By Cindy Szymanski, CFP®
Bloom Asset Management

With the cold Michigan spring we’ve had, it’s hard to believe that this month summer officially begins and the first half of 2013 is almost over. June is a good time to review your New Year’s financial resolutions to see if you are on track. If you didn’t make any, it is never too late to give your finances a look and see where you can improve both in savings and trimming expenses.

1. Review your financial portfolio allocation. Make sure your investment allocation is on track per your goals and objectives. With the markets making all-time highs, it is important to make sure your allocation doesn’t get out of whack (bonds vs. equities). Keeping your portfolio allocation intact is one of the best ways to reduce investment risk. If you didn’t do this at the beginning of the year, you should do so now.

2. Emergency Fund Savings in place. It is important to make sure you have some sort of emergency fund in place for that unexpected bill or event. Three to six months of living expenses should be a sufficient amount to keep in your bank account. I would recommend having your emergency account funded before increasing any other savings goals.

3. Make sure your savings rate is on track. If you have a retirement plan at work (i.e. 401(k) or 403(b)) make sure you are at least contributing what your company will match, so you will get the benefit of getting free money. If you are already contributing, but not maxing out, see if you can increase your contributions. If you are already contributing the maximum to your workplace plan, check out contributing to a Roth IRA as well.

4. Make sure your W-4 is on track. If you overpaid Uncle Sam and got a large refund on your tax return or you unexpectedly owed more than you anticipated, now is a good time to revise your W-4 at work while there is still some time to make a difference. You should reduce the number of exemptions so more federal income taxes are withheld from your paycheck (if you owed too much on your tax return) or increase the number of exemptions so less is withheld to keep more cash in your pocket (in the case of a large refund).

5. Check you credit report. If you haven’t already done so, you should request your free annual credit report at www.annualcreditreport.com. I always do this each year around the time I am filing my income taxes to make sure there is no fraudulent activity andto make sure all outstanding debt I do have is accurately reported. Think of your credit report as your personal report card. Correcting any errors now can save you unnecessary grief when you are trying to obtain a loan.

6. Track your spending. Even if you have extra money at the end of the month, it is always a good idea to see what you are spending your hard-earned cash on. Write down everything you spend money on for the month from your non-discretionary bills (i.e. rent/mortgage, car payment, utilities) to your discretionary spending (i.e. entertainment expenses, eating outs Edits, the daily Starbucks stop, etc.). You may be surprised to see what excesses you have in your monthly spending habits. By trimming your unnecessary expenses, you may be able to put more away for retirement, pay down debt quicker or even save more for your annual vacation.

Maintaining good financial health is just as important as our personal physical/mental health well-being. A mid-year check-up can help you address any concerns that come up and help you to stay on track in meeting your retirement goals. Good luck and have a great summer!

By Jonathan Goldberg, J.D., CPA

Whenever I am developing an estate plan for a client, my goal is to ensure that I protect their assets. But today, those assets go well beyond traditional estate planning focuses like retirement portfolios, homes and other valuables. Now we all need to consider “digital” assets. And while you may be saying, “I don’t have any digital assets”, I guarantee almost everyone has them and needs to protect them as part of their estate planning.

What are digital assets? Well, think about how many different user ID and passwords you have for various online banking, investment and credit card accounts. Those are all considered digital assets. And imagine if they fell into the wrong hands after you died, the hard “assets” they protected could be compromised. And that is only the tip of the digital asset iceberg. Think about all the other online accounts that require a user ID and password: Facebook, email accounts, Twitter, Instagram, Apple iTunes, YouTube, Social Security and the IRS, just to name a few. If you own a business, that list can be even longer and include website or WordPress accounts, online sales or purchasing accounts, online customer databases, online backup of computer files—the list goes on and on. In fact, it is not uncommon for an adult to have 25 or more online accounts. Most people have so many online accounts that an entire cottage industry of software programs exist just to help you remember and protect your ID’s and passwords!

That’s why I make sure I discuss this new area of assets with my estate planning clients and develop a plan to deal with them. That includes doing a complete inventory of ALL the client’s online accounts, and outlining the contents of each one, the URL address to connect to it, the user name and password needed to log into the account, what the client wants to do with the account after their death, and who they want to oversee such disposition.

