Digital files are your best weapon in the battle to conquer clutter.

By Lisa Gerstner, From Kiplinger’s Personal Finance, January 2014
1. Stop paper buildup in its tracks. Sign up to receive online statements and bills from utilities, banks, credit card issuers and other service providers. To help stay on top of payments, sign up for your bank’s bill-paying service. Or link your accounts to Manilla.com. The tool, which includes a mobile application for Android and iPhone, organizes and stores documents online and sends alerts when bills are coming due.
2. Scan, scan, scan. A good scanner can eliminate a mountain of paper. The Fujitsu ScanSnap iX500 desktop scanner ($405 on Amazon.com) connects wirelessly to your PC, creates searchable PDFs, and can handle two-sided scanning. Once you’ve digitized those documents, take them, along with all the other unwanted items sitting on your desk or dining room table, straight to the shredder. Your community may sponsor periodic mass shredding events. A good shredder for home use is the Fellowes Powershred W-11C ($66 at Amazon.com).

3. Prepare a backup plan. Save important documents in multiple places in case your computer fails, says Julie Bestry, president of Best Results Organizing, in Chattanooga. In addition to keeping copies on an external hard drive or a flash drive, store documents using secure “cloud” serv­ices. Dropbox, for example, lets you save 2 gigabytes of data free (and you can share folders with other users). With Google Drive, you can store up to 15GB of files as well as create text documents, spreadsheets and slide shows. The free online tool Evernote lets you save PDFs, clip articles from the Web and create text documents. File items in folders and add tags for easy searching.

4. File it on the fly. A scanner that fits into a bag or suitcase can be useful for, say, digitizing handouts while you’re at a conference, says Erin Rooney Doland, editor in chief of Unclutterer.com. For example, the 12-ounce Fujitsu ScanSnap S1100 ($180 on Amazon.com) can process letter-size documents as well as receipts, postcards and business cards. And plenty of mobile apps can help you keep paper to a minimum, too, though they may not provide the image quality that a scanner does. With the free version of the CamScanner app (for Android, iPhone and Windows Phone), you can snap photos of documents with your phone’s camera and convert them to PDFs. The CamCard Free app lets you photograph business cards and store and file the contact information. With the free Bump app (for Android and iPhone), you can share your contact information by tapping your phone with phones of other app users.

5. Get a handle on receipts. To organize all of your receipts and track spending, try OneReceipt for iPhone, which lets you snap pictures of receipts and save them by using the free app or e-mailing them to your account. The tool can also automatically pull electronic receipts from your e-mail account. Not sure the store will accept an image of a receipt? Hang on to the original.

6. Paper still has a place. In addition to Social Security cards, and certificates of birth, death and marriage, you’ll want to keep estate documents, medical records, insurance policies, proof of mortgage and other loan payoffs, and titles and deeds for cars and homes.

Read more at http://www.kiplinger.com/article/business/T057-C000-S002-6-things-to-know-about-going-paperless.html#PGYri2Ve9pjYVhtt.99

How to Protect Your Digital Content
Tips on safeguarding your files from hackers.

By Kaitlin Pitsker, From Kiplinger’s Personal Finance, June 2015
When your photos, slides and videos have been converted to digital files, your next task is to organize and store them so they’re backed up and safe from hackers, a virus or a technical mishap. This is also a good time to corral the digital photos scattered among various computers, phones and e-mail accounts.

Organize. Start by collecting the digital images in a photo-organization program, such as Picasa or iPhoto, that will allow you to organize, label and edit your images. Both Picasa and iPhoto are nondestructive programs, meaning they don’t compress the files and lose data each time an item is saved. Name each file to help you find it later. The Association of Personal Photo Organizers recommends a year-month-day-event format to make searching easier. You can also add the names of people, where the photo was taken or other keywords by using the “info” feature in iPhoto or adding captions and tags in Picasa.

Back up. To protect your collection for posterity, redundancy is key. You can keep files on your computer for easy access, but to prevent losing them to natural and technological disasters, back them up both offline and in the cloud. You can back up files on an external hard drive (disconnect it from your computer after each backup) or burn the files to archival-quality, “gold” CDs or DVDs. These discs resist oxidation, corrosion and scratches and last longer than traditional discs. A cloud service such as Dropbox ($10 a month for 1 terabyte of storage) adds another layer of safety.
Store. You may want to keep the original photos, or at least some of them. In addition to the emotional reasons for not tossing the originals, some people keep them indefinitely in case new technology improves scanning abilities, says Curtis Bisel, founder of Scanyourentirelife.com. Keep the originals in acid- and lignin-free boxes or envelopes. You can find protective storage options at Gaylord Archival, Hollinger and University Products.

Read more at http://www.kiplinger.com/article/spending/T057-C011-S002-how-to-protect-your-digital-content.html#3HTpqDvihwEWQYVB.99

How to Digitize Your Photos, Movies and Music

Your cherished photos, home movies and music aren’t just taking up space, they are deteriorating. You can convert them yourself or hire a pro.

By Kaitlin Pitsker, From Kiplinger’s Personal Finance, June 2015

If you’re like many Americans, you have countless boxes taking up space in closets, the basement or a storage unit that are filled with irreplaceable photos and videos. Even if you’ve never been much of a shutterbug, you’ve likely collected thousands of snapshots, slides and negatives. Click-happy photographers and self-appointed family historians could easily have accumulated more than 10,000 nondigital images.

