What is the Best Way to Transfer Dollars to Israel?
By Douglas Goldstein, CFP®
When clients ask to transfer dollars from their U.S. investment account to their Israeli bank, the details they must provide sometimes take them by surprise.
Living in a different country from your assets means that money transfers are necessary to meet your cash-flow needs. Following procedures properly can expedite the process.
The easy system of transferring funds
Although we help people choose investments for their U.S. brokerage, IRA, and 401(k) accounts, many clients seek more than advice on what to buy/sell. They are looking for service and attention to details.
When transferring funds, you must pay meticulous attention to details. Even if all the account numbers, names, and addresses match up, the clearing firm often asks additional questions. Because of regulatory concerns and anti-money-laundering policies, compliance officers can require documentation related to the purpose of the funds. This means that what you might have expected to be a quick wire ends up taking longer. (Typically it can take two or three business days for a routine dollar wire to settle. And, if you then need to convert the dollars to shekels it can be even longer until you have access to your money.)
Timing is crucial if you plan to transfer your American assets to Israel. If you leave adequate time for the inevitable back-and-forth, you should be fine. On the other hand, waiting until the last minute to request a money transfer could create a ripple effect of difficulties. Be prepared, and begin the transfer process well in advance. Remember money doesn’t move in America on Sunday or on bank holidays.
Is service important with bank transfers?
Moving money is more complicated than simply pushing a button. Having a good relationship with your bank or money transfer company is crucial, especially if they need to hunt down a lost wire. Make sure that any company you use to transfer funds is legal and properly qualified to handle your money. Following money-transfer instructions carefully is crucial to make sure your money lands in the right spot in a timely fashion.
For more strategies to best manage a multi-currency lifestyle, go to www.profile-financial.com/multicurrency.
Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. 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.
Do All Married Couples Need to Share Their Money?
By Douglas Goldstein, CFP®
What’s the ideal way to handle your money?
In a perfect world, married couples merge their lives as well as their finances, and have joint accounts. However, sometimes a couple can be connected at the heart but have separate bank accounts. While partners should look at their overall assets together, depending on the circumstances, sometimes having separate accounts is more appropriate.
A second marriage
Most people enter second marriages with financial baggage from their first marriage. Either partners may be supporting children, or they may have debts incurred by the cost of a divorce. This creates a delicate situation, balancing the financial needs of merged families. To resolve issues such as making sure that children from the first marriage are supported or that one spouse is not responsible for the other spouse’s debts, separate accounts may be a wise idea. It creates clarity and makes sure that each side is discharging his/her financial obligations. There is also the option of keeping some accounts separate and having a joint account for mutual household needs.
Should both names be on your U.S. brokerage accounts?
Similarly, with regard to U.S. brokerage accounts, in the situation of a second marriage both partners may consider having an individual account or an account that is called "joint tenants with right to survivorship." For retirement accounts, anyone who is concerned about the rights of children from a first marriage may want to name specific beneficiaries, as well as contingent beneficiaries who would receive the money upon their death. It’s important to review these different possibilities when opening an account because once it is set up, changing account titles is cumbersome and may have tax implications.
If you or your spouse have financial baggage, it is crucial to make sure your financial planning identifies the various issues involved and is set up properly. If you have questions whether your investment accounts should be held jointly or separately from your spouse, it’s time for an open conversation with both your spouse and financial advisor.
Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. 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.
How to Make the Most Out of Your Parents’ Stocks
By Douglas Goldstein, CFP®
What should you do if you inherit a portfolio of stocks from your parents?
Should you sell them?
To answer the question of whether you should sell the stocks, start by asking yourself whether you would buy these stocks if you had extra cash.
You have no moral or legal obligation to keep the positions just because your parents owned them. I’ve had people come into my office with stocks that their parents bought decades earlier, and they said, “My father said this was such a great company that I should never sell the stock.” But how could anyone have known whether a company that was in business 10 or 20 years ago would still be a good investment today? Remember Pan Am, Blockbuster, or Enron? Even though your father’s research many years ago suggested that a company would be a good buy, times have probably changed.
What about the tax I’ll have to pay?
Everyone is in a different tax situation, but people who live and die in the United States benefit from an IRS rule called the “cost-basis step-up.” That means that if your father invested $1,000 in the stock and the value of that position grew to $100,000 on the day of his death, if you sold it the following day for $100,000, the IRS would not consider the transaction as if you had just profited by $99,000. Instead, they reset the purchase price of the stock to the value at which you inherited it ($100,000) so you would not have to pay capital gains tax. [This is an overly simplified example, and depending where you live, there could be other taxes associated. Be sure you get proper tax advice before making any trades.]