While many of the online accounts you have won’t have any financial value, you may have some that do. For example, certain website domain names have sold for millions of dollars. And someone who is a photographer and stores all their photo files online could potentially have photographs and digital images that could be sold for lots of money.

Like everything else when developing an estate plan, you have to look at the total picture of your personal assets and determine who you want to get those when you die or what you want to do with them. As you can see, digital assets can be as important in the estate planning process as that 1959 Gibson Les Paul guitar or that Mickey Mantle rookie card you have in mint condition in your collection. Obviously, you would make sure that either of these collectible items would be part of your estate plan. But as we continue to do and store more things online or on the “Cloud”, digital estate planning will become more the norm than an afterthought.

I always tell clients to do a video inventory of their home’s contents both for insurance purposes and to have for their estate plan. Now would be a good time for you to also sit down and put together a list of all your digital assets, store it on a flash drive or CD, and put it in your safe deposit box. That way, your heirs won’t have to jump through digital hoops to get access to your online accounts after you pass away.

If you would like to find out more about digital estate planning, please email me at jonathan@bloomlawfirm.com.

By Jack Riashi, Jr., CFP®

Bloom Asset Management

It wasn’t that long ago when I sat down with clients who were literally frightened by the stock market collapse in 2008 and early 2009, and wanted to pull every last dollar from their portfolio and put it into cash.  Those conversations were challenging because while I was explaining the importance of having a goal-oriented approach to investing(as we at Bloom Asset Management espouse), some clients were asking if the stock market would ever recoup what it had lost up until that time.  Some clients thought the market would never get back to those October 2007 highs while others thought it would take ten years or longer to do so. 

Fast forward to today, and we are talking about record highs on the Dow Jones Industrial Average and Standard & Poor’s 500 Index.  In some ways, these new market highs are confounding when you think about where we were a short time ago.  In other ways, the market is merely playing catch-up to corporate earnings that have been nothing short of breathtaking since the lows of the market in early 2009.  In fact, when you exclude 2007 and 2008, corporate profits have outperformed the stock market dating back to the end of 2002!  Unfortunately, strong corporate earnings have been overshadowed by two massive stock market collapses, so we have to give investors some measure of forgiveness. 

 Unlike previous market rallies, these days I’m hearing from a few clients that the market has gone up too much and too fast and is destined to correct.  In my opinion the market will decline at some point in the near future, which is not unusual since market pullbacks are a normal occurrence.  However, the market will most likely not decline on the level it did in 2008.  Regardless, some clients still ask,” isn’t it time to scale back on stocks?”  It is an interesting thought, but the wrong question.  Here are some thoughts I have on how investors should respond to these new market highs:

-  Just because the market reaches a new high doesn’t mean it will crash.  There are a lot of measuring sticks we look at to assess the health of the market, and right now, other than Europe’s woes, the economy is stabilizing and still growing, and not necessarily contracting.  Investors need to understand that there is a difference between a market pullback, correction, and crash.  The former are normal occurrences, while the latter are generally caused by economic, financial or even geopolitical shocks.   

-  Dedicate yourself to a sound asset allocation plan and stick with it through thick and thin.  This is a cliché but it works over the long-term.  As an example, if you are targeting a 70% exposure to stocks and 30% exposure to bonds, then make sure that allocation remains in place during good and bad times.  If stocks perform well, then you will most likely have to sell some stocks and add to bonds, and vice versa. Do this regardless of market sentiment.   Caveat: Your decision to sell stocks and buy bonds will go against conventional wisdom, but be strong and ignore the bulls. 

-  Ignore the bullish salespeople on CNBC and other financial talk shows.  They know absolutely nothing about your personal situation and financial goals, which is the foundation you should always use to determine your investment strategy. 

-  Trying to outguess which way the market moves is a consistently, long-term failed strategy.  Even market pros who spend countless hours analyzing and assessing market trends and statistics have a difficult time consistently figuring out what direction the market will take. 

-  Don’t assume the rise and fall of the market is directly related to the economy.  It is pretty obvious that correlation has gone out the window with this continued market rise, because the economy has continued to struggle.  Because we are in a more global environment these days, there are plenty of other things that impact the market, both positively and negatively.

