Category Archives for "Financial Planning"

Apr 02

Tax Season Dilemna: Invest Money in a Traditional IRA or a Roth IRA?

By Chris Chen CFP | Financial Planning , Retirement Planning

Invest in a Roth IRA or a Traditional IRA?

This being tax season, you may want to know, should you put your money in a (traditional) IRA or a Roth IRA?

In a traditional IRA, your contribution will be deductible from your taxable income, and will grow tax-deferred .  Income taxes will be paid when you take distributions at retirement.  The immediate benefit is that a contribution will help you reduce your taxable income, and, therefore, your taxes.  (For the 2012 tax year, you have until April 15 to make that contribution.)

For a Roth IRA, your contribution is not tax deductible .  However, it will grow tax free, and distributions in retirement will not be taxable.  Hence, your retirement income from the Roth would be tax-free.

The traditional IRA helps you save on taxes now , and the Roth IRA helps you save on taxes later .  What then should you do: save on taxes now or save on taxes later?

The answer is entirely about what you expect your taxes to be when you retire.  If you expect your tax rate to be lower in retirement than today, you may want to consider a regular IRA.  That is because, you will be saving a relatively large amount in taxes today, and paying at a relatively low rate in retirement.

On the other hand, should you expect your tax rate to be higher in retirement than today, you may want to consider a Roth.  That is because you would be paying at a low tax rate today, and saving even more taxes later on.

So, you might ask, how can you figure out what your tax rate will be in retirement?  That is a different question altogether!

Check out out other retirement posts:

Is the new tax law an opportunity for Roth conversions

Rolling over your 401(k) to an IRA

7 IRA rules that could save you time and money

Doing the Solo 401k or SEP IRA Dance

Roth 401(k) or not Roth 401(k)




Mar 25

Time for Some Spring Financial Cleaning – Getting Rid of Financial Clutter

By Diane Pappas | Financial Planning

Time for Some Spring Financial Cleaning - Getting Rid of Financial Clutter

If you are like most people this time of year, you are probably searching through piles of papers, documents and receipts trying to find the right ones to give to your accountant.  So much financial clutter.  You may be wondering – Do I really need to keep all this stuff?

One of the keys to financial success is being organized.  It is an empowering experience knowing where all your paperwork is and easily locating an important document within minutes.   To help you get started, we’ve provided you with a list of what you need to keep and what you can get rid of.

This is a great time for some spring financial cleaning to put you on the path towards financial success.

What to Keep for 1 Year

  • Paycheck stubs – you can get rid of once you have compared to your W2 & your Social Security earnings statement
  • Utility Bills – throw out after one year, unless using them as a deduction for a home office – then you need to keep them for 3 years after you’ve filed your tax returns.
  • Cancelled Checks – unless needed for tax purposes
  • Bank Statements – unless needed for tax purposes
  • Quarterly Investment Statements – hold onto until you get your annual statement

What to Keep for 3 Years

  • Income Tax Returns – keep in mind that you can be audited by the IRS for no reason up to three years after you filed a tax return.  If you omit 25% of your gross income, that goes up to 6 years and if you don’t file a tax return at all, there is no statute of limitations
  • Medical Bills and Cancelled Insurance Policies
  • Records of Selling a House – needed for documentation for Capital Gains Tax
  • Records of Selling a Stock – needed for documentation for Capital Gains Tax
  • Receipts, Cancelled Checks and other Documentation that Support Income or a Deduction on your Tax Return – keep for 3 years from the date the return was filed
  • Annual Investment Statement – keep for 3 years after you sell your investment

What to Keep for 7 Years

  • Records of Satisfied Loans

What to Hold While Active

  • Contracts
  • Insurance Documents – Homeowner’s Insurance and Auto Insurance Policies until new renewal arrives, then throw out
  • Stock Certificates
  • Property Records – including original Settlement Statement from when you purchased the home, as it shows closing costs and settlement fees paid.  These maybe added to the cost basis calculation when you go to sell your home.
  • Stock Records
  • Records of Pensions and Retirement Plans
  • Property Tax Records Disputed Bills – keep until the dispute is resolved
  • Home Improvement Records – hold for at least 3 years after the due date for the tax return that includes the income or loss on the asset when it’s sold

