Tag: financial planning

Aligning Your Financial Plan With Your Values

Many people are discovering that their financial journeys are even more fulfilling when they align their financial plan with their values. These investing, spending, and giving strategies could help you grow your nest egg while also putting your values in action.

  1. ESG investing

These investment funds contain companies that make positive Environmental, Social, and Governance impacts while also creating sustainable returns on investment. Some investors also use ESG as a strategy to invest a portion of their portfolios in specific companies that they feel rank highly in these areas or exhibit other important corporate values beyond just profit.

If you’re interested in ESG we can review how your current portfolio aligns with these values. We do, however, caution folks against making broad judgements about specific investment sectors. For example, if you have strong negative feelings about large tech companies, we can dig a little deeper and find innovative, investible companies that are trying to improve their industries.

  1. Charitable giving

Does an annual holiday donation to your local food bank fill you with good cheer? Establishing a long-term charitable plan could make giving back a year-round source of fulfillment. Most charitable and nonprofit organizations offer recurring donation options that charge you monthly or annually like any other bill. Talking to your family about working important causes into your household budget can make those donations feel more purposeful and rewarding.

Charitable giving can also help to make estate planning a more positive process. Setting aside a portion of your hard-earned assets to help others in perpetuity builds a real legacy that will inspire your heirs and your community for generations.

  1. Local shopping

The single most powerful tool in your financial plan is your household spending. And while we often talk about the importance of budgeting to make sure you’re hitting your saving and investing goals, you can also put your values to work by being more intentional about the money you do spend every month.

This is especially true as we begin to emerge from pandemic lockdowns. As it becomes safer to shop in your community, consider making a few less bulk delivery orders from big box retailers and spend a bit more at your local grocer or farmer’s market. Swap out a couple fast food meals every month with carry-out from a local restaurant. Often these local options are a bit more expensive. But as long as these purchases fit your budget, think of the extra cost as an investment in businesses that keep your community working.

  1. SMART money goals

It’s important to remember that some of our most cherished values are less global and more personal. Perhaps the importance of higher education is a value you want to put in action by planning for your child’s college tuition. Perhaps you value living within your means and you want to pay down your credit cards this year.

Setting SMART money goals works for values of any size. For example, let’s say you value family time, and you want to start saving for a post-pandemic vacation:

Specific – We’re going to Florida for the 4th of July!

Measurable – I’m budgeting $5,000 for this trip.

Attainable – We can use money we saved from our cancelled 2020 vacation.

Realistic – I can safely put an extra $500 per month into this vacation fund.

Timed – By the end of June, I’ll have the $5000 saved for this trip.

Of course, whether you want to take a vacation or set up a financial plan, planning ahead is always the “smart” strategy. Let’s talk about the values you want to incorporate into your Life-Centered Plan in 2021.

Also, feel free to check out our 8 Point Financial Planning Checklist.

Use This Downtime To Think About Retirement

The coronavirus pandemic has forced many older workers to reassess their careers and how they view retirement. Folks who are fortunate enough to be working from home might be coping with a mix of technological hurdles, while also enjoying more family time and more flexible hours. Too many others nearing retirement are facing real financial worries due to reduced income, job loss, and instability in their investment accounts.

Under ideal circumstances, there are three broad choices about how to transition away from your full-time job: phased retirement, full retirement, and continuing to work in retirement. Let’s consider how the pandemic has affected each of these options and which path could be the most fulfilling for you.

Phased retirement.

Working from home during the pandemic might be giving some workers a small taste of what phased retirement is like. Reducing the hours that you’re in the office can help you ease into a new routine where you’ll be spending most of your time at home. You’ll also have some flexibility with your schedule, which will allow you and your spouse to start experimenting with shared and separate calendars that will let both of you get things done without driving each other crazy.

Moreover, the pandemic has forced all of us to reassess the people, experiences, and goals that mean the most. Phasing into retirement can help you fine-tune your work-life balance as you continue to process how social distancing has affected you professionally and personally.

Full retirement.

That same spirit of introspection is leading many seniors to think about jumping into full retirement sooner. Perhaps being away from your job is making you realize you’re too used to doing unfulfilling work for a paycheck that’s not making your life better. Or, if you’ve been putting off retirement, the experience of social distancing might have motivated you to stop waiting and start doing as soon as life gets back to normal.

Social distancing has created a separation between our sense of self and our jobs that some people find a little unnerving. That feeling is very common among new full retirees, even those who are following a long-established plan and retiring wholly on their terms. If you’re leaning towards a full retirement right now, talk to your spouse about how you’d like to reframe your identity and start living a freer and more fulfilling life after work.

Working While Retired.

Even before the coronavirus pandemic, more and more seniors were choosing to work after retiring. Today’s retirees are healthier and more active. Some are working past 65 because they love what they do. Others transition to part-time jobs that let them explore other interests while still earning a paycheck. Many working retirees also want to top off their retirement and savings accounts while they’re still able so that their nest eggs keep pace with increased life expectancy.

Could the coronavirus pandemic accelerate this trend? While social distancing, many seniors have gained greater proficiency with technologies like Zoom, Skype and Slack. Those skills could open up a whole new world of remote jobs, including teaching and consulting positions. Entrepreneurial seniors might be looking at the shifting landscape of global business and spotting a new route for starting their own dream companies. And still other seniors might be so sick of being cooped up that, when conditions are safe, they’ll seek out part-time jobs as a way to reconnect with their communities.

If retirement is a transition you saw fast approaching on your $Lifeline at the beginning of the year, let’s talk about how the coronavirus has affected your thinking. We just revamped the $Lifeline tool so that it’s easier for you to plot out what you see coming next and sync those changes to your financial plan.

Whatever your approach to retirement may be, we can help you get there. Let’s start with a conversation.

Has the pandemic made Americans more or less confident about their retirement plans? Find out here.

Will A Vacation Home Provide a Good Return on Life?

A vacation home can provide years of enjoyment and fond memories for multiple generations of your family. They can also create an extra layer of headaches and expenses that prove more trouble than they’re worth.

Here are 4 reasons to think twice before buying a vacation home, even if doing so won’t break the bank:

Full-time bills for part-time enjoyment.

Most workers receive around two weeks of vacation time from their employers. Self-employed “gig economy” workers or small business owners might manage to carve out a few extra days. Or, they might be so busy running their businesses that even a week of vacation time is a stretch.

Regardless, the bills associated with your second home are going to be there 52 weeks of the year: mortgage payments, electricity, basic upkeep, etc. Are you going to spend enough time at your vacation property to justify those costs?

“Landlord” is a job.

Many folks plan to offset the expense of a vacation home by renting it when they’re not using it. This can be an effective way to earn some extra money and make your mortgage payments without stressing your finances.

But when you rent out a property you own, you’re taking on a new job: landlord. That means vetting potential renters and dealing with any unruly folks who slip through your screening process. That means more wear-and-tear on the house, appliances, and furniture. That means repairs. That means complicated insurance and tax issues.

And all that means more work while you’re still working.

Maybe taking on that job appeals to you, especially if you’re retired and enjoy doing handiwork. But if you don’t want to add “landlord” to your resume, don’t use renting your vacation home to justify the purchase.

Visit more, travel less.

Buying something new is exciting, especially when it’s a big-ticket purchase like a vehicle or home. But that excitement can be surprisingly fleeting. Take your new sports car around the block a few times, and it’s suddenly just your car. Watch a few movies in your fancy home theatre, and suddenly it’s just your TV.

A vacation home could be an exception to that rule, especially if it becomes a focal point for family gatherings. In that case, what you’re really buying isn’t a home: it’s an experience of time shared with loved ones. The same holds true if your vacation home is near activities you and your spouse both enjoy, like a cluster of great golf courses or a vibrant restaurant scene.

But if your vacation home is just a nice house, that “getaway” feeling is going to become just another part of your regular routine. Vacationing will start to feel like visiting, or worse, like walking into another set of rooms in your house. When vacation time rolls around, it’s going to be hard to justify spending additional money on “bucket list” travel when you know your second house is just sitting there, racking up mortgage interest, waiting for you to replace the leaky water heater.

Retire TO, not FROM.

So: you don’t want to be a handyman, you dream of crisscrossing Europe, and vacationing for more than 10 days per year makes you antsy.

Still, there’s that voice in the back of your head saying, “We love that place. We have the money. If we don’t buy now, we never will.”

Why not?

Maybe buying a second house isn’t going to improve your Return on Life right now. But retiring to your favorite vacation destination could be an invigorating change of scenery. There’s a big difference between putting off your goals until it’s too late and putting a plan in place that will let you hit that goal when the time is right.

In the meantime, keep that favorite spot in your vacation rotation. Who knows? After a few more years, the shine might wear off and you’ll start dreaming about a new retirement home.

Ready to move but not sure where to go? Check out Money.com for the 8 best cities to retire in.

And as your plans evolve, make sure you keep us in the loop. Wherever you decide to settle down, our planning process can help you get there.

 

 

2019 Was One For The Ages | Heritage Wealth Weekly

About face!

2019 was a remarkable year for investors with many asset classes delivering positive performance. Both the Standard & Poor’s 500 Index, a gauge of U.S. stock market performance, and the Dow Jones Global (ex U.S.) Index delivered double-digit increases (see the below table). Bonds and gold rallied, too, delivering positive returns for the year.

