Election Year Markets

My journey into the financial planning and investing world began in the spring of 2012. I changed my college major from Education to Finance with a concentration in personal financial planning. That summer I was selected for a ten-week paid internship with a well-known brokerage firm. The culmination of that internship was in week nine where I had to prepare a presentation to around 100 clients that worked with my supervising advisor. The topic was election-year markets.

Recast vs. Refinance

2024 marks another year of high interest rates for new home buyers coupled with historically high home prices. In addition, the cost to maintain a home has risen and county assessments on home values are increasing taxes. This is a lot for homeowners to handle, especially those who rely on fixed-income sources to maintain their lifestyle.

Survival Tips for a Surviving Spouse

Losing a spouse is one of the most, if not THE most significant periods of grief in an individual’s life. And often, in addition to dealing with the emotional impact of a seemingly insurmountable loss, a widow or widower is suddenly faced with an endless number of decisions, notifications and phone calls.

$328,571… why does it matter?

There’s certainly no shortage of books, videos, and expert advice on how you should invest. It’s never been easier to find information about asset allocation, complex tax strategies, specific fund selection, you name it! However, the abundance of “expert” knowledge at our disposal can sometimes work against us by overcomplicating things or by placing too much emphasis on one topic.

Year-End Tax Planning

I don’t know about you, but it feels like this year has flown by. It seems like we just celebrated New Year’s, watched the Super Bowl and were enjoying the warmer weather, yet here we are on the doorstep of the holiday season.

Value vs Growth: Exploring two common strategies

The goal of investing, in statement at least, is simple: Choosing a place to put your money and hoping it grows over time. For an investment professional, this must be a process that is repeatable, regardless of current market conditions. While there are several approaches utilized by investment professionals to identify appropriate investments that work toward this goal, two of the more commonly used are value investing and growth investing.

Is your home your greatest investment?

Have you ever heard someone say that your home is your greatest investment? We work with many people who subscribe to this theory, and our job is to challenge those assumptions. The personal finance industry is full of dos and don’ts that create a base of financial decisions for many consumers. This especially hits home when advice is received from a parent, friend, or relative. Focusing on home ownership for this article, we look to break down what a traditional investor considers an investment and how a home may or may not fit into that definition.

Mortgage Update: Loan-Leveling Price Adjustments

If you’re in the market for buying a home, some changes are coming. Effective May 1st, 2023, updates are being made to the fees that apply to Loan-Leveling Price Adjustments (or LLPAs).

Money Meets Machine: Exploring the Intersection of AI and Finance

While advances in artificial intelligence, or AI, continue to dominate headlines, as a firm we’ve had numerous discussions about the future role of AI in our field, financial services. We’ve considered the ways this technology could benefit our clients, like 24-hour accessibility to quickly and effortlessly answer questions like, “What is the Roth IRA contribution limit?”. In other areas, questions like, “Are my kids protected when I die?” might prove difficult to find the same level of trust that you would hopefully get from a human connection.

Capital Gains

Let’s be honest – capital gains can be confusing. Most investors with non-qualified accounts, at one point or another, have received a 1099 at the end of the year and wondered what exactly these “capital gains/losses” are and where they come from. This can sometimes lead to frustration at tax time as well as misunderstandings regarding who has control, if any, over these distributions.

Fear and Distress Inspires Confusion! (FDIC)

During periods of turbulence in the economy, media outlets dominate most investors news feeds with doomsday-style headlines aimed at attracting attention and clicks. For the individual investor, at least those we encounter on a regular basis, this usually causes a lot of unease, and we field a lot of questions about whether this crisis is the one that will ultimately dismantle their financial goals and ruin their financial plan.

Financial “Goals”

If you’ve ever worked with a financial advisor, you’ve undoubtedly heard the question, “what are your goals?” In all honesty, it’s a tough question to answer, for many reasons.

