Wilson David Investment Advisors
I fix things. My specialties are financial planning, financial literacy education, taxes, and investment advice, but over my 30-year career, I've been able to help people fix problems with money, construction projects, meetings, sentence construction, culinary disasters, and academic difficulties.
I wish I were like Samantha of the TV show Bewitched and could just twitch my nose to repair everyone's problems. Unfortunately, no magic erupts when I twitch my nose. I help clients using my knowledge, experience, and hard work...although I like to think that our working together has its own magic. My work as a lecturer, teacher, copy-editor, writer, presenter, negotiator, researcher, and office manager in a diverse cross section of business, educational, and government organizations has helped me gain the depth of knowledge needed to advise my clients in all aspects of sound financial planning and investment. I have been described as a fast, cheerful, flexible worker who rapidly resolves unexpected problems and project difficulties. I manage work quality and time based on guidelines provided and use my talents to provide customers with top-notch service.
As a champion for financial literacy, I speak at high schools, libraries, career fairs, churches, businesses and community groups - anywhere I can get a platform! - to raise awareness about financial knowledge and safety. I recently published "Financial Advice for Blue Collar America" which offers guidance on basic concepts of money including insurance and taxes, financial traps to avoid, how to pay for college and tech school, and info about the bright future ahead for blue collar careers.
BA, College of William and Mary
MA, College of William and Mary
MBA, University of South Carolina
By choosing to work with this Advisor, you acknowledge that neither Wilson David Investment Advisors nor this Advisor makes any representations or promises that the services you receive are appropriate for you and your business or guarantees any specific outcome or results. Wilson David Investment Advisors does not guarantee the suitability of the Advisor for your particular needs and does not endorse the advice and services rendered by any Advisor. Wilson David Investment Advisors is a registered investment adviser registered in South Carolina and GA through FINRA. Any commentaries, articles or other opinions herein are intended to be general in nature and for current interest. All content on this website is presented as of the date published or indicated, and may be superseded by subsequent market events or for other reasons. All investments involve risk, including loss of principal invested. The answers presented on Ask an Advisor should be considered general information presented to inform the public. They are based on the information provided in the question, which may have omitted important details that would have changed the answer had they been known. Please consult a financial advisor before concluding that the information is relevant to your own situation.
Investopedia Video: What Are Stocks?
Hi! The other answers here are great, and I wanted to add a thought about how taxes work on unrealized and realized gains. People buy stocks for several reasons including capital appreciation (which occurs when a stock rises in price) and dividends (which are payments made to stockholders when the company distributes some of its earnings to stockholders). So “capital gains” are when you realize capital appreciation by selling the stock. You only take a capital gain in a stock when you actually sell it, and that’s the only time you pay taxes on what you’ve earned. Clients have asked me if they need to pay taxes on a stock that’s appreciated in a year or as in your question, on a stock that shows a "paper profit." In other words, if you spend $1,000 on ABC stock in Jan. 2015 and then at the end of the year the stock has gone up and it is worth $2,000, would you owe the IRS tax on the $1,000 you’ve made that year? In the case of this "paper profit," you wouldn’t owe any tax on the amount you’ve earned so far in 2015 because you haven’t actually realized or locked in that gain. A company you own stock in could feasibly go bankrupt at any moment, so the $1,000 profit you have on paper could disappear and instead of your ABC stock being worth $2,000, it could be worth 0. That’s why you don’t pay taxes on that stock's paper profit – at any moment as the stock market moves and as your stock price moves, your profit changes. It’s only when you sell the stock for more than you paid for it that you realize a capital gain…or a loss when you end up selling it for less than you paid for it or if the company goes bankrupt. Thanks so much for writing to us!
Hi! Thanks for writing! The answer provided by Investopedia here is great. I'd like to add a few more thoughts.
ETFs are a type of exchange-traded investment product that offer investors a way to pool their money in a fund. This fund makes investments in stocks, bonds, or other assets and, in return, receive an interest in that investment pool. Unlike mutual funds, however, ETF shares are traded on a national stock exchange. ETFs are not the same thing as mutual funds. Generally, ETFs combine features of a mutual fund, which can be purchased or redeemed at the end of each trading day at its net asset value per share with the intraday trading feature of a closed-end fund, whose shares trade throughout the trading day at market prices. To put the difference between mutual funds and ETFs in perspective, imagine a day like Black Monday, October 19, 1987 when the stock market dropped 22.6%. If you had owned ETFs (which were actually not sold in 1987), you could have sold your ETF shares at any time during the day for their value at the moment, which was higher as the market was falling than it was when the day ended 22% lower. Had you owned a mutual fund and sold during the day, the brokerage would have taken your order when you said sell, but the sell price would have been calculated at the end of the day based on the net asset value, which in a 22% drop, would have been very low. The ability to sell the ETF immediately for its price right then as opposed to getting the end-of-the-day value for the mutual fund could save money in the event of a rare market crash.
Mutual funds are still the cornerstone investment of many retirement plans, but ETFs have been gaining in popularity in the past few years. Which is a better choice for your investment portfolio? If you are a long-term, buy-and-hold investor with little interest in trading, you are probably fine with highly rated, no-load mutual funds held by a reputable fund manager since the ability to trade often and quickly is not a characteristic that is important to you. If you prefer to buy and sell more frequently, ETFs offer greater tradability, lower costs, diversification, and transparency and therefore may work better for your objectives.
Hopefully this answer and the others provided give you what you are looking for. If not, please write back to us!