The biggest problem with analog technology is that the images (and video and sound) deteriorate over time, dooming those Kodak moments as surely as the fortunes of the once-dominant film company. As photographs age, dyes in the ink fade and discolor, and the paper often yellows or becomes brittle. Tape used for video recordings decays as the magnetic particles lose their charge and the protective layer of film absorbs moisture. Even if it has been years since you last thumbed through your photos or loaded your videos for a nostalgic viewing, they have been degraded by air, light, temperature changes and humidity.

Curtis Bisel, 42, digitized his own photos and later tackled his parents’ collection—including slides from a trip to the 1964 New York World’s Fair. “I’d never seen my family’s whole life play out in order, and there were so many parts of the story that I couldn’t recall,” says Bisel, who has digitized almost 6,600 photos and advises others about digitizing their pictures at www.scanyourentirelife.com.
Digitizing your collection is a huge project, but don’t be discouraged. You have several options to help bring your old-school images into the modern era.

Prints and slides

When choosing a photo-digitizing service, pay attention to the resolution the scanning process will deliver. To capture the details of an image and be able to crop or enlarge it without sacrificing quality, you’ll generally want digital images that are 600 dots per inch for prints and at least 3,000 dpi for slides and negatives.

Images that are saved in JPEG format will be good enough to share on Facebook or to remember Aunt Agnes’s face. But if you plan to heavily edit the photos or use them to print professional-quality photo books, you’ll want the images in uncompressed TIFF files to maintain their integrity. Scanning services may charge extra for these files, which include all of the image data captured during scanning. Note, though, that TIFF files take up more space on your hard drive or in the cloud. (For more information on storing and organizing your files, see How to Protect Your Digital Content.)

Before you decide on a method, weed out duplicates and fuzzy shots. You may also want to cull, say, scenic landscape pictures from the same trip or other photos that don’t help tell a story, says Cathi Nelson, founder of the Association of Personal Photo Organizers. As you’re sifting through your stack, organize loose photos in broad categories, such as “The Eighties,” “Travel” or “Holidays,” to give you a better sense of the themes in your collection.

Mail-away services. If you have a lot of images you want to convert, a digitizing service such as FotoBridge or ScanCafe can do the job for a reasonable price. You mail a box of your photos to the company’s scanning center, where it will scan the images and make small fixes, such as removing red-eye or correcting the color on images that have faded or shifted. (Many of these services also convert videos.) The company will return the originals and digital files, usually on DVD or CD, several weeks later, typically with door-to-door tracking along the way.
To convert prints to 600-dpi files in JPEG format, expect to pay 20 cents to 35 cents each. To convert slides or negatives to 3,000-dpi files saved as JPEGs, you’ll pay 20 cents to 50 cents each. At ScanCafe, you’ll pay an extra 24 cents for each image you want to have as an uncompressed TIFF file. For an additional charge, many of these services also offer options to create galleries you can view online, store images in the cloud, and scan both sides of an image to capture notes written on the back.

Local options. If you’re leery of mailing your photos, you may be able to have the work done at a photo or camera shop in your community. Check on the quality of the scans the store will create, and ask to see samples. It’s pretty easy to set up shop as a digital-conversion service, so check with the Better Business Bureau to see whether any complaints have been lodged against the company.

Or locate a certified personal photo organizer in your area through the Association of Personal Photo Organizers. Many personal photo organizers work from home. They will draft a plan and offer a price quote for your project. Prices vary around the U.S., but digitizing and organizing about 5,000 photos typically costs between $750 and $1,000, says Nelson.

For your most cherished prints or ones that are torn, stained or faded, you may want to use a professional photo conservator. You’ll pay $125 to $250 an hour for skilled repair and restoration. To find a photo conservator, visit www.conservation-us.org.

Do-it-yourself. If you’re reasonably tech-savvy, you can scan your prints, slides and negatives yourself. A flatbed home photo scanner, such as the Epson Perfection V600 (about $230), can capture more image detail than an office scanner. If you have slides and negatives, you’ll need a scanner that includes a transparency unit (a second light source in the lid) and adapters for slides and negatives. Or you can rent a professional-quality scanning system from E-Z Photo Scan for three days for $295.

Most photo scanners include home computer software for basic retouching, such as cropping, adjusting color brightness and removing red-eye. As you scan, or after you get your files back from the scanning service, name the files and include identifying information about each image so it will be easier to find, then back up the digital versions.

Home movies

Digitizing your home videos is trickier than converting prints and slides because you’re capturing both sound and images. Older tapes or films may be fragile, and you may have a tough time finding working machines to play them. As with your prints, start by reviewing your collection to see what tapes or reels you want to convert and what format they’re in. Your collection could include anything from VHS and BetaMax tapes to 8 mm, Super 8, and 16 mm film.

Compared with the high-definition video of today, 30-year-old tapes, even when preserved well, may seem grainy or poorly focused. For sharp images and clean audio, the digitizing service should use high-definition scanning or 2K data scanning, and it should process the image frame by frame (rather than interlacing the images). For the highest-quality videos, ask about raw or uncompressed video files.

Mail-away services. The same services that digitize photos and slides often handle home movies, too. Most charge a flat rate of $20 to $30 to clean, digitize and do some basic editing on a standard two-hour VHS tape, or about 30 cents per foot for 8 mm and 16 mm film. Generally, they include color correction, cutting of blank scenes and image stabilization.

For home movies, which contain more detail and are recorded in a higher quality than VHS tapes, consider a specialist. Film services such as Color Lab and Pro8mm cost more but have more experience working with older, fragile film. At Pro8mm, frame-by-frame, high-definition scanning of silent 8 mm and 16 mm film costs 50 cents to $1.75 per foot.

