get more of that money throughout the year instead of the one big chunk annually. Chances are if you haven’t already done so, you could be seeing a slight rise everywhere else and a reduction in your tax return check.

IRA?: Alongside the 10% rule for saving/investing, it’s also a good idea to look at doing something long-term with some of the money, namely, putting some of it towards an IRA or other form of guaranteed retirement income (annuities, etc). Nothing is more valuable to someone right now than an investment in future stability. Consider asking your advisor, while you’re trying to shrink your tax refund, about recommended retirement investment opportunities.

While it may seem like something of a killjoy at first, making sure that the first thing you do with your tax return is putting some of it in a place that will give you access to it in the future is of utmost importance in tax season. Whether you’re saving, investing, putting it into a retirement fund or contributing to a child or grandchild’s education, just remember that it’s better if your short-term desires wait until your long-term stability is taken care of.  Before you know it, they will have caught up to each-other, and you’ll have made some hefty gains in the meantime.


Seven Questions to Ask Before Investing:

We have all heard of the seven deadly sins, things that you should never do or you risk the harshest of punishments.  But many people don’t know about the seven deadly questions, involving your investments.  There are seven questions that one must answer before dropping a dime on investments, otherwise their money could be lost in the fiery pits of… well you know where.  Making investment decisions isn’t easy, especially if you are just entering the game.  There are a lot of details that many people don’t think about until it’s too late.  So, if you want to avoid the eternal pain of poor investment plans, ask yourself these seven questions.


1.       “Why?”  It’s a simple question, but it’s often the hardest one to answer.  Why are you investing, and what do you hope to gain from it?  In other words, you must set specific goals.  Maybe you want to save for retirement, maybe you want to send your kids to college, or maybe you just want some breathing room from everyday expenses.  Whatever the reason, it’s important that you define why you are investing your money and what goals you wish to accomplish in doing so.


2.       “What is my time frame?” When can you expect to earn your money back?  This all depends on what kind of investments you make.  Most of the forms of investments which you can cash out of at any time, such as stocks, bonds, and mutual funds, often leave you with the risk of not getting back all that you paid in.  Many other investment options will limit or restrict the opportunities that you have to sell your holdings.  Make sure you are aware of these before you enter the game.


3.       “What am I going to get out of it?”  What can you realistically expect to earn on your investments?  Having an unrealistic idea of playing the stock market and striking it rich could leave you simply striking out.  Most earnings, as millions of people encountered in the past few years, are dependent upon the market, and can rise or drop based on market changes.  Other investments, such as bonds, have fixed returns that aren’t as susceptible to market changes.


4.       “What kind of earnings will you make?”  Very few times when investing does a wad of cash appear in your mailbox if you’re successful.  Many times your success is paid to you in things like potential for earnings growth, as in real estate purchases. Other times it can come through interest or dividends.  Knowing the details of your payback can help you make better decisions when you are paying in.


5.       “What’s my risk?”  And here comes the basic balance in investing, risk versus reward.  The higher the risk, the higher the potential reward.  Overall there is no guarantee that you will get your money back or receive the earnings promised to you.  Unless you have your money in a savings account or a U.S. Treasury security, both of which are backed by the federal government, your money is essentially unprotected.  Make sure that the risk you take is worth the reward that you expect to achieve.


6.       “Is my money diversified?”  We can all remember our mothers as some point or another saying, “Now, don’t put all your eggs in one basket.”  Well your mother’s wise words ring true in terms of investments as well.  Certain types of investments do better in certain situations, so by diversifying your investments, you are spreading your eggs across many baskets.  That way if a certain industry tanks or sector is struggling, you will have plenty of other baskets holding your money safe and sound.