Hi! Thanks for writing – I am so sorry that you are in a position where you feel uncomfortable and vulnerable regarding an investment. It’s such an unpleasant feeling. In addition to the fact that you are parting with your money, you are probably wondering how you got into such a mess.
I agree with Joseph that this sounds like an annuity since you use the term “surrender charge” which is usually associated with an annuity. Annuities are very illiquid, which means they are hard to get out of, as you are seeing. It sounds as if you’ve been in this investment long enough that the surrender charge has decreased, so it may indeed be time to just cut ya’ll’s losses and get out. I think I would in your circumstances mainly because seeing the statements and thinking about the unfairness of the product would upset me and ruin my day. It would be worth $400 to get out of it, to stop having to apu $125/mo for it, to sever my professional relationship (although not necessarily the friendship!) with the person who sold it to me, and to move on. Of course, you both have to evaluate how much it upsets you to hold this investment and how likely you think it is that its performance will improve in the near future and make a decision from there.
You mention that the person who sold this investment to you is an “alleged” investment advisor. Investment advisors and broker/dealers are stringently regulated and licensed, and ALL must be registered with FINRA or the SEC. I would take the time to search for this advisor and his or her firm at BrokerCheck (http://brokercheck.finra.org/) and at the FINRA IARD advisor search site (http://www.adviserinfo.sec.gov/IAPD/Default.aspx). In the FINRA site (where you can search under the person’s name or under the firm they work), you’ll open the advisor’s Form ADV and “Brochure” where you can learn more about the advisors credentials. If the advisor or broker isn’t listed, I’d give FINRA a call (they are very nice and helpful!) to check on the ability of this individual to actually sell you the investment. Their number is 800-321-6273.
Again, I am so sorry that you and your partner are having to deal with this issue. It’s so upsetting to feel as if you have been tricked, and the details of this investment sound overwhelming to me as a financial advisor, so I can well imagine they would also be confusing to you. Best wishes to you and please write back if we can offer more help.
Hi! Thanks for writing. Investopedia’s answer to your question is great. I wanted to add a little more info about dividends in case your question was a general one about dividends and capital gain and less about your own personal interest in earning capital gains and dividend for your own profit. People buy stocks for several reasons including capital appreciation (which occurs when a stock rises in price) and dividends (which are payments made to stockholders when the company distributes some of its earnings to stockholders). So “capital gains” are when you realize capital appreciation by selling the stock. You only take a capital gain in a stock when you actually sell it, and that’s the only time you pay taxes on what you’ve earned. Clients have asked me if they need to pay taxes on a stock that’s appreciated in a year. In other words, if you spend $1,000 on ABC stock in Jan. 2015 and then at the end of the year the stock has gone up and it is worth $2,000, would you owe the IRS tax on the $1000 you’ve made that year? You wouldn’t owe any tax on the amount you’ve earned so far in 2015 because you haven’t actually realized or locked in that gain. A company you own stock in could feasibly go bankrupt at any moment, so the $1,000 profit you have on paper could disappear, and instead of your ABC stock being worth $2,000, it could be worth 0. That’s why you don’t pay taxes on that stock profit – at any moment as the stock market moves and as your stock price moves, your profit changes. It’s only when you sell the stock for more than you paid for it that you realize a capital gain…or a loss when you end up selling it for less than you paid for it, or if the company goes bankrupt.
So a capital gain on which you pay taxes only results from a sale of your stock. A dividend, however, is issued while you own the stock. As described in the first answer, a dividend is cash money paid regularly to its shareholders by a company out of its profits or reserves. When you own stock in a company that pays dividends, you receive a cash payment each time dividends are distributed, which for most companies is quarterly. The company sets a rate per share of how much they will pay. For example, in 2016, PNC Bank pays a dividend of $2.04 per year or (51 cents per quarter) for each share you own. That means if you owned 100 shares of PNC, you would be paid $51.00 that quarter (51 cents times 100 shares). You would continue to receive that cash payment each quarter for as long as you owned the shares and as long as PNC chose to continue to pay that dividend. Each year, PNC would send you a 1099-DIV form that would show how much you earned in dividends, and you would use that form to report them on your Form 1040 and pay tax on them.
I hope this info helps! Best wishes to you.
Hi! Thanks so much for writing. I can understand your concern – you love your son and want to help him but you don’t want to hurt yourself in the process. I am not sure that I understand your question. As far as I am aware of, you can’t “add” a person to your credit report. A credit report is unique to one person, like a social security number or an IRA retirement account. In a marriage, spouses have their own credit scores and credit reports which affect each other, but they still have their own separate credit reports. In your and your son’s case, YOU have a credit report and HE has a credit report (actually you each have three, one from each of the credit bureaus, Experian, Transunion, and Equifax). I am thinking that maybe what your son is asking is for you to add him on one of your credit cards as an “authorized user” so that he can be part of your credit that is paid on time and regularly and has established a reputation for that because you have paid on time as a card holder. That move would help him improve his credit score a bit.
The risk for you is that he has access to all the credit on that card and no responsibility to pay it. So if you have a $20K limit on that card and he spends $20K and can’t pay the bill, you are responsible for it. That usage wouldn’t technically “hurt” your credit, but if you weren’t able to pay the bill or to make the monthly payments, it would definitely hurt your credit.
I am so sorry you are in this place. I am sure that your son means well and tries not to spend more than his means, but the fact is that money borrowed has to be repaid. If you share a credit card with him or co-sign a loan or a lease, the burden of payment falls on BOTH of you. If either can’t pay, the other is responsible for the whole amount. I hope that this information helps a bit. If I’ve missed the mark on what you are asking, please write back and we’ll try again. Best wishes to you and your son.