Investing Basics: Picking the Right Stocks

We have witnessed such volatile activity in the stock market in recent years that the old stock selection rules are not always applicable. Seasoned investors and new investors alike want a sure-fire way to pick the winners.

Well, no one can offer any guarantees, but smart investors do have certain characteristics they associate with a winning stock.

A crucial key is that the stock should meet certain criteria. There are good stocks that don’t fit the mold, but historically, the stocks with the biggest gains shared most, if not all, of these features:

• Strong balance sheet Look for companies with a low debt-to-equity ratio. In recessionary times, debt-laden companies may not stay afloat.

• Low price-to-earnings ratio P/E ratios are usually industry-driven, so make sure you compare similar companies. Low P/E ratio may mean an increased rate of return on your investment.

• Good management A strong management team and a leadership position in their industry are earmarks of a good company. Look for a history of steady growth to assess staying power.

• Book value A stock priced lower than its book value provides extra assurance that your investment will not go sour.

• Good dividends A strong dividend history with regular increases adds to a stock’s desirability. A healthy income stream can make the wait for growth returns more pleasant, and it helps prop up a stock’s price in a falling market.

• Undervalued assets Company assets such as real estate and mineral holdings may be worth dramatically more than the balance sheet and stock price indicate. Companies with undervalued assets may be tempting to conglomerates in these days of merger mania.

• Broad ownership base A stock that is held by relatively few investors is much more likely to be subjected to dramatic drops if a major holder decides to bail out.

• Basic industries Shy away from faddish industries, notorious for meteoric rise and fall. When timing is the most crucial element in an investment’s return, it becomes more akin to gambling than investing.

• Strong cash flow Healthy cash flow will help a company weather economic downturns. It might also make the company a takeover target since takeover debt can be paid off with the surplus dollars.

• Unusually low price A low price when compared to the stock’s average historical price could indicate a bargain if the drop is due to market forces rather than changes in the company.

Though there is no magic way to select winners, the hallmarks of a good stock value are somewhat ascertainable. Good investing requires legwork and attention to detail, but that’s a small price to pay for a healthy portfolio. For assistance, don’t hesitate to reach out to our team of professionals: https://www.bas-pc.com/appointment-center/

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Accounting Firms in New Jersey | Business Accounting System

Accounting Firms in New Jersey | Business Accounting System: BAS is the trusted accounting firms in New Jersey that has been providing excellence in servicing accounting, payroll, and tax needs of small businesses.

Before Consolidating Debt, Ask These 4 Questions

You’re starting to feel overwhelmed with debt and you’re not sure how to make even the minimum payments on all those accounts. That’s when you realize that credit card companies are eager to come to your aid. They offer balance transfers to help you consolidate high interest accounts. They provide “one low monthly payment” to simplify your finances. With their assistance, you’ll be debt-free in no time. At least that’s what the advertisements say.

But before consolidating your debt on a new credit card, ask the following questions:

• What fees can I expect? You may be charged for transferring balances. The new company may assess a monthly or annual fee, regardless of whether or not you use the card for additional purchases. If you make even one late payment, that low interest rate may skyrocket and you’ll likely be charged a late fee. If you’re late more than once, both the late fee and interest rate may jump. All such terms will be laid out in your new credit card agreement. Read it before signing.

• Would a personal loan be a better option? In some cases, a credit union or bank may help you consolidate debt by offering a single loan with a fixed interest rate and term. If your credit is decent, this may be a better option than switching to a new card. Knowing that you’re required to make a fixed payment each month and that your debt will be paid off in, say, three to five years can help you from falling into the minimum payment rut.

• Should I ask family and friends for help? If someone offers to lend money, your credit score may actually improve because balances on existing debt will be paid off. However,
  be sure to put the agreement in writing and treat the loan like any other obligation. Borrow from friends and family at your own risk.

• Am I willing to modify my spending habits? This, perhaps, is the most important question you can ask. If you can’t find the discipline to spend less than you make, you’ll likely end up with debt troubles again.

If you’d like help reviewing your debt consolidation options, don’t hesitate to reach out. Our team of finance professionals is here to help. Access our appointment center here to schedule time: https://www.bas-pc.com/appointment-center/

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Avoid These 3 Homeowner’s Insurance Mistakes

Looking for a way to tackle insomnia? Read your homeowner’s insurance policy. Kidding aside, it’s worth the effort. As many families have learned the hard way, failing to evaluate policy details can lead to unanticipated expenses when disaster strikes.

Sweat the fine print, especially if you’re a first-time homebuyer, and don’t make these three blunders:

• Underinsuring. If your policy covers only the mortgage or real-estate value, consider pumping up the bottom line, even if it means paying slightly higher premiums. Your policy should provide enough funds to start over from scratch. Construction prices tend to increase over time, so a new home on the same lot could deplete your emergency savings. In the aftermath of a natural disaster, when supply may outweigh demand for construction materials and labor, you’ll want enough funds to rebuild —not just pay off the mortgage.

• Disregarding exclusions. Is your home covered for exterior flooding, or only interior water damage? Does the policy include coverage for mold, sewer backup and earthquakes? Nail down the details and pay close attention to local risks.

• Misinterpreting deductibles. You may find that, unlike an auto policy, your homeowner’s insurance doesn’t include a flat-rate deductible. Some policies charge a percentage rate under
  certain circumstances. Say your house is insured for $300,000 and an earthquake strikes. If the insurer stipulates a deductible of five percent of the policy amount, you may be saddled with $15,000 in out-of-pocket costs before the insurance kicks in. Can you handle that?

