Sequence Risk and Buffer Assets

Sequence risk is something we’re all likely familiar with, even if we call it by another name. It’s based around the concept that money placed into and taken out of a fluid and changing market will vary in terms of growth and withdrawal percentage depending on the time in which the withdrawal occurs. For example, consider an investment which only allows investors to buy a share at a predetermined price (in this case, we’ll say $1) on a certain day. For this example, your share can only be redeemed with the issuer at maturity, at which point it’s worth a pre-determined value. This investment, essentially has no sequence risk. It doesn’t matter when you withdraw it, it’s always worth $1.

Do You Need an Advisor?

I’ve been asked plenty of times if someone needs an advisor or not. Of course, I believe that everyone can benefit in one way or another by working with a qualified Financial Planner/Advisor, but there are situations that you may be able to tackle alone.

Charitable Giving

A charitable mindset is an incredible thing to have. Now, more than ever, we see the profound impact that gifts, donations, and volunteering can have on those that are truly in need. As financial planners, we assist clients with being as efficient as possible with any financial donations they have in mind, but I always encourage them to approach their gift first and foremost from the desire to help and not strictly from the tax benefit standpoint of gifting.

The Tik-Tok Era of Financial Planning

Today, there is an endless supply of information at our fingertips, including financial planning information specifically. It takes less time to gather information, there are less barriers between problems and solutions, and much of it is available for free! I think we can all agree this is, in general, a great thing, but we also need to be cautious and exercise our own ability to learn and validate what we are reading, watching, or being told.

Credit Reports

Many people overlook the importance of regularly checking your credit report. The key here is understanding the difference between your credit report and your credit score as well as the impact your credit report has on so many financial decisions now or in the future.

Happy New (Tax) Year!

Phew, we made it to 2021! I think we can all agree that 2020 was a bit of a rough year.

Not only is this a good time for a fresh start and setting some personal goals, but the beginning of the year is also great time to focus on tax planning. In terms of financial planning, earlier in the year is the ideal time to plan for the next 12 months. But there are still some opportunities that may be available to you regarding your 2020 taxes.

Things to Know about HSAs

Building on the topic of health insurance, I want to spend some time specifically on Health Savings Accounts; commonly referred to as “HSA’s”. As most insurance plans are moving in the direction of “high deductible plans” (refer to previous blog on Health and Wealth, if you have not already), these accounts are extremely important, not only to the medical coverage itself, but also to the numerous planning opportunities they provide.

Health and Wealth

One topic often overlooked in financial planning is the importance of health insurance and the decisions surrounding it. From a financial standpoint, an individual’s health can directly impact current spending and savings (the structure of premiums and out-of-pocket expenditures), the ability to utilize Health Savings Accounts (medical related investment accounts), and how much one should save to cover their long term expenses based on life expectancy. While these are just a few specific examples of how health relates to wealth, it all begins with having a basic understanding of the terminology associated with insurance.

Get the Ball Rolling - Paying Down Debt

There is more than one way to cook an egg (yes, I purposely chose to bypass the more commonly known phrase about a cat’s demise). Personal finance also reminds us that there is no one single cookie-cutter way to approach things. Aside from investing, how much you should be saving, and when to retire, one of the most common topics around this concept is how to pay down debt.

Taking the Leap – Managing Finances as a Married Couple

Statistically speaking, one of the top stressors amongst married couples comes from managing finances. As a couple, you each bring a different perspective to the table. This could include good or bad financial experiences that you have had,the type of lifestyle you were provided growing up, or your general attitude toward spending priorities.

Why You Should Work with a CFP®

By now, I hope you understand the benefits of financial planning compared to other advisory services. I certainly understand how confusing it can be to take the next step of weeding out salespeople with conflicting interests and distinguishing who is the best fit for providing the necessary services among the hundreds of designations/certifications that advisors have.

The Financial Planning Puzzle

Unless you’ve always been healthy as an ox or avoid modern medicine, I’m sure you’ve seen more than one kind of doctor in your lifetime. This might include visits for your general health, your eyes, your heart, your allergies, etc. Why should your financial health be approached any differently?

Early Career Thoughts

Building proper financial habits are best started early on in your career. Whether it’s saving enough to capture your company match, ensuring you have adequate insurance coverage, or making the most of the additional benefits that your company offers, it is important to gather as much information as you can and to take the time needed to understand your options.

