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Inflation: Expectations for 2018

By | Featured

It seems as if inflation has been biding its time. Since the financial crisis a decade ago, growth in prices and wages has been muted.1 However, many financial analysts believe that’s about to change.

A jobs report from early March revealed continued hiring and a moderate increase in wages. The stock markets welcomed the news, responding with higher performance.2 However, the markets experienced volatility throughout the rest of the month and into April as trade tensions between the U.S. and China escalated.3

While the market is no stranger to daily fluctuations, inflation levels have remained low — and thus, so have interest rates. That appears to be changing. On March 21, the Federal Reserve raised the federal funds interest rate by a quarter of a percentage point and maintained its already-stated forecast of two more quarter-point rate increases this year.4

There are two important things to consider when creating a financial strategy. The first is what’s going on in the economy and how it may impact your assets. The second is to consider any changes to your personal financial circumstances and long-term goals. It’s important to work with an experienced financial advisor who can help keep you informed of any economic activity that could impact your investment portfolio’s mix yet keep you grounded so that any changes you make are aligned with your long-term goals. Please schedule some time with us if you have questions or concerns about how the potential for increasing inflation and interest rates could affect your situation.

The following are some of the factors expected to contribute to higher inflation this year:5

  • Tight labor market (i.e., more jobs than workers) could promote higher wage growth
  • Rising prices on raw materials
  • S. manufacturing growth increased at its fastest pace in three months at the end of 2017
  • Supply of manufacturing materials appears to be waning worldwide

So what happens in the investment markets when inflation rises? Generally, economic growth produces higher prices, which bodes well for financial, energy and materials stocks. On the other hand, regulated industries such as utilities and telecoms do not have as much flexibility to increase prices, and therefore may be negatively affected.6

In the bond markets, Treasury inflation-protected securities (TIPS) tend to rise because their face value adjusts based on changes in the consumer price index (CPI). Note that this may make them more attractive than corporate bonds or other government notes in a rising inflation environment.7

 

Content prepared by Kara Stefan Communications.

1 eTrade.com. Jan. 12, 2018. “Jack Frost still nipping inflation.” https://us.etrade.com/knowledge/markets-news/commentary-and-insights/jack-frost-still-nipping-inflation. Accessed March 20, 2018.

St. Louis Post-Dispatch. March 9, 2018. “U.S. stocks soar on strong jobs report; inflation fears ease.” http://www.stltoday.com/business/local/u-s-stocks-soar-on-strong-jobs-report-inflation-fears/article_ca79880d-941c-5dc6-8f3b-ccc22e77134e.html. Accessed March 20, 2018.

3 Nathaniel Meyersohn and Danielle Wiener-Bronner. CNN Money. April 4, 2018. “Stocks surge back for big gain after plunging on China tariffs.” http://money.cnn.com/2018/04/04/investing/us-stocks-markets-china-tariffs/index.html. Accessed April 5, 2018.

4 Paul Davidson. USA Today. March 21, 2018. “Fed raises rates, keeps forecast for 3 hikes in 2018.” https://www.usatoday.com/story/money/2018/03/21/fed-powell-hikes-interest-rates-consumer-loans/444986002/. Accessed April 5, 2018.

5 eTrade.com. Jan. 12, 2018. “Jack Frost still nipping inflation.” https://us.etrade.com/knowledge/markets-news/commentary-and-insights/jack-frost-still-nipping-inflation. Accessed March 20, 2018.

6 Ibid.

7 Ibid.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. 

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

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Putting a Value on Real Property

By | Featured

Real property generally refers to land, but it also can include structures, bodies of water and machinery.1 It typically denotes property of significant value, which is why state and local governments choose to impose taxes on our homes. These levies could be considered a progressive tax, in that people who own more expensive homes likely will pay higher property taxes.

For many retirees, their homes are among their most valuable assets, but they are just one piece of the financial picture. We can help you create a financial strategy that takes into account all your retirement assets and sources of income. Give us a call if you’d like to learn more about the use of investment and insurance products to help you pursue your retirement goals.

