Category Archives: investing

You are never too young to start.

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Recently, two of my friends asked if I would meet with their 20 something kids. One is getting ready to graduate from college; the other is just starting their first job. These Parents want their kids to start off on the right foot. While this is far from my normal client, I am more than happy to meet with them.

Having money is a big deal, learning how to use it is an even bigger deal. What I hope to show them is how important it is for them to save for emergencies as well as for retirement. They need to know that if they use all of the time they have on their side, they will be very well off. By well off, I don’t just mean financially. Leaning how to use and save money can give peace of mind, the power to make smart decisions, and a happy retirement.

 

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Why is there a river running out of my front door?

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This is the question I asked myself as I was approaching my front door about 18 years ago. As I opened the front door, a flood of water poured out. The pipe under the kitchen sink had burst. It is amazing how far water can go and how quickly it can damage things. Why do I bring this up? Recently, for an interview I was asked what I felt was the most undervalued investment? While my answer is technically not an “investment”, it is the most undervalued. I am speaking of your emergency savings.

Not enough of us have an emergency savings account but everyone has emergencies. A pipe bursting, the A/C unit dies, you roof needs to be replaced -these are items most do not prepare for. These are the items that just may push someone into a financial tailspin. We all need to save at least 3 months of expenses, more if possible. This account needs to be tucked away for an emergency. That is it; you do not touch that account for other purposes.

Give yourself the peace of mind necessary to deal with your own river coming out of the front door.

 

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This is my 100th blog.

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Why all of this talk about bonds?

Interest rates have been kept in check for a number of years, not being allowed to rise and fall as they normally do. Bond prices, whether it is an individual bond or a bond fund, move in the opposite direction to those rate changes. Rates are apparently going to be allowed to increase some time early next year. With all of the current talk about this topic, I thought I’d share an email conversation I had today with a client.

Client:
Nancy, as you know, we do need the income from the shares so where does that
leave us when the bonds go down?

My Reply:
If you are concerned about receiving income, you care about your share balance, not if the value of the fund is going up or down. We do not want to have funds with long term maturity because the value will not react as quickly as those with shorter term maturity… But really, you want the income; you do not care as much about the value.

Client:
Yes, you are right, I do want and need the income now and in the future.

 

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Because I care, that’s why!

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I recently started working with a couple that is three years from retirement. During our first meeting, all we did was talk. I wanted to know what they are doing now, about their family, what they want to do with their time in retirement and what are their dreams and desires. During our second meeting, I reviewed all of their assets, liabilities, pensions, social security and expenses. Then it was time for me to work.

At our third meeting, I presented them with a retirement plan that looked at their cash flow, taxes, which pension choice to choose, when to start social security, and gave them independent investment information on their current investments. I then asked them to take everything, digest the information and write down any questions they have so we can discuss them. I want everyone I meet to feel comfortable with the plans I give them, and most important, be able to understand the plan.

After the third meeting, Mrs. Client asked why her current guy at the bank didn’t do any of this stuff, and why the only call she has received in three years is to be told she has a new Rep?

Because I care – that’s why. I want my client to understand what I am presenting and that I want to see them regularly, at least every six months, to keep up to date on each other. This is how I have run my business for 30 years. This is what I will continue to do.

 

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Time for another question!

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Q: I will be turning 70.5 in November. When do I have to take the mandatory withdrawal, and how much do I have to take?

A: You have to take your first Required Minimum Distribution no later than April 1st of 2014. Your first withdrawal will have to be 3.65% of the 12/31/12 balance of all of your Qualified Accounts. If you wait until April 1st of 2014, you will have to make two withdrawals that year. Two withdrawals in one year could increase your tax burden tremendously. You may want to take part or all of your first RMD this year to ease that potentially large tax in 2014.

 

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This really happened.

