Issue 32.10

In my 53 years on this Earth, experience has taught me one thing.  Sometimes we have to take a step backwards and learn all over again.  The world changes daily and if we want to progress with the times we have to learn new things and build upon old things.

For instance, I could never understand why my parents’ generation loved card games so much.  My generation fell in love with board games.  My kids’ generation loves video games.

For dates, my parents would go to community dances when they were teenagers.  I used to take my dates to a drive-in movie or the local bowling alley.  My kids don’t date.  Instead they rent movies and go to someone’s house to watch it.

When my parents’ generation wanted to “hang out” they would join their friends at a malt shop in town.  My generation hung out at parties or didn’t hang out at all, we dragged Main Street in our cars.  To find my kids when they’re hanging out, I just have to search the local mall.

My point is this – times change.  A generation ago, tax rates were high and expected to go lower so financial advisors were inclined to tell you to defer paying your taxes until later.  Now, taxes are lower than they’ve been in quite some time.  It’s time to relearn our tax instincts.  Instead of deferring your taxes, maybe, for some of you, it’s time to learn how to pay them in advance to save yourself thousands of dollars in taxes.  If your financial advisor is still telling you that deferring taxes is the only way, maybe it’s time you got a second opinion.

Eric Scott can be reached at (435)773-9444 or you can visit Eric’s office at 352 E. Riverside Dr. Ste. #B-4 in Saint George, Utah.  Investment Advisory Services are provided by Brookstone Capital Management, LLC, an SEC registered Investment Advisor.  Insurance services offered by Eric Scott Insurance Agency, Inc.

Issue 24.10

Saving throughout your entire life can sometimes feel just like scaling a mountain.  I know I personally made many personal sacrifices to contribute to my savings, so many things I wanted and thought I needed.  Truth be told, I can’t remember what most of them were so saving my money instead was well worth it.

As you’re nearing the top of the mountain in your savings where you’re getting ready to retire or are already retired, now is the best time to be aware of just what kind of mountain you’re climbing.  After all if you have your savings and retirement accounts in a tax-deferred or taxable account, then you may be sitting at the top of a volcano awaiting the tax time-bomb.

How many of you remember the eruption of Mt. St. Helens in 1980?  I remember because I was moving to Olympia, Washington at that time.  I remember the ash was everywhere and it seemed like forever before the sky finally cleared and we could see that half of Mt. St. Helens was gone - not moved, gone!

That’s the way it seems to be for our savings and retirement accounts with taxes, the market, the economy and many other things going on right now.  We work so hard to get to where we are in life and at our retirement or our death, the government, market losses, low interest rates or even inflation swoop in and take what they think is their share leaving us with much less than we planned for.

How can you get around this?  The best way to scale a mountain, volcano or otherwise, is to follow a guide.  A guide knows the ins-and-outs of the mountain and can take you safely to the top and back down the other side.  Just like a mountain guide, a financial guide is aware of the tax laws and economy changes going on all around you.  Just like scaling a mountain is easier with a guide the best way to ensure you can reduce your taxes, protect your money and prevent outliving your income is with the help of a financial guide, one that has a fiduciary responsibility to look out for you.  A financial guide will guide you through your retirement and help ensure your retirement dollars are kept on track.

Issue 19.10

I remember, as a child, my grandfather and I would play chess together.  As an impatient youngster, I could never understand why he would sit and think about his move for 5 minutes or more.  When he was done, I would immediately move my piece and then wait for his 5-minute move again.

            It wasn’t until I was older that I understood chess required strategy.  My grandfather was taking his time to think about his move because he wanted to make the right move to win.  I wasn’t able to beat him in a game of chess until both he and I were much older when I finally understood we have to think and look at all the moves and strategies available to us.

            My grandfather taught me the importance to think ahead, not only in a game of chess, but in life.  I have used his lessons in my personal life – financial included.

            In 2001, President Bush created a tax cut that put us into the lowest tax brackets in U.S. history.  This is the time to plan how you will prepare for the government’s next move.  If they don’t decide this year to extend Bush’s tax cuts, then tax brackets will return to what they were in 2000.  With the Federal deficit rising higher by the second, the government of course sees that raising taxes will help pay off the debt we owe as a nation.