Possibly the most important factor contributing to asset performance in 2019 was an ‘about face’ by the United States Federal Reserve. Axios reported:

“The Fed’s 180-degree turn was the story of 2019, asset managers and market analysts say…Chairman Jerome Powell and the U.S. central bank went from raising interest rates for a fourth time at the close of 2018 and giving market watchers the explicit expectation this would continue in 2019, to doing the opposite. The Fed cut rates thrice and even began re-padding its balance sheet in the last quarter of the year, bringing it back above $4 trillion.”

How Did Markets React to the Fed?

The Fed’s policy decision gave investment markets a boost, however, it did little to quell investors’ worries about potential recession and the impact of the U.S.-China trade war, reported The Wall Street Journal. As a result, investors moved money from U.S. stock markets into bonds and other investments they perceived to be safer throughout the year.

During the fourth quarter of 2019, U.S. markets delivered positive returns despite uncertainty about the strength of the U.S. economy created by inconsistent economic data. For example, the last jobs report of the year indicated unemployment remained near a 50-year low. Yet, in 2019, workers experienced the highest number of layoffs in a decade.

Many layoffs during the year were the result of corporate bankruptcies, especially in the retail sector. Investors who took time to evaluate the juxtaposition of unemployment levels and layoffs may have recognized disruptions in the retail sector has potential to create opportunities for investors.

How Do The Economic Indicators Look?

A closely watched indicator during 2019 was manufacturing. In December, Fox News reported, “The ISM Manufacturing Index fell for the fifth month in a row to 47.2 in December, down from November’s reading of 48.1. That’s the weakest reading since June 2009, when it hit 46.3, and well below the 49 reading that economists surveyed by Reuters expected.”

One of the reasons for weakness in manufacturing is the U.S.-China trade war. Late in the fourth quarter, concerns about trade subsided after the announcement of a phase one trade deal. The agreement is scheduled to be signed on January 15, 2020.

Continued progress in resolving the trade war could help boost economic growth in the United States. At the end of 2019, United States gross domestic product, the value of all goods and services produced in the country, was expected to remain slow and steady during 2020. However, forecasters at the Federal Reserve Bank of Philadelphia expected the economies of nine states to contract during the first six months of the new year.

From a geopolitical perspective, the 2020s are beginning just like the last decade did, with all eyes on Iran.

In 2009 and 2010, the Iranian Green Revolution captured the world’s attention as social media provided insight to post-election turbulence and unrest in Iran. Last week, the first of the new decade, all eyes were again on the Middle East as tensions between the United States and Iran flared after the death of a top Iranian military leader targeted by the United States.

After rallying on the first day of the new decade, some major U.S. stock markets declined on news of heightened tensions in the Middle East and concerns about the potential consequences, such as the disruption of oil supplies.

what a decade!

While some have called the 2010s a ‘lost decade’ because there was little economic growth, we disagree with the assessment. The decade was filled with remarkable events in politics, sports, science, pop culture, and other areas of interest. Here are a few memorable events from the past decade:

NASA’s Voyager 1 probe left the solar system.

Launched in 1977 to explore planets including Jupiter, Saturn, Uranus, and Neptune, the probe left our solar system in 2013. It will continue to send data until 2025.

 

The Patient Protection and Affordable Care Act was signed into law

The controversial law, which Encyclopedia Britannica reported, “required most individuals to secure health insurance or pay fines, made coverage easier and less costly to obtain. This cracked down on abusive insurance practices, and attempted to rein in the rising costs of health care,” remains under challenge in American courts.

 

eSports became an industry

To the delight of people who would prefer to spend their time gaming, online games became a recognized form of sports competition, complete with news coverage and multimillion-dollar prize money.

 

Civil and social movements changed thinking

There were pro-democracy protests in the Middle East (Arab Spring), and social movements in the United States (Occupy, Black Lives Matter, Blue Lives Matter, and MeToo, among others). MIT explained, “…a successful movement can change how we think and talk about key social issues.”

 

The Higgs Boson particle was found

Any fan of the television show, The Big Bang Theory, will know exactly how much this meant to Sheldon Cooper. The television show’s popularity was also a phenomenon of the last decade.

 

Carli Lloyd scored the fastest hat trick in World Cup soccer

Carli Lloyd scored a hat trick – three goals – in 13 minutes for the U.S. women’s national team during the World Cup final against Japan in 2015. She also played on the team that won the 2019 Women’s World Cup.

Hurricanes, earthquakes, and storms wrought destruction

Countries around the world were pummeled by storms during the decade. Hurricanes and tropical storms like Irene, Sandy, Harvey, Irma, Michael, Dorian, and Maria did significant damage in the United States and its territories. One of the most memorable was the Great Japanese earthquake and tsunami that preceded the Fukushima Daiichi nuclear accident.

 

The Chicago Cubs broke the curse

Advised by their manager to go out there and, “Try not to suck,” the Cubs won the World Series for the first time since 1908.

 

Entertainment took a turn toward streaming

Deadline Hollywood reported, “It is impossible to find a corner of the industry that has not been reshaped by streaming, from the pay TV ecosystem and movie exhibition to labor negotiations and talent deals.”

 

The 2010s provided disruptions and delights. Let’s hope the events of the coming decade will make the world a better place. For a closer look at 2019 in review, check out this link.

Weekly Focus – Think About It

“It’s the action, not the fruit of the action, that’s important. You have to do the right thing. It may not be in your power, may not be in your time, that there’ll be any fruit. But, that doesn’t mean you stop doing the right thing. You may never know what results come from your action. But, if you do nothing, there will be no result.”

–Mahatma Gandhi, Lawyer, politician, social activist

Like what you’re reading, be sure to check out our other blog posts.

Working In Retirement? Here’s 3 Reasons Why You Should

It might sound a little crazy but there are many benefits to working even though you no longer need the money for your living or retirement needs.

These “retirement workers” have discovered that part-time jobs or volunteer positions allow them to keep a nice pace in life and find a balance among using their talents, enjoying recreation, traveling, and spending time with family. Some of our most ambitious clients even start brand new companies in retirement.

Here are three important benefits of working in retirement that might persuade you to clock back in a couple days every week.

Working is good for you.

Retiring early is a very popular goal right now. But while it makes sense to want to enjoy your assets when you’re younger, a recent study links retirement with decreased mental and physical activity and higher instances of illness.

Working keeps your mind and body active. It makes you engage in problem solving and creative thinking. It keeps you mindful about your health and appearance so that you make a good impression on colleagues and customers. It challenges you to keep achieving and rewards you when you do.

And, if nothing else, it keeps you from vegging out on the couch all day and driving your spouse crazy!

Work can give you a sense of purpose.

Many retirees struggle with the transition to retirement because their sense of purpose and identity is so tied to their work. Without that familiar job and its schedule and responsibilities, some retirees struggle to find a reason to get out of bed in the morning. A part-time job can restore some of that sense of structure and drive.

In fact, you might find that working in retirement gives you an even greater sense of purpose than your former career did. You might have worked a job you didn’t 100% love in order to support your family. Now that you no longer need to worry about that, you can take that community college teaching position. You can work a couple days every week at that non-profit that’s making a difference in your community. You can set up regular volunteer hours at a charitable organization that’s close to your heart. You can feel like you’re making a contribution to society without worrying about the size of your paycheck.

Work can improve your connections to other people.

Early retirement can be a period of isolation for some folks. Your friends and family might still be busy working and raising children. The familiar social interactions you enjoyed at work are gone. You and your spouse probably share some common interests, but you can’t spend every single second together.

It’s important for retirees to be open to making new personal connections in retirement. A new workplace is a great place to start that process. You’ll meet new people from different walks of life. You’ll work with and help people who can benefit from your personal wisdom and your professional skill set. You might meet other retired seniors who, like you, are trying to stay active and put their talents to good use. And the more involved you are in your community, the more curious and adventurous you’re going to be about trying new restaurants, shopping in new stores, and interacting with more people.

Of course, working in retirement can affect other aspects of your financial planning even if you don’t need the money, such as taxes, withdrawal rates, and your relationship with your spouse. If you’re considering a new part-time job, let’s schedule a conversation to discuss any adjustments we should be thinking about so that you get the best life possible with the extra bit of money you’ll soon have.

For more on working in retirement, check out this cool article from Nerd Wallet that gives you a few things to consider.

Financial Planning is About Making Your Life Plan A Reality

Many folks who have just begun working with us are surprised by how our planning process starts. We don’t begin by talking about IRAs, 401(k)s, or how much you’re saving. Instead, we begin by talking about you, not your money.

Putting your life before your financial plan.

As Life-Centered Planners, our process begins with understanding your life plan. We start by asking you about your family, your work, your home, your goals, and the things that you value the most.

Our job is to build a financial plan that will help you make your life plan a reality.

Of course, building wealth that will provide for your family and keep you comfortable today and in retirement is a part of that plan. So is monitoring your investments and assets and doing what we can to maximize your return on investment.

But we believe maximizing your Return on Life is just as important, if not more so. People who view money as an end in and of itself never feel like they have enough money. People who learn to view money as a tool start to see a whole new world of possibilities open in front of them.

