What is Robo-advising?

We’ve talked before about using robo-advisors to facilitate trading and help investors organize portfolios, but here’s a quick recap: robo-advisor services are billed as low-cost, user-friendly systems that encourage first-time and novice investors to take a hands-on approach to growing their investment portfolio. Robo-advising allows investors to make investment decisions and transact deals via automation (meaning little to no interaction with a human advisor).

The Wells Fargo ‘Intuitive Investor’

Wells’ robo-advising plartform, dubbed ‘Intuitive Investor‘, is the 3rd automated platform offered by a major Wall Street brokerage. Bank of America and Raymond James Financial both launched their own services earlier this year. Intuitive Investor allows first-time investors to begin with relatively low capital risk and comparatively low commissions. Opening an account requires a minimum $10,000 investment and offers advisory fees at a half of a percent annually.

Tips if you’re considering opening a robo-advising account:

While robo-advising does offer you more individual oversight and control over your investments, that also comes with an increased responsibility to practice smart, secure investing. Automation can be great, but an increased reliance on computers for file storage and transaction comes with increased risk of cyber attack. It’s even more important for you to closely track your portfolio and transactions if you’re going to use a robo-advisor. Contact your brokerage immediately if you notice anything out of the ordinary in your account. Depending on your investment goals, it may also be in your best interest to maintain the services of a traditional investment advisor for either part or all of your portfolio.

Investor Resources

For more info on managing your portfolio using a robo-advisor, check out the SEC’s full investor bulletin. Read more about Wells Fargo’s robo-advising platform here.

Once you understand how tax laws apply to your capital losses, you will quickly see the benefits of reporting them. You will be able to form strategies that actually take advantage of stock losses ahead of time. Once an investment starts to head south, you’ll be able to make the right decisions to mitigate that loss.

Stock Loss Deductions

There are two types of reportable stock loss deductions:

• Short term losses
  • stocks held for less than one year
• Long term losses
  • Stocks held for one year or longer

While short and long term losses mirror capital gains in how they are categorized, the two function very differently. With capital gains, taxes are assessed based on how long you held on to a particular stock before selling. Short term gains are taxed at regular levels while long term gains are taxed at a much lower rate.

Advantages of Stock Loss Deductions

There are many ways you can benefit from reporting stock loss deductions on your tax return. You can use loss deductions to off-set taxes owed on gains. You can even carry over loss deductions into future years. If you have no capital gains taxes to report, losses can be used to deduct from your regular income. While you’re not going to recoup the total amount of a loss, consider deductions as a sort of consolation prize. Eating a stock loss is never fun, but at least deductions make it a little bit easier of a pill to swallow.

Reporting Deductions

As with all deductions, there are limits to reporting stock loss. The IRS requires investors to follow specific rules when it comes to reporting your losses. These apply differently depending on what type of loss you are reporting… Remember when we said there were two types of capital losses? Well there are actually two more. While short and long term losses define the loss itself in terms of how long it was held, losses are actually divided into two additional categories:

• Realized losses
  • When an investment is sold at a price lower than the initial purchase
• Unrealized losses
  • When an investment is held even after its value has fallen under that of initial purchase

Both types of losses must be reported on your tax return, but only realized losses can be applied as a deductions.

Deduction Limits

There are limits to what, how often, and when you can apply loss deductions towards. Most investors use stock loss deductions to offset taxes on short term gains. Since you are taxed on short term gains at a higher rate than long term gains, it makes sense to apply everything available to minimizing tax owed on those gains. Stock loss deductions can also be used to offset your regular income taxes. While The IRS limits this to $3000 in income tax deductions for a given tax year, if you have reported losses for that year greater than that amount, they can be used to offset income tax each year until the amount expires.

Questions About Stock Loss Deductions?

This just provides a basic overview of stock losses, their tax advantages and limits. There are more limits that apply depending on the type of investment, the manner in which it is sold, and to whom the investment is sold. If you have more questions about reporting stock losses as potential deductions, it’s best to speak with a financial adviser, accountant or tax attorney. A tax attorney specializing in stock investment-loss recovery can be a great resource available to you.

This week, market analysts and investors saw Wall Street regaining upward traction. Dow and S&P indexes soared to record weekly gains, buoyed by a flurry of trading activity. According to a Reuters report, financial investing has been one of the major drivers, followed by industrial and tech.

