PUMA Wealth Advisors, LLCRobert J. Richards Jr., CFP®,MSFS, CFS, CAS, CISOwner1108 Hooper AvenueBuilding 2Toms River, NJ 08753855-949-7862puma@pumarichards.comwww.PumaRichards.com

November 2014Financial Myths, Mistakes, andMisunderstandings

Bitcoin: Digital Future or Frenzy?

The Potential Pitfalls of DIY Estate Planning

I just learned that my credit- and debit-cardinformation was part of a data breach. Whatshould I do?

Puma RichardsIndependence, Integrity, Experience, Service

Financial Myths, Mistakes, and Misunderstandings

See disclaimer on final page

I hope this Newsletter finds you well.If you ever have any questions orconcerns please feel free to contactme at 1-(855) 949-7862.

Visit my websitewww.PumaRichards.com to get allthe latest information and marketnews. You can also find me onFacebook, LinkedIn, and Twitter.

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Throughout our financial lives, we may beinfluenced by myths, mistakes, andmisunderstandings (MMMs). Here are just afew.

In the beginning . . ."I don't invest because Idon't know much aboutit." It's time to learn,because a basicunderstanding ofinvesting concepts canhelp you make moreinformed financialdecisions.

"Wow, they'll give me that much credit! Imust be able to handle it." Just because thecredit-card company or bank extends a largeamount of credit to you, it doesn't mean youshould use all of it. The more you borrow, thelarger the monthly payments, and before youknow it, you've bitten off more than you canchew. Figure out how much you'll owe basedon the amount you borrow and determine if itwill fit within your budget. Generally speaking, ifyou can't afford the payment, don't incur thedebt.

"I'm young. I'll worry about retirement whenI'm older." Planning for retirement involvessaving enough by a desired age to enable youto support yourself without having to work. Ifyou wait to begin saving for retirement, you'llhave to sock more away or put off retirement toa later date. So the earlier you begin saving,the better.

Go figureSometimes we think we know something andrely on it as being correct, when in fact itcouldn't be further from the truth.

"I know my finances like the back of myhand. I don't need to write them down."You'd be surprised how often we think we knowhow much we can afford until our bills start toexceed our income. If you write down yourexpenses and income (e.g., create a spendingplan or budget), you'll know how much you canspend.

"I'll dip into my retirement account andmake it up later." First, if you borrow from your401(k), you'll likely pay fees and interest. If youtake money from a traditional IRA, you'll payincome tax on the amount you take andpossibly a 10% penalty. Remember, theseaccounts are intended for retirement. Takingmoney out now increases the risk you might runout of money during retirement.

"My child will pay back the money I loanedto him or her." Good luck. That "loan" isprobably going to turn into a gift, which isn'tnecessarily a bad thing if it really helps yourchild, but be sure you can afford the loan/giftbefore making it.

And later on . . .As we get older, we may fall prey to someMMMs that can be the source of needlessangst, such as:

"I won't need as much income inretirement." Maybe, but it might be a mistaketo count on it. In fact, in the early years ofretirement, you may find that you spend just asmuch money, or maybe more, than when youwere working, especially if you are still paying amortgage. And don't forget to factor inincreasing health-care costs.

And speaking of health care, "the newhealth-care law cuts my basic Medicarebenefits and services." Just the opposite istrue. The Affordable Care Act (ACA) mandatesthat no guaranteed Medicare benefits are cut.In fact, the ACA expands Medicare benefits toinclude a free annual wellness assessment.

And finally, "If I die without a will, the statewill get my assets and property." This isn'tnecessarily true. Each state has intestacy laws,which determine who gets what when someonedies without a will. But those laws generallydeal with assets in your name at your deaththat don't have a designated beneficiary or jointowner. In any case, if you want to have somesay in who will inherit your assets after yourdeath, you need to prepare an estate plan,which probably includes a will.

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Bitcoin: Digital Future or Frenzy?The five-year-old digital phenomenon known asBitcoin has received a lot of attention. If you'reunclear on what all the fuss is about, here's abrief introduction to what it is, how it works, andsome of the potential pitfalls it presents.

Bitcoin isn't a company but a virtual currencysupported by a peer-to-peer computer-basedelectronic cash system first outlined in 2009.Unlike printed currency or coins that areminted, Bitcoin is created by "mining"--usingcomplex software to solve complicatedmathematical computations. Solving a problemcreates a so-called "block," and the computerthat solved it is rewarded with a set number ofdigital bitcoins, each of which is a set of onepublic and one private cryptographic key. (Theunits are generally "bitcoins," while the generalsystem is "Bitcoin.") The number of solutionsthat can be discovered globally per hour (andthus the number of "blocks" created andbitcoins mined) is limited by the system'ssoftware code. The total number of bitcoinsavailable to be mined eventually is said to belimited to 21 million. Most users acquire themeither by buying them with physical currenciessuch as dollars or accepting them as paymentfor goods and services.