Many organizers who belong to the Association of Personal Photo Organizers convert home movies; they generally charge between $18 and $25 per VHS tape. A local camera shop or videographer may also offer digitization services.

Do-it-yourself. The older the video, the trickier it will be to convert the footage yourself. But if your collection dates back only as far as the VHS tapes of the 1980s and 1990s, and you have a working tape player, digitizing the movies at home is fairly easy.

To convert old videocassette tapes, you’ll need a working VCR that has been cleaned recently and has audio-video output ports. You’ll also need an adapter, such as the Diamond VC500 One Touch Video Capture (about $33 on Amazon), to connect the VCR, camcorder or other device to your computer, which should have plenty of hard-disk space. Adapters such as the Diamond VC500 come with a basic editing program that allows you to cut, create chapters within the video, and save the file you’ve created.

Your home movies will take as long to convert as they do to watch, so you may want to pop some popcorn, sit back and enjoy the show.

Vinyl is cool, but digital rocks

Urban Outfitters, the retailer that has long been known for its cred among the younger generation, is a major seller of vinyl records. That means teens and millennials have discovered the warmer sound and fuller dynamic range of records. But for some people, it’s a chore to remove an LP from its sleeve, wipe off the dust and, 20 minutes later, flip it to hear side B. If you have albums that date to the ’60s and ’70s that you’d rather listen to through earbuds connected to your smartphone, you can convert them to digital without a lot of hassle.

If you have a working turntable with audio output jacks, you can use the same adapter and software to convert analog music into digital files that you use to convert videos (see the accompanying article). For better sound quality, use a dedicated turntable with a digital output feature, such as the Audio-Technica AT-LP120-USB ($249 at B&H Photo Video). This type of turntable connects directly to your computer and includes software to capture the music. Too much work? You’ll probably find most of the songs on iTunes for $1.29 or less each.

Read more at http://www.kiplinger.com/article/real-estate/T057-C000-S002-how-to-digitize-your-photos-movies-and-music.html#tH1QecBlbs4w01K2.99

The Mysteries of Cloud Storage Explained

We demystify the cloud, your virtual hard drive in the sky.

By Jeff Bertolucci, From Kiplinger’s Personal Finance, August 2015
Using an internet-based service to save, sync or back up files is convenient. The Big Four—Apple iCloud Drive, Dropbox, Google Drive and Microsoft OneDrive—are all free, if you don’t warehouse a lot of data. The very best thing about cloud storage? When your computer implodes (as mine did recently), your personal files are secure. Life in the cloud can seem a bit hazy to newcomers, so we’ve compiled answers to some common questions.

How do I install the cloud on my Mac or PC? The first step is to download the cloud provider’s app, which integrates the service with your computer’s filing system. If you’re a Windows user loading Dropbox, for example, a folder will automatically appear in File Manager. You can then move or copy files from your hard drive to your cloud account by dragging them from the PC folder to the cloud folder.

Can I save files directly to my cloud account? Yes. Say you’re writing a letter in Microsoft Word. By saving the file to the cloud folder, you’ll have a copy of the letter on your PC and in the cloud. This is particularly handy if you work on multiple devices. Back up your files to another source, too, be it a removable drive, USB stick or memory card. Why? Because redundancy is the best way to protect yourself from the Four Horsemen of the Datapocalypse: fire, theft, hardware crashes and malware.

I’m a little unclear about what “syncing” means. When you sync a file, a copy goes to your cloud account and you can access it from other devices. Apple iCloud and Microsoft OneDrive transfer files well within their own ecosystems, and the iCloud for Windows app lets you back up PC files. But Dropbox is the only cloud storage that works across all platforms. To retrieve a file, browse the cloud folder or open it from inside a program.

I use more than one service to avoid paying for storage. Can I manage them all from one screen? There’s an app for that. Otixo is a file manager that lets you search for files across your cloud folders, and copy or move files between folders without first downloading them to your computer. You can also make cloud files available to other Otixo users. The free version allows for five file transfers at a time between clouds, and one workspace for collaborating with other users.

Is there a file-size limit for cloud storage? Yes, and it varies by service. You can upload files that are up to 15 gigabytes to iCloud Drive. With Dropbox, there is no size limit if you upload files via the service’s desktop or mobile app, but a 10GB limit via its Web site. OneDrive has a 10GB limit, too. Google Drive is a bit more complicated. Uploaded documents that convert to the Google Docs format can’t be larger than 50 megabytes, but files you upload without converting to a Google format can be up to 5 terabytes each! (A terabyte is roughly equal to 1,000GB.)

Which service is the cheapest? Google Drive and OneDrive offer 15GB at no charge; iCloud users get 5GB free. Users of Dropbox’s free Basic service start off with 2GB, but may add an additional 500MB of storage for each new Basic customer they refer—or 1GB for each new paid, Dropbox Pro subscriber—up to 18GB total. For mega users, OneDrive is the price leader at $7 per month for a terabyte of storage. Dropbox and Google Drive charge $10 per month, and iCloud is $20 per month, for 1TB.

Read more at http://www.kiplinger.com/article/business/T057-C000-S002-secure-computer-files-with-cloud-storage.html#DqAPOrBZwVRkIgkl.99

Retirees, Turn Your Passion Into a Business

More seniors are venturing into the start-up world. Learn how you can launch your own business in retirement.