If you receive the stocks in a U.S. brokerage account or Individual Retirement Account (IRA), you may need to follow certain specific steps in order to take control of them. Feel free to contact our office if you have questions about dealing with an inheritance (02-624-2788).
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 You Need to Know About Start-Up Investing
By Douglas Goldstein, CFP®
In a dramatic repeat of what I saw many times in the late 1990s-2000, another start-up company just collapsed, taking with it millions of dollars from investors’ pockets. Not only are the founders’ dream shattered, but its investors’ profits are destroyed and cash lost.
As a financial advisor, I review many new companies from the investor’s viewpoint. In almost every case, the story ends badly.
Don’t invest unless you know how
The main cause of these disastrous results stems from investors putting their money into an idea instead of into a team. Many great ideas fail because of bad management, but lots of new concepts – even mediocre ones – turn into solid businesses when handled properly. Venture capital professionals won’t even consider investing in a company unless they’re convinced that the team running it is qualified and has a robust business plan.
How to analyze a business plan
If this article is your only lesson on how to evaluate a business plan, then you certainly aren’t a candidate to be an “angel” or venture capital investor. People spend years refining their skills in how to analyze business plans and offering documents.
VC pros never start by reading about the anticipated profits of the start-up, since these projections lack real substance. Instead, they look at the salaries that the team hopes to make (all taken from the investors’ money) and how the money will be spent. The case I recently witnessed showed how the investor didn’t consider those two most important factors before dedicating his money. The failed company significantly overpaid all of the team members and blew large sums of money on new offices and unnecessary state-of-art equipment (when other cost-efficient equipment would have been satisfactory in producing the same product).
Still want to invest in a start-up company?
In my weekly podcast about how the strategies of chess can be applied to investing, I have dedicated Episode 85 to start-up investing. Check it out at www.RichAsAKing.com/85.
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 to Do With Your Money at the End of the Year
By Douglas Goldstein, CFP®
As the fiscal year draws to a close, it’s time to review your financial plan. Here are three important aspects that you need to look at:
Savings goals
What are your long-term and short-term goals? Are they the same as they were last year? If your goals are both time and dollar specific, it’s easy to tell whether you are on target to meeting them. Take a look at your pension plan. Is the division of funds among its saving and insurance component still relevant to your current stage in life?
Asset allocation
Apart from saving your money, you also need to grow it. So let’s look at your investments. Are your funds properly invested? Your investments should reflect your risk tolerance, growth objective, and time frame. Recheck your asset allocation to ensure that everything is in order following the movements of the markets over the past year. Often funds can change focus, requiring you to rebalance your portfolio. Furthermore, if a stock or other security does extremely well (or extremely poorly), this can also affect the balance of a portfolio. It may be time to buy/sell.
Review Your Winners and Losers
Before selling weak stocks/funds and actualizing profits, discuss the potential tax ramifications of the sale with your accountant. Depending on your situation, it may be wise to hold onto investments for at least one whole calendar year to qualify for the long-term capital gains rate (if you are a U.S. tax payer). While tax ramifications shouldn’t be the only factor in determining when to sell, they should certainly be taken into consideration.
Don’t let the end of the year pass you by. Call your financial advisor for an appointment today to review your financial plan. Make sure your finances are in the best shape to enable you to realize your dreams.
Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. He is a licensed financial professional both in the U.S. and Israel. Rich As A King: How the Wisdom of Chess Can Make You a Grandmaster of Investing is available 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, SIFMA, 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.
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.
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 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:
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.
Problems With Your U.S. Brokerage Account?
By Douglas Goldstein, CFP®
Many readers have recently contacted me because they received a letter from their U.S. brokerage firm informing them that either “You can no longer purchase additional shares of mutual funds in your account,” or “We will no longer provide investment advisory services to you and/or you may only enter liquidating orders or non-solicited orders in your account.”
This letter is not a result of new American legislation; rather it means the brokerage firm handling your portfolio is no longer interested in working with clients living outside the United States. Don’t despair. There are solutions that can possibly even improve your situation.
What action step you should take
Even if you can’t continue to work with your existing brokerage firm, you do not need to cash out your American account. Rather, work with a firm that specializes in opening brokerage accounts for clients who have an Israeli address (see www.profile-financial.com/faq for details). Then, transfer over assets “in kind” to the new account. The new account (whether a joint account, individual account, IRA, or other type) can be an exact replica of the old account, unless you wish to change your investment structure. By moving everything over in kind (without selling) there are no tax consequences or reporting requirements.