Feeling free.

One of the most important things your money can do for you is provide a sense of freedom. If you don’t feel locked into chasing after the next dollar, you’ll start exploring what more you can get out of life than just more money.

Feeling free to use your money in ways that fulfill you is going to become extremely important once you retire. Afterall, you’re going to have to do something with the 40 hours every week you used to spend working! But you’re also going to have to allow yourself to stop focusing on saving and start enjoying the life that your assets can provide.

Again, having money and building wealth is a part of the plan. But it’s not THE plan in and of itself.

The earlier you start thinking about how you can use your money to balance your vocation with vacation, your sense of personal and professional progress with recreation and pleasure, and the demands of supporting your family with achieving your individual goals, the freer you’re going to feel.

And achieving that kind of freedom with your money isn’t just going to help you sleep soundly at night – it’s going to make you feel excited to get out of bed the next morning.

What’s coming next?

So, when does the planning process end?

If you’re like most of the people we work with, never.

Life-Centered Planning isn’t about hitting some number with your savings, investments, and assets. And we’re much more concerned about how your life is going than how the markets are performing.

Instead, the kinds of adjustments we’re going to make throughout the life of your plan will be in response to major transitions in your life.

Some transitions we’ll be able to anticipate, like a child going to college, a big family vacation you’ve been planning for, and, for many of you, the actual date of your retirement. Other transitions, like a sudden illness or a big out-of-state move for work, we’ll help you adjust for as necessary.

In some cases, your life plan might change simply because you want something different out of life. You might start contemplating a career change. You might decide home doesn’t feel like home anymore and start looking for a new house. You might lose yourself in a new hobby and decide to invest some time and money in perfecting it. You might decide it’s time to be your own boss and start a brand new company.

Planning for and reacting to these moments where your life and your money intersect is what we do best. Come in and talk to us about how Life-Centered Planning can help you get the best life possible with the money you have.  Visit Our Website to learn more.

We also have some really great resources on our YouTube Channel, so head on over there to check it out.

Make The Most Of Your Empty Nest

How to Make Your Empty Nest Time a Prime Time in Your Life

Time flies when you’re a parent. Just when you’ve wrapped your head around the demands and responsibilities of raising a child, you turn around and your little bundle of joy is ready to head out into the world.

This empty nest transition can be very emotional. And in some cases, like children who stay on your health insurance until age 25, the break isn’t as clean as it used to be. But this change should also be exciting! Here are some tips on how you and your spouse can stay positive and make the most out of all your new free time, all that new space, and hopefully, all that extra money.

1. Celebrate!

First off, some major congratulations are in order. Raising children is as rewarding as it is challenging. In order to get where you and your spouse are today, you had to make so many sacrifices, juggle work and family schedules, and carefully manage your finances.

An empty nest fills some parents with sadness and loneliness. But you should focus on the positive. Your kids are ready to be adults. Be proud of them, and of you and your spouse. Pop a good bottle of wine you’ve been saving or treat yourselves to a night out. You deserve it. An exciting new part of your life is about to begin.

2. Readjust your budget.

Children are wonderful. They’re also really expensive! No more sports fees. No more restocking the fridge every other day. Depending on their ages and how much you’re helping with their transition into adulthood, no more school tuition or piggybacking on insurance and phone plans.

Even the smallest of these expenses adds up quickly month after month. Now that they’re in the past, it’s time to make a new budget. You might find ways to ramp up your savings and contributions to your retirement accounts. You also might be able to afford a few more creature comforts or an extra trip or two.

3. Reclaim your space.

If your house suddenly feels a little emptier, well … it is. Too empty? If you and your spouse now have more room than you really need, it might be time to consider downsizing and economizing. Any new homes or neighborhoods in your community that look appealing? Have you considered moving out of state to start a new adventure?

If you’re happy where you are, take back those vacant rooms. Refurnish with a more grown-up touch to create a guest room for visiting friends and family. Give your hobbies and passions their own space by making a crafting room or a library.

Added bonus: if your kids have any trouble “adulting,” they’ll be more motivated to figure things out for themselves if there’s an easel or writing desk where their beds used to be.

4. Reconnect with your spouse.

You and your spouse are going to have more one-on-one time now than you’ve had since you were newlyweds, especially if you’re both getting ready to retire. What things did you used to do together before all those soccer practices and ballet recitals started dominating your schedules? What dream vacations for two have you been putting off? Have your golf or tennis swings gotten a little rusty over the years? Do you have time to cook meals together now?

Another activity that might bring you and your spouse closer is regular visits to your adult children and any grandchildren you might have. Seeing your kids on their own, flourishing at college or raising their own kids, will only deepen the sense of pride you should feel for a job well done.

5. Talk it out.

Major life transitions are often more challenging than we’re prepared to admit. More room, more free time, and more cash in hand are all positive. But the feeling that a large part of your life is over might be hard to shake.

Your blank calendar and lack of routine can be intimidating. Empty bedrooms can feel lonely. And while empty nest blues are often associated with the mother, many fathers suffer in silence. Make sure that you and your spouse are open and honest with each other about what you’re both feeling and get help if necessary.

On the flipside, you might feel overwhelmed in a good way – thrilled by all the options available to you, excited to start something new, but unsure of where to begin.

Again, step one is clear communication with your spouse. Make sure that you are on the same page about what you both want from this new stage of your life. Plan activities that you can do together. But also make space in your new routine for each of you to explore, learn, and grow individually.

Step two: come in and talk to us. We can help you sort through the financial implications of your empty nest and make sure you have the resources to live your best possible life with the money you have.

How Are You Feeling About Financial Markets?

How Are You Feeling About Financial Markets?

Heritage Insider Weekly November 12, 2018

Some votes are still being counted but investors appear to be happy with the outcome of mid-term elections. Major U.S. stock indices in the United States moved higher last week, and the American Association of Individual Investors (AAII) Sentiment Survey reported:
 
“Optimism among individual investors about the short-term direction of stock prices is above average for just the second time in nine weeks…Bullish sentiment, expectations that stock prices will rise over the next six months, rose 3.4 percentage points to 41.3 percent. This is a five-week high. The historical average is 38.5 percent.”
 
Before you get too excited about the rise in optimism, you should know pessimism also remains at historically high levels. According to AAII:
 
“Bearish sentiment, expectations that stock prices will fall over the next six months, fell 3.3 percentage points to 31.2 percent. The drop was not steep enough to prevent pessimism from remaining above its historical average of 30.5 percent for the eighth time in nine weeks.”
 
So, from a historic perspective, investors are both more bullish and more bearish than average. If Sir John Templeton was correct, the mixed emotions of investors could be good news for stock markets. Templeton reportedly said, “Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria.”
 
While changes in sentiment are interesting market measurements, they shouldn’t be the only factor that influences investment decision-making. The most important gauge of an individual’s financial success is his or her progress toward achieving personal life goals – and goals change over time.
Let’s take a look at some performance figures…

Data as of 11/9/18
1-Week
Y-T-D
1-Year
3-Year
5-Year
10-Year
Standard & Poor’s 500 (Domestic Stocks)
2.1%
4.0%
7.6%
10.2%
9.4%
11.7%
Dow Jones Global ex-U.S.
-0.3
-11.7
-9.4
3.2
0.3
4.7
10-year Treasury Note (Yield Only)
3.2
NA
2.3
2.3
2.8
3.8
Gold (per ounce)
-1.7
-6.6
-5.7
3.6
-1.1
4.9
Bloomberg Commodity Index
-1.2
-6.0
-5.2
-0.5
-7.7
-4.4
DJ Equity All REIT Total Return Index
3.5
2.3
1.2
8.2
9.6
13.9
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
 
is A Zeal of zebras a better investment than a blessing of unicorns? 
Collective nouns are the names we use to describe collections or significant numbers of people, animals, and other things. The Oxford English Dictionary offered a few examples:
 
  • A gaggle of geese
  • A crash of rhinoceros
  • A glaring of cats
  • A stack of librarians
  • A groove of DJs
 
In recent years, some investors have shown great interest in blessings of unicorns. ‘Unicorns’ are private, start-up companies that have grown at an accelerated pace and are valued at $1 billion.
 
In early 2018, estimates suggested there were approximately 135 unicorns in the United States. Will Gornall and Ilya A. Strebulaev took a closer look and found some unicorns were just gussied-up horses, though, according to research published in the Journal of Financial Economics.
 
The pair developed a financial model for valuing unicorn companies and reported, “After adjusting for these valuation-inflating terms, almost one-half (65 out of 135) of unicorns lose their unicorn status.”
 
Clearly, unicorn companies must be thoroughly researched. There is another opportunity Yifat Oron suggested deserves more attention from investors: zebra companies.  Oron’s article in Entrepreneur explained:
What is a unicorn company?
 
“Zebra companies are characterized by doing real business, not aiming to disrupt current markets, achieving profitability and demonstrating it for a while, and helping to solve a societal problem…zebra companies…are for-profit and for a cause. We think of these businesses as having a ‘double bottom line’ – they’re focused on alleviating social, environmental, or medical challenges while also tending to their own profitability.”
 
Including both types of companies in a portfolio seems like a reasonable approach.
 
If you were to choose a collective noun to describe investors, what would it be? An exuberance? A balance? An influence?
 