By Eleanor Laise, From Kiplinger’s Retirement Report, July 2015
For a growing number of seniors, retirement means business—start-up business, to be precise. Starting a business in retirement can be a way to pursue a passion, enjoy an intellectual challenge or simply boost your income. Perhaps you’ve done some consulting as a side gig and want to expand the business. Or maybe you have been downsized and are having trouble finding a new job.

If you are on the brink of retirement and thinking of launching a business, “your age can be a very positive factor,” says Ellen Thrasher, who recently retired as director of the U.S. Small Business Administration’s Office of Entrepreneurship Education. With a wealth of work experience and good-sized nest eggs, many seniors are well positioned to succeed as entrepreneurs.

People age 55 to 64 accounted for 26% of all new entrepreneurs last year, up from 23% in 2013 and 15% in 1996, according to the Ewing Marion Kauffman Foundation. More and more people want or need to continue working into their later years and they’re saying, “I don’t mind working longer, but I want to do it on my terms,” says Michele Markey, vice-president of Kauffman FastTrac, which provides training programs for entrepreneurs.

But older entrepreneurs also face unique challenges. Because they don’t have decades to recover from a small business going bust, older entrepreneurs must be particularly vigilant about minimizing risks. They should keep a tight rein on start-up costs, avoid heavy debt loads, research the target market and choose a business structure that will protect their retirement savings from a business meltdown. Before diving in, seniors may want to test whether they’re really cut out for the entrepreneurial life—perhaps by volunteering at a business incubator where they can help mentor younger entrepreneurs.

Some seniors stumble into the start-up world by accident—but then become hooked. Elizabeth Isele, 72, was 56 when she launched her first enterprise. She had retired from the publishing industry in New York City and moved to Maine, planning to do some editing and teaching. But when a publisher asked her to help create Web sites, Isele started researching what the Internet was all about—and realized how much seniors could benefit from it. So she launched an organization to provide computer training to seniors. “I was an accidental senior entrepreneur,” she says.

Once bitten by the entrepreneurial bug, Isele became committed to sharing her know-how with other seniors. She has since launched two new ventures focused on helping seniors launch their own businesses: eProvStudio and Senior Entrepreneurship Works. With training, seniors can “understand they’ve been thinking entrepreneurially their entire lives,” even if they’ve never started a business, Isele says.
Get educated

Your first step in exploring entrepreneurial life: Seek out training and mentoring that will help you determine whether you’re cut out to be an entrepreneur, give you feedback on your business ideas and cover some details of launching a business.

The Small Business Administration offers free online courses designed specifically for encore entrepreneurs. AARP offers online tools that help seniors assess whether entrepreneurship is a good fit for their personality and financesstartabusiness. Also check your local community college for courses on writing business plans and other small-business topics.

You can also find more in-depth training designed specifically for encore entrepreneurs. Kauffman FastTrac, for example, offers a 30-hour program for boomer entrepreneurs. The course is available through community colleges and other institutions nationwide.

SCORE, a nonprofit organization supported by the SBA, lets you connect with a small-business mentor by e-mail or participate in online workshops as well as providing in-person training and mentoring. You can also visit Small Business Development Centers or Women’s Business Centers, both overseen by the SBA. Find centers and other resources in your area.

Next, assemble a “kitchen cabinet”—a team of advisers who can give honest feedback and poke holes in your business plan. Include colleagues or acquaintances who have expertise you lack, perhaps in finance or marketing.

Choosing a business

The best businesses for older entrepreneurs are “not capital intensive,” says James Bruyette, managing director at Sullivan, Bruyette, Speros & Blayney, a wealth management firm in McLean, Va. If you launch a consulting business out of your basement, for example, you’ll likely avoid risking savings that you can’t afford to lose.

Consider your appetite for risk. While opening a jewelry store can be a roll of the dice, you may be able to sell items on eBay or Etsy with minimal risk. A franchise can also make sense for some risk-averse entrepreneurs, Markey says, since the business has already been established and there’s marketing help and other support available. Many franchises are home-based and don’t require a storefront.

Consider how much time you want to put into the business, your energy level and your medical condition. Talk to your family about whether they’re comfortable with the amount of time and money you’ll be devoting to the business.

Talk to business owners in the industry you’re considering to be sure you’re realistic about the demands of the business. Some people consider starting a bed-and-breakfast, for example, because they want to spend more time with their family, Markey says. But “the realities of the B&B don’t give you more time with your family,” she says.

When you’ve settled on your idea, write a business plan, which should include your budget, goals, marketing concepts and other details. The SBA offers a step-by-step guide to writing your plan .

Read more at http://www.kiplinger.com/article/retirement/T049-C000-S004-retirees-turn-your-passion-into-a-business.html#sefQ2e1GTwfFe60J.99

Planning to Pass On Your Family Business

Don’t put succession planning on the back burner. Grooming a successor could take several years.

By Meghan Streit, From Kiplinger’s Retirement Report, May 2014
Larry Berman spent most of last winter in Palm Beach Gardens, Fla., perfecting his golf game and enjoying 85-degree days. Meanwhile, in snowy Newton, Mass., his 30-year-old insurance-adjusting business was growing steadily and was on track to add 50 new customers in 2014.

Berman, 68, is in the process of handing over his business to his son, Jonathan Berman, and Jeffrey Sabel, a family friend whom Berman considers a second son. Last winter, Berman alternated ten-day stays in Palm Beach Gardens with four-day stints in Newton to check up on the business. After about a year of succession planning, Berman says he feels comfortable transferring most day-to-day operations, such as handling claims and managing finances, to Jonathan, 31, and Jeffrey, 36.

