Insights & News

Rockstar Perspective on RMDs


August 17, 2018

RMDs (Required Miminum Distributions) from your IRA may sound boring but they're important, and you need to fully consider your options. Below is an intersting article we saw on the Slott Report that we really liked and wanted to share. Enjoy! -The Foxstone Team

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TAKE YOUR RMD LIKE A ROCK STAR
By Sarah Brenner, JD - IRA Analyst (Slott Report)

Even rock stars get older. Although it may seem hard to believe, both Steven Tyler of Aerosmith fame and rock legend and reality tv star Ozzy Osborne celebrate their 70th birthdays in 2018. Steven Tyler turned 70 on March 26, 2018 and Ozzy will reach that milestone on December 3, 2018.

Do rock stars have IRAs? If they do, like the rest of us mere mortals, they must take required minimum distributions (RMDs). The rules say RMDs must start for the year the IRA owner reaches age 70 ½. The first RMD can be delayed until April 1 of the following year. To calculate the RMD, the IRA owner will use their age on their birthday in the year for which the RMD must be taken.

The RMD rules are tricky! Even though Steven and Ozzy will both celebrate their 70th birthdays in 2018, their RMDs will work very differently.

Steven Tyler’s RMD

Because Steven’s 70th birthday is in March, he will reach age 70 ½ in 2018. He must take an RMD for this year. His deadline for taking it will be April 1, 2019. He will calculate his first RMD using the age 70 because that is the age he attains on his birthday in the year for which he must take his RMD.

Ozzy Osborne’s RMD

For Ozzy, it will work differently because his 70th birthday is in the second half of the year. He will not reach age 70 ½ until 2019. Therefore, the first year for which he will need to take an RMD is next year, 2019. His deadline for his first RMD would be April 1, 2020. He will calculate his first RMD using the age 71 because that is the age he attains on his birthday in 2019, the first year he must take an RMD.

Which Rock Star Are You?

If you will be celebrating your 70th birthday in 2018, ask yourself which rock star are you? Are you like Steven Tyler, or are you like Ozzy Osborne?

If you were partying like a rock star on your 70th birthday in the first half of 2018 (January- June), you are like Steven and will follow the same rules as him. If you are like Ozzy and celebrating your big 70th birthday bash in the second half of the 2018 (July-December), you will follow the same set of rules as Ozzy.

(End of Slott Report Article)

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About Foxstone Financial
Foxstone Financial is a Denver-based investment advisor that uses the latest artificial intelligence investment tehnology, decades of market experience and a network of specialized partners to serve clients that expect better than average. 

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Nondeductible Contributions To Traditional IRA for Retirement Planning


August 15, 2018

An Individual Retirement Account (IRA) is what many individuals rely on in order to help prepare for the financial futures of themselves and often their family. Workers both in the public and private sectors often rely on these type of accounts to secure money for when they reach a certain age and no longer are required to work in an effort to earn money for a living. It is then that these types of accounts can be beneficial helping to supply those who have invested properly with the means to support themselves and the lifestyle they elect to receive through this funding source. The monies allocated at this point are often the result from years of potential investments helping to prepare for this point in their lives.

A traditional IRA works essentially as an account for which multiple other types of funding sources can be stockpiled to be withdrawn at a much later date (depending on the initial investment timeframe). Not particularly an investment in and of itself, the IRA is more of a catch all for securing the financial future of an individual.

Companies often institute various 401K plans for retirement purposes and while these can be and are often considered beneficial, the IRA is a more common source of funding although it differs from a specific investment source. IRAs can be comprised of stocks, bonds, and mutual funds in addition to a variety of other money-making methods and combined with the resources necessary to compliment a 401K once retirement age is reached
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Unfortunately, not everyone gets to take advantage of a 401K fund but anyone can open an IRA and begin to stow away money for the future. These funding types can be extremely beneficial down the road and proper plans for the long-term of an individual or family will help to avoid potential short-falls later in life while ensuring that you and your family are properly taken care of well into the future.

Different Types of IRAs

There are up to seven different types of IRAs to choose from but the traditional method will be focused on here in regards to nondeductible contributions and how they can affect the monetary value of an account while providing extensive benefits if properly aligned and given appropriate tax considerations when applied.
Each of the following has their individual incentives and should be given proper consideration when determining the appropriate steps for securing your financial future. All of these IRA types contain both positives and negatives and depending on your specific circumstances should be properly evaluated to determine which is appropriate and can help you to achieve the specific needs desired and associated with each IRA type.
-Traditional IRA
-Roth IRA
-Nondeductible IRA
-Spousal IRA
-SEP IRA
-Simple IRA
-Self-Directed IRA
While the existence of a nondeductible IRA makes considerations appropriate, there are still tax benefits and ways to incorporate the use of a more traditional IRA while making nondeductible contributions.
Making these nondeductible contributions to a traditional IRA can be the right move for you if given the appropriate consideration and tax burden qualifications. These will help to ensure that you benefit from the most appropriately regarded funding source in addition to providing the best possible coverage for you into the future without limiting the amounts considered for future investments.

