Like most of the nation, my family will gather this week with our extended clan to share a meal and a laugh or two.  Thanksgiving is also a time to take a moment to consider those who are not so fortunate.

If you turn those good thoughts into good deeds, your charity might be eligible as a tax deduction.  Uncle Sam put together a useful guide on Year-End Donations.

Cash and Stock

If you give money to your favorite charities, you can usually deduct the amount donated on Schedule A (Itemized Deductions) of your 1040.  There are some limits.  See IRS Pub 526, Charitable Donations, if you have questions.

If you have stocks (equities) that have appreciated in value, donating them instead of cash can mean a bigger tax deduction for you.  See my post earlier this year on this subject.

Used Clothing and Household Goods

The Salvation Army and Goodwill Industries have offices nationwide.  Personally, Goodwill gets my donations, since the Salvation Army discriminates against LGBT folk (hence the lack of a link to it in the preceding sentence).  In many states, the Vietnam Veterans of America will come to your house to pick up your donations, including small pieces of furniture.

You can deduct the fair market value of donated used clothing and household goods.  The IRS Publication 561, Determining the Value of Donated Property, is a starting point, but Goodwill’s guide to valuation is more direct.

Volunteering

Volunteering your time is the greatest gift you can give.  Whether you choose to work with children, seniors, or community organizing, nothing can replace the gift of your experience, energy, and enthusiasm.  Unfortunately, you cannot take a tax deduction for the value of your time.  You can deduct mileage for driving to the place where you volunteer.

However you choose to celebrate this week, best wishes for a happy holiday season.

Related posts: Charitable deductions warm you twice

Disclosure: No positions

Image credit: HowardLake at Flickr

I’m excited about Schwab’s announcement of commission-free exchange traded funds.  They’re currently offering four ETF’s:

• U.S. Broad Market
• U.S. Large Cap
• U.S. Small Cap
• International Equity (Developed Nations)

In December, they’ll add four more:

• U.S. Large Cap Growth
• U.S. Large Cap Value
• International Small Cap
• Emerging Markets

To keep the rhythm going, I suppose I should list four things I like about the Schwab funds.  Here goes:

• Each fund tracks a Dow Jones or FTSE index, so you can look up exactly what positions it holds.
• Insanely low expense ratios.  The chart below is from the Schwab site comparing its expense ratios to other popular ETF’s.  I’ll point out that Schwab’s expenses are even lower than the Vanguard S&P 500 (VFINX).  Schwab’s expenses are 0.08% (!) for their Large Cap ETF, while Vanguard charges 0.18%
• Commission-free when bought online from a Schwab account.  Schwab’s accounts have low minimums to open, making them accessible to almost everyone.
• Now I can buy ETF’s through dollar-cost averaging.

As I’ve said before, the primary benefit of investing through dollar-cost averaging is that it puts the “when” and “how much” questions  on autopilot, letting you focus on “what” to invest in.  Up to now I’ve avoided ETF’s because my brokerage charges about $12 for an online trade.  To invest in a portfolio of four ETF’s once a month, I would spend $576/year on transaction fees.  Why would I do that when I could instead invest in four no-load low-expense-ratio mutual funds?  (See, for example, my Three-Minute Portfolio and Gold Star Portfolio.)  With commissions set aside, now I can consider Schwab’s index offerings, and they do look interesting, indeed.

Best of all, maybe, just maybe, others will follow suit.  (Are you listening, Vanguard?)  A little competition could be a nice plus to the average investor.

Full disclosure: Long in VFINX.

Disclaimers: This information is provided for educational purposes only.  It may not be an appropriate investment for you. See a financial professional if you have questions about your particular situation.  Investments in mutual funds are not FDIC insured and can cause loss of principal (you can lose money).

Back in August, I created the Gold Star Portfolio — a selection of mutual funds that have low expense ratios and are rated highly by Morningstar.  It’s been almost three months — time for a quarterly check up.

The graph below shows the Gold Star Performance in pink.  The blue line is a weighted average of the indexes.  The good news is that the overall markets went up 5.1%.  The better news is that, in the same time period, the Gold Star Portfolio is up 6.9%.

Continue Reading »

Kyle at Amateur Asset Allocator hosted this week’s Money Hacks Carnival and selected my post on Dollar Cost Averaging as an editor’s pick.  Thanks, Kyle!

In his introductory comments regarding the nascent economic recovery, Kyle said:

Gone (hopefully) are the days of conspicuous consumption as sound personal finance principles come back in fashion.

While I am equally as hopeful that the economy has indeed turned the corner, I’m not so sure that we, the people, have really changed.

When surfing TV last night, I noticed there are as many silly shopping channels as ever.  Surely, if we had mended our spendthrift ways and sworn off late night calls to buy the latest in vegetable-fashioning technology, there would be fewer channels hawking the stuff. Continue Reading »