That arrangement enables Berman to work fewer hours, often remotely, while still keeping a hand in high-level responsibilities such as networking and marketing. “I’m looking at the palm trees, sitting in front of a laptop and surrounded by papers,” Berman says. “I played golf on Monday with a client, which is a nice way to spend an afternoon, and it’s also good client relations.”

Most small business owners are so busy running their companies that succession planning continually gets pushed to the back burner. “Many owners haven’t thought about the fact that if something happens to them suddenly, all of the value in their business can be lost,” says Mark Rosenbaum, a financial planner at Succession Consulting Group, in Portland, Ore. “If you haven’t worked out with your senior management team who will take over if you get sick or pass away, you leave your business in jeopardy and risk losing customers.”
Identifying a successor is the first step in the planning process. Many owners of family businesses turn to an adult child, a grandchild or other relative to take over the reins. If a family member doesn’t fit the bill, an owner is likely to sell, perhaps to a key employee or to an independent third party.

When evaluating a family member, consider his or her attributes as both a manager and an entrepreneur, Rosenbaum says. Someone may be a good manager but lack the ability to focus on the big picture or think strategically—the kinds of skills needed to run a successful company.

Rosenbaum’s business partner Leo MacLeod says good leaders must “have the ability to look beyond what they need to do today. That is a skill set many companies don’t think about—can this person think beyond just doing their own job?”

Kathleen Richardson-Mauro, co-founder of Business Transition Academy, with offices in Boston and Tampa Bay, Fla., says business owners should not presume their eldest son or daughter is the best person to run the company. A successor could be a younger child or a grandchild. Richardson-Mauro, co-author of Cashing Out of Your Business (Book Publishers Network, $18), says one reason so many family businesses fail to make it to the second or third generation is because many families view the corner office as a birthright, and an unqualified successor may not be able to keep the business afloat.
If you have several children, passing on your business to one of them can spark sibling rivalry. David Karofsky, president of Transition Consulting Group, a family-business consulting group, with offices in Framingham, Mass., and Palm Beach Gardens, Fla., says it often becomes apparent to business owners which one of their adult children is best suited to take over the company. Some children may be uninterested, live far away or be committed to another career.

However, when several siblings or cousins are hoping to take the helm, Karofsky says business owners should consider the needs of the company—not family dynamics—to choose a single successor. “We have worked with businesses that have decided to have joint leadership,” Karofsky says. “It’s not our first choice, but there is no playbook for running a family business.”

Choosing one successor doesn’t mean leaving your other kids high and dry, says Karen MacKay, a succession-planning lawyer at Burke, Warren, MacKay and Serritella, in Chicago. She says if you are giving a business to one child, you might give his siblings a larger share of other assets, such as real estate, investment accounts or life insurance proceeds.

However, because a business is usually the largest asset in an estate, MacKay says some parents decide to give children who aren’t involved in the business non-voting shares of stock, while the child who runs the company retains the voting shares. This strategy ensures that all of your heirs share in the wealth your business created, but MacKay says it can cause conflict. “Oftentimes, the business owner wants to plow cash back into the business and doesn’t want to give it to a sibling who isn’t working in the business,” MacKay says. “And the sibling who isn’t in the business is saying, ‘Give me a dividend.’ ”

Grooming Your Successor

Once you choose a successor, it’s important to prepare that person to run the company. Ideally, Rosenbaum says that the process should take place over three to five years. That allows time for the successor to earn employees’ respect and to work in different areas of the business. During the transition period, the would-be successor also should develop relationships with key clients and vendors and begin representing the company publicly. “You are giving them a trial run, and it’s not impossible that you learn in a year or so that this isn’t going to work,” Rosenbaum says.

In the case of Larry Berman’s insurance-adjusting business, his son Jonathan Berman and business partner Jeffrey Sabel had both been working at the company for several years when Berman began grooming them for leadership. Berman says that the young men were eager to advance in the business, and he embraced the idea because he had previously worked for another family’s business that suffered when the founders were reluctant to cede control to the next generation.

The three men worked with a team of professional advisers to draft a succession plan. They decided that Jonathan and Jeffrey would earn equity in the company over a five-year period, at the end of which they would become co-owners. Meanwhile, Larry Berman has a five-year renewable contract that provides for his salary, expenses and a draw against commission.

Berman relinquished his post as president and chief executive officer, but he remains the chairman of the board. Jonathan and Jeffrey were named president and chief executive, respectively, in January. “It’s a matter of learning to let go of the things you don’t need to do,” Berman says.

While he is still active in the business, Berman is making sure his protégés reap the benefit of his experience. He frequently copies his successors on important e-mails. He also makes a point to share stories from his 40 years in the adjusting business, which he says Jeffrey affectionately refers to as “Larry lessons.” “They are earning the business by ‘sweat equity’ and by taking care of my salary and expenses,” Berman says. “And at the same time, they are the beneficiaries of learning from me.”
When you’re passing on a business to a family member, you and your successors will need to find a way for you to be compensated or create a stream of income for your retirement. Steven Faulkner, head of private business advisory for J.P. Morgan Private Bank’s Advice Lab, advises business owners to review all of their assets and income sources during succession planning to determine how much money they’ll need from the business to live comfortably in retirement.

Some owners decide to work on a consulting basis for their former companies and collect a salary. You can require your children to purchase the company, either with their own capital or with a bank loan. Faulkner says another option is a seller-financed buyout, in which the company, the seller or both finance a loan for your successors to purchase the business, thereby creating an income stream for you.