            Also, as part of the tax cuts, the estate tax-free limit went from $600,000 over the years to $3.5 million in 2009.  In 2010, there is no estate tax whatsoever.  In 2011, your estate will be taxed at as high as 55% on any assets over $1 million.

            In conclusion, I have to say this isn’t the time to be an impatient youngster financially.  This is the time to sit down and map out your strategies with a professional to make sure you’re making the right move for 2011.

Issue 14.10

When my oldest son was a young boy, he was convinced mom and dad wouldn’t notice if he only snuck 1 or 2 candies out of our candy dish.  The problem with his theory was that mom and dad never ate the candy and noticed that the candy supply was shrinking over time. By the time I’d noticed, he had emptied almost the entire candy dish.  I remember trying to instill the lesson and learning it myself – small amounts add up to much larger amounts over time.  I was reminded of this story because I recently read an article on Yahoo! Finance that as of March 15, 2010 the Social Security Administration (SSA) is now paying out more in benefits than it is bringing in from taxes. For over 20 years, regardless of which president held office or which governmental party held seats in Congress, the government has been accused of taking funds from Social Security to pay for other programs.  For the first time since the 80s, Social Security is going to pay out more than will come in – an estimated $39 million in 2010 and more than $29 billion over several years. The federal government has borrowed $2.5 trillion from the SSA and now they have reason to claim those IOUs.  This may force our government to borrow more money which may create more tax increases. The SSA claims that current benefits won’t be affected, but economic experts believe that the program’s finances are beginning to fall apart and they predict that the SSA will have drained its funds by 2037 unless Congress steps in and makes changes.  This means that benefits could possibly be reduced for our children and grandchildren.

Our government still needs to learn the lesson that small amounts we take here or there will add up. As a financial advisor, I believe it’s now more important than ever to protect your investments and savings from higher taxes, market losses and get a fair return.

Issue 4.10

When looking back on my life, I can see just how much I’ve learned.  I remember when, as a strapping young man, I stepped into the “real world” known as college.  To be honest, I expected to learn everything I would ever need in life and then I’d move on to my career and be a very happy, successful man.  The truth was, I went through an overwhelming transformation and learned that education, whether formal or not, was very important to me.

After leaving college, I discovered that my education wasn’t over.  My passion for learning is what has helped me serve you more efficiently – and I can always learn more!  When I began my career as a financial advisor in 1983, I soon found out that the economy and the financial laws changed so often that keeping up with them could be a full-time job in and of itself. 

One such law, which was approved a few years ago, has just taken effect at the beginning of this year.  I’ve been surprised at just how many people are unaware of this great opportunity that may greatly affect their taxes.  This law, which is only available in 2010, is regarding converting IRAs to Roth IRAs.  The best part about the law change for 2010 is that on top of added benefits for converting your IRA, anyone is able to take advantage of this opportunity regardless of income.

Roth IRAs, unlike Traditional IRAs, are tax-free growth and tax-free distributions when you start taking your money out.  Also, you don’t have to start taking the money out at age 70 ½ like you would have to with an IRA.  Though the amount that you convert over will be taxed, the special law for 2010 allows you to split the tax into the following years – half in 2011 and half in 2012.  This allows you to pay the tax over time and also gives you the chance to avoid paying taxes in a higher tax bracket.

Please keep in mind that even though this is a wonderful opportunity for some, converting to a Roth IRA is not for everyone.  Each and every individual has different circumstances.  If you’re curious as to whether this strategy is best for you, feel free to contact us at (435)773-9444.

Issue 47.09

I’d like to tell you a story about a wealthy man.  This man was known far and wide for throwing extravagant parties at his home.

During one party in particular, this man led all the young, single men to his swimming pool.  In the pool, the young men could see several sharks of various breeds.

“Any young man who dares to dive into this pool and swim to the other side may be granted one of two things, my only daughter’s hand in marriage or half of everything I own.”  The man said to the young men.

Thinking no man would be foolish enough to try, he turned back toward the party.  To his amazement, he heard a splash as he was walking away.  He turned, startled, to see someone swimming across the pool as quickly as he could, the sharks attacking him from every angle.