Buying Your First Home?

Buying a home can seem overwhelming. From costs and inspections to insurance and taxes, you will likely have plenty of questions along the way. Luckily, there are many professionals involved in the process that will help you through it. However, as a financial planner, I want to shed some light on a few areas that are often overlooked.

Should I Pay Down Debt or Invest?

At some point in your life (if you haven’t already) you may wonder, “should I pay down debt or invest?” Most of these situations involve student loans, credit cards, mortgages, car loans and other forms of personal debt. With these items falling into just about any stage of life, everybody should understand the basic considerations behind this decision.

What is an Emergency Fund?

Times like these show us that life does not always go as planned and that nobody can predict what events might take place tomorrow. Of course, the COVID pandemic is an outlier, but there is an infinite number of what-ifs that could cause financial stress at any moment. Even during what would be considered more “normal” circumstances, I cannot emphasize enough how important it is to consider an emergency fund.

Risky Business

Perhaps the biggest struggle for investors, that I’ve witnessed, has been truly understanding the concept of risk. Of course, we all understand that “risk” in its purest form means that bad things can happen. But, much of the investing population still has a hard time taking a step back to really understand the rationality, discipline, and self-awareness that is necessary.

Tax Myths and Misunderstandings

If tax time is stressful for you, you’re not alone. Being sure that you have all the necessary documents, having to write a check to Uncle Sam, or having to switch preparers can all be overwhelming. In my experience, it seems that some of the stress may come from a misunderstanding of how taxes work in general.

Rounding Third, and Headed for Home

If you’ve been told “the market always comes back,” then you’ve been lied to. At least, a little bit. The U.S. market absolutely has recovered from past recessions, but that blanket statement assumes that we know future pullbacks will always perform the same way and does not reflect the importance of how long each recovery has taken.

Is 5 Always Greater Than 4?

If you saw two different investments, Investment A with an average 4% annual return and Investment B with an average 5% annual return, which would you assume performed better for those who had invested in them? Investment B, right? What if I told you that Investment A actually performed better? How could that be possible?

Apples and Oranges

According to the old MasterCard commercials, there are many priceless moments out there that money can’t buy. Although it’s a bit of a cliché at this point, there are still a few items in financial planning that I would say you still can’t put a price on.

The Only Thing We Have to Fear is Fear Itself

Recently, I attended a presentation on behavioral finance in Indianapolis. I have a pretty good background in the topic, but find it fascinating and always learn something new. During this session, the speaker mentioned that he disagrees with the idea that poor decisions are made through either fear or greed. Specifically, he believes that these are not separate concepts and greed stems from some underlying fear. At first, I wasn’t on board with that statement, but after thinking it through, I would have to agree.

Life is a Highway

We’ve all driven on a busy highway and tried to change lanes when the cars ahead began to slow down and the next lane over was moving faster. Inevitably, the lane you just left soon passes you. Did you second-guess changing lanes and wonder if it will save you time or even make the trip longer?

It’s Your Money, Not Your Advisor’s

My last post was about the important questions and overall responsibility of your advisor to gather the right information, but let’s be honest, there are a lot of questions that you should be asking, too!

What was that Noise?

Do you hear all those voices too? No, I’m not talking about any voices in my head… I’m talking about the never-ending and ever-changing comments from “market gurus”, social media, the internet, and other media outlets. Many people, myself included, simply refer to it as “noise”.

PERSONAL Finances are Personal

I wanted to expand on a recent piece that mentioned the importance of an advisor gathering the necessary information before being able to make appropriate recommendations. Although investments (as an example) are products, keep in mind that providing financial advice is a service. While it may take some time, in order for your advisor to do their job well and provide the best service, there are a variety of questions that he or she should be asking.

Accuracy Before Ego

Something I’ve noticed throughout the industry is the expectation that advisors should always have an answer, and always have a quick one. While it is the year 2020, and technology and other advances call for speed in our everyday lives, an advisor that ALWAYS has an answer may be a red flag.

Student Loans

I don’t know about you, but lately I’ve been seeing more and more in the news, in magazines, and online about the “student loan crisis”. As appropriate as the term “crisis” may be, I find it shocking when I meet someone that doesn’t care about, or doesn’t even know, what their student loan situation looks like. Let me clarify.