Happy Donating!

As we approach the end of the year and the holiday season, we seem to be bombarded with opportunities for charitable giving. Happily, many of us answer this call and donate generously to our favorite charitable organizations. Your generosity may also be beneficial at tax time if you remember a few IRS guidelines for charitable contributions.

  • You must itemize deductions on Schedule A to deduct a charitable contribution.
  • Donate before year end to claim a deduction for 2017. Please remember if you are making a stock donation, to submit the request a few weeks before the end of the year. This will allow your custodian enough time to fulfil the request in time for the deadline.
  • Verify that the charity is tax-exempt (sometimes called 501 (c) (3) organizations) or qualified. The IRS considers the following types of organizations qualified for charitable donation purposes.
    1. A state or possession of the United States, or the United States for public purposes
    2. A community chest, corporation, trust, fund or foundation of the United States organized for charitable, religious, educational, scientific, or literary purposes or for the prevention of cruelty to children or animals
    3. A church, synagogue or other religious organization
    4. A war veterans organization
    5. A nonprofit volunteer fire company
    6. A civil defense organization
    7. A domestic fraternal society if the contribution is used for charitable purposes
    8. A nonprofit cemetery company if the funds are used for the perpetual care of the entire cemetery

More information about qualified organizations can be found in IRS Publication 526, Charitable Contributions. You can also verify the tax-exempt status of an organization on the IRS.gov website.

  • When making your donation of cash or goods, be sure to get a receipt. The IRS requires a receipt for donations greater than $250.
  • Large donations may be limited in the current year to 50% of AGI for public charities or 20-30% for private charities. Any excess donations can be carried forward for five tax years. When planning a large gift, talk to your tax professional to develop the most beneficial giving strategy.
  • Lastly, many employers will match gifts made by their employees, so remember to check your company policy and do twice as much good!

Nancy Blackman - Parsec Financial Corporate HeadshotsNancy Blackman, Portfolio Manager

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Market Update through 8/15/13

as of August 15, 2013        
  Total Return
Index 12 months YTD QTD MTD
Russell 3000 22.51% 18.71% 4.08% -1.33%
S&P 500 20.84% 18.07% 3.73% -1.29%
DJ Industrial Average 17.86% 17.24% 1.78% -2.26%
Nasdaq Composite 20.94% 20.45% 6.20% -0.41%
Russell 2000 29.64% 21.95% 5.26% -1.62%
EAFE Index 23.86% 12.33% 7.46% 2.03%
Barclays US Aggregate -1.58% -2.93% n/a -0.64%
Barclays Intermediate US Gov/Credit -0.15% -1.52% n/a -0.38%
Barclays Municipal  -2.52% -4.34% n/a -0.83%
    Current   Prior
Commodity/Currency   Level   Level
Crude Oil    $107.33    $105.03
Natural Gas    $3.42    $3.45
Gold    $1,361.60    $1,312.40
Euro    $1.32    $1.32

Mark A. Lewis

Director of Operations

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The Bucket List

Several years ago, I read a self-help book that promised to help me manage money better.  I do not remember much about the book, not even the title.  I do remember one exercise that was very useful.

I was supposed to create what is now commonly known as a “bucket list.”  I should list all of the things I wanted to do during my lifetime.  It did not matter how long the list was.  When finished with the list, I should then review it and think about how a change in money management practices could help me achieve those goals.  That would help me to set a budget, make more responsible spending decisions, et cetera.  After all, you need money to pay for most of the things you want to do in life.

I found the exercise to be very enlightening.  To my surprise, I saw that most of the items related to travel.  I realized that I needed to do a better job at maintaining an emergency fund and set a formal budget for travel.  I had been tapping the emergency fund whenever I wanted to visit some place new, which is a bad idea.  I setup a direct debit from my checking to my savings account so that savings could be automatic.  This act created a formal budget for both emergency savings and travel.

Today’s list is very different.  My revised list includes completing several projects around the house, paying off my mortgage a few years early, donating more money to my favorite charity, buying a nice road bike, and squirreling away more money for unexpected expenses and retirement.  Sure, there are a few personal goals that are not tied to money; I am not completely shallow.  In balance, the list is much more practical than years ago, when I wanted to see the world.

I still do not want to wake up one day at age 80 and realize all I ever did was work, work, work.  The list can help me stay focused on important things and achieve some of my goals.  Hopefully, I can strike the right balance between the practical (saving for retirement) and the fun (buying that road bike).  I encourage you to take some time to create your own list.

Then, please share your list with your financial advisor.  Goals change over time, so he or she should be aware of what you want from life.  Together, you can develop a financial plan to direct your savings in a manner that will bring you closer to achieving your goals.

Cristy Freeman, AAMS
Senior Operations Associate


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North Carolina Tax Law Changes

After months of grappling with members of the state’s legislature, Governor Pat McCrory signed a bill authorizing the most significant changes to North Carolina’s tax code since the 1930s on July 15.

