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Health Savings Accounts (HSA)

With the skyrocketing cost of health care, many investors are using Health Savings Accounts (HSAs) to supplement their lifetime health care expenses.  HSAs offer certain tax benefits and may play an important role in managing your long term financial health, as well.  However, not everyone is eligible to enroll in a HSA so it is important to understand who qualifies and how the account can be used in coordination with a long term financial plan.

Simply put, a Health Savings Account is a tax advantaged savings vehicle specifically designed to help cover lifetime medical expenses.  Tax deductible contributions made into the account grow tax deferred and may be withdrawn tax free to cover eligible medical expenses.  Balances remain in the account from year to year and at your death your spouse may continue to use the HSA for their benefit.  Where permitted by the custodian, funds may be invested in a wide variety of mutual funds potentially producing market returns.

In order to be eligible to open a HSA you must be enrolled in a High Deductible Health Plan (HDHP,) you cannot be enrolled in Medicare, you cannot be claimed as a dependent, and you cannot have any other primary health coverage.  However, vision, dental, disability, and long term care policies are allowed with a HSA.  In most circumstances, HSA owners may also have insurance against a specific illness or disease such as cancer.  Prescription drug plans are allowed but only if no benefits are paid until the annual deductible is met.  HSA accounts are opened as individual accounts; joint accounts are not allowed.

A HDHP is a health plan that has a higher than normal deductible and a maximum out-of-pocket expense within guidelines set annually by the IRS.  In 2011 the minimum annual deductible to be eligible is $1,200 with maximum out-of-pocket expenses set at $5,950.  In some cases, HSAs are made available to group plan participants but in many cases HSAs are used primarily by the self-employed and small business owners.  If you are a participant in a group plan, check with your Human Resources department to see if you are eligible.

Contributions made to an HSA are tax deductible if made by an individual and are considered excludable income if made by your employer.  The IRS sets annual contribution limits ($3,050 self, $6,150 family in 2011 with an additional $1,000 if over age 55) with any excess contribution subject to a 6% excise tax.  Contributions to a HSA must be made in cash and the IRS even allows a non-deductible funding distribution from a Traditional or Roth IRA.  You have until the tax filing deadline (April) to make prior year contributions.

Most medical treatments are eligible expenses and may be covered by your HSA balance.  Eligible expenses generally include any expenses that would qualify for the medical and dental expenses deduction on your tax return.  However in most cases, insurance premiums are not considered an eligible expense and must be paid for out-of-pocket.  Recordkeeping is important when using a HSA to ensure compliance with the IRS.

These benefits make Health Savings Accounts a valuable element to any prudent financial plan, if you are eligible.  Health care expenses may account for hundreds of thousands of dollars in your lifetime so establishing a long term funding vehicle with tax benefits may prove beneficial.

If you would like more information on HSAs or how to become eligible for a HSA please contact Scenic Wealth Management and be sure to discuss any tax questions with your accountant.

 

The Value of Scenic Wealth Management

At Scenic Wealth Management, we bring value to our clients by taking a vested interest in their financial lives.  We take our responsibility as a trusted advisor very seriously and we understand the consequences of failure.  Our clients trust and expect us to guide them to financial independence and we work diligently to ensure we meet their expectations.

The primary value our clients see in working with us is knowing that someone is in their corner; loyal to them and looking out for their best interests.  With so many financial decisions that must be made over a lifetime, the choices can become overwhelming and in many instances costly.  By educating our clients on the options available and the potential risks and rewards of each choice, they are able to make better decisions that best fit their financial goals.  By providing competent advice, we aim to straighten the financial path of our clients so they can achieve more in life. 

We provide value to our clients by constantly monitoring the current investment climate and making proactive adjustments to their financial plans.  Managing wealth is not superbly complex but it is a full time job and with the time restraints of a career and raising a family, many clients take comfort in knowing that Scenic Wealth Management is always working to enhance their financial picture.

We aim to deliver value to our clients through our fee based structure which has aligned our interests with the interests of our clients.  We are not compensated by selling products but instead by providing advice to grow your investable assets in the most efficient manner.  We negotiate fees and rates with companies vying for your business and work to ensure you receive only the products you need at the lowest cost possible. 

Scenic Wealth Management uses honesty, integrity, and knowledge to deliver exceptional value to the families who trust us.  We believe that by working hard and treating our clients with respect, we can exceed their expectations to become a valued resource to their families.

25 Scenic Rules for Investing

At Scenic Wealth Management, we believe that utilizing a long term investment philosophy provides the most tax efficient returns.  Below is a list of twenty-five rules we believe can improve your investment performance.