Estate planning is another important aspect of succession planning. Susan Link, an estate-planning lawyer at Maslon, Edelman, Borman and Brand, in Minneapolis, says gifting shares of stock in the family business is one of the most tax-efficient methods of transferring the value of a company from one generation to the next. A well-executed plan will enable you to pass on your family business—while you’re alive or after you die—and minimize the estate-tax bite.

You can transfer shares worth up to $14,000 ($28,000 for a couple) to an individual each year without having to file a federal gift-tax return. Any amount above $14,000 counts against the estate-tax threshold when you die. The threshold in 2014 is $5.34 million for an individual ($10.68 million for a couple). If you have a number of years to plan, you may be able to use these gifts, as well as certain trusts or partnerships, to transfer a large portion of your business to your successors while enabling you to retain control until you are ready to give up the reins. In the meantime, you’ll be removing taxable value from your estate.
The IRS also permits people who are gifted shares of privately held companies to discount the value of that stock if certain standards are met. That allows owners to shift additional shares while limiting their gift-tax exposure. Link says appraisals cost about $8,000.

Selling to a Third Party

For some small business owners, selling to an independent party makes more sense than choosing a successor from within the family. That was the case for Peter Fairbanks, 66, who sold his Norwell, Mass., energy engineering company to a private equity firm in 2011.

Fairbanks and his wife started their company in 1990, and it grew to a 30-person operation. Although the couple’s two sons were working for and had ownership interests in the business, the family decided that selling was their best option.

Fairbanks says he had declined previous offers to sell his company, but this firm made an offer that caught his interest. “It seemed like these folks could provide us with the value we thought the business had,” Fairbanks says. “I made sure my sons benefited at the time of sale as well.”

Getting a business ready for sale requires a different kind of preparation than when you’re passing it on to a relative. Early in the selling process, Fairbanks realized he would need professional assistance, so he hired Richardson-Mauro’s consulting firm, and it connected him with other advisers. The consultants helped Fairbanks prepare the financials in the format that the prospective buyer wanted. “We also engaged an investment banker who helped us with the negotiations and with presenting the company in the best way,” he says.

If you think you might want to sell your business to a third party, you should begin getting your financials in order two to three years ahead of time, says Mark Ferm, a certified public accountant with Tronconi Segarra & Associates, in Williamsville, N.Y. For example, you should stop writing off club memberships and vehicles as business expenses. Ferm says companies are usually valued based on a multiple of earnings, so if your business income is being reduced by personal expenses, that could lower the selling price.

Richardson-Mauro says that it’s particularly important for small businesses to have organized financial documents because the current resale market is competitive. With baby boomers hitting retirement age, she says there’s a surplus of small businesses for sale, creating a buyer’s market. And while lending restrictions have eased since the recession, she says credit is still tight when it comes to buying a company. “Buyers are more discerning and there are more businesses to choose from, so you really want your company to be dressed for success,” Richardson-Mauro says.

Whether you’re selling to a third party or passing on your business to the next generation, you need to prepare yourself for a life without a company to run. Amelia Renkert-Thomas, co-owner of Withers Consulting Group, in New Haven, Conn., and London, says she helps retiring business owners come up with a plan for how they will spend their time and for ways that they can redirect their energy. She says the kinds of people who have the ambition to build successful businesses often are unhappy when they have too much downtime or aren’t working on meaningful projects.

That is why Renkert-Thomas recommends that retired business owners get more involved in philanthropy or put their business experience to good use by volunteering for an organization such as SCORE, which connects new business owners with mentors. What you don’t want to do is name a successor, but then show up at the office every day. “I see business owners who do that for 20 years, and everybody defers to them,” she says. “That can be really dangerous for a business because the senior person isn’t running it full time, and the next generation can’t run it because no one will give them the respect and power they deserve.”

Berman says he had watched too many friends fail to thrive in retirement because work had been the sole focus of their lives. He says he wanted to be more deliberate about how he will spend his retirement years, and for him that includes leisure time with his wife and warm weather.

Read more at http://www.kiplinger.com/article/retirement/T049-C000-S004-planning-to-pass-on-your-family-business.html#JljXJMjiA8d71Wqe.99

 

Smart Savings Tips for New Grads
You got the degree. But do you have a sound savings plan for life beyond college?

By Janet Bodnar, June 13, 2014

A new bevy of graduates has burst out of the college cocoon. But how prepared are they to face financial challenges in the cold, cruel — and expensive — world outside? CNN recently interviewed me on the subject, and my answers reflect the advice that Kiplinger gives in our special Starting Out Guide for Millennials. Here’s a sampling:

See Also: Our Starting Out Columns for Young Adults
Q. Many young people look at you as if you’re crazy if you suggest laying the groundwork for home buying and retirement when they’ve just graduated. How crucial is it to start financial planning right off the bat?

You really don’t have much choice. Assuming you’re fortunate enough to get a job soon after graduating, one of the first things you’ll likely be called upon to do is sign up for your employer’s retirement plan (if you’re not automatically enrolled) and decide how much to contribute and where to invest the money (see Free Money for Retirement). You may not have any immediate plans to purchase a home, but it’s critical to begin building a solid credit history so you can qualify for an attractive interest rate when you’re ready to buy (see How to Get Your First Credit Card and Save for a House).
Q. What are some of the basic financial and investment concepts young people should grasp in the one or two years following graduation?

