4-Minute Money Ideas

Do You Suffer from “Inheritance Loyalty Syndrome?”

by Douglas Goldstein, CFP ®

It is common to feel emotional angst after receiving an inheritance. Inheritors may have doubts as to whether they are “allowed” to use the assets as they wish, or whether they somehow have to use them in a way the benefactor would have chosen to use them.

There are two ways to approach a sudden influx of money into your control:

Selling inherited assets is not being disloyal

Some beneficiaries feel an emotional attachment to the inherited assets that prevents them from making logical decisions. A widow may feel that she is disputing her late husband’s judgment by selling stocks he carefully chose years ago.

Yet what was good for your benefactor is not necessarily good for you, as everyone’s financial situation is unique. It is important to realize that inherited funds are yours, and proper use of the funds means making them jive with the rest of your financial plan. Your benefactor gave you a legacy to use as you wish; s/he can’t control the assets from the grave. 

Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. He is a licensed financial professional both in the U.S. and Israel. His best-selling book, Rich As A King: How the Wisdom of Chess Can Make You a Grandmaster of Investing, is available at online, at bookstores, and at www.RichAsAKing.com. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, FSI. Accounts carried by Pershing LLC., Member NYSE/SIPC, a subsidiary of The Bank of New York Mellon Corporation. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates

Don’t Leave Tax-Loss Harvesting to the End of the Year

By Douglas Goldstein, CFP®

Many investors optimize their portfolio to minimize capital-gains tax. One popular strategy is to do tax-loss harvesting.

What is tax-loss harvesting?

Tax-loss harvesting is the practice of selling a position at a loss, and matching the loss against a gain of different stock that you sold. By offsetting losses against gains, capital growth taxes are only paid on the net profits. While this may be a tempting tax-savings strategy, there are three reasons to avoid the end-of-the-year market selling frenzy.

The wash sale

If you sell a security and buy it (or a substantially similar one) back within 30 days of selling it is called a “wash sale.” Wash sales negate any tax-loss selling strategies, and your attempt to harvest a tax-loss would be disallowed by the IRS. Don’t be the short-sighted individual who sells at a loss, and then, the next day when the stock begins creeping up, wants a piece of the action and buys it again. This scenario nullifies any potential benefit of tax-loss harvesting, and causes further losses by increasing commission costs.

Impending tax law changes

Selling a position at a loss allows you to offset taxes on potential capital gains in a given tax year. However, since the tax codes are constantly changing you can’t know what your future tax situation will be. If the government raises capital gains tax next year, you may have been better off saving your tax-loss harvesting to use in a year with a higher capital gains tax. Also, for American tax-payers, capital gains tax is different on long- and short-term investments, so the time you originally purchased the security may affect its potential taxes.

Market uncertainty

The uncertainty of knowing when a declining position may reverse itself adds further ambiguity to tax-loss selling. An unrealized loss might actually turn around. But if you sell just to capture the loss, you can’t benefit from the recovery. While tax considerations should come into play when making buy/sell decisions, tax considerations should never be the only reason behind a transaction.

Always ask first

If you are considering tax-loss harvesting, consult both your tax and financial advisors. You should always ask a tax professional before making any decisions that can affect your taxes. Call my office (02-624-2788) if you have any questions about your portfolio.

Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. He is a licensed financial professional both in the U.S. and Israel. His best-selling book, Rich As A King: How the Wisdom of Chess Can Make You a Grandmaster of Investing, is available at online, at bookstores, and at www.RichAsAKing.com. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, FSI. Accounts carried by Pershing LLC., Member NYSE/SIPC, a subsidiary of The Bank of New York Mellon Corporation. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Neither PRG nor its affiliates give tax or legal advice.

Don’t Leave Tax-Loss Harvesting to the End of the Year

By Douglas Goldstein, CFP®

Many investors optimize their portfolio to minimize capital-gains tax. One popular strategy is to do tax-loss harvesting.

What is tax-loss harvesting?

Tax-loss harvesting is the practice of selling a position at a loss, and matching the loss against a gain of different stock that you sold. By offsetting losses against gains, capital growth taxes are only paid on the net profits. While this may be a tempting tax-savings strategy, there are three reasons to avoid the end-of-the-year market selling frenzy.

The wash sale

If you sell a security and buy it (or a substantially similar one) back within 30 days of selling it is called a “wash sale.” Wash sales negate any tax-loss selling strategies, and your attempt to harvest a tax-loss would be disallowed by the IRS. Don’t be the short-sighted individual who sells at a loss, and then, the next day when the stock begins creeping up, wants a piece of the action and buys it again. This scenario nullifies any potential benefit of tax-loss harvesting, and causes further losses by increasing commission costs.