The new tax code reduces both personal and corporate income taxes and eliminates the estate tax. Early estimates indicate that taxpayers across the board will pay less in state taxes once the changes go into effect. Some of the other key provisions of the new law are:

• Deductions for mortgage interest on first homes will be capped at $20,000.
• Charitable contributions will remain fully deductible.
• The child tax credit will continue
• Social Security income will remain exempt from state taxes.
• The corporate tax rate will be cut from the current 6.9 percent to 5 percent by 2015.
• North Carolina’s gas tax will be capped until June 30, 2015.
• A deduction on retirement income is eliminated.
• Starting in 2014, the sales tax holidays for back-to-school and Energy Star products are eliminated.
• The deductibility of the first $50,000 of business income has been eliminated
• Service contracts will be subject to sales taxes
• Electricity will be taxed at a general sales tax rate of 7%
• Amusements, movie tickets, etc will be subject to sales taxes

This is only a small representation of the changes. And this information should not be considered tax advice. Individual situations may vary. And as always, please consult your tax advisor regarding how the laws may affect you.

Tracy H. Allen, CFP®
Financial Advisor

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Market Update through 7/31/13

as of   July 31, 2013
Total Return
Index 12 months YTD QTD July
Russell 3000 26.86% 20.31% 5.48% 5.48%
S&P 500 24.99% 19.61% 5.09% 5.09%
DJ Industrial Average 22.36% 19.95% 4.12% 4.12%
Nasdaq Composite 25.41% 20.94% 6.64% 6.64%
Russell 2000 34.78% 23.97% 7.00% 7.00%
EAFE Index 24.27% 10.09% 5.32% 5.32%
Barclays US Aggregate -1.91% -2.31% n/a 0.14%
Barclays Intermediate US   Gov/Credit -0.37% -1.15% n/a 0.31%
Barclays Municipal -2.19% -3.54% n/a -0.88%
Current Prior
Commodity/Currency Level Level
Crude Oil  $105.03  $96.56
Natural Gas  $3.45  $3.56
Gold  $1,312.40  $1,223.70
Euro  $1.32  $1.30

Mark A. Lewis

Director of Operations

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Tools to Help You Age in Place

I live in an older neighborhood where most of the homes were built in the mid 1950’s to early 1960’s. There are a few original owners left, though many younger families have arrived in recent years. I love the quirkiness of our HOA-less neighborhood and the cast of characters that reside in it; but best of all, I love the sense of community that exists among us residents. Like the time 70-year-old Dottie bought a bunch of balloons to celebrate Betty’s 90th birthday and Wallace’s concrete gnome that gets redecorated for each holiday. Most recently, there were handmade yard signs up and down the street encouraging Stan as he recovers from major surgery.

One thing I can say about my neighborhood is that our seniors show little desire to move to a retirement community. And this is not unique to Hunterwood. According to a study conducted by AARP, “82 percent of Americans choose to age in place, within the same communities where they have lived. Every community, from rural areas to suburbs to cities, will include significant numbers of older adults.”

Businesses, local governments and non-profits are responding to this new trend. In 2001, in the Beacon Hill neighborhood of Boston, the first “Elder Village” was created by several residents who desired to age in place. Also called intentional communities or virtual retirement communities, these volunteer-based organizations provide services from transportation and grocery delivery to home repairs and dog walking.

On the technology front, several gadgets, apps and gizmos have surfaced aimed at our aging population. These new technologies go way beyond the Clapper and Life Alert! The camera-less monitoring device, Sonamba, was developed by Durham, NC based pomdevices, LLC. According to the company, “Sonamba periodically sends seniors’ wellbeing status alerts to caregivers and includes senior-oriented Activity of Daily Living Monitoring, Personal Emergency Response, Medication & Calendar Reminders, Social Communications and Games.” Another product, BeClose is an age in place technology that uses wireless sensors placed in the home to track a senior’s well being.

I am sure there are many reasons people opt to age in place, but certainly cost plays a big part in their decision. According to a 2010 study conducted by the National Investment Center for Senior Housing and Care Industry, the average entrance fee for a Continuing Care Retirement Community (CCRC) unit is $249,857. Once you are in, monthly fees for a single occupancy unit will cost $2500 and up each month, depending on the contract type.

The burgeoning Age-in-Place industry is working hard to develop products and services geared toward serving our seniors, and that’s great news for those who want to age-in-place.

Tracy Allen, CFP®
Financial Advisor

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Gonna Make You Sweat

My last blog featured a story about financial planners using yoga in their business practice. Somehow, I’ve managed to find yet another connection between finance and exercise. As I was online perusing Bloomberg the other day, a headline about sweaty Wall Streeters caught my eye. At first I was grossed out by the mental image that immediately came to mind, then I saw something about spin-class meetings. The article was describing a growing trend on Wall Street to conduct client meetings after early morning exercise classes rather than having the usual post-work, waistline-expanding drinks and dinner.