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Last week, I met with a retired couple that have been clients for 3 years. Mrs. Client told me she received a troubling phone call just a few days prior to our meeting. Here is the gist of the call:

A man with a foreign accent, who said his name, was Paul Smith claimed to be calling on behalf of Medicare. He wanted to know if they would like to upgrade their Medicare services and receive a new card. First off, no one form the Medicare office calls retirees. Here comes the scary part – he knew their bank, account number, and next check that they would use.

My client immediately called their bank and the police. Flags have been placed, fraud files have been opened, and this is what is happening today. Please be as careful as you can with your information. I have no idea where this call originated from. There is a lot of fraud, especially in regard to the elderly. Keep your eyes and ears open.

 

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Must-Haves for Hurricane Season

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Hurricane season starts this Saturday; are you prepared? Here is a list of items that will make life easier, take it from me – 2004 was a lot easier due to being prepared.

Consider a generator. Having some power made all of the difference.

Update your home inventory. If you do get hit, an inventory can make the insurance claim process a bit smoother. Take photos or everything, not just of your stuff but also of the structure of your home. E-mail the file to yourself so you can access it for anywhere.

Trim your Trees. Flying debris causes the most damage. Talk to your neighbors to make sure all of you have picked up or stowed items that can fly.

Put together a disaster kit. A battery-operated radio is a must, being able to know what is going on outside of your home makes a huge difference. Flashlights, food, water, and a coffee pot that you can use on your gas grill are musts. Have all of your important papers stowed in a water tight container.

Being prepared will make life easier from an emotional and financial standpoint.

 

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Have you had “The Talk”?

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For many the talk about the birds & the bees seems to be the hardest but in reality, “The Talk” about money with your Parents is worse. My Dad passed away in a blink at the age of 50, this forced an abbreviated version of the talk, but it has been 28 years and we need to have the talk again.

My Mother recently went to see her 91 year old Brother who was put under Hospice care, this has forced the issue. I have found out that while she has paid for a cemetery plot, she has not arranged for or pre-paid for a funeral. She does have a life insurance policy that should cover that expense. I also found out that she does not get rid of any statements. She has about 40 years of statements neatly bundled together – why?! I told her that she only needs to keep a few years (but not really in our world today) if that would make her happy.

What we really need to find out is; does she owe on anything? Who does she hold credit cards with? Who is her health insurance with? What does that cover? Where is all of her liquid money and where are the retirement accounts? One would assume that I, of all people, would know these things. Our Parents that are in their mid 70’s or older do not like to talk about money.

You have to have “The Talk” – it will make things so much easier in times of illness and death.

 

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In honor of those who have served.

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And I’m proud to be an American, where at least I know I’m free, and I won’t forget the men who died, who gave that right to me and I’ll proudly stand next to him to defend her still today, ‘cuz there ain’t no doubt I love this land, god bless the USA. -Lee Greenwood

Please follow this link to learn about the Wounded Warrior Project.

http://www.woundedwarriorproject.org/give-back

 

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18% – are you kidding?!

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18% of you that are in your late 50’s are banking on an inheritance for your retirement security. I have news for you, your parents and Grandparents are not living their lives so you can inherit!

Our parents and Grandparents are living longer, but not necessarily healthier lives. We all know that health care, especially Long Term Care, has increase in cost by leaps and bounds. Because our parents did not expect to live into their late 80’s or 90’s, they are spending much more than anyone dreamed on their own health care. This is chunking into your “inheritance”. Our Parents are staying in their homes much longer than previous generations did; this is also taking a bite out of your “inheritance”. If you think about past generations, when someone retired, they moved to Florida and lived out their lives in the sun & fun – until about age 72. We already live in Florida, as do most of our Parents – and they are living 10- 15 years longer in the same house. Home repairs, as well as retro-fitting for an elderly parent, cost a lot of money.

Our Parents saved for their retirement and for a “rainy day.” This is the lesson we need to learn from them. If we inherit anything, it is as an unexpected gift.

 

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