It makes sense to comparison shop. Friends and family can often provide insight into how promptly claims have been paid and whether payouts have been fair. Check online rating sites. Be especially wary if a particular insurer is routinely cited for substandard customer service. Above all, be proactive. Don’t wait until the ground starts trembling.

For further assistance, reach out and schedule a free, no obligation introductory call: https://www.bas-pc.com/appointment-center/

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Should You Invest in Rental Real Estate?

If you want to make a profit by investing in rental real estate, you must be willing to commit more resources to this property than you would to an investment made at your bank, through a broker, or in a mutual fund.

Someone has to collect rents, find good tenants, and maintain the property. If you hire help to do these tasks, your profit shrinks.

Also, if you borrow money to buy the property, you have to pay the mortgage whether or not the property is rented. You should have emergency funds so that you will not lose the property to foreclosure if you lose your tenant.

If you decide to invest in rental property, you may need professional help to match your resources to property that will meet your goals. Some of the questions you should consider before you invest:

• What can you afford? Determine the highest price range you can sustain, given your present resources and the projected cash flow from the property.

• Is the property fairly priced? Get a list of comparable listings and recent sales from a real estate company. Make any purchase offer contingent on the results of structural and
  pest inspections. Check local records to verify that additions and major improvements were made in compliance with building codes.

• Are there any restrictions on the property? Rent control will lower the price that you can afford to pay for a property.

• Who will be your tenants? Evaluate the likelihood of non-payers, transients, and untidy housekeepers -and adjust your price accordingly. If you are buying a condominium in a building populated with young people, you may find it difficult to interest a retired couple (if that’s your market) in living in the unit.

Investing in rental property can be very profitable, but you should be fully informed before you invest, or you could end up with more work and less return than you anticipated.Please ask for help if you are considering this investment strategy. Contact our team for guidance in this big financial decision: https://www.bas-pc.com/appointment-center/
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Tax Surprises for Newly Retired | Accounting Firms in New Jersey

You’ve got it all planned out. Your retirement savings plans are full, you have started receiving Social Security benefits, and your Pension is ready to go. Everything is planned, what could go wrong? If you plan to retire in 2020, here are five surprises that can turn your plan on a dime:

1. Health emergency and long-term care. When a simple procedure could cost thousands, health care costs can put a huge dent in your plan. Long-term care can cost thousands per month. Have you planned for this? If your health insurance is not adequate you may need to pull money out of your retirement plan to pay the bills. While this withdrawal may not be subject to a penalty, it might be subject to income tax if the funds are from a pre-tax account.

Tip: Look into creative ways to enhance your health insurance coverage including supplemental health insurance and prescription drug cost coverage. Consider long-term care insurance and other alternative ways to reduce your potential living needs.

2. Taxability of Social Security benefits. If you have excess earnings, your Social Security benefits could be reduced. Even worse, if you are still working, your benefits could be subject to income tax.

Tip: If this impacts you, consider conducting a tax planning session to better understand your options including the possibility of delaying the receipt of Social Security benefits.

3. Your pension plan. Understand if your pension is in good financial health. Often pensions will offer a lump-sum payout option for you. Should you take it?

Tip: Review your pension plan’s annual statement. How solid is it? If there are risks, consider cash out alternatives and planning for the potential drop in future income.

4. Minimum Required Distribution (RMD). Forgot to take your minimum required distribution from your retirement plans this year? The tax bite could be quite a surprise as the penalty on the amount not withdrawn is 50 percent!

Tip: Select a memorable date (like your birthday) to review your RMD and take action so this tax surprise does not impact you.

5.Future Tax Rates.The federal government is spending over $1 trillion more than it brings in each year. Cash starved states are looking for new tax revenue. Don’t be surprised when future tax rates continue to rise during your retirement.

Tips:

• Create a retirement plan with higher state and federal tax rates
• Plan for increases in health care costs through Medicare
• Plan for more tax on Social Security benefits
• Plan for higher capital gain and dividend tax rates

Before you retire it’s important to have a plan in place to ensure your financial future is secure. You can count on our team of professionals to assist. Set up time to learn more: https://www.bas-pc.com/appointment-center
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Should you Incorporate your Business?

If you’re a sole proprietor, you have probably wondered at some point whether you’d be better off if you incorporated your business. Here are some facts for you to consider.

• The single biggest benefit of incorporating a business is limiting an owner’s liability. In theory, a stockholder in a corporation risks only his or her investment in the corporation stock. A lawsuit against the company generally cannot be satisfied by attaching the stockholder’s personal assets. In practice, most small corporation stockholders must personally guarantee bank loans for their corporations. Thus, if the corporation fails, the stockholder’s personal assets are at risk. In addition, where personal services are involved, the individual performing the services may be personally liable for his or her actions even though the business is incorporated.

• The second advantage of operating as a corporation is that it may be easier to raise capital because the business can do so by issuing stock and selling bonds.

• A third advantage is that ownership interest in a corporation is easier to transfer than in a sole proprietorship.

• A corporation files its own tax return and pays its own income tax. Therein lies the major drawback to the corporate form: business profits may be taxed twice -once at the corporate level and again at the shareholder level when paid out as dividends or liquidating distributions. Double taxation can generally be avoided by electing S corporation or LLC status.

• The corporate form does allow for more fringe benefits that are deductible by the corporation and tax-free to employees, including an owner-employee.

No business owner should incorporate without carefully considering the pros and cons of doing so. Our team is here to help! If you have questions about the right path for your business or need help incorporating, don’t hesitate to reach out to our team: https://www.bas-pc.com/appointment-center/

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