Special Financial Section

2020 Vision

Financial Foresight for the Year Ahead

Posted

With a flip of the calendar, it’s January, that marker of the
New Year and fresh starts. For many of us it’s also a time to return to our pre-holiday eating (put the cookies down!) and spending, and of course tax season begins to loom. We’ve assembled tips and useful information from various sources to help you set your sights on a bright 2020. In our guide, you’ll find tips on how to save money, make money, and even get money in the Ocean State.

 

Taxes

But First, Withholding

January is the perfect time to review the withholding on your paycheck. Withholding is the amount withheld by an employer that goes directly to the government as a partial payment of income tax. According to the Internal Revenue Service (IRS), most employees are over-withheld on their taxes, meaning that more taxes than they owe are withheld from their paychecks and that’s how you get a refund. Taxpayers who have children under age 17 may see their refunds increase as a result of the new tax law. On their website, IRS.gov, find a Tax Withholding Estimator tool that can provide the info you need to make any adjustments. From there, consult with your employer on next steps if changes are needed.

 

Quick Tax Tips:

• Get your refund fast by combining direct deposit with electronic filing to get your money without worrying about it getting lost, stolen, or unable to be delivered.

• If you use an ITIN (Individual Taxpayer Identification Number) to file, make sure it hasn’t expired.

• Keep all of your financial paperwork in one place so at tax prep time, you know where it is. Doesn’t have to be a file cabinet – could be a folder, shoe box, or empty drawer. Having all the necessary documents beforehand helps you file a complete and accurate return.

 

Get Help

If you’re someone with a side hustle or two, the idea of doing your taxes can be daunting. Fortunately, there’s help. Low- and modest-income Rhode Islanders may qualify for free help filing their taxes and applying for tax credits like the Earned Income Tax Credit from VITA, Volunteer Income Tax Assistance. There are multiple sites in Providence County; just visit EconomicProgressRI.org for locations. Appointments are highly recommended and be sure to bring picture IDs for both the applicant and spouse, and social security cards for everyone listed on the return.

 

Investing

Investing is most often thought of as synonymous with the stock market, where you can buy, sell, and trade stocks (you’re probably envisioning the bustling beehive that is the New York Stock Exchange). Stocks and bonds are both certificates used to raise money for starting or expanding a business, and often bonds are used for municipal purposes and can be tax exempt, and you don’t need to be in NYC to give it a go. Thinking of rolling up your sleeves? Here’s some information to spark ideas along with unique ways to invest.

 

Outside the Box

Here are alternative places to invest your money and diversify your portfolio (though, experts say, these should not comprise more than 15 percent overall).

Precious Metals: When the dollar is weak, the coin reigns supreme. At least, the gold and silver kind. While this investment is not the most reliable, as is the rise and fall of the dollar, it’s worthwhile to have precious metal coins on hand in case of an economic or financial
collapse, during which they can be used as barter.

Collectibles: Fine art and antiques are examples of unconventional investments that pay off – if you know your stuff. Ideally, you buy a collectible for less than its worth and sell it for more, which requires knowledge of the item and its resale value. Our state is filled with estate shops, antique stores, etc.

Real Estate: There’s a reason flipping houses is a popular pastime beyond HGTV. Investing in a piece of property is smart for many reasons, the first being that it’s a “real asset,” a physical commodity with value. You can rehabilitate and sell for a quick profit, or rent out for monthly income. When the market is low, you can find
bargains, and when it booms, you can earn a fortune.

Wine: Stockpiling fine wines? That might sound appealing enough on its own, but you can make a pretty penny off of buying sought-after vintages and selling to wine connoisseurs. Find the right wines, keep track of when and where you purchased it, store in a temperature-controlled room, and reap the benefits of an investment that literally gets better with age.

 

Top Rhode Island Stocks

Shopping local doesn’t always mean shopping small – especially when it comes to stocks. Check out the by-numbers breakdown of the Ocean State’s top stocks (and consider investing). *Prices and data are as of November 21, 2019

Citizens Financial Group (CFG) | Headquarters: Providence | Employees: ~18,100 | Share Price: $37.80 | Market Value: $16.43B | Price-earnings Ratio: 9.97

CVS Health Corp. (CVS) | Headquarters: Woonsocket | Employees: ~295,000 | Share Price: $74.66 | Market Value: $97.15B | Price-earnings Ratio: 22.13

Hasbro, Inc. (HAS) | Headquarters: Pawtucket | Employees: ~6,000 | Share Price: $95.97 | Market Value: $13.23B | Price-earnings Ratio: 46.59

Textron Inc. (TXT) | Headquarters: Providence | Employees: ~35,000 | Share Price: $46.09 | Market Value: $10.52B | Price-earnings Ratio: 12.62

United Natural Foods Inc. (UNFI) | Headquarters: Providence | Employees: ~19,000 | Share Price: $7.95 | Market Value: $423.89M | Price-earnings Ratio: N/A

 

Rhode Island Bonds

Hearing a lot about our “crumbling infrastructure”? Treasurer Seth Magaziner recently rolled out a campaign for Rhode Islanders to invest in school construction and environmental projects by buying bonds. If the idea of buying bonds sounds a bit fancy and something for the “top one-percent,” it doesn’t have to. Buying a bond is like lending money with the agreement to be repaid with interest at a later time, and anyone can do it. A website has been launched with FAQs, steps, and resources. Learn more at RhodeIslandBonds.com

 

Getting Money

Claim What’s Yours

You might not think you have any missing money, but according to the Treasurer’s office, more than 300,000 Rhode Islanders have unclaimed cash and assets waiting to be returned. Maybe it’s an old bank account (Christmas Clubs, anyone?), unused balance on a gift card, even a safe deposit box. Treasurer Seth Magaziner developed YOUR MONEY, a program that automatically reunites Rhode Islanders with missing funds. Little Rhody is only the second state to adopt this type of system; property is kept safe until it can be returned to its rightful owner. Visit FindRIMoney.com to search the database. You could be in for a nice surprise.

