New Direction Financial Strategies, LLC
Certified Divorce Financial Analyst, Financial Planner
J.F. Kennedy said, ”If not I, who? if not now, when?” Michelle Buonincontri was moved and inspired by this quote when she first heard this and joined her children's School Board - more than 17 years later it is still her call to action.
“Belief” is Michelle's number one Gallup strength - her beliefs, in conjunction with this message, drive life her choices. Those with this theme “have certain core values that are enduring. .. your Belief theme causes you to be family-oriented, altruistic, even spiritual, and to value responsibility and high ethics both in yourself and others. These core values affect your behavior in many ways... it also demands that you find work that meshes with your values. Your work must be meaningful; it must matter to you" In 2009 when her divorce began, too many friends, family members, her children and herself were adversely affected by the divorce process.
At this time, Michelle founded her own firm, FOAL Planning, Inc, inspired by the vision of being and having a Faith-filled, Overflowing, Abundant Life; specializing in Investment Management and tax preparation After her divorce, she left her New York State Registered Investment Advisory firm in 2012 and moved to Arizona; worked with Schwab Private Client Investor Advisor, Inc., as an Portfolio Manager, and then joined a small RIA as a CERTIFIED FINANCIAL PLANNER™ (CFP®), where she provided clients with Financial Planning, Investment Management and Retirement Income planning services.
Now, after 20+ years in Financial services, working with corporate/business clients and individuals to define goals/objectives and implement solutions, she is nudged again - this time to found Being Mindful in Divorce, so that she can use her own personal and professional experiences to support couples, and professionals during the divorce process – to be a contribution to others.
Michelle holds the CERTIFIED FINANCIAL PLANNER™ (CFP®) designation, and has experience in Financial Planning, Investments, and taxation with specialized training as a Certified Divorce Financial Analyst (CDFA™) to address her clients concerns before, during and after divorce. Additionally, she is a registered Tax Preparer, is a contributing writer for Credit.com, trained as a mediator and a life coach, and volunteers as a presenter and financial coach at Fresh Start Women’s Foundation in Phoenix. Currently, serve as a WINS Advocate for the CFP Board, and have served as Director of Public Relations for the Financial Planning Association of Greater Phoenix, and as the Director of Communications for the Financial Planning Association's Long Island Chapter. Michelle is also a member of the Maricopa County Association of Family Mediators, The Institute for Divorce Financial Analysts, The Association of Divorce Financial Planners and on a more local note a member of the Chamber of Commerce.
Michelle has the privilege of creating a life she loves to live, and she wants to help her clients do that as well!
BAS, Business Administration and Communication, Adelphi University
The information, tools and material presented by the Author are provided to you for informational purposes only and are not intended to be and should not be used or considered as an offer, recommendation or a solicitation to sell or an offer, recommendation or solicitation to buy or subscribe to any financial instruments, investment management services or advisory services. The Author does not intend to provide investment, tax or legal advice. Third-party information that is reproduced on this website is purely for informational purposes and does not constitute any endorsement of the Author’s viewpoint. Decisions based on information contained on this website are the sole responsibility of the user and the user agrees to hold Being Mindful in Divorce and New Direction Financial Strategies (also known as "NFDS") harmless against any claims for damages arising from any decision the user makes in reliance on information provided on the website. Prior to the execution of any transaction involving information provided by this website, the user should consult its business advisor, attorney and/or tax and accounting advisors with respect to the price, suitability, value or other aspects of any stock, bond, mutual fund, security or other investment. Depending on the user’s specific investment objectives and financial position, the investments discussed may or may not be suitable. It is up to the user to weigh any decision carefully.
Finding My Voice & Power through Divorce -- Part 3: Turning Pain into Purpose
Typically, bonds are placed in a "tax-deferred" account such as an 401(k) or IRA because when they are placed in an "after tax" brokerage account the "interest" increases your adjusted gross income and is taxed as your higher ordinary income rate annually.
If you are in a high-tax bracket now and believe you may be in a lower bracket at retirement this makes sense because you are putting off the taxation. Municipal bonds are usually kept in brokerage accounts because their interest is not added to income, and is federal tax free. In some cases the interest is also state & local tax free, this allows your tax-able income to be lower which may be important so that more of your social security is not taxable, or you are not knocked into the next tax bracket by the additional interest income.
