Insights Blog

Donating investments for a bigger impact

By Jim Rankowitz, CFP®, CSRIC™, Senior Vice President – Investments, Senior Financial Advisor

 
March, 2023

Donating investments can be an excellent strategy for philanthropic individuals who want to give to their preferred charities or non-profit organizations. By giving certain investments instead of cash, donors can not only support their favorite causes but also enjoy certain potential tax benefits. Here are some charitable giving strategies to consider:

Donate appreciated securities: If you hold securities that have increased in value, donating them to a charity can be a smart move. You may receive a tax deduction for the full market value of the investment and can potentially avoid having to pay capital gains taxes on the appreciation.

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Choose the right charity:
Before donating your investments, do your research to make sure the charity is legitimate and aligns with your values. There are varying tax deductibility benefits for different types of non-profits and foundations.


Consider a donor-advised fund:
If you don't have a specific charity in mind, you can donate your appreciated securities to a donor-advised fund (DAF). A DAF is a charitable account that allows you to make donations to multiple charities over time.


Time your donation:
Timing is everything when it comes to donating securities. Consider donating investments that have appreciated in value for more than a year, as this may make you eligible for a higher tax deduction.


Consult with a financial advisor:
Finally, it can be a good idea to consult with a financial advisor in coordination with your tax professional before making a donation. They can help you understand the tax implications of donating and ensure that it aligns with your overall financial goals.


Wells Fargo Advisors is not a legal or tax advisor.





How much cash should you keep in the bank?

By Jim Rankowitz, CFP®, CSRIC™, Senior Financial Advisor, Senior Vice President – Investments


March, 2023

 

Short-term interest rates have been rising and with it, the ability to move cash off the sidelines and into conservative short-term vehicles.  Short-term CDs, treasury bonds, T-Bills, and position money market funds are offering the highest yields in decades, but how much should you have in these vehicles?  Is there a rule of thumb for an appropriate amount of cash versus investments?  

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Emergency funds, or cash reserves in excess of your monthly living expenses, are a vital component to one’s financial picture.  Cash provides security, flexibility and optionality.  Traditional planning advice recommends a minimum of three-to-six months of living expenses as savings, and one-to-two months of living expenses in checking.  If you were unable to work, you would potentially need to access this savings.  The amount in savings should at least cover your expenses for the amount of time needed to replace your job.

The emergency fund amount should also vary if your income is variable, if you are the only income-earner in a multi-person household, if you have a niche job, if you have a high income job that is hard to replace, if you have medical conditions that may make you more prone to take time off of work, if you don’t have disability insurance coverage and based upon your risk tolerance.

The appropriate amount of cash in the bank is also the amount you need to sleep comfortably at night.  This will vary for everyone and impossibly to quantify as a formula.  This is usually based upon risk tolerance, and how one views the impact of an unexpected financial event.

In short, the amount of you need to keep in cash and cash alternatives should be enough to cover a period of unemployment and enough to allow you to sleep comfortably at night.






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