Most important is the time value of money, for a number of reasons. At this stage of your life, time is arguably your biggest asset. That means that thanks to the magic of compounding, small amounts set aside now can grow into big piles of cash later (see Start Saving Now). Also, when you’re investing for the long haul — for example, a retirement that is 40-plus years away — you can afford to take reasonable risks in pursuit of higher returns by investing in the stock market (see Start Investing Wisely).
Q. We’ve heard so much about student-loan debt and the tough job market. How do new grads navigate those economic factors and still get their personal finances off to a good start?

The best way to handle student loans is to set up a manageable repayment plan that fits your finances; if your circumstances change, you can always change the plan (see Don’t Stress Over Student Loans).

 

As for the job market, be proactive about your search (see Job-Hunting Tips for New Grads and  How Students Can Improve Their Chances of Getting a Job). Do an honest assessment of your skills to see if you have what it takes to qualify for jobs that are in demand. If you need to acquire additional knowledge, be a strategic student. Don’t head back to grad school (and potentially acquire more debt) unless you’re in a field that will pay off (see Advanced Degrees Worth the Debt). You may be able to acquire skills free by taking a massive open online course (MOOC), such as those offered by Khan Academy, Udacity or Coursera (see 6 Things You Must Know About E-Courses).
Q. A lot of new grads are going to ask, “How can I save for the future when I’m broke now?” What practical advice can you give them?
Many new grads make the mistake of thinking, I’m living paycheck to paycheck. I don’t have money to put aside. Or they think they need to make more money before they have enough to start saving. But that never works; the more you make, the more you tend to spend. The best way to save is to have someone else do it for you: Contribute automatically to your retirement plan at work, or have your bank deposit a portion of each paycheck into your vacation account. You’ll never miss the money if you don’t see it, and even small amounts will add up (see  How to Stretch Your Money).
Read more at http://www.kiplinger.com/article/college/T023-C002-S003-smart-saving-tips-new-grads.html#wUsDwCi0PwMyj3SE.99

The Basics of Investing in Mutual Funds

Learn how funds work and how to use them to set up a well balanced portfolio that’s right for you.

By the editors of Kiplinger’s Personal Finance, Updated January 2014
Funds offer plenty of benefits to busy investors. Here’s everything you need to know to make them work for you.

See Also: Our Favorite No-Load Mutual Funds

Why Mutual Funds?
For investors without much experience or time to devote to building a portfolio, mutual funds offer advantages that simply aren’t available anywhere else.

Sales Loads and Other Charges
Learn about the expenses funds charge and which ones you can avoid.

Focus on Categories
A fund’s performance depends on what it buys. Each category carries its own level of risk … and reward.

Build a Solid Portfolio
A balanced collection of funds will serve you better than a collection of the latest high fliers.

Start Your Search
From first choice to final check, here’s how to find the best funds for you.

Tips for the New Fund Owner
What paperwork to keep, how to track your investments and when to say “sell.”

Hang onto Your Profits
Keeping careful records, and understanding cost-basis rules will prevent you from overpaying your taxes.
Read more at http://www.kiplinger.com/article/investing/T041-C000-S001-growing-a-fund-portfolio.html#SDcRoJzQClbVQOWw.99

 

FUND BASICS – Start Investing

From first choice to final check, here’s how to find the best funds for you.

By the editors of Kiplinger’s Personal Finance, Updated January 2014
Funds offer plenty of benefits to busy investors. Here’s how to start finding the right ones to add to your portfolio.

See Also: The Basics of Investing in Mutual Funds

Your first step is determining whether you’ll pick funds entirely on your own or rely on the help of a broker, financial planner or other adviser.

If you seek help, you will likely pay a load when you buy your fund shares. Studies show that the commission does not buy better fund management. In general, loads compensate the sales people who sell the funds to their clients.

If you’re picking your own funds, there’s no point in paying a load for advice that you haven’t gotten. On the other hand, if you go to advisers for help, don’t begrudge them the commission you owe for their advice.
If you decide to stick with no-load funds, you will slice the universe of funds you need to consider roughly in half. Once you find a no-load you like you can purchase shares directly from the fund company, or through a discount broker, which may or may not charge its own transaction fee (see the Kiplinger 25 center for our favorite no-load funds).

Study Past Results

This is arguably the trickiest part of the process, because past performance is no guarantee of future returns. Not even the best and brightest beat the averages every year.

Focus on three- and five-year returns rather than one-year figures. A ten-year return is even better, especially if the fund is still managed in the same way (and by the same person) now as then and hasn’t changed in some fundamental way. The longer a manager has achieved superior results, the more confident you can be that those numbers are meaningful.

Concentrate on the consistency of a manager’s return. Even five-year results can be exaggerated by one spectacular year.

Examine how a fund has done each year of the period you’re looking at relative to its peers or against an appropriate benchmark index (such as the S&P 500 index for large-company funds or the Russell 2000 for small-company funds).

Incidentally, there may be times when it makes sense to invest in funds with less-than-stellar records. For instance, aggressive-growth funds that invest in small companies with strong earnings momentum have performed poorly over much of the past three years. If you want to invest in such a fund because you feel those kinds of stocks are attractively valued or because you need to round out a portfolio, be prepared to accept a fund with poor recent results.

 

Who Runs the Fund?

Look at how long the most experienced manager involved in running the fund has been associated with the enterprise. If the current manager took over the job in the past few years, the fund’s long-term record is probably meaningless. This may not disqualify a fund from consideration, but it does serve as a yellow light.

How Risky Is It?