Impending tax law changes

Selling a position at a loss allows you to offset taxes on potential capital gains in a given tax year. However, since the tax codes are constantly changing you can’t know what your future tax situation will be. If the government raises capital gains tax next year, you may have been better off saving your tax-loss harvesting to use in a year with a higher capital gains tax. Also, for American tax-payers, capital gains tax is different on long- and short-term investments, so the time you originally purchased the security may affect its potential taxes.

Market uncertainty

The uncertainty of knowing when a declining position may reverse itself adds further ambiguity to tax-loss selling. An unrealized loss might actually turn around. But if you sell just to capture the loss, you can’t benefit from the recovery. While tax considerations should come into play when making buy/sell decisions, tax considerations should never be the only reason behind a transaction.

Always ask first

If you are considering tax-loss harvesting, consult both your tax and financial advisors. You should always ask a tax professional before making any decisions that can affect your taxes. Call my office (02-624-2788) if you have any questions about your portfolio.

Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. He is a licensed financial professional both in the U.S. and Israel. His best-selling book, Rich As A King: How the Wisdom of Chess Can Make You a Grandmaster of Investing, is available at online, at bookstores, and at www.RichAsAKing.com. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, FSI. Accounts carried by Pershing LLC., Member NYSE/SIPC, a subsidiary of The Bank of New York Mellon Corporation. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Neither PRG nor its affiliates give tax or legal advice.

What Should You Do When You Get An Inheritance?

By Douglas Goldstein, CFP®

Many of my client relationships began as a result of receiving an inheritance. The sudden infusion of money is a good impetus for a review of one’s goals.

The first thing to do when you get an inheritance is – nothing. There’s usually no rush to spend or invest the money. Let the pain you may feel at losing a loved one and the excitement of “coming into money” die down. Before you make any decisions about what to do, make sure you’re in a calm frame of mind.

Explore your options

Once you are ready to make some decisions, the next step is to figure out what you really want. Some people immediately use an inheritance to realize a material dream and buy a house, car, or go on a luxury vacation. The problem is that many of those who rush into spending an inheritance often find that in the flurry of excitement, they end up spending more money than the original bequest.

While there may be nothing wrong with spending an inheritance, be wary of compartmentalizing your finances. Look at your overall financial picture. Should you use the funds to pay off existing debt? Create an emergency fund? Save for anticipated future expenses like tuition, weddings, and retirement? And if the answer is “yes,” how will you do it?

Be realistic as to what the lump sum you received can actually do. Even a six-figure infusion of funds may not stretch as far as you think it will. And Americans who inherit IRAs need to be aware of tax regulations affecting the way they can withdraw funds.

Maybe the most important thing you can do when you receive an inheritance is assure your children that it may or may not be passed on, so they should work hard and secure their own financial house.

Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. He is a licensed financial professional both in the U.S. and Israel. His best-selling book, Rich As A King: How the Wisdom of Chess Can Make You a Grandmaster of Investing, is available at online, at bookstores, and at www.RichAsAKing.com. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, FSI. Accounts carried by Pershing LLC., Member NYSE/SIPC, a subsidiary of The Bank of New York Mellon Corporation. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates.

What Should You Do When You Get An Inheritance?

By Douglas Goldstein, CFP®

Many of my client relationships began as a result of receiving an inheritance. The sudden infusion of money is a good impetus for a review of one’s goals.

The first thing to do when you get an inheritance is – nothing. There’s usually no rush to spend or invest the money. Let the pain you may feel at losing a loved one and the excitement of “coming into money” die down. Before you make any decisions about what to do, make sure you’re in a calm frame of mind.

Explore your options

Once you are ready to make some decisions, the next step is to figure out what you really want. Some people immediately use an inheritance to realize a material dream and buy a house, car, or go on a luxury vacation. The problem is that many of those who rush into spending an inheritance often find that in the flurry of excitement, they end up spending more money than the original bequest.

While there may be nothing wrong with spending an inheritance, be wary of compartmentalizing your finances. Look at your overall financial picture. Should you use the funds to pay off existing debt? Create an emergency fund? Save for anticipated future expenses like tuition, weddings, and retirement? And if the answer is “yes,” how will you do it?

Be realistic as to what the lump sum you received can actually do.  Even a six-figure infusion of funds may not stretch as far as you think it will. And Americans who inherit IRAs need to be aware of tax regulations affecting the way they can withdraw funds.

Maybe the most important thing you can do when you receive an inheritance is assure your children that it may or may not be passed on, so they should work hard and secure their own financial house.

Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. He is a licensed financial professional both in the U.S. and Israel. His best-selling book, Rich As A King: How the Wisdom of Chess Can Make You a Grandmaster of Investing, is available at online, at bookstores, and at www.RichAsAKing.com. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, FSI. Accounts carried by Pershing LLC., Member NYSE/SIPC, a subsidiary of The Bank of New York Mellon Corporation. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates.