Weekly Focus – Think About It
 
“In his learnings under his brother Mahmoud, he had discovered that long human words rarely changed their meanings, but short words were slippery, changing without a pattern…Short human words were like trying to lift water with a knife.”
–Robert Heinlein, American science fiction writer
 
Have a great week.

3 Ways to Know When You Are Ready to Retire

3 Ways to Know When You Are Ready to Retire

Mike Desepoli, Heritage

There’s a pretty good chance that your parents and grandparents retired just because they turned 65. Today’s retirement is a bit more complicated than that. While age is still an important factor, your ability to connect your financial resources to your lifestyle goals is what will truly determine if you’re ready to retire.

Here are three important markers to cross before you crack open your nest egg:

  1. You’re financially ready.

The most common question we field from our clients is, “How much do I need to retire?” While there’s no magic number to hit, a few key checkpoints are:

  • You have a budget. Many clients who are preparing to retire tell us they’ve never kept a budget before. Time to start! If you have any big plans for early in your retirement, like remodeling your home or a dream vacation, let us know so we can discuss front-loading your annual withdrawal rate.
  • Your debts are paid. No, you don’t necessarily need to pay off a fixed-rate mortgage before you retire. But try to reduce or eliminate credit card balances and any other loans that are charging you interest.
  • Your age, retirement accounts, and Social Security plan are all in-sync. If you’re planning on retiring early, be sure that your retirement accounts won’t charge you any early withdrawal penalties for which you’re not prepared. Also keep in mind that the earlier you take Social Security the smaller your payments will be. Can you afford to live without Social Security until age 70 to maximize your benefits?
  • You and your spouse have a health care plan. Medicare insures individuals, not families. If only the retiree is 65, the younger spouse will need to buy health care elsewhere.
  1. You’re emotionally ready.

We spend so much of our lives working that our jobs become a large part of our identities. Rediscovering who we are once we stop working can be a major retirement challenge. To prepare for this emotional transition:

  • Talk to your spouse ahead of time. Don’t wait until your last day of work to discuss how both of you feel about retirement. What do each of you imagine life will be like? What are the things you’re excited to do? What are you afraid of? What can each of you do to make this new phase of life as fulfilling as possible?
  • Make a list. What are the things you’re passionate about? Something you’ve always wished you knew more about? A skill you’d like to develop? A cause that’s important to you? An ambitious business idea that was too ambitious for your former employer?
  • Check that your estate plan is in order. It’s understandable that many people avoid this part of their retirement planning. But putting together a legacy that could impact your family and community for generations can have tremendous emotional benefits. The peace of mind that comes from knowing the people you care about are taken care of can empower you to worry a little less and enjoy your retirement more.
  1. You’re ready to do new things.

Ideally, the financial piece of this conversation should make you feel free enough to create a new retirement schedule based on the emotional piece. Plan your days around the people and passions that get you out of bed in the morning. Some ideas:

  • Work at something you love. Take a part-time job at a company that interests you. Turn that crazy idea you couldn’t sell to your old boss into your own business. Consult. Teach. Volunteer.
  • Keep learning. Brush up your high school French by enrolling in an online course. Learn some basic web design so you can showcase your photography portfolio or create an online store for your crafts. Sign up for cooking classes and get some new meals in your weekly rotation.
  • Get better at having fun. What’s the best way to lower your handicap or perfect your backhand? Take lessons from a pro. The second best? Organize weekly games with friends and family.
  • Travel. Planning out a big vacation can be a fun project for couples to do to together. And while you’re looking forward to that dream trip, take a few weekend jaunts out of town. Stay at the new bed and breakfast you keep hearing about. Visit your grandkids. Go on the road with a favorite sports team and enjoy the local flavor in a different city.
If you’re nearing retirement and struggling with these issues, working through the Return on Life tools with us might provide some clarity. Let’s discuss how we can help get you ready for the best retirement possible with the money you have.  

 

For more retirement resources visit the AARP website.

5 Next Steps When You Are Concerned About Aging Parents

5 Next Steps When You Are Concerned About Aging Parents

As your aging parents begin to settle into their final phase of life, their health, residence, and finances could become a factor in your retirement planning. This is especially true if you are the person your parents have tasked with settling their estates.

There’s no simple way to tackle all the logistical and emotional challenges associated with caring for an aging parent. But these five steps will help you get the help you’ll need to make sure your parent is safe, cared for, and financially secure.

  1. Call a family meeting.

No two families are the same, but in most cases, you’re going to want to gather together all siblings and close family members for an open and honest discussion. If your parent is dealing with a serious and potentially debilitating health issue, don’t sugar-coat the truth. Hiding the facts now will only lead to hurt feelings, resentment, and poor planning.

Depending on the parent’s condition, you might consider dividing up a caregiving or visitation schedule. Even pitching in on small day-to-day tasks like helping mom or dad buy groceries can be a big help.

If you’re contemplating a more serious decision, like assisted living, make sure you give everyone space to voice an opinion. Try to keep the conversation as positive and solution-focused as possible. Employing a mediator or family counselor to facilitate might be a good option if you’re concerned old family issues could boil over and prevent a solid resolution.

  1. Don’t try to parent.

Shifting from the role of adult child to caregiver is going to be a difficult transition for both you and your parent. Don’t try to do too much too soon. Seniors who feel like they’re being “babied” are prone to depression or dangerous outbursts of independence, like grabbing the car keys or refusing to take medication.

A better approach is to try to frame your caregiving as a way of being more involved in your parent’s current routine. Take a seat at dad’s weekly card game. Put the grandkids’ sports and performance events on the calendar and offer transportation. Bring an extra dish to a dinner party. Drive mom to the movies … and let a sibling know the house will be unoccupied for a few hours if there are any cleaning or hoarding issues that need attention.

  1. Gather the essentials.

If your parent doesn’t keep all important documents in one location, now is the time to collect, copy, and file things like:

  • Identification (driver’s license, passport, birth certificate, marriage certificate, etc.)
  • Bank records
  • Home deeds and vehicle titles
  • Insurance records
  • Investment and retirement account records
  • Wills and trusts
  • Power of attorney
  • End of life directives
  • Login information for important online accounts (banking, subscriptions, social media)

There may be other documents that are unique to your parent’s living or financial situation. We can help you make a comprehensive list.

  1. Tag along.

Start attending doctor’s appointments. Don’t be afraid to ask questions that will help you familiarize yourself with your parent’s medical condition and aid with any at-home care like prescription drugs.

Also ask your parent to introduce you to his or her financial advisor and attorney. Make sure the relevant professionals have all important information about changes to your parent’s health, mental capacity, or living situation.

  1. Plan for the next steps.

At some point, your aging parent may no longer be self-sufficient. The earlier that you and your close family members decide upon an action plan, the better. Do you or anyone in your family have the room, the time, and the means to take in your parent? How can non-caregiving siblings or other family members chip in on associated costs of living?

In many cases an assisted living facility is a more realistic option. But be aware that your parent’s Medicare plan probably will not cover those costs. If your parent does not have retirement funds earmarked for end-of-life care, you and your close family members may need to hold another meeting to discuss how to pay for a facility.

None of these steps are easy, and none of the associated options your family settles on will be perfect. The sooner you loop us in on how caring for an aging parent might affect your financial picture, the sooner we can get to work on the money side so that you can concentrate on giving your family the love and support it needs during this difficult time.

Are You Financially and Emotionally Prepared for Life’s Big Transitions?

Are You Financially and Emotionally Prepared for Life’s Big Transitions?

Mike Desepoli, Heritage

Financial planning is more than just a series of savings and investments you lock away and forget about. Your money doesn’t exist in a vacuum. Your financial needs are going to fluctuate in response to the transitions that we all go through as we work, raise our families, and look ahead to retirement.

Managing these transitions is one of the keys to maximizing your finances and to achieving a greater Return on Life™ (ROL).

It’s Better to Prepare Than Repair

When it comes to your financial future, it’s easier to prepare for what’s ahead than it is to repair mistakes. With that in mind, we have a tool called The $Lifelineä. It’s designed to help you prepare for life’s transitions by asking you to anticipate what’s coming up and the age at which you expect the transition to happen.

You can then plot the applicable transitions on your $Lifeline, and use a color-coded system to rate the transition based on whether it is a High, Medium, or Low priority. If you’re married, you and your spouse can plot both shared transitions and transitions that are unique to each of you on the same $Lifeline for a complete picture of all the milestones that will affect your household, and your finances. Each transition also includes links to additional resources that you can consult for more information.