1. Systematically save & invest.
2. Know what is required to meet financial goals.
3. Rebalance.
4. Never get emotionally attached to a stock.
5. Stick to the game plan.
6. Be patient.
7. Manage the risk, not the return.
8. Buy & Hold is a fancy name for Investor Apathy.
9. Hope can be a verb or a noun – but is never a trading strategy
10. Diversify all risks.
11. Do not let any industry account for more than 20% of the portfolio.
12. Do not let an individual security account for more than 5% of the portfolio.
13. Live in a world of percentages.
14. Remember that there is a reversion to the mean.
15. Trust the charts.
16. Limit the losses.
17. Cash is a viable investment.
18. Set a price objective & sell / trim when it hits that price.
19. Take profits.
20. Do not let taxes govern investment decisions.
21. Know when you got lucky.
22. Know when you’re right.
23. Remember the stock doesn’t know or care where you bought it.
24. Never act on a hot stock tip.
25. Accumulate, Participate, or Protect.

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The Story of Scenic Wealth Management

The story of Scenic Wealth Management began in the 1920s in Memphis, Tennessee where Joe H Davis was a young man working as the elevator operator at First National Bank.  Each day, he would escort the bank executives to their offices on the sixth floor.  Impressed with his interpersonal skills they began to take him under their wing and soon promoted him first to the mail room then to a position selling war bonds to fund the military efforts in World War II.  After the war, Mr. Davis established himself as a leading fixed income salesman throughout the southeast United States.

In a career lasting six decades, Joe Davis Sr. attained Executive Vice President and built First Tennessee Bank’s fixed income desk into one of the top desks in the country.  The son of a Presbyterian minister, Joe used honesty and integrity to become one of the most influential people in banking in the United States serving as Treasurer of the American Bankers Association and he was a featured speaker with Dale Carnegie (author of How to Win Friends & Influence People) on leadership.

In the 1960s, his son Joe H Davis, Jr. began in banking after graduating from Vanderbilt University and serving active duty in the US Army.  Utilizing the proven techniques of his father, Joe Jr. worked his way through the retail division to eventually head the Metropolitan Division at First Tennessee Bank before ending his career in 1996 as Executive Vice President overseeing consumer lending at Leader Federal Bank.

Throughout his thirty-three years in banking, Joe Jr. refined and adapted the skills inherited from his father and achieved success in his own right.  A firm believer in service and philanthropic giving, he served on numerous charitable boards including as Chairman of LeBonheur Children’s Hospital and the Salvation Army – Memphis Advisory Board.

Jeff Davis, founder of Scenic Wealth Management, began his advisory career in 2000 after graduating from Briarcrest Christian School in Memphis, Tennessee and the University of Tennessee at Knoxville.  At Briarcrest, Jeff was a three sport MVP and all-state athlete in football and track.  During his senior campaign, Jeff was an all-state Quarterback and Safety under the direction of current University of Mississippi Head Coach Hugh Freeze and held numerous individual and team records upon graduation.  While an undergraduate at Tennessee, Jeff worked in the Tennessee football office and served as assistant to Assistant Head Coach and Offensive Coordinator David Cutcliffe working with two of Tennessee’s most beloved quarterbacks, Peyton Manning and Tee Martin.

During this time, Jeff was exposed to complex financial planning when his parents included him in estate planning and investment discussions.  The concept of game plan construction through knowledge was a skill he had learned from Cutcliffe, Manning, and Martin and the epiphany that that skill carried into financial planning opened a whole new set of career doors.  Upon graduation, Jeff began his advisory career working for such Wall Street firms as Morgan Stanley, Wells Fargo, and Merrill Lynch.

While at Merrill Lynch, Jeff established himself as a leading national provider of wealth management services to coaches.  Driving forty thousand miles a year, he traveled throughout the country establishing relationships with the most recognizable coaching names in the country and quickly was considered among the preeminent advisors to coaching families.  After an eleven year career with leading Wall Street firms, Jeff founded Scenic Wealth Management in July, 2010.

Utilizing the generations of knowledge of financial disciplines and interpersonal skills, Jeff has made certain that the influences of his father and grandfather are constantly displayed to all people.  The disciplines used by the Davis family have been tested through the Great Depression, six global wars, fifteen Presidents of the United States, Hitler, Stalin, tech bubbles, real estate bubbles, assassinations, scandals, and every other imaginable investment environment.

With nearly one hundred years of financial experience, the financial and life guidelines established by Joe Sr. and passed along to his son and grandson still hold true today: work hard, save your money, and invest wisely; treat people with respect and always be a man of your word.