7.       “What is the effect of taxes on my investments?” It may seem like the nightmare of early April trying to sort out your taxes each year, but taxes are just as critical in making investment decisions.  What you pay into certain investments, such as a Roth IRA, are tax deductible, but there is no tax on the earnings.  Other options, such as Traditional IRAs, work in the opposite way, in that your contributions are not taxed, but your earnings are.  Certain bonds are exempt from state and local taxes, such as U.S. Savings Bonds, while others, such as municipal bonds are exempt from federal income taxes and most state income taxes as well.  Make sure that you are using your investment’s ability to avoid taxes in the most efficient ways possible.


Now that you know the questions, it’s up to you to determine the answers.  The important thing to remember is that the best answer to each one is whatever works best for you and your goals.  Take the time to think through your decisions and all the alternatives.  There is no standard pathway to success on the road of investments, but if you take the time to ask yourself these seven questions, it will be a much smoother ride.


4 Critical Retirement Pitfalls to Avoid

Life happens so fast these days.  As a teenager in high school, you are consumed with homework and friends.  In college, you choose your area of studies in hopes of getting the career of your dreams.  After you graduate, your dream is sometimes delayed with the harsh reality of entry-level jobs, lower pay than originally expected, and a few unforeseen bumps along the way.  Years later, you finally earn that dream job, you meet and marry the man/woman of your dreams, you start your beautiful family that you always wanted, you buy that bigger house on the hill, you plan spectacular yearly vacations for your family, and you invest in your brilliant child’s Ivy League education.  Wow… your life speeds by before you know it.  So, what do you do now with your retirement years on the horizon?  Don’t become so blinded by planning for your career, success, and family early in life that you forget to plan for yourself later in life too.

When planning for your retirement, avoid making these classic errors that could potentially threaten your retirement savings, happiness, and financial security.

Mistake #1: You start saving for your retirement in your later years.   Solution: You need to start saving when you are young.  Don’t be caught behind the eight ball and trying to make up for lost time,  and consequentially,  lost savings. Liz Weston, author of The Ten Commandments of Money: Survive and Thrive in the New Economy, suggests that an individual needs to start saving for retirement by age 35.  Otherwise, he/she will have an impossible uphill battle trying to catch up.

Mistake #2: You ignore your debt.   Solution:  Before you retire, focus on tackling your mortgage and credit card debt.  It sounds obvious and  somewhat self-explanatory;  however, some studies now indicate that older Americans are taking on more mortgage and credit card debt at an alarmingly increased rate. Don’t add to this increasing number of older Americans who enter into retirement deep in debt.   Pay off your credit card debt and mortgage debt as soon as possible. Make your climb out of debt your number one priority so you are not making these payments with your retirement savings.

Mistake #3: You expect a large amount of retirement support from Social Security.  Solution: Base your expectations on reality and not what you hope it will be.   Don’t place so much of your retirement stability on your expectations of Social Security.  Just think, if you underestimate the boost provided by your social security, you will only be pleasantly surprised in the long run.  This way of thinking is much better than the alternative method of being caught off guard.

Mistake #4: Your investment decisions resemble the same investing risks that you took in your twenties.  Solution: Diversify your retirement investments so you don’t place all of your eggs in one basket.  What happens if the basket breaks? What do you have to fall back on? You don’t want to lose all of the hard work accomplished with your own blood, sweat, and tears. The vitality of your retirement savings and investments is not worth that kind of risk even if a high-risk investment looks like it will have enormous growth potential.  The key word here is “looks”.  You do not want to place your future welfare in “looks”; you want to place the future of your retirement stability in “diversification”.  That’s right, the term “diversification” is not just a fad term coined for stock portfolios anymore.

Ultimately, just guarding against these mistakes can drastically improve the outcome of your retirement years.  What you don’t think about and plan for now can haunt you in the years to come.  Yes, it’s initially easier to spend the first half of your life carefree and not looking out for your golden years; but in the long run, it’s easier to spend the time and energy now securing yourself against these potential retirement pitfalls in the future.  So, be proactive now, and adjust your path to your retirement.  Start as early as possible, and optimize your golden years!—You will be so glad you did.