Let’s take a look at the six $Lifeline categories, and a few of the important transitions we can help you map out and prepare for:

Family
  • Expecting a child
  • Special family event
  • Assistance to a family member
  • Child going to college
  • Child getting married
  • Empty nest
Health
  • Worried about an aging parent
  • Concern about the health of child
  • Possible concern about the health of spouse
  • Family member with disability or illness
  • Recent death of a family member
  • Create end of life medical directive

 

Work
  • Contemplating career change
  • Job re-structuring
  • Expand business
  • Start a new business
  • Acquire / purchase a business
  • New job training / education
Retirement
  • Downshift worklife
  • Full retirement
  • Changing residence
  • Start receiving Social Security income
  • Eligible for Medicare.
  • Start receiving retirement distributions
Financial
  • Refinancing mortgage
  • Reconsidering investment philosophy
  • Significant investment gain
  • Significant investment loss
  • Considering investment opportunity
  • Receiving inheritance
Giving
  • Stipend to family member
  • Gift to children / grandchildren
  • Develop / review estate plan
  • Create a foundation
  • Create or fund a scholarship
  • Fund a cause or event

 

Transitions Change Over Time

Once we’ve plotted your anticipated life transitions on your $Lifeline, we can start discussing the transitions that are most important to you from an immediate planning standpoint. Maybe you need to understand the financial implications of taking care of an aging parent. Perhaps it’s figuring out how to pay for your kids’ education. Or you may want to know the best time to start receiving pension payments.

Over time, as new transitions arise and old ones get completed, we can add, remove, and reprioritize transitions as necessary.

The easiest way to throw off your financial plan is to make a rash, emotional decision in the middle of a difficult moment. The $Lifeline, and our Life-Centered Planning process, will help you avoid reacting – or overreacting – to the ebbs and flows of your life by putting you into a more proactive mindset about your financial future.

You’ll be less likely to take on a risky second mortgage to pay for your son’s freshman year of college and your daughter’s wedding if you plan for those events in advance—something the $Lifeline helps you visualize.

As you prepare to go through the $Lifeline exercise, take a look at the categories and transitions listed above. If you’re married, talk to your spouse about them. Write out a list of transitions that you know you’ll want to plot on your $Lifeline. When we meet, we’ll fire up the tool and create your personalized $Lifeline so you can start preparing for life’s big transitions.

 

Giving: How To Do The Most Good Without Disrupting Your Financial Plan

Giving: How To Do The Most Good Without Disrupting Your Financial Plan

Lou Desepoli, Heritage

Many studies have shown that charitable giving provides greater happiness than buying more stuff. Eventually, you get used to your fancy new car, and the enjoyment it provides goes down. But giving forges feelings of connectedness and community that don’t fade away.

Incorporating charitable giving into your financial plan is a great way to make sure that your generosity is aligned with the things that are most important to you. Some forethought about these key issues will also make sure that your good intentions don’t throw off the rest of your long-term planning:

Have a purpose.

The most effective charitable giving is thoughtful and intentional. It may be helpful for you and your spouse to ask yourselves some questions that will narrow your focus, such as:

  • Do we want to give to a national or local cause?
  • Are there pressing issues in our community that we feel we can help impact?
  • Do we have any personal connections to causes, such as medical research or support for the arts?
  • Want to support friends or family by contributing to causes that impact their lives or fulfill their passions?
  • Do we want to support a religious organization, such as our church?
  • Are our charitable impulses motivated by on-going problems, such as education or homelessness, or would we rather position ourselves to react to events such as natural disasters

Do your homework.

Once you’ve settled on a cause, do some research on potential recipients. Visit the local nonprofit you’d like to support and meet with its leadership team. Is the organization running itself responsibly? Are there good, competent people in charge? Will these people get the job done? Don’t sink your money into a well-intentioned black hole.

If you’re looking to give to a national organization, keep in mind that even some of the biggest names have come under fire lately from watchdog groups for misusing donations. Make sure you’re giving to an organization that’s doing what it says it’s going to do with your money.

Also, remember that big organizations – even non-profits – have to manage things like overhead, salaries, and insurance. Are you happy supporting the organization itself? If you want to see your money in action more visibly, you might be happier giving locally.

Beware the internet.

Whenever something bad happens in the world, our inboxes and social media are flooded with donation links. Read before you click. Be especially wary of crowd-funded campaigns on sites like GoFundMe. The cause may sound worthy, but these sites do not provide meaningful oversight on every campaign. Your money could be going to a cause, or it could be going straight into a scam artist’s pocket. You’ll never know for sure unless you know the person organizing the campaign.

Find out what will do the most good.

There’s more than one way to give. Maybe the local adult literacy center needs volunteer tutors as much as it needs money. Perhaps you’d feel more fulfilled helping out at your church’s food bank than you would feel by writing a check. Taking a more active role in a cause that’s important to you might be the most valuable thing you can give.

However, if you want to help with large-scale problems outside your own community, like hurricane recovery on the other side of the country, money is usually the most effective way to contribute. Unlike toiletries or canned goods, money doesn’t have to be boxed and shipped. You’re better off contributing to large, trustworthy organizations that already have systems and pipelines in place.

Know your limits.

Especially as you near retirement age, your giving should be a planned part of your budget. Don’t make a large one-time contribution that’s going to force you to dip into an emergency savings fund. Don’t sign up for a recurring gift that’s going to put a strain on your monthly bills. If you can’t give as much money to a cause as you’d like, think about supplementing a smaller contribution with regular volunteering.

Sometimes our best intentions get us into the most trouble. It’s great that you and your spouse want to use your money to try to make the world a better place. But your comfort and happiness are important too. Even the wealthiest people have to say no.

If you are ever in doubt, let your core values be your guide. Apply the same principle to your giving as you do to the rest of your life-centered financial plan: use the money you have to get the best life possible. With a little planning, you’ll make life better for those around you as well.

 

For more info on this topic and many others, check out The #AskTheAdvisor Show

Facebook Data Scandal: What you need to know

Facebook data scandal: Here’s everything you need to know

Mike Desepoli, Heritage

Cambridge Analytica is in the midst of a media firestorm. This came after an undercover sting operation caught senior executives boasting about psychological manipulation, entrapment techniques and fake news campaigns. Alongside social media giant Facebook, the London-based elections consultancy is at the center of an ongoing dispute over the alleged harvesting and use of personal data.

What happened

It started with an explosive expose broadcast by Britain’s Channel 4 News on Monday. In it, senior executives at Cambridge Analytica, were caught on camera suggesting the firm could use sex workers, bribes and misinformation in order to try and help political candidates win votes around the world.

How did this initially come to light?

The Channel 4 News investigation followed articles published over the weekend by the New York Times and U.K. newspaper The Observer. The reports sought to outline how the data of millions of Facebook profiles ended up being given to Cambridge Analytica.

In this way, 50 million Facebook profiles were mined for data. Kogan then shared this with Cambridge Analytica, which allowed the firm to build a software solution. The software was used to help influence choices in elections, therefore spurring the narrative of collusion. This was according to a whistleblower, who revealed the alleged practices to both newspapers.

How has Facebook Stock responded?

As you might expect it’s been under quite a bit of pressure the last few days. It is currently off about 10% from recent all time highs made in February. With growing calls for executives to appear before congress, it will likely continue to be under pressure. In the news today, there is a group of investors who have filed a class action lawsuit against Facebook with the intention to recoup stock losses.

What happens next?

U.S. senators have urged Facebook boss Mark Zuckerberg to testify before Congress. They will likely ask about how the social media giant will protect its users. Meanwhile, in the U.K., Zuckerberg has been summoned by the chairman of a parliamentary committee in order to explain the “catastrophic failure” to lawmakers.

The head of the European Parliament has also said it will carry out an investigation to see whether data was misused.

 

 

3 Financial Resolutions for 2018

3 Financial Resolutions for 2018

by Mike Desepoli, VP of Heritage

With 2017 coming to a close and 2018 in our sights, it’s time once again to make that list of new year’s resolutions. Each and every year, we sit down in late December and hammer out a list of things we hope to accomplish next year. While we all certainly have good intentions, studies show that most resolutions have come and gone by the time January ends. Some evidence of this would be going into a gym in early January, you can bet the place is packed. However, head back there in mid march and you can be certain the crowd has thinned out.

So that begs the question, why do so many people fail at keeping their resolutions? Do they reach too far? Maybe they set the bar too high? As we know with goals, they not only need to be measurable, but it helps when they are actually achievable.

I may not be able to help you in every part of your life, but when it comes to personal finance we have your covered. Here are 3 financial resolutions for you to deploy in 2018.

Be Aware

One of root causes of financial problems is lack of attention and accountability to ones finances. It is no longer acceptable not to know what your account balance is, what is your credit limit, and how much money you spend on a monthly basis. The first step to achieving any basic financial goal is awareness. Once you are more in tune with where your money flows every month, you can start to identify financial opportunities that will move you forward towards greater things.

Create a Budget

Yes, I know you have heard this 100 times but how many of you have actually done this? We all think we know what we spend money on, but the fact is without a budget there is no doubt you are wasting money each month. Outlining a budget will help you have a closer relationship with your money. The more we learn to respect money, the more responsible we will handle it. Make sure creating a budget is one of your new year’s resolutions.

Reduce Debt!

This is so simple, yet so important. Most financial problems originate from debt. It starts small, and the next thing you know your credit cards are maxed out and you can only afford the minimum interest payments. This starts the cycle of perpetual debt that is very hard to climb out of. Having a budget will help you avoid debt in the first place, but if you should find yourself in debt start by paying off the highest interest debt first.

These are just a few quick tips to get you on the right track. For more info hit the link below to check out our Youtube Show! Happy Holidays and Happy New Year!

For more info check out episode 52 of The #AskTheAdvisor Show!