Given the exponential rise in obesity-related diseases in this country, I see this as a positive move. I’ve also noticed an increased interest in health in our own office on Wall Street in Asheville. Gone are the days of the bottomless candy bowl and rarely will you find any doughnuts in the kitchen. There is a slight uptick in sweet treats around the holidays, but it’s nothing like it used to be. And when we do receive a thoughtful, delicious yet sugary gift from a client or vendor it seems to take much longer to disappear these days. We have added a fitness-related event our calendar, as well – this year marks the third annual Parsec Prize 5k in October, where proceeds go to the recipients of the year’s Parsec Prize winners. Many of our employees participate in the race and enjoy a little friendly competition.

Some of us enjoy a lot of competition – I’ll have to miss the 5k this year to participate in my third CrossFit Garage Games (I had already committed to it before I knew the dates were the same), and I’m no longer the only CrossFitter at Parsec. Speaking of which, I work out at 6 a.m. most mornings – any takers?

Sarah DerGarabedian, CFA
Director of Research

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Market Highs: 81 Years Later

Earlier this month (July 8th to be exact) the Dow Jones Industrial Average passed its 81st anniversary of its closing low during the Great Depression. On July 8, 1932 the average closed at 41.22 (that is right, 41.22…I didn’t leave a digit out) which marked the end of an -89.19% decline from its prior peak set on September 3, 1929. Over 81 years later, with many other bear and bull markets in-between, the index is currently at or around a record high level of over 15,500.

Though it is hard to imagine what it was like to be an investor in such a significant downturn, chances are you lived through history’s second worst peak to trough decline. From October 9, 2007 to March 9, 2009 the DJIA index fell -53.78%, which was the worst peak to trough decline since that period over 80 years ago.

Many people, after having experienced this significant decline in recent memory, are acutely worried about when the next bear market will come. A bear market represents a 20% decline from the market’s prior peak level, and a correction represents a greater than 10% decline but less than 20% (which would turn the correction into a bear market). The news media will try to forecast which data point will trigger the next decline — whether it is monetary tightening by the Federal Reserve, slowing economic growth in China, or any number of reasons.

History, as told by the Dow Jones Industrial Average and documented by Crandall, Pierce & Company, suggests that since 1900 there have been 38 corrections and 21 bear markets. That averages out to about a bear market or a correction every 1.9 years. So, will another bear market or correction occur in the future? Our answer is yes, certainly. When will it happen? We don’t know that answer, and we don’t feel that there is a good source to indicate the exact timing of when the next downturn will occur.

So, we encourage clients to pick an asset allocation that fits their situation and one that can sustain them through the next downturn. That way they can remain invested to participate in the following recovery – which has happened 59 times out of the last 59 corrections or bear markets.

Travis Boyer, CFA
Financial Advisor

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What’s the Difference in a 529 Plan and a Custodial Account?

Saving for college is daunting enough as it is, and then you have to worry about whether to save into a 529 Plan or a Custodial account.  Either can be used for education and both have their own benefits and drawbacks. When making a decision about which to use, you’ll want to consider the specific factors of your family situation.

A 529 Plan is tied to the state that sponsors it. Almost every state has a plan and you don’t have to live in the state to use their plan. You can compare the various plans at www.savingforcollege.com.  North Carolina’s plan has Vanguard funds, which are inexpensive, and there is currently a state tax deduction for residents that contribute to the plan up to $5,000 annually.

A custodial account on the other hand can be opened at any brokerage firm. There are no such deductions for contributions.

Comparison of 529 and Custodial Accounts


529 Plans

Custodial Accounts

Who Owns the Account?

The adult

The child

Who Controls the Account?

The adult

The adult only until the child’s age of majority

What is the Tax Character?

Investments grow tax-deferred and qualified withdrawals (for education) are withdrawn tax-free; non-qualified withdrawals come with a 10% penalty and a tax on earnings.

Investments are subject to the “kiddie-tax” but otherwise treated as any investment account, no special tax treatment.

What Can the Money Be Used for?

Qualified post-secondary education expenses to avoid the 10% penalty.

Anything that benefits the minor (you usually have to prove this)

Investment Options?

Usually index funds or mutual funds, restricted to the plan’s options


Can You Change your Mind about Giving the Money to the Minor?

You can change the beneficiary of the account to another member of the family.

No, it belongs to the child always.


If you feel confident there will be some qualified post-secondary education expense for your child or her siblings, the 529 plan is tax-friendly and a great choice, but it comes with some serious limitations.  If you want the freedom to use the funds however you want, the custodial account is the way to go.  But beware, the money will become the minor’s when they reach age 21.

Harli Palme, CFP®, CFA


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Parsec Expands Social Media Presence

We are happy to announce that you can now find us on Facebook and follow our Twitter feed.  We still have our website and blog.  The new additions give us another means of communicating with our clients and others who might be interested in Parsec.

You may be wondering why it took us so long.  We have lots of regulations with which we must comply.  We wanted to understand what we could and could not say.  We also wanted to create something that might be meaningful to our readers.  It was rather difficult finding the right balance.

We began posting to Facebook and Twitter this month.  We hope you enjoy the new offering.

Cristy Freeman, AAMS
Senior Operations Associate

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