IRA Contribution Methods

There are essentially two different methods for making these types of contributions although their purposes and execution differ greatly. The first involves tax deferral so long as the contribution remains in the IRA. These types of contributions are beneficial when considering the types of investments which may typically require a higher tax rate associated with the income source.
While potential distributions may be taxed at the regular rate another aspect for these type of contributions are that they require detailed record keeping and appropriately maintained forms submitted to the Internal Revenue Service (IRS). The IRS 8606 form is used to record a number of effective but different distributions and contributions.

The other aspect or component for making a nondeductible contribution to an IRA are for “back door” contributions. These type of investments are typically used to establish a contribution up to a given amount and then convert that money over to a Roth IRA.
Implications for this type of contribution is typically based on whether or not the investor owns any other type of opportunity and whether or not the contribution is made to a sole account or part of a more active portfolio. If the latter is in line with a current investment opportunity then a higher tax bill or implication from making such a contribution can have more of an effect on the income sources or end of year tax assumptions required to be reported.

While these nondeductible contributions can be extremely beneficial if utilized appropriately they can also in turn create a potential tax issue which must be given proper consideration prior to making any such move. These tax implications are best discussed with a professional before deciding to make any move regarding an IRA or contribution to the said product.
If appropriate record keeping is considered in addition to ensuring the quality of an investment will reap the derived benefits then these type of contributions can have a lasting impact on an individual's financial future. As with any consideration deriving a future return on investment, researching the cause and implications of how money will be added or taxed is important and must be administered appropriately to ensure the best possible future return - especially considering retirement accounts.

If you’re ready to create a specific retirement plan or investing opportunity in order to achieve your life goals then let the financial planning experts at Foxstone Financial, Inc. be your guide today. Their willingness to offer a detailed review of your individual situation in regards to each of the aforementioned contribution opportunities will leave you on the right path to financial freedom. Get on track for the life you wish to live and gain control of your finances with their expert advice and knowledgeable staff. Contact us or call 1-866-988-5443 to put the plan in place so your investments can provide the best potential return in the future.
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​Using Technology to Improve Investment Performance


August 9, 2018 - Christian Ravsten

Technology astounds me by what it can do and how it can transform lives. I have talked with farmers in Idaho who have GPS on their massive tractors so the lines of seeds they lay down are as straight as possible. Talking with clients that have Tesla electric cars and the unbelievable things the Model S can do is all thanks to technology. Our phones can guide us to faraway destinations, help us pick out new restaurants and even recommend new songs we should hear. I am grateful for technology and recognize its massive potential to improve our lives.
 
With the massive change occurring in almost every industry because of technology, why are investors still ‘settling’ for the old way of investing. Why do they put up with an asset allocation strategy that has either flat or downward trending investments? For example, why be invested in bonds during a period of rising interest rates by the Federal Reserve? Bonds move inversely to interest rates, so if rates are going up, typically intermediate to long term bonds are decreasing in value. On the other hand, if emerging markets are showing signs of growth like they did in 2017 as one of the top performing asset classes, why not allocate more money into those investments? And what is your strategy for allocating to cash when there isn’t an opportunity for productivity and growth in the market? Can your investment strategy optimally allocate to cash for safety?
 
If technology has the ability to reshape and make more efficient every other industry, shouldn’t it be used to make more informed and efficient buy and sell recommendations for an investment portfolio? Why rely on old asset allocation formulas that are stuck in history while the market is ever changing? Think about this for a minute. The Modern Portfolio Theory was created in 1952 and has helped shape the way people invested by reducing risk through a diversified mix of investments. With the lack of technology at the time, it was the most consistent way to invest. In the early 1950’s, when the first computer language was developed, we started to see technology come alive. Since that decade, think about how far computers and technology have come and compare it to your investing process or the one used by your financial advisor. Has it evolved at all?
 
At Foxstone Financial, we leverage cutting edge investment technology that includes artificial intelligence to make buy and sell recommendations for our clients' portfolios with a tremendous rate of accuracy. This unique technology runs six million iterations every night to find productivity and safety. Optimizing our clients’ investment portfolios using this advanced technology is the name of the game. The market changes at a rapid pace and many of the changes are driven by emotion and assumptions. Shouldn’t your investment portfolio have a dedicated technological strategy to ensure a high degree of accuracy and reduced risk by eliminating emotion, ego and fear?  
 