Advocates argue that the advantages of thesystem are: (1) It's not controlled by anygovernment's central bank, (2) a global virtualcurrency facilitates global commercialtransactions, (3) every block and Bitcointransaction is recorded, and (4) thoughtransactions are recorded, the payer and payeeare anonymous, much like a cash transaction.(However, that anonymity has attractedcharges that its chief use so far has been forillegal activities such as money laundering; inOctober 2013, the FBI shut down the Silk RoadBitcoin exchange and seized its assets.)

How does a Bitcoin payment work?Just as a physical wallet holds paper moneyand change, a digital wallet stores the privatesoftware keys that are bitcoins. It makes orreceives payments by communicating with thenetwork of other Bitcoin wallets. Somemerchants and services, especially those thatfocus on online or international sales, arestarting to explore Bitcoin transactions. Physicalbitcoins, which have a software key embeddedin them, have begun to be minted. However,acceptance of bitcoins as payment is entirely ata seller's discretion; there is no guarantee you'llbe able to spend them where you want to or getthe value you expect. Also, as outlined below,problems at some exchanges have sometimesimpeded access to Bitcoin funds.

Speculating in BitcoinBitcoin's usage as a currency is a ripplecompared to the tidal waves of investmentspeculation it has fueled. "Investing" in bitcoinssimply means acquiring them through one ofthe methods outlined above. However, to saythat Bitcoin as an investment is volatile is anunderstatement. Over Bitcoin's five-yearhistory, its value has fluctuated wildly as bothspeculation and confidence in it as a currencyhave ebbed and surged. In April 2013, afterrising from $90 to $260 over two weeks, abitcoin's value plummeted to $130 in just sixhours;* since then, it has undergone multipledouble-digit price swings.** Despite its lack ofconnection to any central bank, Bitcoin also hasbeen vulnerable to actions by individualgovernments. After China cracked down onvirtual currency transactions by financialinstitutions in 2013 and halted deposits of yuanat exchanges there, Bitcoin's worth in dollarswas cut by more than half.**

That volatility has led to problems for peopletrying to make payments in bitcoins. It's hard touse a currency when you're not sure whetherthe amount in your virtual wallet is worthenough to buy a Range Rover or a tank of gas.Complicating the issue is the fact that the valuecan vary on different Bitcoin exchanges.

However, volatility is only one of the problemsthat have created havoc in the Bitcoin universe.The cybercurrency has been subject tocyberattacks that have halted trading briefly onseveral exchanges. At one point, one of thelargest abruptly declared bankruptcy andannounced that nearly half a billion dollars'worth of bitcoins held there had vanished. Andfederal seizure of the Silk Road exchange'sassets created problems accessing thosefunds. Worse than not knowing how much yourbitcoins will buy is not knowing whether they'reavailable to buy anything at all.

The Wild West rides againSo far, regulatory oversight of Bitcoin has beenspotty. The currency is not backed by either agovernment or any physical asset such as gold.Major exchanges are located around the world,and the decentralized nature of the systemmakes it more challenging for governmentalregulators to get a handle on it. If you'reconsidering exploring virtual currency, either fortransactions or as a speculative investment,you should become more familiar with it ratherthan simply relying on this discussion. Andbecause of the issues outlined above, youshould be prepared for dramatic price swingsand only use money that you aren't relying onfor something else.

The Internal RevenueService has said it will treatBitcoin holdings as propertyrather than as a currency fortax purposes. This meansthe sale or exchange ofbitcoins that have gained invalue since they wereacquired could potentiallytrigger a tax liability. Also,payments made in bitcoinsare subject to the sameinformation reportingrequirements as any otherpayments made in property.

*Source: "Bitcoin panicselling halves its value,"April 11, 2013, BBC News(www.bbc.co.uk)

**Source: www.bitcoincharts.com

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The Potential Pitfalls of DIY Estate PlanningAmericans, by and large, are do-it-yourselfers.Books, websites, software programs, and evengiant box stores exist solely to help ambitiousAmericans tackle all kinds of everydaychallenges, from fixing leaky faucets to buildingbackyard sheds. The same holds true for estateplanning--there's certainly no dearth ofinformation for those wanting to prepare theirown wills and other important documents.However, do-it-yourselfers may want toexercise a bit of caution here.

Although do-it-yourself (DIY) estate planningcan cost a fraction of what attorneys charge,depending on your personal situation, this maybe a case of being penny-wise andpound-foolish.

Cheap, easy, and better than nothingProponents of DIY estate planning typicallyhave two arguments:

1. It's cheap and easy: Creating a will andother estate planning documents on yourown can cost far less than doing so with anattorney's assistance. You can findresources online and in the library that couldhelp.

2. It's better than nothing: What happens ifyou die or become very ill without importantestate planning documents? In that case,the state will make important decisions foryou, such as how your property will bedistributed, who will care for your minorchildren, and what medical care you'llreceive if you are unable to make yourwishes known.

These points are valid: For those who cannotafford to pay an attorney, DIY may be aneconomical alternative. For others, a poorlydrafted will may be better than no will at all,especially when naming a guardian for minorchildren is involved. But there are several risksto DIY estate planning, including the risk thatyour wishes will not be carried out exactly asyou intend.