Financials

• Bank of America, MorganStanley and Citigroup up 1 percent

Industrials

• Boeing and Caterpillar up 1 percent

This rebound comes ahead of the upcoming, two-day Federal Open Market Committee meeting at which Federal Reserve Chair Janet Yellen will speak. Investors will be looking for signals as to when new interest rate hikes might be announced. Investors are also watching for an announcement on the Fed’s plans to unpack much of its $4.2 billion portfolio of mortgage-backed securities and Treasuries The recent Wall Street rally also comes at a relatively calm period of uncertainty and market anxiety. Concern over global conflicts, as well as uncertainty over domestic policy has led many investors to hold back on riskier investments.

Calm Before the Storm?

Recent activity has reached record level. Dow and S&P recorded their best and second best weekly gains this year, respectively. However, there remains major uncertainty over future market outlooks. There is still uncertainty over how the Trump Administration will effect changes to current financial regulations as well as trade policy. Additionally, concern over foreign policy and rising geopolitical tensions has led to an apprehensive investment market. Until this rebound, financial investing, as well as other markets, had seen a slump after an initial, post-election boost.

Investor Resources

If you want to find out more about the recent, record-setting weekly gains, read the full Reuters article. For questions about protecting your investments or investment-loss recovery contact our team. Our expert legal team is here to ensure that you don’t fall victim to financial scams or investment fraud.

What You Need to Know About Initial Coin Offerings

In certain instances, virtual currency offered in an ICO is considered a security. As such, it is subject to regulation by the SEC. The SEC closely monitors companies and firms engaging in initial coin offerings. If there is suspicion of fraudulent activity, the SEC will actually suspend trading operations to protect investors. If you are offered to invest in an ICO, the best thing you can do is to first check with the SEC on the offering’s regulatory standing. You can also research a company and evaluate the investment risks yourself. When researching a potential ICO investment opportunity, be sure to check:

• To make sure the company’s public records and reports are up-to-date
• Take steps to verify, to the best of your ability, that company information provided is accurate
• Research the company’s recent trading activity, check for suspensions with the SEC

Investor Resources

If you have more questions about investing in initial coin offerings, you can find out more here. The SEC’s EDGAR database provides extensive organizational and financial information for many companies. You can access that database here. If you believe you invested in an ICO under false pretenses or misleading information, call us to find out your investment recovery options.

What is Ransomware?

Ransomware is a computer virus that targets your computers digital files and literally holds them for ransom until a payment is sent for their release. So far this year, we have already experienced two widespread ransomware attacks: the WannaCry virus, back in May, and now the Petya virus in June. While these viruses are sophisticated, there are steps you can take to protect you investments against ransomware attacks.

Install/Update Anti-virus Software

It may be a nuisance, but every time you see a notification that your anti-virus software needs an update, run it. These updates are extremely important to keep up with changes to existing malware and viruses. If you don’t have any anti-virus software on your computer, GET IT!

Back-up Your Computer Files

Running backups can be one of the best safety nets if your computer becomes infected by ransomware. With the latest Petya virus, it reboots your computer and begins encrypting your files. If you have backed-up your files already, you can shut down your computer in the middle of this process. You can then reconfigure your hard-drive, reboot and restore back-ups.

Avoid Keeping Investment Documents on Your Computer

To make sure your investments are secure, you should not store sensitive files in open files on your computer. You can encrypt them yourself, but that does not always guarantee they will be secure against a ransomware attack. The best safety measure would be to store investment documents in hard-copy somewhere and immediately remove them from your computer.

Investor Resources

For more information on how to protect your investments against ransomware attacks, contact our team. Check out this USA Today article for more information on the Petya virus.

What is robo-advisor investing?

Automated investing platforms, also known as robo-advisors, allow investors to make investment decisions and transact deals with little to no interaction with human advisors. By completing online questionnaires outlining investment goals and financial information, these systems compile and manage portfolios for investors.

Why use a robo-advisor investing platform?

• Directly manage your investment portfolio
• Lower cost alternative to traditional investing
• On-demand deal transaction

When not to use a robo-advisor

Robo-advisor investing may be a great alternative for some, but it may not be the best option for every investor. Depending on your particular investment goals and needs, a traditional investment advisor may be a better fit. Robo-advisor investing can only operate based on personal and financial information provided. Therefore, it can only advise and suggest deals in a limited capacity. Traditional advisor can take a more nuanced approach to your portfolio. Also, as an economical alternative, robo-advisors offer low-cost investment advice. It may not offer truly high-value advice like a human investor might be able to.

Investor Resources

• To view the SEC’s full robo-advisor investor alert, click here
• Check out our blog archives for even more tips for safe investing practices