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

Tags: charitable deductions, charity

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).

Tags: commission, ETF, Schwab

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 »

Tags: LINTA, QVC, recession

I’m not sure why Uncle Sam waited so long to publish his tax guide for the newly unemployed.  The US unemployment has been above 5% for over a year.  We really could have used this last winter when the rate of new claims was at its peak.

And a note about manners, Uncle Sam.  I don’t expect you to be overly touchy-feely, but after all, the people reading this document will have just suffered a traumatic life event.  Couldn’t you have started a little gently?  Perhaps, something like “the economy is going through difficult times, and many individuals like yourself have temporarily lost employment.”    But nooooh.  Your opening line is:  “Severance pay and unemployment compensation are taxable.”  Ouch.  Harsh. Continue Reading »

Tags: seasonal unemployment, tax tips, unemployed

My post on being a solar cell skeptic was included in this week’s Carnival of Personal Finance hosted at Money Crashers.  Here are a couple of other posts I enjoyed:

• Madison at My Dollar Plan wrote about a calculator at Vanguard.com that compares the cost of an ETF vs. a mutual fund.  It’s a particularly thorough calculator that includes, for example, the bid-ask spread on the ETF purchase.  Now if only the calculator was available at a more general site that included more than just Vanguard’s funds.  (Hint:  Are you listening Google?)

• The Canadian Finance Blog had a solid post with financial tips for soon-to-be-parents.  As the Mom of a young son, the best suggestion I have to expectant parents is to not go overboard in buying stuff (Canadian’s tip #5).  When in doubt, resist the urge to buy.  Babies need a lot less than you might think — a few clothes and toys, but mostly your bountiful love and attention.  They grow out of the baby stage quickly, so thoughtful friends and family might consider buying books or toys that will be useful in 6 or 12 months. Continue Reading »

Tags: CreditKarma, ETFs, rental deposit

Cris Edwards created a terrific graphic of what happens behind the scenes of a credit card transaction.

Thanks to my new fave blog:  Chartporn.

Tags: credit cards, financial art

Polycrystalline Solar Cell

Back in July, I announced the start of a new series of posts on Sustainable Energy, but I haven’t had a chance to actually write about the topic until today.  No time like the present, then, to launch into my favorite diatribe:  Solar Heresy.

My concern about solar cells — specifically silicon photovoltaic cells — is that it takes a great deal of energy to make silicon. Continue Reading »

Tags: solar power, solar sceptic, Sustainable energy

Dollar cost averaging is the practice of investing the same amount of money at regular periodic intervals.  For example, a person might invest $300 every month.  It’s generally thought to be a good practice, but some call it a marketing gimmick, and others call it a losing proposition.  Which is true?  As with most debates, each viewpoint has some truth to it.  Let’s look at each.

Why it’s a Useful Tool

The benefit of dollar cost averaging is this: by investing periodically, you’re more likely to buy shares when prices are low.  The low-priced shares give you the greatest return.

As an example, let’s look at investing in a stock for which the price was $10 in month #1, rose to $15 in month #2, fell to $5 in month #3, and returned to $10 in month #4.  A graph of the stock prices is shown below.

Continue Reading »

Tags: dollar cost averaging, investing strategies

My thanks to David at Credit  Card Offers IQ for selecting my post as an Editor’s Pick for this week’s Money Hacks Carnival. Well, “Editor’s Pick” is my term — he categorized the top tier as “VISA Black.”  After all, it is a credit card site. Continue Reading »

Tags: Appliance cash for clunkers, ETF deathwatch, probate process