How to Help Your Children Become Financially Independent

By Douglas Goldstein, CFP®

A client told me about her married daughter who is in a financially dysfunctional marriage.

The young couple finds it hard to make ends meet, and often applies for help from charitable organizations. Yet despite their lack of funds, they still live a fairly extravagant lifestyle. Occasionally, the daughter asks her mother for money, but the mother refuses. My client realizes that she doesn’t have the means to bail them out – and even if she did, they would never learn to stand on their own two feet. Teaching financial responsibility is one of the toughest lessons a parent faces.

Close the Parental Bank

Saying no to a child in fiscal trouble is difficult. I know many parents who support an adult child still living at home, or married children who can’t quite make the month. These parents tell me, “What can I do? They’ll starve without my help!”

Sadly, these well-intentioned parents don’t realize that rather than helping their children become financially independent, they are perpetuating the situation. Acting as the Parental Bank on a regular basis doesn’t give children any incentive to become financially independent. Why should they live within a budget, if they know their parents will bail them out?

Let go of your child’s hand

When a toddler learns to walk, you have to let go of his hand, even though you know there’s a high chance that he’ll fall and skin his knee.

Similarly, when adult children ask you for help after they’ve failed financially, don’t automatically write a check. Offer them your sympathy and explain to them the necessity of budgeting and planning their finances. Give them the number of a budget counselor or financial advisor and let them know you are interested in encouraging them to become financially stable.

Never help my children?

This article is not meant to say never help out. Rather, make sure you understand the difference between helping your kids get a start in life with a gift for education or buying a home versus enabling them live beyond their means.

Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. He is a licensed financial professional both in the U.S. and Israel. His best-selling book, Rich As A King: How the Wisdom of Chess Can Make You a Grandmaster of Investing, is available at online, at bookstores, and at www.RichAsAKing.com. Call (02) 624-2788 for a consultation about

How to Help Your Children Become Financially Independent

By Douglas Goldstein, CFP®

A client told me about her married daughter who is in a financially dysfunctional marriage.

The young couple finds it hard to make ends meet, and often applies for help from charitable organizations. Yet despite their lack of funds, they still live a fairly extravagant lifestyle. Occasionally, the daughter asks her mother for money, but the mother refuses. My client realizes that she doesn’t have the means to bail them out – and even if she did, they would never learn to stand on their own two feet. Teaching financial responsibility is one of the toughest lessons a parent faces.

Close the Parental Bank

Saying no to a child in fiscal trouble is difficult. I know many parents who support an adult child still living at home, or married children who can’t quite make the month. These parents tell me, “What can I do? They’ll starve without my help!”

Sadly, these well-intentioned parents don’t realize that rather than helping their children become financially independent, they are perpetuating the situation. Acting as the Parental Bank on a regular basis doesn’t give children any incentive to become financially independent. Why should they live within a budget, if they know their parents will bail them out?

Let go of your child’s hand

When a toddler learns to walk, you have to let go of his hand, even though you know there’s a high chance that he’ll fall and skin his knee.

Similarly, when adult children ask you for help after they’ve failed financially, don’t automatically write a check. Offer them your sympathy and explain to them the necessity of budgeting and planning their finances. Give them the number of a budget counselor or financial advisor and let them know you are interested in encouraging them to become financially stable.

Never help my children?

This article is not meant to say never help out. Rather, make sure you understand the difference between helping your kids get a start in life with a gift for education or buying a home versus enabling them live beyond their means.

Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. He is a licensed financial professional both in the U.S. and Israel. His best-selling book, Rich As A King: How the Wisdom of Chess Can Make You a Grandmaster of Investing, is available at online, at bookstores, and at www.RichAsAKing.com. Call (02) 624-2788 for a consultation about

How To Break Your Bad Habits And Get Rich

By Douglas Goldstein, CFP®

Money woes are generally not due to a market gone awry or a low salary. The number one cause of most money problems is bad financial habits.

Do you spend without tracking what is leaving your wallet, neglect to make regular deposits in savings, and overlook regular financial reviews and discussion of financial goals with your partner? If so, you may be guilty of harboring negative financial habits. Bad financial habits can be as deadly as smoking.

Some habits are so ingrained that it seems impossible to break them… but it can be done! I spoke with James Clear, an expert in habit creation, on The Goldstein on Gelt Show about how people could improve their finances by replacing negative habits with positive ones.

Why stopping cold turkey doesn’t work

Stopping a bad habit by simply not doing it anymore doesn’t tend to work since nature hates a void. Instead of just stopping your bad habit, find a good habit to substitute for the negative one. For example, instead of “retail therapy” to improve your spirits by going out shopping try exercise or chatting with a friend. Or replace your credit card in your wallet with a picture of your saving goal to provide a constant reminder of what you are working towards.