Let Foxstone Financial show you how we can use advanced investment technology and artifical intelligence to transform the management of your investments.

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About Foxstone Financial
Foxstone Financial is a Denver-based investment advisor that uses the latest artificial intelligence investment technology, decades of market experince and a network of specialized partners to serve clients that expect better than average. 

 
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​Too Much of a Good Thing Can Be Bad for the Lawn & Your Investment Portfolio


August 3, 2018 / Christian Ravsten

I’m not a green thumb in the garden but I understand that basics when it comes to keeping my grass green. I water regularly, mow once a week, fertilize in the spring, and do aeration once a year. This past April, I fertilized with a turf builder product which claimed to green up the grass and kill those pesky dandelions. Well, the grass greened up nicely and it killed the dandelions.

A few weeks later, I had a thought that if the fertilizer did the trick after one application, another application would really green up the grass and help it come in strong for the summer season. What happened was the exact opposite. The second application of fertilizer burned our grass. We had big spots of really dry, brittle, brown grass that looked terrible. After doing some research, I found out the chemical-based fertilizer that I had used was full of salts, that when put on the lawn too frequently cause the grass to dry out and even die. The resolution to this issue was lots of water, time and hope that the roots didn’t die and the grass would bounce back.

I began thinking about how my grass fertilizer story relates to investing. Equities are like fertilizer, that when added to your investment portfolio can provide upside performance, positive returns and opportunities for growth. The problem is when too much of your allocation is invested in equities and the market corrects, you can end up getting burned and potentially lose a sizable amount of money. You then have two choices, wait and hope the equities earn a positive rate of return which will recover your losses, or cut your losses and purchase other investments with the hope that you recover what you lost. As investors, we can’t control the market but we can control how much “fertilizer” we invest in and when. The key is to understand the length of time you should own the equities in your portfolio and when to stop using them to avoid disastrous consequences. Wouldn’t it be nice if there was a way to know when to stop using certain investments in your portfolio and instead to allocate to cash or other safety measures? 

At Foxstone Financial, we use advanced investment technology that leverages Artificial Intelligence to monitor our mutual fund and ETF investments on a daily basis to find the optimal portfolio. Our unique technology performs these tasks by making six million iterations every night to determine where to invest, and how long to stay in each investment. If a change is needed, the technology informs us to allocate to a different asset class or allocate to cash. Humans just don’t have the ability to run six million calculations on a nightly basis to determine what and where to invest. My experience has been that many investment advisors aren’t sure when to exit the market and if and when they do, they aren’t sure when to get back into the market. Thus, the approach they most often taken is to stay in the investments, not sell, and “Hope” the market and the investment allocation recover quickly. With our advanced investment technology, we don’t have to use HOPE as an investment strategy.


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About Foxstone Financial
Foxstone Financial is a Denver-based investment advisor that uses the latest artificial intelligence investment technology, decades of market experince and a network of specialized partners to serve clients that expect better than average. 

 

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Is Buy and Hold an Outdated Investment Strategy?


July 26, 2018 / Chris Ravsten

In our opinion, the investment strategy of “buy and hold” has become outdated and maybe even obsolete. With the advent of powerful computing technology, artificial intelligence and the vast amount of readily available market data, there are now mathematical algorithms that can help you in the effort to achieve a consistent stream of investing success with far less risk than the S&P 500 index. Now you can strive to beat the S&P 500 index instead of just mirroring it.
 
In the early 1950’s, Modern Portfolio Theory (MPT) was introduced as the break-through investment management process of the century. Since then, many investors have tried to beat the performance of MPT using strategies like active management, market timing, sector rotation and many others. However, these strategies never produced consistent results because the investor had to be correct twice in the process, once when they bought the investment and then again when they sold the investment. This has been impossible to do without modern technology.
 
Thankfully, this is no longer the situation. New options are now available for investors who want more than a passive investing strategy. With advanced computer technology and mathematical algorithms, investors can now choose from a multitude of portfolios that have solidly outperformed their respective benchmark indices, including the S&P 500 index, with less risk and volatility. And this level of success has not been consistently experienced before.
 
Wouldn’t it be more satisfying to be diversified in actively producing assets only when they are actively producing, and then selling out of them, when they aren’t actively producing? Why does being diversified signify a need to own losing investments? You no longer have to settle for benchmark-like returns, just because your investment advisor or some large fund manager says you should.
 
Now you can make investments compete for your money, rather than your money being placed in passive, unproductive assets. Welcome to the future of investing!

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About Foxstone
Foxstone Financial is a Denver-based investment advisor that uses the latest artificial intelligence investment technology, decades of market experience and a network of specialized partners to serve clients that expect better than average.
 
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