There is nothing inherently wrong with investing in risky funds. But if you are going to take big risks, you ought to be compensated with big returns. What you don’t want is a fund that takes big risks but delivers just so-so returns for more than a year or two.

The Costs of Owning

All funds charge investors for the cost of management, sending out prospectuses and shareholder reports, legal services, accounting and other administrative matters. These costs are expressed by the fund’s expense ratio. An expense ratio of 1.00 means a fund extracts $1 a year for every $100 invested. (Performance results, incidentally, include these ongoing expenses.)

It’s always better to invest in a less costly fund. Expenses vary among different types of funds, so it’s important to view expenses in the context of a fund’s category. See Sales Loads and Other Charges for more information.

Is Size a Problem?

All things being equal, it is easier to manage a modest amount of money than a huge amount. Managers who invest in large, easily traded U.S. stocks or government bonds can hold many billions in assets without unduly hampering results. But funds specializing in small-company stocks or junk bonds might be overwhelmed by even $1 billion in assets. With small-company funds in particular, think twice about any fund with assets greater than $1 billion.

Study the Style

Once you’ve identified consistent, high-performance, low-cost funds with acceptable levels of risk, learn how the managers run them. The fund’s style will help you understand which market conditions are conducive to great returns and which are likely to hurt. See Focus on Categories for details on the different kinds of funds.

You’ll smooth the volatility of your overall portfolio if you choose funds from a variety of investment objectives and, in the case of stock funds, a cross section of investment styles. Request both a prospectus and a shareholder report. The prospectus contains information about the fund’s objectives, its strategy for achieving those objectives, and its risks.

A shareholder report will list a fund’s recent holdings. Also check management’s letter to shareholders. It sometimes contains useful information about the manager’s strategy or an assessment of his or her recent performance.

What’s the Yield?

In general, the higher the 12-month yield (that is, income distributed to shareholders the previous 12 months), the riskier the fund. Because bond-fund yields tend to be modest, low expenses are even more important.

Read the Prospectus

If a fund catches your eye, call the fund company and ask for its prospectus. Read the section on the fund’s investment objectives and policies, which tells you what types of securities it may invest in. Also be sure to read the sections that describe the fund’s risks and expenses to verify your research.

A fund’s annual and semiannual reports will give a snapshot of the fund’s recent holdings. Also look at which industry sectors a stock fund is emphasizing. If a fund says it invests in blue-chip stocks and you don’t recognize any of the names of the stocks in the annual report, that should set off an alarm.

Read more at http://www.kiplinger.com/article/investing/T041-C000-S001-start-your-search.html#gaZ29Ckl5hW6TB9R.99

6 Things You Must Know About Identity Theft

The number of victims is going up. Don’t become a statistic.

By Lisa Gerstner, From Kiplinger’s Personal Finance, June 2013

3 Things Not to Keep in Your Wallet
1. It’s no joke. The film Identity Thief poked fun at the perp, played by Melissa McCarthy, and her hapless victim, played by Jason Bateman. But the movie highlights how pervasive ID theft has become—and how easy it is for criminals to wreak havoc. “There are more people looking over your shoulder,” says George Milne, a professor of marketing at the University of Massachusetts, Amherst, who specializes in privacy. Still, you don’t need to lose sleep—or sign up for pricey monitoring services.
See Also: Is Your Identity At Risk?

2. Who’s stealing what. About 12.6 million people were victims of identity theft in 2012, an increase of more than one million from the previous year, reports Javelin Strategy & Research. One likely reason: a spike in Web site data breaches. LinkedIn, Sony and Zappos are among the high-profile businesses attacked in recent years. Javelin found that nearly one in four people who were notified that their data had been compromised in a breach became victims of identity theft last year. The fix: Create a variety of passwords so that a thief won’t be able to use a password stolen from one site to enter another. Passwords for your e-mail and financial accounts, in particular, should be unique. Create longer passwords that contain a mix of upper- and lowercase letters, numbers, and symbols.

3. What to watch for. Review your credit reports periodically and check each bank and credit card statement for unauthorized transactions. Bills from medical providers for services you never received could mean someone is posing as you to get treatment. Make a habit of shredding documents that contain sensitive information.

4. Lock the door behind you. Don’t share your phone number or birthday on social media sites. Keep your computer’s security software up-to-date, and avoid sending personal data over unsecured Wi-Fi networks and Web sites. Set up alerts through your bank and credit issuers to notify you when large transactions—say, $150 or more—take place. Lock your smart phone’s screen with a password, and set up the ability to erase data remotely in case the phone is lost or stolen.
5. Monitor your child’s identity, too. Kids are attractive targets because crooks may be able to use a child’s information for years before anyone realizes something is amiss. Be on the lookout for unauthorized bills addressed to your child or calls from debt collectors. Have the credit agencies run a manual search of your child’s Social Security number to see whether it has been used. If you’re not sure why a school form requires your child’s Social Security number, don’t hesitate to ask.

6. And if worse comes to worst. If you suspect you’re a victim of identity theft, contact the organi­zation involved, such as a bank or credit issuer, and file a police report. Place a fraud alert on your credit reports by contacting one of the three major bureaus (Equifax, Experian or Trans­Union), which will notify the other two. Lenders will have to take extra steps to verify that you are the person taking out credit in your name. In more serious cases, a security freeze, in which lenders must get your permission to pull a report, may be necessary.

Read more at http://www.kiplinger.com/article/credit/T048-C000-S002-things-you-must-know-about-identity-theft.html#t8skYPSy1gSrZ0zl.99

 


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