College Planning

It’s never too early to start planning for college, right? Every child born to or adopted by Rhode Island families is eligible for a $100 CollegeBoundbaby Grant to be used for higher education. Parents apply for the grant right at the hospital (yup, that early) by checking the box on the Birth Worksheet. Parents may also complete and submit the enrollment form before their child’s first birthday or within one year of the child’s adoption date. Learn more at CollegeBoundBaby.com

 

Saving Money

5 Easy Ways to Save 5K

We’re all looking to save money – but how? Take these small, easy steps to start saving dollars that will quickly add up by the next new year.

Members Only: Cancel any unused or unnecessary services and subscriptions. Do you shell out monthly payments for a gym membership or music streaming service you hardly use? Do you still pay for a landline when all you really need is a cell phone? Or maybe you’re still responsible for subscriptions you didn’t even remember you had. Double check to make sure you’re not paying for anything you don’t actually use!

Track Habits: While not anyone’s idea of a good time, gather your bills and statements and see how you’re spending your money. Are there things you can do to save? This is where creating a budget comes in. Aim for the 50/30/20 rule: 50 percent of your budget should be spent on “needs” (i.e. groceries, utilities, housing, health insurance, or transportation); 30 percent should be spent on “wants” (i.e. shopping, dining out, or hobbies); and 20 percent should be saved. Knowing what’s coming in and going out is a great place to begin.

Shop Smarter: You can spend a lot per week on groceries, especially if you’re trying to feed a family. Tips for making that supermarket trip kinder on your wallet? Opt for buying any in-season products from farmers markets, buy in bulk, clip coupons, and pre-plan your meals (so you’re not buying anything you won’t actually eat that week!).

Turn Down for What: While your best bet is to invest in energy-efficient appliances and smart technologies, you can do little things to save money on your electric bill. The US Department of Energy (Energy.gov) suggests lowering the temperature to 68 degrees when you’re out of the house or while sleeping. Also, unplug any electronics when not in use.

Get an Energy Assessment: National Grid offers no-cost home assessments to provide you with a plan to save on energy costs while improving energy use. This entails a visit to your home by a specialist who will conduct an attic-to-basement evaluation. You’ll receive a custom home energy report outlining recommended energy efficiency improvements. You can also receive advanced power strips, LED bulbs, rebates, and more. For more info call 1-888-633-7947.

Free Fun: In Rhode Island, especially Providence, we’re lucky to have access to great local entertainment options that are free and open to the public! RISD Museum offers free admission on Sundays, Roger Williams Park Zoo lets PVD residents meander for free the first Saturday of the month, and there are plenty of concerts, festivals, and markets to enjoy throughout the year! It’s a great way to get out and about with the community – without breaking the bank.

 

Financial Advisor & Debt Management

How to Choose a Financial Advisor

Working with a financial advisor means putting your investments and finances in someone else’s hands. That takes a trusting relationship. To find an advisor who is right for you, the National Association of Personal Financial Advisors (NAPFA) recommends:

Talk to family members about what you want to accomplish by working with a financial advisor. Are you seeking general investment advice? Paying for college or a house? Retirement?

Ask for recommendations from friends, family, and colleagues so you have a list of advisor candidates to choose from.

Research potential advisors’ websites and individual biographies.

Meet face-to-face with each candidate before you sign up. Use NAPFA’s Financial Advisor Diagnostic tool at NAPFA.org to evaluate each advisor’s answers to your questions. These should include:

  1. How are you compensated?
  2. If you accept commissions, will you itemize the amount of compensation you earn from products that you recommend to me?
  3. Do you accept referral fees?
  4. Are you held to a fiduciary standard at all times?
  5. Would you sign a fiduciary oath committing to putting my financial interests first?
  6. Do you have many clients like me?
  7. Have you ever been disciplined by the Securities and Exchange Commission or the Financial Industry Regulatory Authority?
  8. Do you provide comprehensive financial planning or just investment management?
  9. How will you help me reach my financial goals?
  10. What happens to my relationship with the firm if something happens to you?

Finally, once you choose your advisor, be sure to evaluate their performance on an ongoing basis.

 

Tips to Manage & Reduce Debt

Stop creating more debt. It’s easier said than done. Make sure you can’t rack up more debt by cutting up credit cards or freezing your credit.

Increase your monthly payment. Paying just the minimum each month will mean freedom from debt is a long way ahead (and, chances are, cost way more than you even charged!).

Build an emergency fund. It might sound counterintuitive to set aside money rather than putting it toward payments, but creating a safety net ensures you can tackle an emergency without using your credit card. 

Tackle one at a time. Pick one debt and focus your efforts on getting it paid off, sticking with minimum payments on the others.

Consider consolidation or seek credit counseling. Both options – combining all debts into one payment or trying out a debt management plan – help lower the interest rate and make monthly payments more affordable.