The way real property is valued can offer advantages and disadvantages to owners. During the 2008 recession and its real estate market decline, many home sellers and buyers experienced a substantial discrepancy between the appraised value and the market value of their homes. Appraised value is how much a licensed appraiser believes your home is worth, while market value is determined by just that — the market. In other words, it’s whatever buyers are willing to pay for the property. If the market value is lower than the appraised value, owners become “upside down” on their mortgages, which means they owe more than the home is worth.2

Then there’s the case of assessed value, which is usually conducted on behalf of the county or municipality that imposes property taxes.3 This value may be less than the market or appraised value, based on a calculation of various factors. A lower assessed value generally equals lower taxes, so there’s an advantage to the assessment not increasing — particularly for retirees planning to stay in their homes for the duration of their life.

Real estate appears to be a popular asset for many affluent investors, thanks to its finite supply and the fact that demand will generally continue to grow as the population increases. A recent survey of the portfolios of affluent investors revealed:4

  • The principal residence of an affluent investor typically represents up to 30% of his or her total assets
  • Beyond the principal residence, between 4-6% of assets are in real estate
  • Among all investors, 20% own a second or vacation home
  • Among ultra high net worth investors ($5 million to $25 million), 32% own a second or vacation home

Factors that may have some impact on property values in the future relate to transportation. For example, the rise of driverless cars could have an impact on the real estate market. Transportation experts say they could make public transit less necessary to commuters, thus affecting property values near train stations and other public transit.5

Another interesting trend is in commercial real estate. You may have noticed vast, empty parking lots sitting aside malls and shopping plazas where storefronts are empty. As the country shifts more toward buying online, brick-and-mortar stores are being abandoned. Lower demand for retail shopping spaces could lower rents or require landlords to rethink how they use the space.6

 

Content prepared by Kara Stefan Communications.

 

1 Investopedia. “Real Property.” https://www.investopedia.com/terms/r/real-property.asp. Accessed April 6, 2018.

2 Angela Colley. Realtor.com. Jan. 22, 2015. “What Is a Upside-Down Mortgage?” https://www.realtor.com/advice/finance/what-is-upside-down-mortgage/. Accessed April 6, 2018.

3 Chris Seabury. Investopedia. “How property taxes are calculated.” https://www.investopedia.com/articles/tax/09/calculate-property-tax.asp. Accessed April 6, 2018.

4 Spectrem Group. 2018. “How Investors Appraise Real Estate.” https://spectrem.com/Content/-how-investors-appraise-real-estate.aspx. Accessed March 15, 2018.

Ely Razin. Forbes. March 11, 2018. “How Driverless Cars Could Disrupt The Real Estate Industry.” https://www.forbes.com/sites/elyrazin/2018/03/11/how-driverless-cars-could-disrupt-the-real-estate-industry/#61039ab013c1. Accessed March 15, 2018.

6 Richard Kestenbaum. Forbes. May 30, 2017. “This Is What Will Happen To All The Empty Stores You’re Seeing.” https://www.forbes.com/sites/richardkestenbaum/2017/05/30/this-is-what-will-happen-to-all-the-empty-stores-youre-seeing/#58aea44bb78b. Accessed April 6, 2018.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. 

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

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The New Tax Law: Things to Consider

By | Featured

Who will be affected by the new tax legislation that went into effect Jan. 1? That is a question many are asking.

While “everyone” is likely to see some changes, here’s an idea of how many people fell into each income group. In 2015:1

  • About 1.4 million Americans accounted for the top 1% of income earners. These Americans earned at least $480,930 of adjusted gross income that year and paid about 40% of all federal income taxes.
  • The top 50% of taxpayers earned at least $39,275.
  • 71 million taxpayers earned less than $39,275 and paid 2.8% of all the income taxes.

Our tax liability is about as personal as our investment choices, career path, favorite foods and what we wear to work in the yard. In short, no matter what’s in the new tax law, it’s likely to affect your tax return differently from your neighbor’s. If you anticipate significant changes, we suggest you seek the counsel of an experienced tax advisor. We can help you find one if you’d like a recommendation.

By the same token, it’s a good idea to work with your financial professional when strategizing a tax-efficient plan, because most financial decisions are intertwined. It’s good for the left hand to know what the right hand is doing.

