Month: March 2024

As a retired financial planner, I admit that my favorite clients were those whose goals included generous charitable giving. One couple comes to mind. Not only did they make generous donations to their alma mater and favorite non-profits, but they also invested in community efforts to improve blighted areas. Their life purpose was passed along to their son who gave them his promise to continue their legacy.

My parents, although not wealthy by any measurement, made tithing their highest priority so I grew up in an environment that recognized the blessings that surrounded us and the desire to help others was ingrained in me.

Charitable Inclination

So, when I read a Fidelity Charitable report about the generation who will inherit from their baby boomer parents and the younger generations’ greater inclination toward charitable giving, I let out a cheer. The report was published last September and was geared toward a financial advisor audience so the results focus on ways that advisors can reach the next generation to retain or grow their client base.

“Among investor respondents who didn’t already have a financial advisor, those aged 21 to 41 – Generation Y millennials and Generation Z respondents – were twice as likely as those classified as baby boomers, aged 58 and above, to prefer a financial advisor who could help them with charitable giving goals. The study also found that among those with advisors, 71% of investors dubbed “Gen YZ” valued their advisor’s support in creating a legacy that benefits the world – compared to only 36% of boomers who did so.”

Research firm Cerulli Associates estimates that about $84 trillion will pass to the next generation by 2045 in the “great wealth transfer.” According to the research, that does not automatically mean that checks will be written to a favorite charity. Many of the next generation respondents want to be involved in other ways.

Charitable Involvement

The research found that younger clients want to be more innovative and strategic in their giving, as well as peer-engaged in the process. That could mean impact investing – choosing to invest in companies creating a social or environmental impact alongside a profit. They want their capital and charitable investments to work together to be part of an equitable and inclusive society.

The popularity of donor-advised funds (DAFs) is predicted to grow. DAFs provide tax benefits and give donors a more active hand in the philanthropic process than just a simple cash donation. A donor-advised fund is like an investment account for the sole purpose of supporting charitable organizations. 

Cash, securities, or other assets may be contributed to a donor-advised fund and the current market value is usually eligible for an immediate tax deduction. Then the funds can be invested, and any growth is tax-free. Grants can be made to any eligible IRS-qualified public charity immediately or over time.

DAF charitable giving accounts are available through many financial institutions – Fidelity, Vanguard, Schwab, or Bank of America, for example. Community foundations and many charitable institutions also offer DAFs. A quick online search will provide contact information for a DAF resource linked to a favorite charity or a community.

Charitable Resources

Of course, there are other ways to make charitable gifts and support the causes that you treasure. If you work with a financial advisor/planner, make sure they are aware of your desire. They can work with your legal and accounting professionals to find the best option for your situation.

If you are a boomer and want your charitable intent continued in the next generation, talk not only with your family or those who will inherit your wealth, but also with your advisors to make sure everyone is on the same page. If the research is correct, your beneficiaries are likely to welcome your intent and may even take it to the next level. What a wonderful thought that is for all of us!

Let’s Have a Conversation:

Is your charitable giving important to you? Do you expect the same intent of your beneficiaries? Have you shared your charitable wishes with your family or those who will inherit your wealth?

Originally posted at: Danielle Olivera’s Green Wave Print Pant Set

When thinking about second homes, it’s natural to think this means buying a house, condominium or mobile/manufactured home. However, many long-term renters consider their getaway as a second home.

Rental = Second Home?

At what point does a rental become a second home? In one respect, it’s in the mind of the renter. Consistently returning to the same property year after year could easily cause one to view it as more than a vacation spot or some other sort of temporary arrangement.

What goes into this thinking? Here are a couple of dimensions.

How Long Is the Rental?

For a lot of people, a longer-term rental of 3 to 12 months could be viewed as a second home.

Consistently Return to the Same Property?

Returning to the same long-term rental annually would make it easier to confer second home status on the property in the renter’s mind.

Consider this scenario. A couple from Iowa rents the same Nevada house every year from November through April. They bring enough clothes and personal belongings in the car to see them through the six months. They also rent a storage unit in Nevada to hold items like bicycles they prefer not to carry to and from their primary home.

Also, if they stay in Nevada for over half the year, even by one day, they will no longer pay Iowa state income tax.

Given this hypothetical situation, it’s understandable how this couple considers their Nevada rental as a second home.

