Money – The Year- End Tax Count Down by Valerie Lunden, MA

Taxes offer a win-win situation! You don't believe me!
Well, perhaps the more chilling reality is that the tax year will be coming to a screeching halt in a few days, and many of the general populace might have to PAY taxes. The only question is, how much?

The following is a list of additional (last minute), deduction options. Even a simple contribution of $1000 (or less) could offer relief to an otherwise dismal tax situation. In a few of these examples the government appears willing to reward us - if we take advantage.

Which LAST MINUTE Tax Deductions are still available?

How about contributing to an IRA (Roth or Conventional)? The deduction amount varies from year to year, so check the IRS website for current guidelines. This financial instrument is considered a retirement savings plan, but like any investment, one that requires monitoring.

Medical Health Account (HSA): Relatively new in concept, but another favorable deduction option, particularly for those who have their own business and pay out of pocket expenses for health insurance.

Charitable Deductions (church, or other non- profit donation). For anyone this is a great way to get rid of accumulated stuff that someone else might use. Always make sure you keep a record of all items and their donated values.

Business Mileage (Make your list and check it twice!)

Last minute large business purchase (computer, fax, printer)

CHECKLIST GOALS FOR 2006 – MORE OPTIONS FOR A LIFETIME OF SAVINGS

Do you own a home? If not, do you need to start saving for a down payment? Should you set aside a fixed amount to do this? What percentage should this be? Do you have access to an automatic deduction plan? January is a great time to start NO FEE automatic deductions! Call you financial institution to find out more.

The stock market: What do you know about stocks? What do you need to know about stocks? See article included in this section.

What is your savings goal for next year [2006]? What did you save in 2005? Will you be able to add 3-5% to this?

Do you have children? Is it time to start a college fund? Ask at your bank or credit union about college savings programs.

Health Benefits. Will there be additional dental or prescription costs for you or your family in 2006?

Do you need to buy Life Insurance? Who would benefit the most (which spouse or beneficiary)?

How about Mortgage Insurance? Could this potentially pay out more then life insurance? This option works best if you never plan on moving. Mortgage Insurance payouts often apply to only the existing mortgage and don't carry over to new loans.

Your salary: Is it on par with inflation? Will a a 3% annual salary increase be enough to maintain your savings goals?

Self-improvement: What "money performance" classes do you need to take? Do you need to find other investment options like Real Estate, Tax Saving Programs or Certificates of Deposit?

Home Improvements – Do you need to save for major repairs (a new roof, copper plumbing, etc)?

Car Expenses: What sort of maintenance expenses do you foresee? Do you need to consider buying a new car? When? Should you start a separate savings account for this? If you own your own business, should you consider leasing a new car?

What amount of future taxes could you potentially save? Should you take a tax information class? A very ambitious rule here is to save as much as possible, or preferably pay less!

THE STOCK MARKET- Part I
For those who might need a basic overview.

In recent years there has been controversy surrounding stock market investing and the nature of its feasibility as it relates to long-term investment options. Indeed, because stocks have not generated major returns in the last several years, we have witnessed companies going bust and pension plans going under. Indeed, since the late nineties the instability of global stock markets has been influenced by a depressed world economy and its inability to bounce back because of a variety of reasons. One of these factors is technology advancement and the speed information travels. The increased use of the Internet, E-mail and other wireless communications, as well as increased day trading and more day traders has revved-up the pace of stock transaction execution. Money changes hands faster today then it did five years ago.

Regardless, the stock market is here to stay, and historically it has been used time and again for long- term investing. Let's not forget that stocks have been a consistent vehicle for expansion, used by companies (large and small) to raise cash so that they can grow and sustain the business and pay for the costs of research and development. Also keep in mind that no matter how volatile the market, stocks have been responsible for creating wealth - even for the modest investor.

Historically, when stock markets are doing well, the annual return on initial investment far surpasses that offered by a regular savings account (on average between 9 - 15%). This being the case, the viability of stocks as a savings instrument should not be dismissed.

The more we understand how stock markets work, the better. Of course, experts recommend increasing the spread (and risk), of investments - which should be a priority. One way of diversifying risk is to own stock in a variety of different industry sectors.

What is an industry sector?
Stocks are sometimes classified by sector. Because of economic shifts some sectors may go up and others may go down. Examples of sectors include, manufacturing, technology, retail, housing and one of the most important, oil and fossil fuels.

How to learn more about stocks? What to invest in?
Stocks are impacted by a variety of factors. These include the success and decision-making that happens within that stock ownership company, currency fluctuations, international disturbances (wars) and government spending. Stock markets are also influenced by the annual calendar, taxes, takeovers and expansion costs.

Never buy stocks on instinct. Anyone who “plays” in them must be ready to participate long term - through thick and thin, as long as you both shall live, etc.

With so much to consider where should a novice investor begin?
The best answer here is learn everything! If you plan on keeping abreast of every news article and decision made in each company you own stock, then you must have a great deal of time on your hands. If not, there are people who get paid to watch stocks, (Brokers) who will do this work for you. If you take this route, there will of course be expenses, called commissions or loads (in mutual funds).

Picking a broker who is competent and knowledgeable is not always a guarantee that all will be well. It is important to be aware of how your investments are doing at all times, and a regular review of your financial picture should happen at a minimum, once a quarter when stock statements arrive in the mail. Also, before investing in anything, be aware of how much commission fees cost and also if there are annual fees charged. The more expenses you pay the less profit you make!

To learn more about stocks and end of year financial planning, the following links offer additional resources.

• Fool
• MSN Money
• IRS
• Ameritrade