How Are You Spending Your Tax Refund?

With tax season behind most of us refund checks are starting to roll in. According to statistics from the IRS this year’s average federal tax refund will be around $2,913. When met with a windfall of funds sometimes our mind can play tricks on us. People tend to view buckets of money differently based on how the funds were earned. Behavioral finance refers to this term as mental accounting.

Don’t Forget Your 401K

When leaving a job, whether it’s due to being laid off, finding a better position with a different company, retiring, or starting a business, you have to decide what to do with the money you have accumulated in your 401(k) or 403(b) plan. Many people don’t realize they have choices and end up leaving the funds in the 401(k) at their previous employers. Why would anyone leave their 401(k) behind when they leave their job? In effect they are trusting that someone they probably don’t know, at a job they no longer work at, is going to have their best interest in mind as they manage their future. You are only allowed to take control of these funds when you leave your job. More often than not, the opportunity to roll these funds into an IRA is extremely beneficial.

Not All ETFs Are Created Equal

Although exchange traded funds (ETFs) provide an effective and easy way to gain exposure to different asset classes or sectors, not all of them are the same. ETFs that are created to track the same sector, related indexes, and even the same index will vary in performance because of a variety of different factors. As ETFs gain even more popularity and as more varieties such as actively managed ETFs come onto the scene, it is becoming increasingly more important to recognize the differences between these funds.

Avoid the Herd

By nature human beings are drawn to a Herd Mentality. It can be evidenced in new fashion trends, technology, social norms, and even the stock market. Ideas and trends start small with only a few early adopters jumping on board. Then as acceptance grows the new trend starts to become the new norm. It is this inherent need to follow the herd that prevents some people from joining trends too early on.

The S&P 500 at Post Crash Highs, What to Do Now?

Since the beginning of the year the S&P 500 is up nearly 8 percent. This quick jump in the stock market has taken place depite the fact that much of the debt crisis remains unresolved in Europe as well as in Washington. China’s economy is showing signs of slowing while inflation fears could lead to a surge in emerging markets. All the while a presidential race is heating up and the prognosticators are calling for all sorts of calamity. This surge has sparked frenzy in the media bringing about predictions from financial pundit bulls and bears.

Employee Stock Options

Employee stock options have been a hot topic recently due to Facebook’s filing for an Initial Public Offering (IPO). Employees of Facebook reportedly own about 30% of Facebook from the stock options they have been issued over the years. Based on the most recent valuations 30% of Facebook is worth about $30 billion and analyst predict over 1,000 Facebook employees will become millionaires when Facebook goes public. Even if you weren’t lucky enough to get in on the ground floor of a multi-billion dollar company like Facebook there is still a good chance you have been granted stock options at some point in your career if you have worked for a publicly traded company. We often have clients ask us what they should do with the stock options they have been granted and how the process of exercising them works.

Young woman looking pensively with faded computer code in the forefront. Copy is Covered Calls Pros and Cons.

What is a Covered Call? Learn the Pros and Cons

Before diving into the complexities of a covered call trade and how it can be used to generate portfolio income lets first define what an option contract is and what it means to each party involved. There are two main types of options, call options and put options. A call option is a contract that gives the holder (buyer) the right, but not the obligation, to buy a security at a specified price for a certain period of time.

Simple Resolutions for the New Year

With the each New Year we reflect upon the challenges we faced during the previous year while making resolutions for the next. Many of these resolutions I hear from family and friends are often either financial or health related goals as these seem to be the two areas in our lives that always seem as though they could be improved. I think the problem with most of the resolutions I hear made this time of year is that they are far too ambitions and often never end up being fulfilled. With this in mind I’ve compiled a list of simple financial do’s and don’ts for the coming year that can help you get your finances in order.

What were you thinking in 1986?

In spite of all these economic and political issues the S&P 500, including dividends, has still returned nearly 10% over the period. Nonetheless, most investors did not experience this level of returns because they let their emotions drive them in and out of the stock market at inopportune times.

The Hazards of Market Timing

For as long as markets have been around there has been a subset of participants that believe they can outsmart the market. These investors are frequent traders that believe they can consistently time the market to buy low and sell high. Over the years investors have developed many techniques from the fundamental analysis of companies’ financial statements to drawing lines across charts of a stock’s historical price movement. Do these techniques work in the long term? The data suggest they do not.