- If all of this seems puzzling and confusing, then consider hiring a financial advisor, but don’t assume every advisor is the same.  Not all of us are salespeople looking to sell you the hottest fad or product available.  Firms like Bloom Asset Management are paid 100% from its clients, and not from selling products.  Therefore, if you cannot go about this alone, then by all means, do your due diligence and find out what makes advisors and their firms tick.  Understand their investment approaches, their fees, and their competencies.  Having a long-term partner and fiduciary by your side can be very rewarding to you and your family. 

Just remember, if you are an investor that has a well thought-out, long-term investment plan, you would do well to stick to stick to your strategy instead of jumping out the proverbial window regardless of whether the Dow or S & P 500 Index are hitting all-time highs or lows.  Now, if your investment strategy is totally dictated by the daily ups and downs of the market, then you need to change your approach! 

Scott Whyte, AAMS®, Financial Advisor, Bloom Asset Management

In about a month, my oldest son will be graduating from Troy Athens High School. One of those major milestones that proud parents like my wife and I look forward to and then when it happens we realize it has come along far too fast.

He will be heading off to Oakland University this fall to pursue a degree in engineering and his tuition will be paid for the next four years courtesy of a Presidential Scholarship he was awarded by OU because of his outstanding academic achievements. Although his tuition will be covered, we still will be writing some large checks for room, board and other unexpected expenses I am certain.

On the bright side, we have money set aside in a Michigan Education Savings Plan account that we will be able to tap into to pay for these expenses. This is an account that my wife and I set up for my son over 12 years ago specifically so we could save for his future college expenses. The best part is that this money has been compounding TAX-FREE!

We also set up accounts for my younger son and daughter who are just about to finish 7th grade this year. Every month, since early 2001, we have been systematically investing a fixed amount into each of their accounts, so we could accumulate the funds necessary to pay for their future college expenses. As I consider how invaluable this savings tool has been for my family, it seemed like a good time to share with you all a great way to save and invest if your goal is paying for a college education for your child or grandchild.

An excellent way to save for college education is by utilizing the Michigan Education Savings Plan (MESP). This is a 529 college savings plan that offers tax-free growth with a low minimum investment requirement and a high contribution limit. Money can be invested on an after-tax basis and the earnings grow tax-free, as long as the money is used to pay for qualified higher education expenses. Qualified higher education expenses include tuition, of course, but take into account a variety of other expenses including room, board, books and other related expenses.

In addition to the Federal income tax advantages, there are also some potential State of Michigan income tax benefits. Michigan taxpayers may be eligible for a Michigan income tax deduction on contributions made to the MESP up to $10,000 for a married couple or $5,000 for an individual, per year. The deduction is permitted to the extent that any contributions are greater than withdrawals from the MESP during the same calendar year.

This type of account can be opened for a beneficiary by parents, grandparents, relatives and friends who are a US Citizen and at least 18 years of age. A nice feature of these accounts is that whether your beneficiary decides to go to a private or public college or university, in-state or out-of-state, trade or graduate school, the funds can be used for any type of degree program at any eligible higher educational institution in the US and many abroad, not just Michigan institutions.

You may be concerned about what happens to the money if your beneficiary doesn’t go to college or receives a scholarship. You can name another beneficiary to the account as long as the new beneficiary is a family member of the current beneficiary. And if the beneficiary does not immediately go to college after graduating high school, keep in mind that there is no time restriction or age restriction to use the funds. They can remain in the account and compound on a tax-free basis until needed.

However, if you don’t use the money for qualified college expenses, you will be penalized 10 percent when you withdraw the money to use it for something else. In addition, both your state and the federal government will tax the earnings on your account in your current tax bracket.

There are a variety of different low-cost investment options to choose and they are managed by TIAA-CREF. I am a big fan of the age-based options as they automatically adjust the portfolio to take less risk the closer the child gets to college age. Even within the age-based options you can choose whether to be middle of the road, conservative or aggressive.

You can set up and fund an account online which is very convenient or you can have materials sent to you to review. If you want to explore this excellent tool for saving for college, I recommend you visit their Web site www.misaves.com or call 1-877-861-MESP.

You can reach Scott Whyte at (248) 932-5200 or at scott@bloomassetmanagement.com.

By Ken Bloom, J.D., LLM

Now that you have finalized your tax returns and the weather is hopefully turning to spring, it is a very good time to spend a few minutes looking at your portfolio. After a very strong first quarter your portfolio probably needs some “spring cleaning.” From the beginning of the year through March the S&P 500 was up an impressive 10.6 percent. As impressive as that gain was, most domestic stock categories did even better! What this means is that unless you have rebalanced your portfolio, the stock portion of your portfolio is a greater percentage of your total holdings than it was before.