According to a survey from Willis Towers Watson, two-thirds of employers surveyed say they’ve either made or are considering making enhancements to their employee benefits as a result of the Tax Cuts and Jobs Act. Among them:2

  • 26% are increasing contributions to their sponsored retirement plans.
  • 34% are considering expanding personal financial planning programs for workers.
  • 19% are considering increasing or accelerating contributions to defined benefit plans.

Social Security recipients also may see a change. The new tax law will make cost-of-living adjustments using the Chained Consumer Price Index (CPI) rather than the traditional CPI.3 The difference is that growth of the Chained CPI is generally a few tenths of a percentage point lower the traditional CPI. This could mean slower growth in Social Security benefits.4

Homeowners who take the state and local tax deduction (SALT) as a part of their itemized deductions are going to see a cap ($10,000) on the amount of interest they can deduct from their 2018 return. This mostly is expected to affect residents of states with high income taxes.5

The new law also caps the mortgage interest deduction on home purchases made after Dec. 14, 2017, at $750,000 in mortgage debt, a decrease from the previous cap of $1 million. Further, it eliminated the deduction for interest paid on a home equity loan, for both current accounts and new ones opened in the future.6

Content prepared by Kara Stefan Communications.

1 Kevin McCormally. Kiplinger. Nov. 1, 2017. “Where You Rank as a Taxpayer.” https://www.kiplinger.com/article/taxes/T054-C000-S001-how-you-rank-as-a-taxpayer.html. Accessed Feb. 22, 2018.

2 Nasdaq. Jan. 25, 2018. “Tax law fueling changes to employer benefits and compensation programs, Willis Towers Watson survey finds.” https://globenewswire.com/news-release/2018/01/25/1305044/0/en/Tax-law-fueling-changes-to-employer-benefits-and-compensation-programs-Willis-Towers-Watson-survey-finds.html. Accessed March 6, 2018.

3 Robert Powell. The Street. Jan. 26, 2018. “How the New Tax Law Affect Tax Brackets and Roth Conversions.” https://www.thestreet.com/story/14463562/1/how-the-new-tax-law-affect-tax-brackets-and-roth-conversions.html. Accessed Feb. 22, 2018.

4 Sho Chandra. Bloomberg. Dec. 19, 2017. “What You Need to Know About ‘Chained CPI’” https://www.bloomberg.com/news/articles/2017-11-20/why-chained-cpi-has-links-to-u-s-tax-debate-quicktake-q-a. Accessed Feb. 22, 2018.

Amelia Josephson. SmartAsset. Jan. 18, 2018. “Changes to State and Local Tax Deduction — Explained.”https://smartasset.com/taxes/trumps-plan-to-eliminate-the-state-and-local-tax-deduction-explained. Accessed March 6, 2018.

Samantha Sharf. Jan. 9, 2018. “How the New Tax Law Will Impact Your Housing Costs.” https://www.forbes.com/sites/samanthasharf/2018/01/09/what-in-the-final-tax-bill-could-impact-your-housing-costs/#243c76c32c08. Accessed Feb. 22, 2018.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. 

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

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The Federal Reserve’s Role in the Economy

By | Featured

The U.S. government’s system of checks and balances applies not only to its distribution of power but also to its economic viability. The Securities and Exchange Commission regulates the investment industry, the Consumer Financial Protection Bureau safeguards the interests of consumers and a banking supervisory system regulates U.S. monetary policy. That’s where the Federal Reserve Board comes in.

For example, the Federal Reserve is expected to step in if the newly passed tax reform legislation does what Congress projects it will do — spur a jump in economic growth. If growth is considered excessive, it frequently leads to higher levels of employment, increased wages and higher prices. When that happens, it’s up to the Federal Reserve’s Federal Open Market Committee (FOMC) to regulate interest rates to help tamp down the negative impacts of high inflation — such as another recession.1

The Fed has a dual mandate to maximize employment while maintaining a stable price growth rate. To do this, the Fed targets a 2 percent inflation rate. If inflation rises above that threshold, the Fed is likely to increase the benchmark federal funds rate. This is the interest rate that banks charge one another for overnight lending. The trickle-down effect of this action is to dampen economic growth by raising the cost of credit to consumers.2

These government actions are interwoven so that no one agency can drastically impact the U.S. economy without some form of checks and balances. And this is a good thing. It’s like managing a household budget. If you spend too much in one area, you won’t be able to save enough. If you need helping keeping your own personal budget in check, we’re happy to look over your spending to establish a financial strategy designed to meet your retirement goals. Please contact us to schedule a consultation.