2 Helpful Tax Strategies for Year End

2 Helpful Tax Strategies For Year End

By Kristi Desepoli, Heritage

If you’re like most taxpayers, you have no clue about the most effective tax strategies for these financial vehicles – especially if you lack access to expensive accountants and attorneys. Here’s some guidance. Here are two common situations and innovative solutions that might help.

 

You are self-employed and want to save tax.

You feel you pay too much in taxes and want at least $17,500 of deductions. You are not an employee with a company that offers a 401(k) retirement plan but you still need more deductions than the $5,500 annual contribution ($6,500 if 50 or older) limit for a traditional individual retirement account.

 

Solution: a solo 401(k), aka an independent, one participant or family 401(k). Using this vehicle in this case hinges on your being a sole proprietor or operator of the business with your spouse, and have no nonfamily employees.

 

Let’s say your spouse works in the business with you and is younger than 50.

He or she can contribute up to $17,500 annually to the solo 401(k) plan, and this is called employee salary deferral of up to a full year’s compensation. If your spouse earns $17,500 this year ($18,000 in 2015) he or she can put all of $17,500 into the solo 401k(k) plan.

 

Assume you are 50 or older and now also contribute a maximum $23,000 (the maximum $17,500 contribution for 2014 tax year plus the $5,500 catch-up amount) employee salary deferral to a solo 401(k) plan. With an eye to even further deductions, you can also kick in the employer contribution – remember, you are both the employee and the employer – of 20% of your net earnings if you are a sole proprietor and 25% if your business is a corporation.

If you are 50 or older by this Dec. 31, you can save up to $57,500 in the solo 401(k), a combination of the employee salary deferral and the employer contribution. For 2015, the total maximum contribution increases to $18,000 salary deferral plus $6,000 catchup plus $35,000 employer contribution, or $59,000 total.

 

Additional points:

 

You can still contribute to an IRA in addition to your solo 401(k) contribution.

 

Setting up a solo 401(k) can be inexpensive and easy. A reasonably priced independent 401(k) administrator can cost as little as $500 for set up and $500 in annual fees. Brokerage firms can offer lower costs but you then are tied to their investment choices.

 

If you have non-family employees and want to offer a workplace retirement plan, your normal 401(k) plan may come with potentially higher set-up and maintenance fees. You will also be subject to nondiscrimination rules. This means that you must allow your permanent employees into the plan and that your employer profit contribution must treat all employees – including you the owner – equally.

 

You want to leave a tax-free legacy.

In one excellent example, a retired nurse, married, 75, wants to leave a legacy to her 9-year-old twin grandsons. The most tax-effective strategy: Combine the Multi-Generational (MGIRA) strategy with a Roth IRA conversion.

 

The MGIRA, aka an extended or stretch IRA, allows you to designate a successor beneficiary to pass on funds you saved for retirement. Converting other kinds of IRAs to a Roth IRA offers many advantages, including eventual tax-free withdrawals of qualified distributions.

 

We structured a Roth conversion of the nurse’s $385,000 traditional IRA and paid the conversion tax with non-IRA funds. The two grandsons will each get slightly more than $2 million tax-free over their lifetimes in annual checks without ever raiding the principal. Now that is one effective tax strategy.

 

Let’s hope they raise a glass to the grandma who will still be looking after them.

 

When Was Your Last Financial Check Up?

The Importance of an Annual Financial Check Up

By Kristi Desepoli, Heritage

 

It’s crazy to sit back and think about everything that can happen in a year. With all of the curveballs that life throws your way, it’s important to adjust accordingly.  When it comes to financial success, it’s critical to have a plan in place and make adjustments as things change.  What may have been important last year, may not be as important this year, and it’s imperative to assure your plan aligns with what is significant to you and your goals.

Here are three reasons why an annual financial check up should be at the top of your to-do list:

Your retirement plan may no longer reflect your goals.

Along with everything else, our priorities tend to change. What many see retirement looking like at one point, can often change drastically after the addition of grandchildren, real estate purchases, or any other major life-changing event. Even in the event that your goals remain the same, and no major life changes occur, sitting down annually to review and make any necessary adjustments is critical in assuring that your retirement dreams become a reality.

Your insurance needs and beneficiaries may need to be updated.

Insurance can serve as a great protector against the unexpected, but it is always smart to sit down and take a look at your needs annually. Make sure that you have the proper amount of coverage in all of the right places. For example, when it comes to life insurance, as your family grows it may be best to increase your amount of insurance to protect your loved ones. Additionally, although most people typically make changes to their wills after major life changes, more often than not other accounts get overlooked when it comes to those changes. Assets in retirement accounts pass directly to the beneficiaries that you designate within the account. Because of this, it is vital that you review your beneficiaries annually to be sure they are up to date.

Your investing goals might have changed.

Since our priorities change from time to time, during your annual financial review it is important to evaluate your current investment strategy. If things have changes, you can be sure to make adjustments as necessary. Even in times where your goals may have remained steady, it is vital to also look at different economic factors. Real estate conditions, interest rates and inflation, all determine whether your portfolio needs adjusting based off of those factors.

 

For more information on financial wellness check out The #AskTheAdvisor Show Episode 22

The 1 Question Investors Should Ask

The 1 Question Investors Should Ask: Is My Financial Advisor a Fiduciary?

By Mike Desepoli AIF®, Vice President of Heritage Financial Advisory Group

Financial advisors will have a new regulation to deal with starting in April, and it’s the biggest change the financial advice industry has seen since the great recession. It’s called the “Fiduciary Rule”, and it will have a significant impact on how financial advice is delivered. It is important that investors understand what this change is, and why its’s important.

Introduced by the previous administration, the fiduciary rule will require financial advisors to put the client’s needs before their own. Yes, you read that right. Until the rule officially goes into effect, your financial advisor may not have your best interest in mind.

What is the current law?

As the law currently stands, there are two standards that advisors are held to, the suitability standard and the fiduciary standard. The suitability standard gives advisers the most wiggle room. It simply requires that recommendations must fit clients’ investing objectives, time horizon and experience. You can satisfy the suitability standard by recommending the least suitable of the options, as long as it falls within the general suitability test of that client. The suitability standard invites conflicts of interest pertaining to compensation, which can vary greatly from one product to another.

It also doesn’t require advisors to disclose conflicts of interest. So what that means is often the products that are being recommended are best for the broker, and have higher costs for the investor. It is estimated that non fiduciary advice costs Americans approximately $17 billion each year.

The other standard of care, the fiduciary standard, tasks advisors with putting their clients’ best interest ahead of their own. For instance, faced with two identical products but with different fees, an adviser under the fiduciary standard would be compelled to recommend the lower cost option to the client, even if it meant fewer dollars in his or her own pocket.

Unfortunately many investors can’t distinguish among advisors who is a fiduciary, and who isn’t. Studies have shown that individual investors don’t know who is a fiduciary or what a fiduciary actually is. So here are a few questions to help you sort through the rubble:

How often do you monitor my investments?

Investors don’t ask this question often, because most investors assume the advisor keeps a close eye on their portfolio. A common reason for using an advisor is insufficient time to self-manage. Hopefully, you are not paying an annual fee for an advisor to put your money into passive index funds and not monitor their performance. If your advisor is not analyzing your portfolio at least quarterly, you may want to discuss the services offered for the annual fee you pay.

 

What is your investment philosophy?

Paying careful attention to the advisor’s answer can offer insight into the business model. Although there is no one-size-fits-all approach, all advisors should have a disciplined and repeatable investment approach. Markets fluctuate, and strategies that may have been in favor last year might perform terribly the next year. An advisor who chases performance and lacks an underlying process often generates poor returns. If they are pitching a new “hot” fund every time you meet, they may not have your best interest in mind.

 

How much am I really paying?

Disclosure requirements have improved since the financial crisis, but “hidden” fees remain for the average investor. Often, when selecting a financial advisor, clients base their decision on the advertised fee. In some cases, there may be no fee referenced at all. Is the advisor working for free? If the fee seems too low, that may also be concerning. The advisor may be receiving ongoing service fees from the investment they are recommending.

This undisclosed compensation is a big conflict of interest. Beware, as these fees can become a significant cost over time, compared to the explicit fees of a fiduciary advisor. A typical fee-based advisor has a tiered structure based on account size that is disclosed to a client up front. Selecting an advisor with a reasonable fee is important, but what you get for that fee is equally relevant. If one advisor is a fiduciary and the other is only held to the suitability standard, the difference in fees may not paint the full picture. Investing in an advisor who has your best interests at heart could pay handsomely over time.

When it comes to choosing a financial advisor, take nothing for granted. Know what you are paying for, and what services you are entitled to. Remember, a misguided broker focused on his or her next commission could cause you financial ruin.

Interest Rates on the Rise

Interest Rates on the Rise

Heritage Financial Weekly – December 19, 2016

 

The Federal Reserve put a hitch in the markets’ giddy-up last week, raising interest rates for the first time in over a year.

It wasn’t the Fed’s second interest rate hike in a decade that caused markets to stumble. December’s rate hike was old news before it happened. In mid-December, Reuters reported Fed funds futures indicated there was a 97 percent probability the Fed would raise rates one-quarter percent at its December Federal Open Market Committee (FOMC) meeting. In addition, all 120 economists polled by Reuters agreed rates were headed higher.