Most investment advisors recommend periodically rebalancing your portfolio. Rebalancing serves a very important purpose by making sure that your portfolio always has the appropriate mixture of stocks and bonds. Rebalancing also helps you avoid a major sin of investing: market timing. Studies have consistently proven that market timing does not work. It is impossible to know when an individual stock, mutual fund or index has reached its peak and more often than not, individuals sell at the wrong time, damaging their returns.

Compounding this problem of selling at the wrong time is that investors don’t know when to reinvest. I have met with countless individuals who sold at the wrong time and sat waiting for the right time to reinvest, but ended up losing in the end.

At a minimum you should rebalance your individual accounts at least once a year if not more frequently. Automatically rebalancing your portfolio eliminates the emotion and the futile attempt to time the market.

If the equity allocation of your portfolio has increased significantly, now would be an appropriate time to reduce the stocks. For example, assume your target allocation is 60% stocks and 40% bonds. However your actual allocation is now 70% stocks and 30% bonds (stocks having increased substantially since your last rebalancing). Because your actual allocation is different than your target allocation you need to reduce your stock portfolio and increase your bond portfolio.

When rebalancing the first step is to determine the appropriate allocation for your given your particular risk tolerance, needs, etc. Review your individual accounts to determine where you need to reduce the stock allocation.

Selling stocks that have appreciated will result in a gain. The tax consequences will depend on your particular tax situation and whether the assets sold were owned in a taxable account or retirement account. It is important to know, in advance, the tax consequences of the gains. Capital gain rates for couples earning less than $250,000 per year ($200,000 for individuals) remain at 15%. If your income exceeds that level the tax results will be greater than in 2012.

Although paying taxes on gains is very distasteful, losing money is even worse. Reducing your position in stocks as part of rebalancing your portfolio will lessen the chance of losing money. This is why professional advisers advocate rebalancing.

If you have a capital loss it may be used to offset the gains realized on the sales. Even if there are no losses to be used capital gains at all tax brackets are taxed at lower rates than ordinary income.

Even though bond yields are at historically low rates, adding bonds holdings makes sense if you are too heavily concentrated in stocks. Interest rates are due to increase at some point but it is impossible to determine when that will happen. Because rising interest rates negatively affect bond prices I would avoid long term bonds and focus more on high quality short and intermediate term bonds.

When rates do eventually increase there will be a drop in the value of the bonds, but the loss should be relatively modest (assuming you own high quality bonds). More importantly, bonds have a proven record of reducing the volatility of owning stocks. Historically the more bonds an investor has owned the less volatile the entire portfolio. For the investor who owns a broad based diversified portfolio the reason to own bonds is as a counter balance to stocks, not for the yields on the bonds. In the past when interest rates have increased, bonds continued their role as a protector of the portfolio from stock market volatility.

I know that it is difficult to sell when markets are reaching new highs, but taking some profits to protect the entire portfolio will reduce your portfolio’s overall risk level. Over the long term the return you will realize will not be impacted, but the volatility will be greatly reduced if you rebalance your portfolio on a regular basis.

Email Ken Bloom at ken@bloomlawfirm.com

By Cindy Szymanski, CFP®, Bloom Asset Management

Well, you have five days until tax day, 4/15/13, when we can once again breathe a sigh of relief. At this point you fall into one of two camps:

1) You’ve filed your return electronically (highly recommended) and have already received your refund or you owe and will send your payment in on Monday, 4/15/13; or
2) You will be filing an extension (form 4868) to file your return by 10/15/13. Either way you’re done or have some time now to concentrate on other things.

If you haven’t filed your return yet or will be filing an extension, don’t forget that you can still contribute to the following accounts (if applicable to you) by 4/15/13 to trim you tax bill:

• Traditional IRA (up to $5,000 if under age 50 or up to $6,000 if 50 or older).
• SEP IRA (contributions for 2012 can actually be made until October 15th if you filed an extension. If you are an employee you can contribute up to 25% of your salary up to $50,000 for 2012; if you are self-employed you can contribute 20% of your net self-employment income after your self-employment tax deduction up to a maximum contribution of $50,000)
• Health Savings Account – if you are insured through a high-deductible health plan, total contributions are $3,100 for individuals and $6,250 per family.