Over the past six months, there’s been a fair amount of disruption among the Fed’s board members. William Dudley, president of the Federal Reserve Bank of New York, announced that he will retire in mid-2018, several months before the end of his term in January 2019. Jeffery Lacker, president of the Richmond Fed, resigned unexpectedly in April 2017, and his post remains vacant. President Trump recently nominated another sitting Fed governor, Jerome Powell, to succeed Janet Yellen as Fed chair when her leadership term expires on Feb. 3, 2018. Although her term as a governor doesn’t expire until 2024, Yellen announced she would resign from all Fed posts as soon as Powell was confirmed and sworn in as Fed chairman.3

On a final note, the FOMC made its final interest rate increase for 2017 in December and projected three increases in 2018. Yellen told reporters, “This change highlights that the committee expects the labor market to remain strong, with sustained job creation, ample opportunities for workers and rising wages.”4

 

Content prepared by Kara Stefan Communications.

1 Arthur Delaney and Daniel Marans. Huffington Post. Nov. 30, 2017. “How the Federal Reserve Could Rain on Trump’s Tax Cut Parade.” https://www.huffingtonpost.com/entry/donald-trump-federal-reserve-offset-tax-cuts_us_5a2076cae4b03350e0b55f99. Accessed Dec. 4, 2017.

2 Ibid.

3 Michael Ng and David Wessel. Brookings. Nov. 27, 2017. “Janet Yellen and Bill Dudley are leaving the Fed. Who’ll be next to go?” https://www.brookings.edu/opinions/whats-next-for-central-bank-turnover-after-jay-powells-nomination-bill-dudleys-retirement/. Accessed Dec. 4, 2017.

4 Christopher Condon and Craig Torres. Bloomberg Markets. Dec.13, 2017. “Fed Raises Rates, Eyes Three 2017 Hikes as Yellen Era Nears End.” https://www.bloomberg.com/news/articles/2017-12-13/fed-raises-rates-while-sticking-to-three-hike-outlook-for-2018. Accessed Dec. 18, 2017.

 

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. 

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

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Update on the DOL Fiduciary Rule

By | Featured

In August, the Department of Labor (DOL) proposed to delay the launch of the final portion of the new “fiduciary rule” until July 2019. Part of the rule went into effect in June of this year, mandating that any financial professional making financial recommendations to a client with regard to an individual retirement account (IRA) act as a fiduciary. This means that these financial professionals must provide advice that is in the best interest of their clients, rather than for their own benefit.1

The part of the rule that could be delayed is the requirement that financial professionals who wish to charge commissions sign a “best-interest contract” with each IRA client. The contract provides details as to how they will be paid for their recommendations. It represents the primary enforcement mechanism of the fiduciary rule – with a contract in place, individuals would find it easier to sue to recover losses resulting from poor retirement investment and financial advice.2

Although the new DOL rule hasn’t been fully launched, its effects are being felt. One unintended consequence of the new rule is that some advisory firms have decided to stop offering retirement advice to clients with small account balances. A survey of financial advisors found that 35 percent said they wouldn’t advise clients with IRAs worth less than $25,000.3

With the future of the DOL regulation unclear, some states are considering their own fiduciary rules. In fact, Nevada passed a law in June that holds financial professionals to the fiduciary standard when advising clients on their retirement accounts. The state senator who proposed the bill, Aaron Ford, said he took action because of the uncertainty surrounding the federal law. “I felt it was important to protect Nevadan citizens in the event the federal government wouldn’t,” he told WealthManagement.com.4

Despite the delays in the DOL fiduciary rule, many financial services firms have already invested in making the changes necessary to implement the rule’s standards throughout their firms, so it is unlikely they would halt those efforts at this point – even if the rule were revoked.5

If you have questions about the DOL rule and what it means to you, please don’t hesitate to give us a call. It’s our responsibility to evaluate and assess your financial situation and only make recommendations that are in your best interest, and we do so with integrity and transparency.

