Jazon Zweig is one of our favorite columnists who is published in the Wall Street Journal every Saturday/Sunday Edition.
Here are his comments on 2018 New Year’s resolutions, surprisingly not about investments and most worthwhile reading. Click on the link below.
http://jasonzweig.com/less-phone-more-nature-34-resolutions-for-a-better-2018/
At our November, 2017 Investment Forum, we discussed cyber security and the measures you can use to protect your identity, personal data, and assets from online theft. We developed a 1-pager that outlines the best practices to help prevent cyber fraud as well as the resources available if you do find yourself the victim of cyber fraud. We hope you find it useful.
As we approach the end of the year, charitable giving is once again expected to ramp up between Thanksgiving and December 31st, and we at Edgemoor would like to share some advice with any clients that wish to make donations. Although there is no wrong way to donate to charity, there are steps you can take to minimize taxes and maximize impact.
Donating IRA Distributions
Clients over the age of 70 ½ who have an IRA can donate up to $100,000 of distributions to charity instead of receiving it as taxable income. We recommend using funds from non-IRA accounts for donations above the Required Minimum Distribution amount. This strategy allows IRA assets to grow tax-free for as long as possible, ultimately increasing the funds available for future donations, expenses, and beneficiaries of Inherited IRAs.
Gifting Appreciated Stock
You can avoid taxable capital gains if you donate appreciated securities that have been held in taxable accounts for at least a year. This is preferable to selling the securities and donating the cash proceeds, because you avoid realizing long-term capital gains while still getting the full deduction for up to the fair market value of the donated securities. We recommend donating the securities with the largest capital gains to maximize the tax benefits of charitable giving.
Making Direct Donations vs. Funding Donor-Advised Funds
Appreciated securities may be donated either directly to charities or to a Donor-Advised Fund (DAF). DAFs are investment vehicles for giving to charitable organizations. Edgemoor offers DAFs through its custodians, Fidelity Investments and Charles Schwab & Co.
Appreciated stock donations to DAFs have several advantages:
Fidelity and Schwab both require a minimum initial balance of $5,000 for DAFs and provide lists of select funds for investment of donations pending their distribution to charities. For accounts exceeding $250,000 you can have your DAF funds managed by the investment advisor of your choice and invest in stocks, bonds, and a wider range of funds. Administrative fees for DAFs range from 0.10%-0.60% based on account size.
We at Edgemoor would be happy to provide allocation recommendations free of charge for DAFs invested in the lists of DAF select funds, or to manage DAFs exceeding $250,000. Setting up a charitable giving account through a DAF is easy, and Edgemoor is ready to prepare all forms and guide you through the process.
Timing Your Donations
You receive the tax benefits from giving to charity, either directly or to a DAF, in the year you make the donation. There is a maximum deduction you can take for charitable giving which is a function of your taxable income. Spreading out your donations over multiple years may maximize your tax savings. However, if you have a higher than usual income in a single year (e.g. from selling a family business), it may be best to make one large donation to a DAF to reduce your large tax bill that year, then distribute the funds to designated charitable organizations over multiple years.
If you wish to receive tax benefits in a certain year, the charitable organizations or DAFs must receive your donations by December 31st of that year. We recommend beginning to transfer assets at least several weeks before the end of the year to ensure the charitable organization or DAF can process your donations in time.
Contacting Edgemoor
If you have any questions, please feel free to call 301-543-8881 or e-mail us at rroane@edgemoorinv.com.
Cybersecurity is a major concern, and recent data breaches heighten the importance of protecting one’s privacy and data security. Following is a summary of the latest data breach at Equifax and our recommendations to reduce the risk that someone can obtain and use your personal identity and data.
Equifax Incident
On Thursday, September 7th, the credit reporting agency Equifax announced it had been the target of a cybersecurity breach that could potentially impact 143 million Americans. Criminals accessed files that included the names, Social Security numbers, birth dates, addresses, and even some driver’s license numbers of Equifax customers. A more detailed summary can be found here: https://www.equifaxsecurity2017.com
Equifax is giving all consumers the ability to check whether they have been impacted by this breach and the option to enroll in its credit monitoring service, TrustedID Premier, for free for one year regardless of whether you were impacted by the breach. TrustedID Premier includes:
To check whether you have been impacted and enroll in TrustedID Premier, simply follow these steps:
Freezing Your Credit and Other Tips for Protecting Your Identity
In the wake of this breach, The New York Times has also provided tips for protecting one’s information online in a variety of articles. Helpful tips include:
We at Edgemoor recommend all our clients take the above steps and begin monitoring any online accounts with personal identifying information for suspicious activity. We also urge everyone to be cautious regarding any suspicious requests received online, whether through a website or e-mail.
I attended my twelfth Berkshire Hathaway Annual Meeting this past weekend and found it to be as worthwhile as ever. Chairman/CEO Warren Buffett, age 86, and Vice Chairman Charlie Munger, age 93, are still at the top of their game. Their appreciative audience seemed to me larger than ever with approximately 40,000 stockholders in Omaha, NE for the meeting and related Berkshire Hathaway events.
Once again for five hours they responded to questions from financial journalists, research analysts and stockholders, many of which dealt with how the intrinsic value of Berkshire Hathaway is not reflected in its balance sheet and income statement. Here are some of the stunning highlights:
Buffet believes that the intrinsic value of Berkshire Hathaway’s stock far exceeds its book value.
Positive News for the Future
Past performance is not indicative of future results. The information provided in this commentary should not be considered financial advice or a recommendation to buy or sell a particular security. You should not assume that any of the investment strategies or securities discussed herein are or will be profitable. The opinions expressed herein are those of Edgemoor Investment Advisers, Inc. (Edgemoor) and are subject to change without notice. You should always obtain current information and perform due diligence before investing. All recommendations for the last 12 months are available upon request.
Edgemoor Investment Advisors, Inc. is a registered investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about Edgemoor including our investment strategies, fees, and objectives can be found in our ADV Part 2, which is available upon request.