Basic is not always idealAlthough DIY sources can typically handle theneeds of simple estates, they generally are notappropriate for even the most commoncomplexities such as children from a priormarriage, children with special needs, propertythat has appreciated in value resulting in capitalgains, and estates that are large enough to besubject to estate taxes (typically those worthmore than $5,340,000 in 2014). Also, DIYsources generally fail to take advantage ofsophisticated estate planning strategiesbecause they usually can't account for anindividual's unique circumstances.

Further, you may make an error by failing tounderstand the instructions or by following theinstructions incorrectly.

The result is that the documents you createcould be invalid, ineffective, or contain legallanguage having consequences you neverintended. You might not know if that is the caseduring your lifetime, but at your death yourloved ones will find out and may suffer thelasting consequences of your mistakes.

You may benefit from legal adviceDIY sources provide forms but not legal advice.In fact, these sources clearly state that they arenot a substitute for an attorney, and that theyare prohibited from providing any kind of legaladvice.

Estate planning involves a lot more thanproducing documents. It's impossible to know,without a legal education and years ofexperience, what the appropriate legal solutionis to your particular situation and what planningopportunities are available. The actualdocuments produced are simply tools to putinto effect a plan that is specifically tailored toyour circumstances and goals.

Estate planning laws changeLaws are not static. They constantly changebecause of new case law and legislation,especially when it comes to estate taxes.Attorneys keep up with these changes. DIYwebsites, makers of software, and othersources may not do as good a job at keepingcurrent and up-to-date.

Fixing mistakes can be costly andtime-consumingAs previously stated, working with an attorneyto create your estate planning documents canbe very expensive, costing anywhere fromseveral hundred to several thousands ofdollars, depending on the complexity of yourestate. But these costs are minor compared tothe costs and frustrations that your loved onesmay experience if there are serious errors inyour DIY estate plan. Many more thousands ofdollars and many hours with attorneys mayhave to be spent to undo what was donewrong. Before embarking on a DIY estate plan,consider these risks very carefully.

The one-size-fits-all,fill-in-the-blank forms thatdo-it-yourself estateplanning sources providemay be attractive to someindividuals because theycost a fraction of whatattorneys typically charge.But is saving a few dollarsworth the risk of doingthings incorrectly?

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PUMA Wealth Advisors, LLCRobert J. Richards Jr., CFP®,MSFS, CFS, CAS, CIS1108 Hooper AvenueBuilding 2Toms River, NJ 08753

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2014

IMPORTANT DISCLOSURES

Securities offered through SecuritiesAmerica, Inc., member FINRA/SIPC.Financial Planning and Advisory servicesoffered through Arbor Point Advisors, LLC.Securities America, Inc. and Arbor PointAdvisors, LLC. are not affiliated withPUMA Wealth Advisors, LLC.

Broadridge Investor CommunicationSolutions, Inc. does not provideinvestment, tax, or legal advice. Theinformation presented here is not specificto any individual's personal circumstances.

To the extent that this material concernstax matters, it is not intended or written tobe used, and cannot be used, by ataxpayer for the purpose of avoidingpenalties that may be imposed by law.Each taxpayer should seek independentadvice from a tax professional based onhis or her individual circumstances.These materials are provided for generalinformation and educational purposesbased upon publicly available informationfrom sources believed to be reliable—wecannot assure the accuracy orcompleteness of these materials. Theinformation in these materials may changeat any time and without notice.

I just learned that my credit- and debit-card informationwas part of a data breach. What should I do?Now, more than ever,consumers are relying on theconvenience of credit anddebit cards to make everyday

purchases, such as gas and groceries, and tomake online purchases. With this convenience,however, comes the risk of having your accountinformation compromised by a data breach.

In recent years, data breaches at majorretailers have become commonplace acrossthe United States. Currently, most retailers usethe magnetic strips on the backs of credit anddebit cards to access account information.Unfortunately, the account information that isheld on these magnetic strips is also easilyaccessed by computer hackers.

While many U.S. banks and financialinstitutions are in the process of replacing theolder magnetic strips with more sophisticatedand secure embedded microchips, it will taketime for both card issuers and retailers to get upto speed on these latest card securitymeasures.

In the meantime, if you find that your accountinformation is at risk due to a data breach, youshould make it a priority to periodically review

your credit card and bank account activity. Ifyou typically wait for your monthly statement toarrive in the mail, consider signing up for onlineaccess to your accounts--that way you canmonitor your accounts as often as needed. Ifyou see suspicious charges or account activity,you should contact your bank or credit-cardcompany as soon as possible.

In most cases, your bank or credit-cardcompany will automatically issue you a newcard and card number. If not, request to havenew cards and card numbers issued in yourname. As an additional precaution, you shouldalso change the PIN associated with the cards.

Whether you will be held liable for theunauthorized charges depends on whether thecharges were made to your credit- or debit-cardaccount and how quickly you report them.

For more information on your rights if you areaffected by a data breach, visit theFederal Trade Commission andConsumer Financial Protection Bureauwebsites.

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