 

It was the dot plot – a chart showing FOMC members’ assessments of appropriate monetary policy going forward – that unsettled investors. Barron’s explained:

 

“The market, however, was surprised when the Fed turned ever-so more hawkish, with its “dot plot” indicating they will raise interest rates 3 times next year, up from two. Still, stocks handled the news better than might be expected, with the Standard & Poor’s 500 index dropping 0.8 percent immediately following the announcement but still finishing the week down just 0.1 percent to 2258.07. The NASDAQ Composite fell 0.1 percent to 5437.16, while the Dow Jones Industrial Average gained 86.56 points, or 0.4 percent, to 19843.41, its sixth consecutive winning week.”

 

Bond market investors weren’t too happy last week, either. The yield on 10-year Treasury notes has nearly doubled during the past five months, rising from 1.36 percent to 2.6 percent. When bond rates move higher, bond prices move lower.

What do Interest Rates mean for bonds?

If there is a silver lining for bond investors, it may be some specialists believe changes in Treasury rates will be modest during 2017. Barron’s reported, “For what it’s worth, the 10 firms surveyed in our Outlook 2017 see the 10-year yield at 2.69 percent late next year, just a tad above today’s level.”

 

Data as of 12/16/16 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor’s 500 (Domestic Stocks) -0.1% 5.5% 3.9% 8.1% 13.1% 4.7%
Dow Jones Global ex-U.S. -1.0 1.0 1.9 -2.7 3.3 -1.3
10-year Treasury Note (Yield Only) 2.6 NA 2.3 2.9 1.9 4.6
Gold (per ounce) -2.8 6.5 5.2 -2.9 -6.6 6.3
Bloomberg Commodity Index -1.2 10.9 13.0 -11.7 -8.7 -6.3
DJ Equity All REIT Total Return Index -0.5 7.2 7.6 12.9 12.4 5.0

S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.

 

to 20,000 and beyond!

You may have noticed investors have been pretty enthusiastic about U.S. stocks in recent weeks. It’s possible the Dow Jones Industrial Average will surpass 20,000. The fervor for U.S. stocks may be due to improving corporate earnings growth or it may reflect expectations for the incoming U.S. President. The Economist reported:

 

“…the American stock market rally since the election has been quite remarkable, given the qualms expressed by many investors before the election. The big hope is that Mr. Trump will focus on his plans for fiscal stimulus and corporate tax-cutting; this will boost America’s economy and corporate profits. But, it may also push up inflation so investors are switching out of Treasury bonds and into equities. At the same time, investors are counting on Mr. Trump to forget about, or downplay, his protectionist rhetoric; as yet, they have been remarkably sanguine about his twitter wars with China.”

Last Week

Last week, the American Association of Individual Investors (AAII) Sentiment Index showed more than 40 percent of participants (44.7 percent) are optimistic share prices will move higher during the next six months. The historic average for bullish sentiment is 38.4 percent. About 32 percent of participants were bearish, which is also above the historic average of 30.3 percent. It’s interesting to note the percentage of bearish participants rose by 5.8 percent from the previous week when it was below the historic average.

 

Any time investors become exuberant, the words of Warren Buffett come to mind: “Two super-contagious diseases, fear and greed, will forever occur in the investment community. The timing of these epidemics will be unpredictable…We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.” The U.S. bull market may have further to run, but contrarians may see better relative opportunities elsewhere.

 

Weekly Focus – Think About It

 

“The supreme quality for leadership is unquestionably integrity. Without it, no real success is possible, no matter whether it is on a section gang, a football field, in an army, or in an office.”

 

–Dwight D. Eisenhower, 34th President of the United States

25 Ways to Save Hundreds on Your Holiday Shopping

Tips to Save Hundreds on Your Holiday Shopping

 

You’re not alone. A recent study found that 39% of Americans feel pressured to spend more than they can afford during the holiday season.

That’s no wonder, with the average U.S. adult planning to drop $830 on Christmas gifts this year, and 30% of people planning to spend upwards of $1,000, according to a November poll.

To help you make the most of every gift-giving dollar, we’ve asked shopping experts for their smartest strategies. We will explore how to score deals and outsmart retailers at their own tricks. Here are many ways to save during this years shopping season.

1. Track the items you want

One of the easiest ways to save is to avoid impulse buys. Start by making a gift list, then comparison-shop . You can also use price tracking tools to see the highest and lowest prices an item is currently selling for. That way you know whether to whip out the card now or wait till closer to Christmas.

 

2. Set up price alerts

Want something that’s still too pricey for your budget? Use the web to set up email alerts that will notify you when the price drops.

3. Ask for a price match

Once you know the lowest price an item is selling for, ask your local merchant to match it. Most stores will price-match with their direct competitors. You can even compare prices while you’re out shopping by using mobile apps like Price Grabber or Shop Savvy.

4. Shop from a cash-back site

Plenty of websites will give you cash back for shopping at certain retailers as long as you enter the shop’s site through them first. You’ll typically get between 1% and 5% of the purchase back, though sometimes retailers will run specials that bump that figure up to 20%.

You may have access to a similar deal through your credit cards. Discover’s Discover Deals program, for example, includes several retailers who offer between 5% and 15% cash back when you click through Discover’s site to the retailer. As with the sites above, these offers are on top of your usual credit card rewards.

5. Subscribe to store emails

It can be well worth the spam to sign up. Major retailers offer special loyalty coupons and early sale access to frequent customers. Just keep in mind that come-ons for 40% off clothing or housewares could cause you to ramp up spending even as you hunt for bargains. Avoid the temptation by keeping these emails in a separate folder that you check only when you actually need something.

 

Fragile Markets

Fragile Markets

Heritage Financial Weekly – December 12, 2016

 

Dad: “Fra-gee-lay” …it must be Italian!

Mom: I think that says “fragile,” honey.

Dad: Oh, yeah.

 

This holiday season, investors’ enthusiasm for U.S. stocks has rivaled old man Parker’s passion for his major-award leg lamp in ‘A Christmas Story.’ Last week, three major U.S. indices hit all-time highs.

Consumer Sentiment on the Rise good for stocks?

Barron’s reported consumer confidence is helping make this the most wonderful time of the year for U.S. stock markets. The University of Michigan’s Index of Consumer Sentiment rose to 98 in December, reflecting a surge in consumer confidence. It was the highest reading since January 2015 and is closing in on the highest level since 2004. Surveys of Consumers chief economist, Richard Curtin, wrote:

 

“The most important implication of the increase in optimism is that it has raised expectations for the performance of the economy. President-elect Trump must provide early evidence of positive economic growth as well as act to keep positive consumer expectations aligned with performance. Either too slow growth or too high expectations represent barriers to maintaining high levels of consumer confidence.”

 

In his December Investment Outlook, Bill Gross cautioned while many aspects of Trump’s agenda – tax cuts, deregulation, fiscal stimulus – are good for stocks over the near term, investors should keep an eye on the longer term, as protectionist policies could restrict trade and, together with a strong dollar, could lead to more fragile markets.

 

European stocks also moved higher last week as a result of the European Central Bank (ECB) announcing a taper. Quantitative easing will continue through 2017, but ECB purchases will fall each month beginning in April.

A Look At The Numbers

Data as of 12/9/16 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor’s 500 (Domestic Stocks) 3.1% 4.6% 5.4% 7.7% 12.5% 4.8%
Dow Jones Global ex-U.S. 2.7 2.0 2.1 -2.8 2.7 -1.1
10-year Treasury Note (Yield Only) 2.5 NA 2.2 2.9 2.1 4.5
Gold (per ounce) -0.8 9.5 7.6 -2.0 -7.4 6.4
Bloomberg Commodity Index 1.3 12.2 11.2 -11.2 -9.2 -6.3
DJ Equity All REIT Total Return Index 3.8 7.7 10.8 12.1 12.6 4.8

S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.

 

Divorced? you may want to investigate spousal benefits.

If you weren’t the top wage earner in your marriage, or your job was raising the children, then Social Security’s spousal benefit could prove advantageous. As a result, it provides the lower earning spouse with 50 percent of the higher earning spouse’s benefit at full retirement age, even if you’re no longer married.

 

“Social Security operates with a philosophy that a divorced person may deserve a personal benefit, having been the long-term partner and helpmate of a member of the workforce. The benefit is similar, in fact, to the spousal benefit that is available to a person who is still married.”

 

What Does it all Mean?

To qualify, you do have to answer ‘yes’ to a significant list of requirements:

 

  • Married for at least 10 years
  • You are unmarried now
  • Age 62 or older
  • Your ex-spouse is entitled to Social Security benefits
  • The benefit you qualify to receive based on your work, is less than the benefit your ex-spouse qualifies to receive because of several factors. There are other factors that could affect your application for spousal benefits, including whether your ex-spouse has begun taking benefits. If you would like to learn more, contact your financial professional .
Weekly Focus – Think About It

“My mission in life is not merely to survive, but to thrive; and to do so with some passion, some compassion, some humor, and some style.”

–Maya Angelou, American poet

5 Signs Your Spending Too Much in Retirement

Signs You’re Spending Too much In Retirement

 

How can you tell that you’re spending more than your savings will support? If any of these five signs describe you, it’s time to make some changes.

You don’t know how much you should be spending.