Finally the young man, exhausted and bleeding, pulled himself from the pool and faced the awestruck man.

“I didn’t think anyone would dare do that, but I’m a man of my word.  You may have my daughter’s hand in marriage or half of my estate.”

“Sir,” the young man replied, “I’m not ready to get married yet and I don’t want your money.  I just want to know who pushed me in the pool!”

Today, in our economy, we also face sharks like taxes.  The government has offered us several promising benefits like the new health plan and stimulus package.  To get these benefits, though, we must swim through the tax sharks, which will eat away a great percentage of our income.

Our economy is turning into a dangerous shark pool but take comfort.  Financial advisors, such as myself, act as dolphins which will ward off the tax sharks.  We are aware of tax laws and can help you save more on your taxes.  Don’t let the tax sharks eat up all your assets.

Eric Scott can be reached at (435)773-9444 or you can visit Eric’s office at 352 E. Riverside Dr. Ste. #B-4 in Saint George, Utah.  Investment Advisory Services are provided by Brookstone Capital Management, LLC, an SEC registered Investment Advisor.  Insurance services offered by Eric Scott Insurance Agency, Inc.

Issue 35.09

Just a little over a week ago, I was ready for another business trip.  Now, even though I had had this particular trip planned for quite some time, my busy schedule influenced me to put off phoning ahead for my rental car.

By the time I had finally gotten around to it, I discovered that the only options less would cost me double what I normally paid and that the cars I was able to choose from were of a lesser quality than I normally drive.  Not only was the car lesser in quality, but it wasn’t very well cleaned either.

How many times has this happened to you?  How many times have you procrastinated your plans and your to-do lists only to find out that the last-minute options aren’t as good as the ones you had originally planned on?

If I had called even a week before I did, I would have paid less for a nicer car.  Instead, I put it off until all that was left was a small car that was poorly cared for.  The reason I bring this up is to also point out that our economy is always changing.  Do you know that the options you are looking forward to will still be available in the future?  If your money isn’t prepared for the changes in our economy, you might end up with higher bill, less income and a lesser quality financial plan than you had originally intended.

I always urge my clients to think ahead.  I want their money to be secure and the only way to guarantee that is to start now.  Right now.  Who knows what financial options will be available in the future?  Like I mentioned before, if I had acted simply one week before I did then I could have had a much nicer rental car for a lower price.  The same mentality applies to your finances.

Maybe you’ve thought about what you want to do with your money, but still haven’t taken the time to actually take steps toward that goal.  I would love to sit down for a free visit with you and learn about the goals you have for your money and for your lives.  Please feel free to give me a call at (435)773-9444 to set up your free visit now.

Issue 31.09

Last month, my son and his wife decided to buy their first car.  They asked if I could come along and help out.  After looking around a few used car dealerships, they found a nice little car that suited their purposes perfectly.  After being told that the car was in great shape and haggling over a price, we took the car for a test drive over to an auto shop, where we got a second opinion about its true value.  The mechanic agreed that the car was in good condition.

After returning the car to the dealership, my son and his wife decided that they wanted to take some time to think about it.  They looked at other cars elsewhere and ultimately decided that that first dealership car fit their needs best.

The reason I tell you this story is this.  The economy is changing drastically.  The market is dropping and the taxes are rising.  Your financial plan, which may have been working perfectly up until now, may not be enough protection against the economy’s future changes.  Have you taken the opportunity to have an advisor look over your financial situation and possibly adjust your plan?  Are you going to outlive your income?

Going back to cars, when your oil is low a warning light comes on.  If you want your car to last longer, you get your oil changed.  You don’t keep driving around, thinking that the change in your car is just a phase and it will pass.  The news about our economy is your oil light.  It’s time to have someone look over your financial situation again.

Sometimes, you’ll need an overhaul of your current financial plan.  Other times, you’ll find out that a simple adjustment might put you in a safer place.  I have visited with many people with plans that, in the past, were working perfectly for them, but the changing economy had started to negatively affect their financial situation.  With our help, they were able to make changes and adjustments to protect their money in these rough economic times.