 

Content prepared by Kara Stefan Communications.

1 Tobie Stanger. Consumer Reports. Aug. 25, 2017. “Why Saving for Retirement Is Getting Harder, and What You Can Do About It.” https://www.consumerreports.org/retirement-planning/why-saving-for-retirement-is-getting-harder-and-what-you-can-do-about-it/. Accessed Oct. 10, 2017.

2 Greg Iacurci. Investment News. Sept. 11, 2017. “DOL fiduciary rule has enforcement gaps — and they could widen.” http://www.investmentnews.com/article/20170911/BLOG03/170919995/dol-fiduciary-rule-has-enforcement-gaps-x2014-and-they-could-widen. Accessed Oct. 10, 2017.

3 Liz Skinner. Investment News. “10 unintended consequences of the DOL fiduciary rule.” http://www.investmentnews.com/gallery/20160505/FREE/505009999/PH/10-unintended-consequences-of-the-dol-fiduciary-rule. Accessed Nov. 7, 2017.

4 Michael Thrasher. WealthManagement.com. June 26, 2017. “Other States Considering Their Own ‘Fiduciary Rules’ After Nevada’s Becomes Law.” http://www.wealthmanagement.com/industry/other-states-considering-their-own-fiduciary-rules-after-nevada-s-becomes-law. Accessed Nov. 7, 2017.

5 Sandra Block. Kiplinger. Feb. 5, 2017. “Why the Fiduciary Rule for Retirement Savers Is Here to Stay.” http://www.kiplinger.com/article/retirement/T047-C000-S003-fiduciary-rule-for-retirement-is-here-to-stay.html. Accessed Oct. 10, 2017.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. 

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

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Ways to Help Increase Retirement Savings and Reduce Your Tax Liability

By | Featured

As we head into the homestretch of this year, two things individuals may be seeking are ways to help maximize retirement savings and minimize 2017 tax liability.

One way to help do so is by contributing as much as possible to an employer-sponsored retirement plan. Many employers match worker contributions up to a certain point, so that’s just “free” money going into the account. Plus, the more you contribute, the less taxable income you will have to claim. For 2017, the maximum contribution limit for a 401(k) plan is $18,000; $24,000 for people age 50+.1

If you’re already set up to max out your account, you might consider opening and/or contributing to an IRA. Even if you don’t get to claim a tax deduction for IRA contributions (although IRA contributions can also be made pre-tax, subject to certain limits), you can still benefit from additional retirement savings and tax-advantaged compounding. In 2017, the maximum for an IRA (Roth, Traditional or both combined) contribution is $5,500; $6,500 for people age 50+.2

Here’s a little-known benefit available only for active duty military widows: They can contribute all or part of the service member’s $400,000 life insurance death benefit, and even an additional $100,000 for a combat-related fatality, to a Roth IRA within one year of receiving the payout. Because life insurance proceeds are tax-free, this benefit allows the money to be transferred to a tax-free retirement savings account, which also benefits from tax-free growth.3

Another option for those who are already contributing large amounts to a 401(k) and/or an IRA is to consider purchasing an annuity. An annuity also enables tax-deferred growth, and there typically are no contribution limits.4 There is a wide variety of immediate, fixed rate, fixed index and variable annuities from which to choose. We’d be happy to evaluate your financial situation and recommend  if an annuity may suit your needs and objectives.

One more tax-related bit we ran across: If you’re considering relocating during retirement to a low/no tax state, or even just wonder where your state gets its tax revenues, check out this breakdown compiled by Pew Charitable Trusts.5

 

Content prepared by Kara Stefan Communications

 

1 Brighthouse Financial. July 21, 2017. “5 Tips for Tax-Smart Investing.” https://www.brighthousefinancial.com/education/tax-smart-strategies/tax-smart-investing-strategies. Accessed Sept. 4, 2017.

2 Ibid.

3 Jeff Benjamin. Investment News. June 26, 2017. “Military benefit allows widows to put $500K into Roth IRA at once.” http://www.investmentnews.com/article/20170626/FREE/170629938/military-benefit-allows-widows-to-put-500k-into-roth-ira-at-once. Accessed Sept. 4, 2017.

