Time Weighted Rate of Return vs. Internal Rate of Return

We recently reviewed the calculations available through Morningstar to report the performance for our clients’ portfolios. Historically, we have used a method called Time Weighted Rate of Return (“TWR”), but beginning January 1 of this year, we changed to Internal Rate of Return (“IRR”). While both are acceptable methods of calculating returns, we decided to make the change because we believe that the IRR approach provides a more appropriate way of reporting our clients’ personalized rates of return. Continue reading

Transfer on Death Accounts

“Transfer on Death” is a designation that can be applied to an individual or joint account that enables you to specify your beneficiary(ies) in the event of your demise. Typically, when IRAs are set-up, you have already made those decisions since there is a place on the application form for you to designate your beneficiaries. However, applications for taxable accounts generally do not ask for beneficiary designation. Designating an account as “Transfer on Death” allows you to specifically name whom you want to receive the account’s assets so that upon your death, the funds become immediately available to the recipients without having to go through probate. Continue reading