I am fortunate and usually can file my taxes by April 15th and am done for another year. I look at this date as the official start of spring and the time to get some things accomplished before summer (both tax related and non-tax related).

If you’ve filed your taxes and found that you owed a bit too much, make sure your W-4’s are updated at work, or better yet, increase your contributions to your workplace retirement plan, if that option is available to you; better to pay yourself than the government.

On the other end, if you are getting a large refund, you can also adjust your W-4 so less federal withholding is deducted. With the large refund, many of us will take a family vacation, which is always a good thing to recharge from the stress of life. However, you could also consider spending that extra money in a financially prudent manner, such as:

• Paying on a high interest credit card balance
• Contributing to your IRA or Roth IRA
• Depositing some cash to your emergency fund (if it is low)
• If you have kids, contribute to an existing 529 savings plan for college or start one (in Michigan, if you open one through the state www.misaves.org, you get a deduction on your state tax return for the contribution (up to $5,000 for a single return and $10,000 for a joint return)

April 15th also brings the start of warmer weather, so you can now focus on some outdoor chores around the home. If you put Christmas lights up for the holiday season, you may still have them up (like me). So, the plan is by the end of April to get the lights down and put away. I also wash the outside windows (of course with some assistance from my significant other).

For the new tax year, I also start to go through my household items and clothing and make a trip to donate these items. Doing this task initiates some “spring cleaning” in the closets and storage areas. I also look again before the end of the year and possibly make two trips. While, I actually take my items to the charity on the weekend (as it is not far from my house), you can also have these items picked up.

Whatever, your after-tax season to-do list is, you should definitely start one so you can get things done before our wonderful Michigan summer hits!

By Jonathan Goldberg, J.D., CPA

With the spring and summer home buying season heating up, it is important for home buyers to remember to get a home inspection before they make one of the biggest investments of their lives.

And I’m not talking about getting your brother-in-law the handyman to look at it; I mean a home inspection from a professional home inspector that is a member of either the American Society of Home Inspectors or the National Association of Home Inspectors.

Getting the home inspected protects the buyer in the event there is something structurally wrong with the home or it has other serious defects, such as mold in the attic.

The standard purchase agreement that a real estate agent will use for the purchaser generally has a clause that specifies the buyer will get a home inspection and will have the ability to cancel the purchase if the inspection turns up anything that makes the buyer uncomfortable about buying the home. However, I have also seen purchase agreements that are more favorable to the seller, so it is vital to have one drafted that protects you when you are buying a home.

To protect the buyer, this is the type of clause that I put into any purchase agreement when I represent the buyer:

Purchaser does hereby acknowledge receipt of statutory “Seller’s Disclosure Statement” pursuant to P.A. 92 of Michigan Public Acts of 1993 to disclose the condition and information concerning the property known by Seller. Purchaser shall have the option for 10 days from the date of acceptance of this agreement to have the property inspected, at Purchaser’s expense, including, but not limited to, defects in the major component parts of mechanical systems, including plumbing, electrical, heating, well and septic systems and structural repairs or replacements. Within this 10 days, the Purchaser shall notify the Seller in writing with a copy of the inspection report specifying any defective conditions. If no notice of a defective condition is received or no inspection is held within the time allotted, the right to an inspection shall be deemed waived and the Purchaser shall accept the property “as is”. In the event of a timely and valid notice of defect, the Purchaser has the option to allow Seller to either fix the defect or terminate this agreement with full refund of the earnest money deposit. If the Seller is to fix the defect, the notice of such election shall specify the manner of repair and the Seller shall agree to have the repair completed within fourteen days from the date of notice.

This type of provision provides the buyer with ample opportunity to walk away from the deal if any defects are found during the inspection. But remember, getting a professional home inspector is the key to knowing what may be wrong with a home. Generally, a home inspection will cost between $300 and $500 depending on the size of the home. I look at that as a good investment and as an insurance policy against buying a “faulty” home. Better to spend the money up front than to end up in a home like the one in the movie “Money Pit” with Tom Hanks and Shelly Long.

As many people know, identity theft is a rapidly growing crime. With the explosive use of technology (smart phones, tablets, as well as computers) many people assume that their data and confidential information is more susceptible to being compromised using the internet. And while that is true, an article I read indicated that the internet is not the top cause of identity theft.