Keep Forever

  • Tax Returns – You may want to keep your tax returns indefinitely.  The IRS destroys original 1040s after 3 years, but you and your heirs may need information from the returns at some point in the future.
  • Marriage Licenses
  • Divorce or Separation Agreements
  • Birth Certificates
  • Death Certificates
  • Social Security Cards
  • Wills
  • Living Wills and Advanced Medical Directives
  • Trusts
  • Estate Documents
  • Powers of Attorney
  • Deeds
  • Records of Paid Mortgages

A Word About Home Improvement Records and Cost Basis

If you plan to sell your current home at any time in the future and you have made home improvements that add to the value of your home, you should keep all your sales receipts for items purchased for the improvement, (like a sink and the hardware to install the sink), credit card statements showing purchases if no receipt, and checks to contractors.  When you go to sell your home, you will need to establish a cost basis, which is the original cost of the property, plus any improvements made by you, the owner.  You will want to keep these records for at least 3 years after the due date for the tax return year that you sold your home in.

Improvements can be items such as:

  • Remodeling the interior of the home
  • New roof or deck
  • Installing utilities on a building lot (new well or septic)
  • Numerous other improvements performed by the owner, see for more details


Mar 21

Have you updated your financial plan yet?

By Chris Chen CFP | Financial Planning

Have you updated your financial plan yet?

As originally published in

If we could predict the future, we would always be ready for anything that life throws our way, right?

The truth is that even for what we do know, many of us are not ready. We do know that most of us should probably contribute more to our retirement plans, that we should save for the college fund; and that we should purchase long term care insurance. Yet we don’t do it.

We do know that the sooner we contribute to a retirement plan, the more there will be when we need it. We do know that the more we contribute to the college fund, the easier the burden when our son or daughter goes to college. We do know that the longer we delay buying long term care insurance, the more likely we won’t be able to.

The reason is simple: We are overwhelmed. We are overwhelmed by all the things we know we need to do, and all the other things we need to spend on. We don’t know how to prioritize them.

Yet, imagine that we were to take a minute to prioritize all these very important issues, that we were to realize the benefits of planning sooner, and the penalties for delaying, then surely we would get back on track, wouldn’t we? Plan sooner.

Mar 15

Are your affairs in order?

By Chris Chen CFP | Financial Planning

While it is not  pleasant to think of one’s own passing, having your affairs in order can help ease the burden on friends and family, when the time comes, and can contribute to your own peace of mind knowing that you have done all you can to prepare. There are many factors that should be considered when trying to create an effective and comprehensive estate plan. Some considerations include:

  • Instructions on your own care in sickness
  • Guardians for your minor children should both parents pass
  • Protection from creditors
  • Charitable contributions
  • Continuation of a family business
  • Reducing or eliminating tax
  • Maintaining family harmony
  • Legacy creation and support of future generations

In addition, all these factors should integrate appropriately with your retirement income planning and your investment decisions.

Even if you already have an estate plan in place, you may want to conduct a review. Decisions made years ago may not accurately reflect your current wishes. Estate plans are not for the significantly wealthy alone. If you have children in your care or a business you wish to leave to future generations, it is important that protections and guidance are put in place now and are not put off until your retirement years. It is always a possibility that you may not have the luxury to wait so long.

A poorly executed estate plan, or the lack of one at all, could leave those you most care about suffering needlessly in your absence.  Get ready today to gain control of your estate plan!

Feb 22

Alice in Wonderland and financial planning

By Chris Chen CFP | Divorce Planning , Financial Planning , Retirement Planning

Alice in Wonderland Plans

Those who have read Alice in Wonderland may know the Cheshire Cat as a mysterious and baffling being.  The Cat often makes some very good points, although rarely in a very helpful way.  One is in the picture below.  Unfortunately,  I took it with my phone, and the text is a little blurry.  So I transcribed it.

