THE STOCK MARKET: AN EMOTIONAL ROLLER COASTER
There is no magic potion or hidden secret to a guaranteed method of making a killing in the stock market.
Let’s be real, every business is in the business to make money. Their method of doing so depends on their level of integrity. It’s believed that the stock analysts reports are the inside scoop as to how a company is performing and the expected projections of profits. But is that really how it works? Take for instance, when news comes out on a particular stock that causes the price to rise drastically. The enthusiasm by the average investor is to jump on the band wagon of this “hot tip”. Doing so will continue to drive the price up, making the stock look very attractive. In the meantime, those who already hold the stock may not even buy additional shares. Why? Because they are waiting for the price to max out so they can sell at a profit. Another question is who is giving this information to the market? I don’t mean to sound skeptical here but, we as investors need to be careful not to get caught up in the artificial enthusiasm behind hot stock tips. The corporate scandals of early 2000 are a prime example of this sort of activity. Many Wall Street analysts, brokers, and executives unfairly profited from activity such as this. Information was either acted upon in secret before being given to the general public or false information was given to the public, while executives secretly benefited from the information. Although the government has strict rules concerning the fiduciary responsibility of publicly traded companies, many of these regulations were side stepped intentionally for the sole benefit of profit. By the time the government found out, executives had already claimed millions in profits, and the general public or investor was left bankrupt. What’s the lesson to be learned here? When investing be extra careful about how you use the information you receive. Remember to stick to your investment strategy, which should be based on factors such as, income level, investment knowledge & financial goals. What I learned in economics 101 still holds true: prices are based on the laws of supply and demand. When the supply is fixed, the price will fluctuate based on the demand. If demand is high, the price will go up. If demand is low, the price will go down. And thus the stock market also follows this rule. So the next time you hear about a “hot stock tip”, do some research to find out who disseminated the information and why? You just might be surprised.
Partnering for your success
Jacqueline Williams
Financial Strategist
TAXES DON’T HAVE TO BE SO TAXING
Tax season is here. Most believe that it only occurs once a year, but actually the season lasts all year. Whether for businesses or individual, events continually occur all year long that represent potential tax benefits or blunders, depending upon how they are handled. Although the major events occur from January through April, the remainder of the year should be utilized as the planning phase or preparation phase for the next filing period.
Just recently I had a discussion with a colleague about performing tax services. She proceeded to tell me what I should do during the busy season from January to April, in order to file taxes properly for clients. First she talked about how unfair the tax code is to the average citizen, and then she proceeded to explain how necessary it is to receive a refund. She viewed it as some sort of payback from the government for taking her hard earned money all year. She also talked about maximizing deductions, tax credits, and exemptions. As I listened intently, I waited patiently for her to come to the part about her role as a taxpayer and what she was willing to do to educate herself on the process. As the conversation concluded, I expressed my frustration with trying to educate individuals, who were only concerned with the size of their refund instead of overall planning. My colleague finally admitted that she fell into that category, and that her only concern was that she wanted a refund, the bigger the better. Anything that occurred outside of that reason was to be challenged. In conclusion, we both determined that we want to have the best experience possible. I want clients to be properly prepared throughout the year, and she wants to have a better overall financial experience. At this point I realized to achieve this will take a great coordination of efforts.
There appears to be a great divide that exists between tax preparers and tax clients. Why? For many reasons. The average tax client feels challenged by the complexity of the US tax code, and therefore has created a barrier of distrust concerning this system. They believe the majority who pay into the system are low to mid level wage earners, while the wealthy take advantage of laws written in their favor.
The tax preparers goal is to complete the tax form as accurately as possible, which allows the client to take advantage of all deductions and credits to their benefit. The tax preparer is committed to portraying the information based on the requirements of the US tax code.
How can we collaborate efforts so that everyone comes out on top?
The first course of action should be to clear our minds of what previously existed by way of action plans. It’s clear that what has happened has not worked very well for either of side. A shift in our mindset must occur. Change only comes from within.
Secondly we must take on new habits of behavior. The ultimate goal is to have each person financially solvent and to minimize their tax liability, while taking advantage of any credits or deductions. One must remember that every financial event that happens in our life has a potential direct impact on our tax situation. Start with educating yourself on simple processes like properly filing your W-4.
