What to Do with a Tax Refund?

Well, first things first:  If you are getting significant refund, let’s say over $2,500, you might want to reevaluate your withholding on your weekly or biweekly paystub.  You may be paying too much in taxes over the course of the year, which results in your big refund when you file.  In essence, you are providing the government an interest-free loan.  One year I got a whopper of a refund, and then worked with UBS payroll department in Human Resources to reduce the amount withheld from my pay every 15th and 30th of the month.

But when you get that money back, what should you do with it?  I would advise an allocation like: 50% pay down debt; 20% save; 20% invest; 10% enjoy.  Exact allocations can vary in individual circumstances, but the main idea is to decide to be responsible with the vast bulk of it, while still allowing a little fun on the side.

Enjoy and best of luck.

Tim Shields


I Don’t E-File

I still mail in my tax returns.  And apparently I’m not the only one.  On April 15 at about 2pm, I walked over from the UBS building to the Chicago post office at Dearborn and Adams.  Big long line.  Average age… oh, probably 73.  But that’s ok.  I like a little bit of ritual around taxes.  It’s far more satisfying to hand over my completed tax return to the post office clerk than it would be to e-file from my home computer.  That’s my feeling, anyway.  I’ll keep doing it until the IRS eventually forces everyone to select an electronic method.

Running Trails in Illinois

An alumnus of Stanford University’s MBA program, Timothy Shields serves as a program and portfolio manager at UBS in Chicago, Illinois. Tim Shields leverages his Stanford education and past leadership positions to oversee long-term technology projects and manage operating frameworks for information technology programs. Away from work, Timothy Shields is an avid runner, who stays actively involved with the Chicago Frontrunners, an organization he joined in 2003.

Illinois offers paved, dirt, and gravel running trails spanning various distances. The following trails cater to runners:

1. Paved with asphalt, Deer Grove Trail in Cook County takes runners through the Deer Grove Forest Preserve on a nearly 4-mile run. The path links to the Palatine Trail system and has moderate inclines. The preserve is home to wildlife, like turtles and salamanders, and a bevy of wildflowers.

2. Made up of concrete, asphalt, and dirt, North Shore Channel Trail covers just over 6.5 miles. Most of the path follows the canal, and runners can jog along both sides of the aqueduct. Runners who prefer training entirely on asphalt should utilize the east side of the trail from Green Bay to Emerson, then move over to the west side from Emerson/Golf to Lincoln and return to the east side from Lincoln to Lawrence. This also reduces street crossings.

3. Long-distance runners should consider Prairie Trail, which begins at the Wisconsin and Illinois border and ends in Algonquin. Only experienced runners should attempt this path, due to its length—it stretches 28 miles across McHenry County. Runners must prepare for long stretches without water sources and for several types of pavements, including crushed stone. This route provides scenic views of bridges, a rail corridor, and a lake.

‘Tis the Season

Tax time doesn’t have the spirit of common communal suffering it used to.  I remember when I was filing in the ’90s in California, I found myself at the Stanford post office at 9pm on April 15, and the atmosphere was hilariously both festive and frenzied.  People were filling out their tax forms and asking each other questions like “can I deduct my tuition?” (answer: it depends), but at the same time there were drinks and jokes and a spirit of camaraderie.  That’s all gone away now that we all file online.

Happy Tax Day, folks.  Remember: tis better to pay the man now rather than later.  You want to tell the IRS what you owe them, and not the other way around.

Best of luck.

Tim Shields, UBS

Individual Retirement Accounts

While I always make a big deal about participating in employer-sponsored 401k and/or 403b plans, I don’t often make much of Individual Retirement Accounts, or IRAs.  An IRA is a privately held account not linked to employment, and can serve as an additional tool for retirement planning.  IRAs are highly worthwhile if your income allows for establishment of a Roth IRA.   A Roth IRA is not funded with pre-tax dollars the way a 401k is, but the distributions and earnings ultimately withdrawn are not taxed.  That is a powerful advantage.  Tax free income is a beautiful thing.  For that reason, anyone eligible for participating in a Roth IRA absolutely should.  There are income limits on earnings: for 2015, a single filer earning over $131,000 or joint filers earning over $193,000 exceed eligibility for a Roth.

Roth IRA contributions are not tax deductible, so it is funded with after-tax dollars. Still, the back-end benefit of a tax free withdrawal makes it a highly worthwhile tool in retirement planning.

–Tim Shields, UBS