Financial Planning

Would you tell me please, which way I ought to go from here

That depends a great deal on where you want to go” said the Cat.

I don’t much care where …” said Alice.

Then it doesn’t matter which way you go,” said the Cat

… so long as I get somewhere,” Alice added as an explanation.

Oh, you’re sure to do that,” said  the Cat, “if only you walk long enough.

If you are reading this blog post, chances are you are interested in financial planning.  Alice has taken the first step: she knows she would like to get somewhere, she realizes that she does not know how to, and she has asked for advice.

Hopefully, in real life, you won’t have to rely on the Cheshire Cat for advice, or any Cat for that matter!  Do remember though: if you walk long enough, you will eventually get somewhere. 

Will it be where you want to? And, how long do you want to walk? Check in our Financial Planning page, or click on the button below for a complimentary consultation.

Jan 28

How to Implement a New Year Resolution

By Chris Chen CFP | Financial Planning

How to Implement a New Year Resolution

We are nearing the end of January. How have your New Year’s resolutions survived so far? While we may not be able to help you stick to your gym routine, we can help you with resolutions that include better financial planning and smarter investments. Here are a few things to keep in mind:

  • Make a plan! It is very easy to stray when you haven’t set specific goals for yourself.   We can show you how to get your plan in order.
  • Determine risk. The proper level of risk is different for every investor. We can help make sure you are not taking on more risk than you are willing to take.
  • Consolidate. Are your investment accounts scattered? Combining old or ineffective accounts can maximize your return and make tracking your investments much easier.
  • Know what it is costing you. Beware of hidden fees and costs that can impact your investments. We make sure you are aware of all costs and fees to ensure you know exactly where and how your investment dollars are being spent.

Every good New Year resolution needs a support system. A best friend to keep you honest at the gym. A house mate to give you the eye when you head to the fridge. And a financial planner to guide you to the most informed investment decisions. Contact us so today so we can help you put your New Year’s resolutions back on track.

Jan 04

Inaugural Post

By Chris Chen CFP | Divorce Planning , Financial Planning , Retirement Planning

Welcome to the Insight Financial Strategists LLC blog! As this is our inaugural post, let’s start with the basics. First, an introduction: Our company was created as a knowledge center tailored to helping you assess your specific financial planning needs. This personal approach to financial planning helps us in designing financial plans specific to your needs and financial goals.

All of us know about money and finance, but most of us don’t know it very well. We are often uncertain about how much we need to save for the future, and how we should invest it.

And if that weren’t enough, we often feel overwhelmed by fluctuations in the marketplace, the daily squawk box of financial news, and tax laws that are ever changing. Case in point: as we write this post, we stare at the Fiscal Cliff, we wonder what impact it will have on us, and we sit mesmerized.

Let’s face it: the world is a mess; it’s confusing, even frightening. And would it not be wonderful if we could turn to someone who could guide us through this confusing mess?

At Insight Financial Strategists LLC, our team offers you our deep and focused expertise and insight to guide you in making informed decisions and giving you a solid foundation of understanding on which to plan. Regardless of whether you are looking forward to your retirement years, are in the midst of a long divorce or just need to make sure you are doing the best you can with your current financial planning picture, Insight Financial Strategists can help you navigate confidently through it all.

Our team is small, allowing you to get to know us as we get to know you, without the fear of getting lost in the shuffle of a large corporation. Our services are one-on-one and we know the local landscape. Please feel free to visit the About Us page on our website to learn more about us.

While you are on the site, please sign up for our newsletter to receive the latest news and analysis to help ensure all your financial decisions are informed ones. And, of course, be sure to check back here on our blog. We will provide you with our analysis of financial trends, let you know about upcoming events and feature guest bloggers to offer fresh perspectives on pressing issues.

Every financial situation is unique. Please be sure to contact us so we can provide the most accurate and customized information we can for your personal financial situation.


~ The Insight Financial Strategists Team


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