A recent study by Travelers Insurance of customers insured against identity fraud found that stolen or misplaced items are the major cause of identity theft or fraud. Approximately two-thirds of the claims filed by Travelers’ customers were the result of stolen wallets and purses. So while many of us are signing up for services that will alert us when our Social Security number or other confidential information is being used by an online thief, we shouldn’t forget that many of these crooks are just as comfortable with the old-fashioned way of obtaining access to your credit cards and account numbers.

Regardless of which method crooks use to steal your info, identity fraud is an increasing problem and the use of technology has provided an entirely new way for them to compromise your information. A key factor contributing to the increase in incidents is a substantial number of data breaches. The most common items exposed during a data breach are credit card numbers, debit card numbers and Social Security numbers.

A recent report I read found that 1.5 million people were defrauded by someone they knew, with lower-income consumers more likely to be victims.

Recent surveys also found a majority of smart phone owners do not use a password, which allows anyone with access to their information if the phone is lost. Considering that smart phone owners were victims at a higher rate than the general public, this not surprising.

Based on all the evidence about the increase in identity theft, here are some tips to help you avoid getting “hacked”:

1. Keep personal information private.
2. When paying bills online make sure you have a secure connection.
3. Before sharing any private information, ask simple questions: who is asking for the information, why do they need it and how is the information being used?
4. Be vigilant. Review statements on a regular basis. If something looks suspicious contact the credit card company, bank, etc., as soon as possible. The law will protect you if you notify the bank or credit card company in a timely fashion. To do so, you must, however, review your statements on a regular basis.
5. Don’t use obvious or simple passwords. Try using a combination of letters and numbers, and symbols wherever possible.

Remember, thieves make their living trying to steal people’s identity. So make sure you are diligent about protecting your purse and wallet wherever you go, and spend a little extra time and effort when you are doing anything online or with your smart phones.

Ken Bloom, J.D., LLM
Bloom, Bloom & Associates

Effective on January 30, 2013, Chrysler made some major changes (or as Chrysler likes to put it, “enhancements”) to the Hourly Employees’ Deferred Pay Plan, the Salaried Employees’ Savings Plan and the Employee Managed Retirement Plan (401k accounts), all offered through Merrill Lynch where Chrysler plans are custodied through.

Chrysler, like many major companies have streamlined its plan choices for cost reduction, as well as what they feel are improvements for the employee. Depending on your comfort level with choosing investments, these new plan features may or may not be an improvement for you. If you are confident in your ability to research your employer’s 401(k) investment options and make your own choices, or you are fortunate( like our clients) to have an experienced financial advisor assist you in your decision- making process, the reduction in plan choices is not a welcome change; less choices is never a good thing.

When it comes to investing, I am an advocate of choice – the more choices a person has the better. If you deduct the dozen target date funds and the money market fund from the new plan choices, you are left with a whopping TEN choices of indexes and “fund of funds” that Chrysler has put together (five US/three International and two US bond). If you are not familiar with a Target Date Fund, it is a hybrid fund of stocks and bonds that automatically grows more conservative as you reach the “target” date which is supposed to be the date that you will retire. All Target Date funds are not the same and can underperform.

Chrysler, like many other employers, seems to feel that a more simplistic, less-is-more, approach to investing is better; however, I think it only hurts investors who actively manage their accounts. Fortunately, Chrysler does offer a self-directed brokerage option. So, if you like to invest in stocks, ETFs and fixed income securities, you are all set – you just set up this option, move your money into this account and invest accordingly. However, if you are like me and like the wide array of no-load mutual funds that are available, then you are out of luck. That’s, because Chrysler does not allow you to invest in mutual funds through the self-directed brokerage option. I have never understood this restriction.

Chrysler also offers what it calls “Advice Access”. If you don’t necessarily want to choose your own funds and don’t know if you want a Target Date fund, Advice Access will give you recommendations based on your age and account value and current contribution rate. It will also give you recommendations on whether you should contribute more both inside and outside the plan. However, as stated in their literature, this advice is based on a “probabilistic” approach and does not consider your comfort level of investment risk, nor does it give you specific investment advice for outside assets. I do not agree with this approach as age has little to do with how you invest your money, while your individual goals and objectives and your risk tolerance are very important to how you should invest your money. If you don’t have a financial plan in place and need some guidance with your investments, you should seek the advice of a qualified financial professional.  If you are a Chrysler retiree and never rolled your plan to an IRA, this would be an excellent time to do so.