4 CNN. 2017. “Ultimate guide to retirement.” http://money.cnn.com/retirement/guide/annuities_basics.moneymag/index4.htm. Accessed Sept. 4, 2017.

5 Mary Beth Quirk. Consumerist. July 5, 2017. “Should You Move? See How Your State Gets Its Tax Money.” https://consumerist.com/2017/07/05/should-you-move-see-how-your-state-gets-its-tax-money/. Accessed Sept. 4, 2017.

The content provided in this blog is designed to provide general information on the subjects covered. It is not, however, intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market or recommend any tax plan or arrangement. You are encouraged to consult your personal tax advisor or attorney.

Annuities are insurance products that may be subject to fees, surrender charges and holding periods which vary by company. Annuities are not a deposit of nor are they insured by any bank, the FDIC, NCUA, or by any federal government agency. Annuities are designed for retirement or other long-term needs.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. Investing involves risk, including the potential loss of principal.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

 

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What Type of Investor Are You?

By | Featured

Each person is unique. We are composed of many variables, such as genetics, family influence, geographic influence and even the birth order among siblings – a veritable combination of the forces of biology and society.1 So when it comes to managing your finances, the debate isn’t about nature versus nurture; it’s both.

For example, consider two siblings raised in the same household: same socio-economic background, same parental influence, even the same level and type of education. Yet one sibling is a saver while the other is a spendthrift. Why is that?

We can’t always control whatever personal characteristics drive our needs, desires and indulgences, but we can learn to manage them responsibly. One way to pursue your financial goals is to work with an objective and knowledgeable financial advisor, a role we’re proud to fill for our clients. We can research and analyze your financial needs and objectives to help match appropriate investment and insurance products for your financial situation.

While self-knowledge is important, so is investor knowledge. Knowing how and where to invest isn’t an instinct we’re born with, but takes time and effort. If you’re wondering where you currently stand with financial literacy, consider taking the investor quiz at the Financial Industry Regulatory Authority (FINRA).2

Investors tend to fall into various personality types. According to psychologists who study financial psychology, financial personality types can run the gamut from hoarder to social value spender to the ostrich (i.e., the proverbial “head in the sand”).3 To help counteract any obstacles that may be driven by your financial personality, one strategy is to focus on your goals. We may have very tangible components that influence our financial goals, such as the timeline for needing specific funds, the amount we’ll need and our personal tolerance for market risk. These three factors are instrumental in determining where and how to invest your money.4

When it comes to investing with the goal of creating retirement income, designing your retirement plan may become even more complex. Not only should we take into consideration our household budget and all the travel, philanthropic and expensive items on our bucket list, but we also must weigh the potential impact of additional factors, such as:

  • How long we expect to live
  • How long we expect our spouse to live
  • Whether or not our children or grandchildren might need financial help
  • Whether we’ll experience significant health care expenses
  • Whether we’ll need full- or part-time assistance as we age

The point is, even if we are natural savers, ongoing students of financial education, experienced investors or obsessive planners, there are still plenty of unknowns that can potentially knock us off course.

But the more we know, the better prepared we can be.

 

Content prepared by Kara Stefan Communications.

 

1 Martha C. While. Money. April 8, 2016. “Blame Your Brothers and Sisters for Making You Messed-Up About Money.” http://time.com/money/4279788/siblings-money-attitudes/. Accessed Aug. 18, 2017.

2 FINRA. 2017. “Investor Knowledge Quiz.” http://www.finra.org/investors/investor-knowledge-quiz. Accessed Aug. 18, 2017.

3 Naomi Rovnick. Financial Times. Jan. 12, 2017. “Six financial personality types — which one are you?” https://www.ft.com/content/5e8da24c-bb09-11e6-8b45-b8b81dd5d080. Accessed Aug. 18, 2017.

4 Michael Finke. ThinkAdvisor. July 3, 2017. “What’s the Point of Investing?” http://www.thinkadvisor.com/2017/07/03/whats-the-point-of-investing?slreturn=1503255710&page_all=1. Accessed Aug. 18, 2017.

This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

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