Basically, after signing new account paperwork, a client’s assets are easily transferred over to the “cross-border-friendly” U.S. brokerage firm. Within one month, clients get a brokerage statement from their old brokerage firm, and the next month they get the statements from the new firm (which they could also choose to get online for free).
If you receive a letter inviting you to leave your existing company, look at this as an opportunity to review your financial plan as well as your investments with an investment advisor who is licensed both in the United States and in Israel.
Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. He is a licensed financial professional both in the U.S. and Israel. Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, SIFMA. Accounts carried by Pershing LLC., Member NYSE/SIPC, a subsidiary of The Bank of New York Mellon Corporation. His newest book, The Retirement Planning Book, is available at www.profile-financial.com. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. The opinions expressed are those of the author and not necessarily those of Portfolio Resources Group, Inc. or its affiliates.
How Quickly Should You Invest The Money You Inherit?
By Douglas Goldstein, CFP®
Though I often advise people to wait before investing an inheritance, sometimes you must take quick action.
When do you need to act quickly?
If you inherited a risky position, you should consider liquidating it. For example, the grandfather who always managed the stock portfolio passes away, leaving large amounts of money invested in a few individual stocks. Unable to live on her own, the grandmother who now owns the stock portfolio needs to move to a nursing facility. What would happen if she waited 12 - 18 months to deal with the account and then, just before she sold in order to pay her bills, the stock market crashed?
How much money do you need now?
If you inherit a portfolio of stocks, ask yourself if you are in a position to wait (possibly for years) to use the money. A fancy car or a luxurious vacation is not an emergency expense. On the other hand, paying for home health care or other medical procedures may very well be a question of life and death and cannot be delayed. Any money needed for the near future, regardless of the type of investment it was in when you inherited it, should be converted to liquid assets like short-term bank deposits, money market funds, and savings accounts. If that means selling Grandpa’s stocks, it’s the right choice. After all, wealth should first and foremost be used for your family’s health and well-being.
How to get the money quickly
Depending on the account’s structure, you may or may not have easy access to the funds. Even if an account is titled “joint account” or “transfer on death,” there may be a drawn out procedure to follow before the money is fully available. Your investment advisor should be able to walk you through the process. Nonetheless, make sure money is available to each spouse separately so that the survivor does not face undue financial pressure caused by bad planning.
Not sure how to structure your accounts?
If you have assets, especially money in different countries, contact a cross-border investment advisor who can help you determine the best way to structure your portfolio. Learn more at www.Profile-Financial.com.
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 You Getting The Social Security You Deserve?
By Douglas Goldstein, CFP®
The “Greenberg Settlement,” the resolution of a class-action lawsuit brought against the Social Security Administration (SSA), changes the way American olim receive their American Social Security payments.
Under the SSA’s Windfall Elimination Provision, if you receive a foreign earnings-based pension, your American benefits are reduced. Until now, claimants of Social Security living in Israel who also received Bituach Leumi old age pension had their payments from Social Security reduced under the Windfall Elimination Provision (WEP). This was because Bituach Leumi was considered as an extra pension and counted as a “windfall.” In 2013, Ephraim Greenberg, a U.S. citizen living in Israel, brought a class action to change this situation because Bituach Leumi pensions are not dependent on earnings and therefore don’t fall within the criteria of the WEP.
Now you can claim your money back
In July 2015, U.S. District Judge Rosemary Collyer determined that the Social Security Administration was wrong in reducing payments to U.S. citizens who receive Bituach Leumi. This is because Bituach Leumi payments aren’t considered earnings-based in the same way as a private work-related pension is. Bituach Leumi payments are considered more of a social benefit for the elderly than a “windfall,” and therefore do not affect Social Security payments. (However, if you receive a work-related pension in addition to Bituach Leumi, your work pension would trigger the WEP reduction in Social Security benefits.)
If your Social Security payments were reduced under the previous erroneous application of WEP, you can claim back the funds that are owed to you from September 2004. Furthermore, if someone who was unfairly penalized under the WEP has passed away, his heirs can apply for the funds retroactively. This is good news for the many American olim eligible for Social Security payments.
Here’s how
I discussed the Greenberg Decision with the lawyers involved in the case, Ira Kasdan and Beth Johnson. We discussed the specifics of how to claim money that may be owed to you. To learn the specific steps involved in claiming withheld WEP as well as learning more about the provisions concerning with private pensions, listen to our 15-minute discussion at www.GoldsteinOnGelt.com/Kasdan.
(The opinions expressed on The Goldstein on Gelt Show are those of the guest, and not necessarily my opinion or the opinion of Portfolio Resources Groups, Inc.)
Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. 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.