Plan Ahead. Did I say plan ahead?

October 15^th has come and gone.  If that wasn’t an important date for you this year - congratulations.  Your lack of focus on October 15^th probably means your 2012 taxes were not filed at the last minute deadline this year.  But look out.

Next year could be different.  That wonderfully misnamed “Taxpayer RELIEF Act of 2012”, actually passed and signed into law January 2, 2013, is waiting to surprise you.  A previous tome ridiculed the 1984ish naming of things (double speak) to mean something other than what it really is, but we can’t help ourselves from

pointing it out once again.

The point of this message is that now is the time to start learning and calculating your tax consequences for this year while you can still do something about them.  I hope you desire to reduce your taxes to the lowest allowed by law.  That’s going to take some work this year as a lot of rules and limits have changed.

So what can you do between now and the end of the year to lower your 2013 tax bite?  Here’s my three simple suggestions:

1.     Take your tax preparer out for breakfast or lunch.  Tell him or her you’d really like to pay the lowest amount possible this year and that you’d appreciate any suggestions.  If you don’t ask, you don’t get, my father frequently reminded me.   It applies here.

2.     Look at your taxable securities investments and see what your gain/loss position is at the moment.   Do you have any “carryover” losses from last year?  Could you sell something now at a loss and buy it back 31 days later to offset some gain you might recognize if you sold one of your big winners and then bought it back again.  This is a technique we call raising your basis, or increasing the number that you have to report to the IRS as your purchase price.  Sound confusing? Well, a short reminder that your author gives advice by the hour on this particular topic.

3.     Charitable gifts.  How about gifting some stock or mutal funds to your church or other favorite charity?  Instead of giving cash, giving appreciated stock helps you avoid the capital gains tax and moves your tax bill slightly lower versus gifting cash and then claiming a deduction.

So there you go.  Wake up and take some action today.  It will be 2014 before you know it and one of these ideas takes you 31 days or longer to fully implement. Get moving.

Are you planning ahead this year? Comments?

United WiFi: First Report: #Fail

FIRST REPORT – United WiFi

In a word: SLOW

Came on at 24,000 feet, not 10,000 feet as advertised.

Sign up pretty easy, just slow.

Browsers: Works ok in Safari, Firefox and Chrome

Too slow to download files from SugarSync or use Morningstar’s Advisor WorkStation (analysis tool for investments if you’re not in the business)

OK for Gmail chat when it’s working

Twitter: blocked

Favorite error phrases I saw again and again in the first 90 minutes while trying to use email:

not connected

still working

unable to reach

trying

Oops... a server error occurred and your email was not sent. (#1)

Unable to reach MainStreet Financial Planning, Inc. Mail. Please check your internet connection or company's network settings. Help

Oops…the system encountered a problem (#502)

Loading....

An error occurred while trying to save or publish your post. Please try again. Dismiss (Blogger post)

This webpage not available

There was a problem completing this action, try again (Google+ post)

Is it worth $14.99.  In another word: NO

Yes, emails will come in and I’ll face 100 upon landing, but the frustration at this early stage is just not worth it.  Dial up was better.

Answer to a frequent question that invokes market timing

Jim: Should we stop contributing to our retirement accounts for a couple of years since the market is so high and save for a car instead?

This is a version of a question we frequently receive intimating the writer thinks the market is about ready to take a big dump and they want to miss it.  Notice they didn't say sell everything and go to cash but it's close to the same question.

My answer:

One' person's too high is another person's opportunity.  It's all supply and demand.  If people want to own more companies the market prices go up. If people want to own less companies the market prices go down.  No one, and I repeat no one, including Warren Buffet can time the market.  WB has done the best of any widely known person in America and he says "be fearful when others are greedy and be greedy when others are fearful". 

My former boss Ken Fisher, said the market climbs a wall of worry.  Seems to me we're in a time period like he describes.  Who would have thought the market would go up with the government shutdown and fiscal cliff happening at the same time? Not me. I did change my asset allocation a few weeks ago as I get nearer to retirement and announced that in last month's tweet summary going from 90/10 to 60/40 in my pension plan to reflect that change. Anna Sergunina, my partner,  remains at 90/10. Anna is 30 years old.

As for your specific question, unless you are changing your time for retirement, you'll most likely have to save more after the car diversion is over. Then again, you might find a great deal at 0% financing like others, and regret saving into cash for a couple of years making nothing.  If the market goes down like it did  in late 2008-early 2009, you can say I told you so. Only congress could drive us there. OMG, it could be bad in January and February!

Frankly, I have no idea what the market will do in the next two years, but moving some of your savings from Bucket 3 (long term) to  Bucket 1 (short term)  for a car purchase in less than two years, and continuing to dollar cost average into your retirement savings, will help you in a market turn down to recover quicker.  Otherwise, you'll just have to wait a longer time period for your long term savings to recover. That's what retired people have to do because they've stopped dollar cost averaging.

Hopefully, you've read the book we recommend, "Winning the Loser's Game" by Charles Ellis, 6th edition and follow Rick Ferri on his blog, along with The White Coat Investor.  Those resources will reinforce my comments today.

That's my position and I'm sticking to it.  Comments?