We feel that regular reviews with our clients are important to their financial standing.  Many of our clients find that their financial situation hasn’t been affected by the changing economy.  Other clients have, with our help, been able to change their plans before it was too late.  That’s why I meet with them often so we can make those changes.

If you are interested in a free consultation (second opinion), feel free to give us a call at (435)773-9444 and schedule your financial oil change.  Let me get to know you and learn what your financial hopes and dreams are.

Over the past few months all of us have seen that our nation has many problems besides just the recession and high unemployment.  The big question is how to correctly fix the problems which can potentially cripple the financial future of this nation.  What will the new presidential administration do to help?  I have heard a lot of different opinions from friends and clients.  Opinions have been good and bad from both Republican and Democrats.  Opinions extend from international treasury officials who also criticize and praise Obama.  Let’s look at some of the pending changes which drive Obamas political engine.

In the beginning of the Bush administration many tax cuts to the wealthy were extended.  Obama’s plans entail repealing many of the Bush tax cuts.  On March 24, 2009 White House officials disclosed that tax increases and social security tax increases to the wealthy will not occur before 2011.  There was a strong guarantee that no tax increases will happen to families earning less than $250,000, or single filers less than $166,800 a year.  Capital gain taxation will also remain the same through 2010.  I am sure that when the Obama administration realizes the enormous tax dollars involved they will turn their heads towards the higher tax bracket later.  We can expect to see a continuation of the Alternative Minimum Tax.

For seniors earning less than $50,000 (considered low income,) expect to see an elimination of your Federal Income Tax.  Here are some other significant proposals for seniors:

For those who are at least 70 ½ there will be a suspension of required minimum distributions for account owners.

Suspensions of Federal Income Tax on the required minimum distribution.

Penalty-free hardship withdrawals of 15% to IRA accounts (max of $10,000 a year,) and possibly no Federal Income tax.

We can all conclude that it will be more expensive for the high income earner.  I have developed programs which will reduce your tax bill, it is my specialty.  Come see me for a free tax analysis and tax planning, and IRA planning for your future.

Eric Scott can be reached at (435)773-9444 or visit Eric Scott at 352 E. Riverside Dr. #B-4 Saint George, Utah 84790 Investment Advisory Services provided by Brookstone Capital Management, LLC a SEC registered Investment Advisor. Insurance services offered by Eric Scott Insurance Agency, Inc.

A little over a year ago I had an experience with my son and brother that I will never forget and it reminds me of what has taken place in the economy and market.  It was a beautiful peaceful day in October as we went four wheeling.  For a few hours we enjoyed seeing the sights and the beauty all around us.  It was one of those days where you thought nothing could go wrong.  As the others took off down this path, I was putting my drink away and noticed that they had left me behind so I tried to catch up.  The problem came when I increased my speed as I started racing along the path, not seeing too far ahead, going too fast over the mounds of dirt as though they weren’t there.  I knew where I wanted to be but didn’t have a safe plan on how to get there. 

All of a sudden the big one came up and I flew through the air and realized I was in trouble as I was about to come down very, very, hard.  I am so glad I had my helmet on or I would have had some major injuries that could have affected me the rest of my life.  It wasn’t until the $1,500 in damage to the four wheeler and a $1,000 hospital bill that I took the time to analyze the mistakes I had made in my quest to catch up.  I realized the danger in not taking the necessary precautions for the path conditions.  I did not know the road, I drove and acted like I was 20 or 30 years old, not being wise in my decisions like I should have been for being in my 50’s. 

This is what happened in 2008 to many people with their retirement investments.  Retirees should look at the road ahead and see the dangers that might lay ahead and look at the risk factors based on our needs and age.  We have to make sure our money will always be there and last throughout their lifetime. Every day I see people come into my office who took to much risk with their investments and did not consider the dangers of the economy.  They acted like they where in their 20’s or 30’s, taking too much risk.  They needed to first preserve their money then look for growth conservatively based on their needs and age.  

It is important to look over your retirement investments and make sure your money is in the right investments so that you preserve what you have left.  We have programs that will help you down the right financial paths to make sure you can enjoy your retirement and have a peace of mind that you are investing your money in the right places.