Family and Finances

How often do you have financial related conversations with your family? Once a month? Once a year? Ever? Financial related struggles are very common in America, leading to stress, anxiety, and very often, divorce. So, how can we reverse this trend, or at least do better as a society? Here are three essential actions, in my opinion, that families can take to help make financial conversations less stressful.

Year-End Planning

There’s no time like the present when it comes to getting your financial house in order. This rings especially true near year-end when you’re faced with decisions regarding health plans and other benefit elections, preparing for taxes, rebalancing investments, or planning around a bonus you may have received from work. Of course, the end of each year is also filled with the holidays, travel, family visits, and work deadlines, but it’s important not to completely sweep your finances under the rug.

CD Ladders

With interest rates on the rise this year, I’ve seen articles aimed at investors discussing more traditional fixed income style investments. These types of debt-focused investments like bonds and CDs had fallen out of fashion in the past several years because their coupon rates had dropped so low that they typically paid far less than incentivized cash accounts, like online savings. However, traditional strategies to employ them as an income generator in a portfolio have had a slight resurgence lately, and it’s a topic I’ve always been fascinated by.

Should I pay off my mortgage before I retire?

A question we are often asked when working with individuals and families approaching retirement is “should I pay off my mortgage?” After all, many families would enjoy not bearing the burden of having a mortgage payment once they retire and income sources change. Living in retirement with no mortgage or other forms of debt is a wonderful place to be but shouldn’t be the only goal at the cost of hard work in the form of retirement savings.

Lump-Sum Pension UPDATE

Recently, the IRS announced an increase in the interest rate used to calculate lump-sum pension benefits. In some cases, companies have notified employees of a 20-25% reduction in their estimated pension amounts.

Medicare – IRMAA

We’ve all heard of Medicare. However, there are many important details that are often misunderstood regarding what will likely be the most important medical coverage you will have in your retirement years. One of those items is “IRMAA” and how it can sometimes be at the center of retirement income and tax planning.

Deciding When to Collect Social Security

Deciding when to collect Social Security benefits can be important. In fact, according to a study released in 2021 by the Social Security Administration, Social Security benefits represent about 30% of the income of elderly individuals. That is huge! And keep in mind that is the average, meaning that many retirees will rely on Social Security to make up a much larger percentage of their income.

Considerations for Roth Conversions

Roth conversions have become an increasingly popular topic over the years. As investors have experienced multiple bull markets resulting in compound returns and an everchanging tax landscape, many are looking for vehicles providing tax-free opportunities. Couple that tax-free growth and distributions (for those over age 59 ½) with earlier access to the basis within your account and it’s no wonder why Roth IRAs have become such an important planning tool.

Homeowners Insurance and Inflation Walk into a Bar

Inflation is here, that’s no secret. News about rising prices on gas, food, cars, and most other goods we use is everywhere you turn. Literally everywhere. I can’t remember the last time I turned on the TV, scrolled through social media, or even got together with family or friends, where the topic of inflation wasn’t at least brought up in one way or another. Everyone has their own view on general inflation, so I don’t want to spend time on that. What I do want to spend time on is something most people don’t think about; the indirect effect that inflation has on homeowners’ insurance.

Social Security Outlook

For most retirees, Social Security plays a major role in setting the foundation for income in retirement. While you should not rely solely on Social Security benefits to meet your needs in retirement, you should keep abreast of the health of the Social Security system to better evaluate different collection strategies and any impacts to your financial plan as a whole.

Account Rebalancing

As a follow-up to Choosing Investments in Your Employer-Sponsored Retirement Plan, many investors have questions regarding how to rebalance their personal accounts. Assuming you have completed the tougher task of wading through investment options and have settled on those that best fit your situation, consider the following as a high-level guide to rebalancing your current holdings into your target allocation.

Choosing Investments in your Employer-Sponsored Retirement Plan

Whether you are just beginning your first full-time job or are in the later stages of your career, you are not alone if you have questions about your company’s retirement plan and the investment options within the plan.

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.