Financial Planning

Business consulting and internal audit firm Protiviti has updated its Global Financial Crisis Bulletin with answers to the latest questions about the financial meltdown.

I’ve known David Steinberg for some 20 years now. He was introduced to me by one of the major CPA firms in New York City as knowledgeable and honest mortgage broker. I’ve used him many times and have found him quite effective. So, when we hit this financial morass, I thought it might be interesting to see what he had to say while we are in this epic meltdown. “There is no telling where things are going,” says David. But I’d like to share some observations that I believe will withstand scrutiny regardless of where markets are by the time you read this.” The following is from David’s mouth: Cash is King. You’d be amazed how much easier you can sleep if you have that emergency fund to (at least) six months of living expenses. Cash is King II: That emergency fund must be liquid. Having a HELOC (Home Equity Line of Credit) doesn’t count because many banks are getting cold feet and cutting the lines back or eliminating them. So, even if you have perfect credit, there is no guarantee that your HELOC will be there when you need it. Cash is King III: Gains (or losses) are not real until you realize them, when you sell. For years Americans have been feeling rich because their houses and portfolios were appreciating. That wasn’t real. The losses we have experienced in recent weeks as our portfolios have fallen are no more real (unless you sold). If your initial choices were solid, your portfolio should come back when the market comes back. Buy Low and Sell High: I said, “If your initial choices were solid.” All too often people buy speculatively. How do you buy well? Watch Warren Buffett. He won’t buy unless he perceives value. Learn to sit on cash waiting for opportunities. Gotta Know When to Hold’em and Know When to Fold’em: These have been tough times for investors—tough figuring out whether to hold or sell. Stick to stock in good companies that have good management (Warren Buffett) and sell the rest. ‘When’ is the challenge! Sell on your terms—don’t get stampeded into selling at the wrong time. Volatility is a Fact of Life: Hold on! Volatility, which has been at record levels throughout 2008, is not going away any time soon. Get used to it. Strategize for it. Can’t Take the Heat: Get out of the market for the next six months or so if you can’t tolerate the swings. Be prepared to miss some of the glory if the market roars back. Gotta Know When to Buy: Me? I’m buying. Why? Because Warren Buffett is buying. Due to some luck 40 percent of my retirement funds were in cash as of October 10. I told my stock broker to start buying cautiously. (And, remember, it’s not polite to laugh at people.) There’s Gold in Them Thar Hills: Fortunes will be made by those with vision and courage to take advantage of the opportunities that will surely be present in the coming months. For more information, contact him at Dave@SummitFunding.com.

Baby Boomers planning for retirement need to stick to a budget, according to one tax expert.

"There have been nine pieces of tax legislation passed this year," he noted. "The primary responsibility for accountants is to adequately and accurately reflect things that happen to the taxpayer in a way that gives the taxpayer the greatest benefit allowed by the legal system. Tax planning helps the preparer to meet this responsibility."

A new career in income tax preparation could be a safety net for some of the thousands of bank and financial services employees who are losing their jobs due to the current economic crisis. Many of those being laid off are older employees who would not be able to find another comparable full-time job, but are not ready to retire.Tax professionals need many of the same qualifications that bankers and financial professionals possess. A tax preparer must be able to conduct a thorough interview to extract financial and personal information from their client and hold that information in complete confidence. Preparing income tax returns requires similar skills as completing banking, mortgage or investment documents.

When was the last time you or your clients took a hard look at your 401(k) plans?If you're like many small and midsized business owners, chances are that you haven't spent much time reviewing the plan since the day it was set up three, five and perhaps even 10 years ago. Most employers implement a plan and simply assume that even years later it will continue to do what is best for themselves, their company and their employees.

IRS RE-ASSURES MONEY FUNDSThe Internal Revenue Service issued a notice aimed at calming fears that it would act against insurance-dedicated money market funds that take advantage of a new temporary guarantee program. Notice 2008-92 provides that the Treasury and the IRS will not assert that participation in the program by an insurance-dedicated money market fund causes a violation of the diversification requirements of Section 817(h) of the Tax Code in the case of any segregated asset account that invests in the fund.

Change is scary. There's no doubt about it. I often tell my clients that whenever I am facing a major change, I feel like I am at the edge of a diving board and just can't jump into the water.I guess I'm no different than any of you when it comes to change. Sometimes I have been forced into it, and other times I have led it.

When it comes to personal finances and investing, affluent women are hard working, smart, and self-driven, according to Women & Co., Citigroup’s resource program dedicated to helping women achieve their financial goals. The survey, Women and Affluence 2008: A Generational Study, reveals that affluent women are knowledgeable about investing, confident about their retirement, often the primary decision maker, and influencing the next generation of women to do the same. Lisa Caputo, founder and CEO of Women & Co. says that the study is part of the ongoing dialogue with women. “This survey is the latest example of how we listen to women and continue to learn about their distinct financial needs, attitudes, and perspectives. The results indicate that today’s affluent women have far surpassed their mothers in financial acumen, and decision making responsibility. Despite a lack of female financial role models, affluent women empowered themselves and are committed to being a positive financial role model for their daughters.” In fact, according to the survey, women stated they talk to their daughters more about money than any other topic. Why? The research shows that women are embracing their role as CFO (Chief Financial Officer) of the household and encouraging their daughters to do the same. Some key findings from the study include:

Treasury Secretary Henry Paulson said the department's Troubled Asset Relief Program would begin to focus more on relieving tight consumer credit markets and shift away from the original plans to buy mortgage-backed securities.