This will allow you better investment options for your retirement goals. If you have a financial advisor, they would be able to assist you with this. If not, and you need assistance, Bloom Asset Management would be happy to review your account and give you our recommendations.

Just a reminder that if you are a Chrysler Employee of Retiree, you must make changes to your plan by March 1, 2013, or Chrysler will automatically move your account to one of the Target Date funds that is based on your approximate age of retirement (65). Again, if you are a Chrysler Retiree, you should also seriously think about rolling your account to an IRA prior to March 1, 2013.

I believe we should all take a proactive approach when it comes to our money and investing. Don’t leave your accounts on auto-pilot; you should always have a plan and know how your money is being invested.

-Cindy Szymanski, CFP®, Financial Advisor
Bloom Asset Management

Recent statistics indicate that the housing market is slowly starting to rebound in Michigan, and with the spring home buying season not too far away, I thought it would be a good idea to offer some tips to anyone buying a home.

Whether you are using a real estate agent during the purchase process or not, it is vital that you protect yourself by having a purchase agreement for the home that will ensure you will get what you expect when the deal closes.

Generally, the purchaser’s real estate agent will prepare the Agreement. Unfortunately, too many people sign a purchase agreement that is drafted by their agent and come to regret that decision later. A real estate agent is not as knowledgeable of the law as an attorney and may not always be looking out for your best interests. That’s why I always recommend that the buyer have a qualified real estate attorney review the purchase agreement before they sign on the dotted line and commit to a home purchase. Remember, the purchase agreement is a binding contract, so once you sign it you may not be able to get out of purchasing the home.

One of the important things a well-drafted purchase agreement can provide the buyer is peace of mind in the event an issue arises during the sale process. That’s why the purchase agreement needs to spell out all the transaction details as well as any contingencies where the buyer can renege their offer.

Probably the most important contingency is to make certain the purchaser qualifies for a mortgage in the amount necessary to purchase the home. In the event the purchaser cannot obtain a mortgage he or she does not want to be legally committed to purchasing a home when they don’t have available assets. Another important contingency is that the purchaser should have an inspection of the property by a qualified home inspector. The inspection contingency provides that in the event the inspector finds material problems with the property, the purchaser may opt out of purchasing the property. Of course the parties may still come to an understanding regarding the problems. This may consist of the seller correcting the problem or a reduction in the purchase price. However, the inspection contingency is a negotiated item and the standard inspection language in the Agreement may not be beneficial to the buyer. An attorney may assist you with this language to protect you in the event the inspection is not satisfactory.

The purchase agreement should also include all the provisions that you have agreed upon with the seller regarding the purchase. For example, if there is a child’s play set on the property and the purchaser has children he or she may want to include the play set in the items being purchased. If this is not provided for in the Agreement the purchaser will not receive the play set. You should also specify the date that the seller must vacant the property, or even the “rent” the seller will pay if they stay over the time limit.

Having an attorney involved in the purchase process from the beginning is the best way to protect the purchaser when they are buying an owner-occupied home, but it is even more important when someone is buying a foreclosed home that is unoccupied because these homes are often vacant for months and can have serious issues (such as water leaks) that have damaged the property. That’s why it is important to have a purchase agreement with contingencies that ensures the purchaser doesn’t have to buy the home if any damage issues are discovered during the home inspection.

Because there are not a lot of homes for sale on the market these days, I have also heard about bidding wars between buyers for particular homes. That too can be a dangerous purchase strategy that could lead to serious consequences if you are in a hurry to buy and don’t take the time to have an attorney involved in the purchase process or a home inspector go over the home before you make an offer.

Even though you should have a lawyer involved from the beginning, a contingency provision should provide for an attorney to review the Agreement in the event there a changes to the original offer.

Purchasing a home can be an exciting time for anyone. But remember, getting an attorney and home inspector involved in the process can ensure you are getting the home of your dreams instead of a money pit!

If you would like assistance in reviewing or drafting a purchase agreement, please give me at call at (248) 932-5200.

-Jonathan Goldberg, J.D., CPA
Bloom, Bloom & Associates