Third, we must take the necessary steps to plan in advance. Planning alleviates the stress of having to figure out important information months after it occurred. One procedure I’ve trained myself to do is to make a folder at the beginning of each year labeled “Tax File 200_”. As items occur throughout the year, such as donating clothes to Goodwill, or attending tax deductible fund raising events, I keep a copy of the notice or receipt, or whatever evidence is provided, as documentation of the possible deduction. I also make small notations or notes about what occurred and for what purpose. At the end of the year I just refer back to my folder and categorize all the information based on the type of expenditure. This process has helped numerous clients be better prepared for reporting special tax events. But still the trick here is you have to do it yourself.
Once we all make the decision to join efforts, we can all have a better tax experience!
Jacqueline E. Williams
Financial Strategist
NEW YEAR’S FINANCIAL RESOLUTIONS
The holiday season is finally over and it’s time for us to get back to what we call the “grindstone of life.” The beginning of the year brings new hopes, new possibilities, new ideas, new dreams, and new ambitions. We generally take this as a time to reflect on what has happened, and look for ways to make our experiences better than ever before. One of the most common practices is to make a new year’s resolution. From health goals, to relationship goals, to financial goals, we challenge ourselves every January 1st to come up with bigger and better ideas on how to live our lives more prosperous. Goal setting is a necessity if you expect to achieve anything. I’ve asked a few colleagues about their feelings on their financial goals for the New Year.
My News Years Resolution is the affirmation I repeat to myself everyday….
“I am the Center of Abundance, all of my needs, wants and desires are fulfilled”
and
“The Universe supplies all of my needs with unlimited possibilities”
Linda Slack, Creative Director
African American Family Connections
http://www.africanamericanfamilyconnection.com
I don’t really do resolutions I set goals instead. My financial goal for 2009 is doesn’t have $ value because I find I achieve more when I’m not focused on the money but instead focus on my passion which is helping women who want to operate a business online from home. So my financial goal for 2009 is help 5000 women enjoy their life by developing and improving their skills and resources to generate revenue continuously by operating a business online from home.
Beryl Powell
Business Advisor
OperateItRight (www.OperateItRight.com)
My goal is very simple; to save more money by making sure that I pay myself first.
Richard Williams, III, PhD
Assistant Professor, Morgan State University
My position on New Year’s resolutions is that every day is a new opportunity to make a better choice. New Year’s can occur daily, giving new hope, new faith, and a new found purpose of having the best experience possible. What’s your position on this most famous method of goal setting? Share your belief by leaving us a comment.
Jacqueline (Ford) Williams
Financial Strategist
Twas the night before Christmas
Twas the night before Christmas………………
While we shop through the mall
We rush and we hurry, having no fun at all
We’re feeling the pressure to buy one last gift
In hopes that our conscious will get quite a lift
As we open our wallets, and pull out a card
A struggle within us asks “Why is this hard?”
The pressure to buy, the pressure to spend
The struggle within us wants the misery to end
So we gently put the card back in its place
Feeling guilty, but trying our best to save face
So we think and we ponder about what really matters
As it comes to us clearly, amidst noise and the clatter
This season is not about money or things
This season is about the joy that one brings
The peace, the harmony, the happiness and love
Are all the things we should really think of
So let’s join our forces and pray with great might
That we realize there’s no need to struggle or fight
What we really should be thinking about instead
Is the human experience we share that’s widespread
So forget that last gift, and head home with great speed
Have the happiest, safest, holiday indeed.
Jacqueline E. Ford
Financial Poet
Year end Tax Tid Bits for your business
With the end of the year right around the corner, it’s time we start planning for the upcoming tax season. So the next few articles will contain some bits of useful information to help prepare you and your business for a successful filing. Although the tax code can be torturous to understand, I’ve pulled out some of the most common ideas that the average small business will come across.
1) Owner participation: It pays to participate in your business to the fullest extent possible in order to deduct all your losses under the passive loss limitation rule. This rule only pertains to those business owners who have ownership interest but do not work in the day-to-day operations or management. If you qualify for this rule, be sure to keep good records of how and when you participated in the business.
2) Review qualified plan selection: Review your plan (SEP, IRA, SIMPLE )to make sure it optimizes your benefits while keeping your costs down.
3) Reimbursement arrangements: When reimbursing for travel or entertainment, be sure that the arrangement is treated as an accountable plan. The company deducts the expense and no income is reported to the employee.
4) Classify workers correctly: Make sure you are classifying workers as employees instead of Independent contractors. If you misclassified, the IRS will charge back employment taxes with interest and penalties.
5) Accelerate expenses: Pay outstanding bills in advance. Make purchases for needed equipment and supplies. Be careful not to prepay expenses that relate to items extending beyond one year.
Jacqueline Ford
Financial Strategist