Along the same logic, risker assets like stock, which will appreciate in value and may pay dividends are placed in the brokerage account because they get preferential "capital gains" tax rates & may get the "qualified dividend rate" which can result in a 0%/10%/15%/20% tax rates which are more desirable that ordinary income tax rates.
Depending on your tax rate now and what it will be in retirement, and the type of bonds in your brokerage account it, the type of account the bonds are in, may not make a significant difference.
For example: if you are 20 years old today, paying 15% or less in taxes, most likely when you retirement you will be in a higher tax bracket, let's say 25%. For now, keeping those non-municipal/taxable bonds in your brokerage account makes more sense because only the inteerst is taxed at your low rate. If they were in your 401 (k) every dollar, both the bonds and the interest would be taxed at the 25% in retirement when you made withdrawals.
Hope that makes sense!
Yes, that is correct the employer match is typically in a "tax-deferred" account and as a result would need to be rolled-over to a traditional IRA. Employers get a corporate tax break by contributing a "match" on a pre-tax or tax-deferred basis.
Not all Financial Advisors are equal, nor are they meant to be. Some focus on Investments, others Insurance products, and others look at your life holistically through comprehensive Financial Planning, of which Investments and Risk Management (Insurance products) are only 2 pieces of the puzzle. Those that are trained as Certified Financial Planners, and have a CFP® certification, typically work in the latter way – but that is NOT a guarantee, so you need to ask.
I think that research and referrals are always great starting tools. Followed up with a meeting and choosing someone that you get a sense of trust from. Someone that listens more than they talk, and seems to understand your priorities and concerns. After all this is a relationship, and we want to work with people that resonate with us, so “Trust your gut”!
Here are some tools to help
- Consider working with a CFP – Certified Financial Planner. They must do what is in your best interest, not their own when making recommendations. You can check if they actually are a CFP at http://www.letsmakeaplan.org/choose-a-cfp-professional/find-a-cfp-professional?#oname using a name search.
- Ensure there are no FINRA complaints or violations against the person you are considering working with, Use Brokercheck at https://brokercheck.finra.org/
NOTE: Not everyone needs to be licensed as a Broker, as they may not be selling securities products. So if they don’t have a record, or are not currently “a registered” Broker that is not a necessarily a bad thing. For example, a CFP giving fee-only advice does not have to be a licensed broker.
- If the person has an insurance license, check that it is valid, in good standing with no complaints. Regardless of the state you may lookup an individual by name using https://sbs.naic.org/solar-external-lookup/
- Ask for and review their Form ADV if they have one. This brochure is the primary disclosure document that investment advisers provide to clients.
These are some beginning thoughts. I hope this help!
Investing in a Mutual fund/Index fund or ETF, regardless of whether it’s stock/equity or a bond fund brings market risk. Typically investing in “the market” is not suggested unless you do NOT need the money in the next 5 years.
According to facts provided, you will need some or all the money in the next 2 years. This is considered “short-term” savings and as a general rule should be invested in something in which you cannot lose money and you can easily withdraw your money without loss of principal (this is referred to as liquidity). Different buckets of money, have different “jobs to do” “or “perform”. Short-term money has the job of ‘being safe” and not losing value - that is what your account is doing now.
Having said that, I know interest rates are low, if you haven’t already checked recently, perhaps a CD with a bank or Credit Union may be higher than what you are currently earning - unless you are willing to take potential risk that you may lose some of your principal.
Unfortunately, risk = reward/return, so you will not get a substantially higher interest rate or return without taking on more risk.
Your advisor is correct. Basically losses on your investments are first used to offset capital gains of the same type. For example, short-term losses are first deducted against short-term gains, likewise long-term losses are deducted against long-term gains. Net losses of either type can then be deducted against the other kind of gain. If losses exceed gains, then after offsetting taxable gains, losses can then reduce taxable ordinary income (like wages) up to $3,000 per year, $1,500 per year if married filing separately. See https://www.irs.gov/uac/irs-reminds-taxpayers-they-can-use-stock-losses-to-reduce-taxes for more information.