If you don’t have a budget, you’re probably spending too much. The Center for Retirement Research at Boston College found that 53% of households risk falling more than 10% short of their retirement goal. Another 40% of retirees may run out of money for basic needs. Other statistics show that more than two-thirds of Americans don’t use a budget.

“A budget acts as a roadmap for overall spending during a given week, month or year. A lot of times we are unaware of how much money we spend in any given month.A budget really is an accountability tool to make sure we are living within our means,” says Mark Hebner.

If you don’t follow a disciplined spending plan, start today.

You’re spending more than 6% of your savings per year.

How much you should spend post-retirement depends on many factors. Retirement experts say that depleting more than 4% to 6% of your savings annually is ill-advised. If you have $750,000 saved, a 5% withdrawal rate would give you $37,500 per year plus Social Security benefits. If you want to be safer, go with the traditional guideline of 4%.

You’re paying too much to service your debts.

Recent data from the Bureau of Labor Statistics found that the average retiree is spending 31% of his or her income on a house payment. That works out to about $13,833 per year, assuming an average income of $44,713. (And that’s just the house payment.)

Experts advise no more than a 36% debt-to-income ratio. Debt hurts you in two ways. First, the interest drives up the cost of the item. Second, you’re using money that could remain invested to service the debt. The more money that remains invested, the more your accounts will continue to grow. This is even more important now that you’re no longer bringing home a salary.

You’re displaying evidence of a “cut loose” mindset.

You spent decades working more than full time, supporting a family, paying into Social Security and delaying the fun things that come with making a comfortable salary. Now you’ve reached retirement and it’s time to do all those things you’ve always dreamed of doing.

That’s true, but not all at once. Rewarding yourself in the first year by purchasing a Corvette, going on an around-the-world vacation and purchasing a summer home will give you very few years of comfortable living. Spread those purchases over time if they fit into the budget.

“Financial planning in general is focused on the long game. Retirees should not only view the investment process as long term, but they should also make the most of their savings in retirement. Spending down all of your savings in the first few years of retirement is a recipe for complete disaster,” says Hebner.

You aren’t supporting your excess spending with a side job.

If you didn’t save enough for retirement – or you discover that your desire for adventure is costing more than your budget can support – working to support your spending can fill in the gap. Even a part time job that brings in $15,000 per year allows you to spend a lot more than the confines of your retirement budget may allow. Don’t fall into the trap of spending without a plan to augment your retirement income if you find yourself falling short.

The Bottom Line

It’s true that your thinking should change from amassing money to using it once you retire. But you need to create a transition plan. Your money may have to last 30 years or more – you probably hope you need it that long. Just keep in mind that over time, as your healthcare requirements rise, you may naturally spend more. Be sure you leave yourself enough of a cushion.

4 Qualities to Look for When Hiring a Financial Advisor

4 Important Qualities When Hiring A Financial Advisor

Honesty

When it comes to choosing someone to help handle your finances, it can be somewhat terrifying. Providing insights into your funds, investments and needs requires the right professional.. While any professional will identify himself or herself as trustworthy and honest, here is something to consider…are they making guarantees? While financial advisors are skilled professionals with a background in this industry, no financial advisor can guarantee results. If you’re being guaranteed returns, chances are this individual is not being honest and forthcoming.

 

Knowledge

Your potential financial advisor should be able to provide evidence to you that they are knowledgeable about the financial areas you need managed. Don’t misread this into thinking your advisor should speak over your head with corporate lingo you don’t understand. Your advisor should be able to explain the topics being discussed in a graspable, educated way. After all, Albert Einstein once said, “You do not really understand something unless you can explain it to your grandmother.” If your advisor is knowledgeable of the ins and outs of his or her trade, they should be able to articulate these insights in clear, logical ways.

Experience

This is a tough one. Not every financial advisor has been in practice for multiple decades, nor do they need to have been. Any advisor resting on their past laurels is not guaranteed to be a perfect fit for you as the regulations and industries of finance change regularly and last year’s success does not infer an assumed return this year. By the same token, you should strive to find a financial advisor who can identify and discuss how they’ve been able to successfully advise other clients with similar needs in order to provide additional assurance that your circumstances fit well within their wheelhouse. Ask for specific situations (not requiring identities of current or past clients, though) and what research and factors informed the advisor’s actions that helped create success.

Availability

Your finances, along with your financial circumstances, are always evolving and changing, just like the numerous markets associated with them. You need a financial advisor who is available to you based on your needs. For many, you may only need to communicate with your financial advisor quarterly. However, when preparing for a major financial decision, you will likely need more frequent communication. Speak to your potential advisor about their availability. What good is having a financial advisor if they are never available to give you advice when you need it?

What Does The BREXIT Mean To You?

What Does the Brexit Mean to You?

And What Does it Mean for Britain

Voters in the United Kingdom chose to Brexit from the European Union (EU) late Thursday, June 23. The “Brexiters” (those who voted in favor of leaving the EU) were victorious, snatching 52 percent of the vote and setting Britain on a historic path to be the first country ever to do so.
Stock markets reacted swiftly to the news. Asian exchanges, which were open as the results came in, fell sharply with Japan’s Nikkei 225 Average down as much as 8 percent and China’s Shanghai Composite lower by 1.3 percent. European markets opened the morning off as well. German and French stocks are down 6.8 percent and 8.5 percent, respectively. Financial companies and banks, especially those in Europe, have been the hardest hit with some down as much as 25 percent. Furthermore, our domestic stock markets pointed to a Friday morning open down more than 2.5 percent.

The bank of England, the central bank for Britain, has promised 250 billion pound sterling to ease the markets. This will help create liquidity for the embattled currency. This had a somewhat calming effect and helped bring many off their intraday lows. However, global equities are still trading sharply lower than their previous close as is the British pound. The pound sterling was off as much as 11 percent yesterday before rebounding to close down 6 percent.

How will the Markets React?

In the short-term, we expect volatility to spike as investors reassess the global markets. Britain is already experiencing political fallout with the Prime Minister, David Cameron, announcing his resignation. However, he will stay in office for a few more months to ensure a smooth transition. The vote is historic and U.K. politicians have every intention of honoring the vote. However, while going through with the “Brexit,” the U.K. is still technically part of the EU and must abide by its rules and regulations until the separation is finalized.

In the intermediate-term, much work is ahead in Britain. Trade agreements, treaties, and many regulations must be renegotiated and reworked. The U.K. economy and markets should experience significant volatility. The government will seek to reestablish its global relationships and put the country on the best possible path going forward.

Long-term, the future of the EU is much more in doubt than it was two days ago. Whether the British know it or not, they are being watched very closely by other members of the EU to see how they weather the coming months and years. If they are successful in their separation, they could be paving the way for other countries to leave as well.

We are watching the markets closely and will continue to do so, providing updates as it relates to U.K.’s economic future and what this means for investors in general. Although events such as these are impossible to time, we continue to stand by the benefits of a comprehensive wealth plan as well as the process we follow in volatile situations such as these.

Pink Tie 1000 Gala Event

Pink Tie 1000

This Monday May 9th we attended the annual Pink Tie Gala event. The Crest Hollow Country Club in Woodbury, NY played host to this year’s gala. It was truly an incredible event. There were over 2500 professionals in attendance, as well as numerous local sports heroes.  Consequently, the event featured numerous auctions and opportunities to purchase memorabilia. As a result, it was a great place to raise money for charity. The proceeds raised from the event will benefit the Don Monti Memorial Research Foundation. Billy Joel cover band “Big Shot” rocked and rolled all night long to the delight of the crowd. I am honored to be a member of such a fantastic organization like pink tie, and I know my father Lou is as well.

The pink tie 1000’s mission is to create a networking community of 1000 professionals that contribute 100$ per quarter for membership. As a result, $100,000 is generated per quarter to be donated. Then, these proceeds are contributed in their entirety to charity.

Here is a quick picture from the festivities.

pink-tie-1000-desepoli-wealth-management

10 Tips to Boost Your Savings

10 Tips to Boost Your Savings

Looking to boost your savings? Here are a few strategies to focus on to get on the right track.

1. Focus on starting today!

Time is your best friend when it comes to growing your savings so don’t wait any longer and get to it!

2. Contribute to your 401(k)

If your employer offers a 401k plan that allows you to contribute pre tax money, ENROLL IN IT! Your future self will thank you for this.

3. Contribute enough to get a “match” from your employer:

If your employer offers to match your 401k contributions, make sure you contribute at least enough to take full advantage of the match….IT’S FREE MONEY!

4. If you don’t have access to a 401k, open an IRA:

Consider establishing an Individual Retirement Account to help build your nest egg. You will be saving for your future and you will also be eligible for a tax deduction. Double WIN!

5. Take advantage of catch up contributions if you are age 50 or older.

6. Automate your savings and pay yourself first:

Make your retirement contribution automatic each month and you’ll have the opportunity to potentially grow you nest egg without having to think about it.

7. SPEND LESS:

Examine your budget and evaluate what is a want, versus what is a needs. Rein it in.

8. Set GOALS

9. Create a rainy day fund

10. Consider delaying social security as you get closer to retirement:

For each year you delay taking social security, your benefit will increase up to a certain point, consult your advisor or accountant for help.