Buy or Rent?

First, let’s look at the arguments in favor of buying.

Ownership = Equity

An owned asset (your house) can fluctuate. Since U.S. real estate values have gone up across most markets over the past 50 years, buyers could reasonably expect their second home value to increase over time.

Rental Income

Owning a home means you can rent out the property for income.

Tax Advantage

Mortgage interest can be deducted from federal taxes for both a primary and second home.

Independence

The owner of a home can use the property whenever desired. Also, there’s the freedom to store things and decorate the dwelling inside and out. However, if a Homeowner Association is involved, various rules may exist that the owner must follow.

So, what are the disadvantages of buying?

Value Can Go Down

Owning an asset involves risk, so there is no guarantee that a second home will increase in value.

Landlord Responsibility

If renting out a property for income, there can be headaches involved regarding work and expense.

Ownership Costs

There are lots of expenses in owning a second home beyond the purchase price. Interior and exterior structure maintenance, appliance repair/replacement and other needs can get expensive.

Next, let’s consider the positive aspects of renting.

No Ownership Risks and Costs

Renters depend on the landlord to cover property maintenance, structural insurance and other costs. Renters also evade the costs of purchasing or selling. Most importantly, renters pay only for the time spent staying in the property, while owners pay even when they’re not living there.

Flexibility

When renters no longer want to stay in a property after the lease expires, they can simply leave. This allows them the freedom to rent different properties in different locations each year, which could be an excellent way to scout future retirement locations.

What’s negative about renting?

No Asset Appreciation

Although the risk of owning a second home is the value could go down, renters cannot benefit from the flip side of booking gains in a rising market.

No Income

There are no chances to earn rental income.

No Tax Breaks

Renters have no ownership tax advantages.

The Landlord Rules

Renters are at the mercy of the landlord.

Costs of Renting

Renters not only pay rent but also pay for such things as a security deposit, pet deposit/fees, renter’s insurance, and utilities.

Decision, Decisions

The decision to buy or rent involves a combination of personal and economic aspects.

Personal Questions

Do I want to:

• Live in the property anytime I please?
• Be responsible for maintaining the property?
• Be able to change the property inside or out?
• Stick with one location for a second home?
• Follow landlord rules?

Economic Aspects

• Do I want an asset that could go up and down in value?
• Do I want to be able to rent out the property?
• Do I have the money to buy and maintain a property?
• How do buying and renting compare in terms of total financial outlay?

Doing the Analysis

To compare buying and renting, you’ll need some data. For a purchase, these are the primary costs:

• Purchase price
• Down payment
• Mortgage amount and interest rate
• Mortgage Payment (P&I)
• Property Taxes
• Insurance
• Maintenance, Repairs, etc.

For renting, gather this data:

• Monthly rental amount
• Non-refundable front-end fees
• Other monthly fees

You can input these numbers into a rent versus buy calculator like realtor.com to help you compare the two alternatives. Remember that changing some assumptions can yield varying results, so don’t hesitate to try different scenarios to find the best fit for your situation.

Further read, SECOND HOME: WHAT TYPE IS RIGHT FOR YOU?

Let’s Have a Conversation:

What factors do you consider when you rent a property? Do you consider the same factors when buying? Does renting or buying a second home makes more sense to you?

Ciara Miller’s White Mini Dress / Summer House Season 8 Episode 3 Fashion

This was one of my favorite scenes of last night’s Summer House episode because West finally asked Ciara Miller on a date. But I can’t help but mention the potential irony that she’s wearing a white mini dress?! Just kidding, of course. I think the only “bells” we’ll be hearing are our doorbells after a new adorable white dress gets delivered to out door.

Sincerely Stylish,

Jess

Originally posted at: Ciara Miller’s White Mini Dress

Lindsay Hubbard’s Brown Metallic Ruched One Piece Swimsuit / Summer House Season 8 Episode 3 Fashion

It was good to see Lindsay Hubbard and Carl Radke put their troubles behind them (for the time being anyway) to enjoy a nice beach day. Lindsay looked super chic in her brown metallic ruched one piece swimsuit that turns out, is also super affordable as well. Which means we can’t wait to dive down to shop it.

Sincerely Stylish,

Jess

Originally posted at: Lindsay Hubbard’s Brown Metallic Ruched One Piece Swimsuit