Join forces with a friend

One of the best ways to improve your financial habits is to team up with a partner. Read self-help books together, or attend an online financial education class (ask me for recommendations). When two people work together, you can both support each other through the inevitable ups-and-downs of creating a positive habit.

The key to success

When you launch a new habit, start with a positive attitude. If you believe you can succeed, you are more likely to do so than if you set yourself up for a negative outcome.

For more concrete tips on improving financial habits, listen to my discussion with James Clear at: http://www.goldsteinongelt.com/james-clear.

Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. He is a licensed financial professional both in the U.S. and Israel. His best-selling book, Rich As A King: How the Wisdom of Chess Can Make You a Grandmaster of Investing, is available at online, at bookstores, and at www.RichAsAKing.com. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, FSI. Accounts carried by Pershing LLC., Member NYSE/SIPC, a subsidiary of The Bank of New York Mellon Corporation. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates.

How To Break Your Bad Habits And Get Rich

By Douglas Goldstein, CFP®

Money woes are generally not due to a market gone awry or a low salary. The number one cause of most money problems is bad financial habits.

Do you spend without tracking what is leaving your wallet, neglect to make regular deposits in savings, and overlook regular financial reviews and discussion of financial goals with your partner? If so, you may be guilty of harboring negative financial habits. Bad financial habits can be as deadly as smoking.

Some habits are so ingrained that it seems impossible to break them… but it can be done! I spoke with James Clear, an expert in habit creation, on The Goldstein on Gelt Show about how people could improve their finances by replacing negative habits with positive ones.

Why stopping cold turkey doesn’t work

Stopping a bad habit by simply not doing it anymore doesn’t tend to work since nature hates a void. Instead of just stopping your bad habit, find a good habit to substitute for the negative one. For example, instead of “retail therapy” to improve your spirits by going out shopping try exercise or chatting with a friend. Or replace your credit card in your wallet with a picture of your saving goal to provide a constant reminder of what you are working towards.

Join forces with a friend

One of the best ways to improve your financial habits is to team up with a partner. Read self-help books together, or attend an online financial education class (ask me for recommendations). When two people work together, you can both support each other through the inevitable ups-and-downs of creating a positive habit.

The key to success

When you launch a new habit, start with a positive attitude. If you believe you can succeed, you are more likely to do so than if you set yourself up for a negative outcome.

For more concrete tips on improving financial habits, listen to my discussion with James Clear at: http://www.goldsteinongelt.com/james-clear.

Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. He is a licensed financial professional both in the U.S. and Israel. His best-selling book, Rich As A King: How the Wisdom of Chess Can Make You a Grandmaster of Investing, is available at online, at bookstores, and at www.RichAsAKing.com. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, FSI. Accounts carried by Pershing LLC., Member NYSE/SIPC, a subsidiary of The Bank of New York Mellon Corporation. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates.

Are Bonds a Good Investment for You?

By Douglas Goldstein, CFP®

Bonds are a very popular investment, but before you buy any, let me tell you what I share with my clients about them.

Think of a bond as a loan between you and a company or government. Assuming all goes normally, here’s how it looks:

1. You lend them a sum of money
2. They pay you interest periodically until “maturity.”
3. They return the principal of the loan on a specified date.

Why buy bonds?

Investors looking for steady current income (perhaps to supplement a pension) and wanting to diversify their portfolios often purchase “fixed income” securities (as bonds are often called). Owning bonds may give the investor a sense of security because the issuer guarantees to pay back the principal of the bond. However, bear in mind that the “guarantee” is only as solid as the guarantor, so if the issuer defaults you could lose money.

Government bonds are generally considered to be safe investments, since the government has the ability to raise taxes and print money in order to generate enough revenue to repay bondholders. But nothing is guaranteed. Even governments occasionally default on bond payments. Indeed, in August 2015 Puerto Rico defaulted on some of its bond payments. Nonetheless, government bonds are still considered relatively secure, with American treasury bonds at the top of the list.

What bond is right for you?

There are many types of bonds and bond funds, each meeting different investor needs. While U.S. Treasury bonds and some municipal bonds may be tax free in certain circumstances, they are still subject to Israeli taxes.

Corporate bonds can provide dependable income, as well as a somewhat liquid market if you want to sell a bond you own. A more risky sector is high-yield, or “junk bonds.” While these bonds can provide a higher potential return, they also carry a higher risk of default. In addition to buying a specific bond, there are bond funds that mitigate the risk of owning specifics by creating a broadly diversified portfolio. These funds, though, have their own risks, so be sure to read the prospectus before investing.

To learn which bonds may be appropriate investments for you, watch this 15-minute video I made: www.Profile-Financial.com/Bonds. Then, call my office to review or to consider adding to your bond holdings.

Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates.