Ep. 47 Launch Financial- Earnings Season & Return To Work Controversy

Overview: 

Check out this week’s episode of Launch Financial with Ashley & Brad as we discuss a huge earnings week and the delta variant’s impact on company’s decisions regarding return to work. Check out the links in the show notes for our Financial Planning Checklist for College Grads and Short and Long-Term Goals blog. 

What You’ll Learn:

  • How your favorite companies performed this earnings season
  • How to create short vs. long-term goals 
  • Financial steps to take as a recent college graduate 

Show Notes:

Financial Planning Checklist For College Graduates

What Are Your Short and Long-Term Goals?

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Financial Planning Checklist For College Graduates

Just graduated college and not sure what to do next? Want to set yourself up for financial success, but not quite sure how to get started? Well, you’ve come to the right place! We recently published a Financial Checklist for Recent College Grads that will walk you through important and easy financial steps to take as you embark on the next chapter of your life. You can download the checklist here. 

  1. GET ORGANIZED & DEVELOP A BUDGET 

Using wants vs. needs along with the bucket strategy, you can build out your priorities and create a budget that works for you. The bucket strategy is when you create different buckets based on priority, importance, time needed to save, and money needed to save and distribute your money to each bucket in order to reach your goals. 

  1. BUILD AN EMERGENCY FUND WITHIN A HIGH-YIELDS SAVINGS ACCT 

You’ve had a few summer jobs & have a few dollars saved up. Open a high-yields savings account with the highest interest rates that will earn you the most money on your dollars and continue to save! Click here for CNBC Select’s top HYS accounts. Starting early and saving the most you can while you are young is extremely important and will help you the most in the long-run. 

  1. OPEN A LINE OF CREDIT & BUILD YOUR CREDIT SCORE 

Once you graduate college, you should take on a source of debt by getting your own credit card and building your credit. But, make sure you pay your bills in full & on time! PS: Don’t forget about those college Verizon cable bills! Check out our podcast with KC Cole to get some tips on how to better and build up your credit score. 

  1. CONTRIBUTE TO RETIREMENT ACCT 

Contribute to a Roth IRA & opt-in to your company 401(k) if offered as it’s a great way to save for retirement with tax benefits. Always take advantage of the company employer match! If you take a look at the JPMorgan chart below, you can see the benefits of saving earlier rather than later. 

  1. AUTOMATE YOUR FINANCES 

You are the kings of social media! Take your finances online too. Reach out to us to get access to our financial client portal/app that allows you to track all your data in one place, and on your i-phone! Email us at info@shermanwealth.com if you would like a complimentary trial. 

  1. ASK ABOUT YOUR WORKPLACE BENEFITS & PERKS 

When starting a new job, it’s always important to take advantage of all that your company offers, in regards to retirement accounts, health benefits, and more. Talk to HR to make sure you understand the full scope of your company benefits. 

  1. INVEST IN YOUR FUTURE! 

Whether it’s learning about and investing in the stock market or saving for graduate/medical school, invest in yourself & be smart about achieving your goals. 

While these are only a few of the financial moves you should make when graduating from college and prepping for the next few years of your career, there are many more things to consider and ways to make yourself financially fit. If you would like to learn other easy ways to set yourself up for financial success, reach out to us at info@shermanwealth.com or sign up for a complimentary college grad prep session here. 

What Are Your Short and Long-Term Goals?

Do you have financial goals? If so, are they short-term or long-term, or both? Maybe you don’t know the difference. That’s okay because we are going to discuss the difference between short and long-term goals and how to strategize for them. 

So, what is the difference between a short and long-term goal? We like to think a short term goal is something that you need liquid cash for in the foreseeable future, maybe within around 12-18 months. A longer term goal is something that you want to save for over a duration of time, maybe achievable within 3+ years or so. 

Now that you know the differences between the two, you may ask yourself, how do I create these goals I have for myself? First and foremost, you want to think about your priorities in life. Do you have upcoming expenses, do you need to save for retirement, do you have enough money in your emergency fund and checking account for your monthly expenses? 

When thinking about your goals, it’s also important to think about your risk tolerance. For example, are you willing to risk your money on investments? Or do you want it to be safe in a FDIC insured account? These are all questions you should ask yourself when designing your goals and thinking about how you want to use your money.

Setting goals can oftentimes get tricky because it’s hard to find a balance between wants vs. needs. Is your goal a necessity? Or a Want? Ask yourself some questions about the importance of your goals and think about how reasonable each one is given your financial situation and lifestyle. Deciphering wants vs. needs is a great starting point when creating goals.  When creating shorter-term goals, be sure to ask yourself when you will need the money you are reaching for so you know exactly how to strategize and save. 

Once you’ve clearly identified a realistic goal and determined the amount, timeline, and urgency of the goal, it’s time to start working towards it. Be slow and steady and stick to your plan once you make it. Goals and the methods of savings will be different for every individual, so it’s important to drown out the noise and do what is best for your personal situation. With the help of a financial advisor, you can easily put your priorities and strategies in place to reach your goals.  If you find yourself needing clarity on goal-setting and achieving your milestones, email us at info@shermanwealth.com or schedule a 30-minute consultation here.

Here Are The Differences Between A Roth and Traditional 401(K)

Have you been hearing more about Roth 401(k)’s lately. There are more and more options in company 401(k)’s recently, including the Roth option, whereas before many companies only provided traditional 401(k) options. More employers are now offering this option to their employees so check out the rest of the blog and then see if it’s a valuable option for you. 

So, you may be asking yourself, what is a Roth 401(k)? A Roth 401(k) is an employer-sponsored retirement savings account that can be funded with after-tax dollars up to its contribution limit. For people who think they may be in a higher tax bracket down the line, this might be the better option for you. On the other hand, in a traditional 401(k) plan, you contribute pre-tax money, which will be taken out based on your future tax-bracket in the future. 

Now that you know what a Roth 401(k) is, you may be wondering, do I qualify for one? As long as your employer offers the Roth options, you are eligible for it if you are also eligible for your company’s traditional 401(K). 

Let’s take a look at this example: 

​​Your yearly base salary, gross income is $50,000.  If you choose to contribute 10% ($5,000) to a traditional 401(k), your taxable income becomes $45,000 for the tax year. You took that 10% and deferred paying taxes on it. That $5,000 now grows tax-deferred inside of your traditional 401(k). When you withdraw the money from your traditional 401(k) at retirement, your total will be taxed then with regards to your tax bracket. 

Within a Roth 401(k), you are paying your income taxes as you should, and then the funds head into your Roth account. So with that same $50,000 salary, if you choose to contribute 10% to your Roth 401(k), you will pay income taxes on your full $50,000.  After income taxes are taken out, your funds for the year ($5000) goes towards your Roth 401(k). When you withdraw the money from your Roth 401(k), you can take both the contributions and earnings out tax-free since you had previously paid them. 

For both Roth and Traditional 401(k)s, the contribution limits are the same, at 19,500.  You can defer $19,500 out of your paycheck into a traditional 401(k). In contrast, you also can contribute $19,500 to your Roth 401(k). Additionally, you are also allowed to contribute to both a Roth and Traditional 401(K), as long as you stay within the contribution limits. 

Considering Roth options when deciding on your 401(k) and IRA contributions is a very important step. If you want your money to grow tax deferred, you should highly consider opening a Roth account. Continue following along to see if there are any tax changes in the near future, and make sure you consult a tax professional to see what options make the most sense for you.  If you have any questions about your personal situation or want to know how to get started, email us at info@shermanwealth.com or schedule a 30-minute consultation here. 

 

Ep. 45 Launch Financial- Market Volatility Emergency Press Conference

Overview: 

Check out this week’s episode of Launch Financial with Ashley & Brad as we host an emergency press conference to discuss great market volatility, bond yields, and investing in such a volatile market. 

What You’ll Learn:

  • How to recognize investment biases that hinder your financial decisions 
  • What investing means in such a volatile market 

Show Notes:

Are These Psychological Biases Holding you Back from Building Wealth?

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Are These Psychological Biases Holding you Back from Building Wealth?

Our emotions are powerful. It’s hard to not let them take over and impact decisions we make in life. What people often don’t think about is that our emotions often times impact our financial decisions, even though it may not seem like it. At Sherman Wealth, we often discuss behavioral finance with our clients and how behaviors can drive or impact our financial decisions as humans. 

Investment biases get in the way of us making solid, un-clouded financial decisions. By acknowledging and familiarizing yourself with these behavioral biases, you can teach yourself to avoid them when you come across them. Here are some major behavioral biases to watch out for:

  1. Loss aversion

Loss aversion occurs when individuals are scared about an apparent “impending” negative outcome. When this happens, an investor, for example, could sell their stock when the market starts to tank. At Sherman Wealth, we always prioritize the long-term strategies and the importance of “time in the market”. When you feel these nerves coming on, stay calm and be sure to maintain a balanced portfolio.

2.Bandwagon effect

Do you consider yourself a leader or a follower? The bandwagon effect refers to individuals that follow the investment decisions of the crowd, because they are popular. As you will hear from us several times, make sure to do your own research and feel good about an investment before jumping into it because its “popular” or “trendy”. 

    3.Sunk cost fallacy

Dwelling on past and poor decisions is something we all have a hard time coming to terms with. The sunk cost fallacy prevents individuals from being able to fully move on from a poor investment, solely based on time and money they have put into it. If something is continually dragging you down, stop investing resources in it and consider that it may be best to move on.

4. Confirmation bias

As humans, we enjoy and seek for confirmation about our previous decisions, which often times allows us to be clouded in the reality of the situation. Before making big investment decisions, make sure to do proper research in order to make informed decisions. 

Confronting these behavioral biases can help you avoid making clouded decisions in the future. If you have any questions or want to learn more about how to avoid behavioral biases, schedule a complimentary 30-minute meeting here. 

Ep. 44 Launch Financial- Inflation and Earnings Season

Overview: 

Check out this week’s episode of Launch Financial with Ashley & Brad as we discuss the beginning of earnings season, inflation, high-yields savings accounts, credit score, more! 

What You’ll Learn:

  • How inflation is affecting your favorite purchases
  • Why you should re-evaluate your portfolio
  • Why you should open a high-yields savings account 
  • How to get the most out of your credit card 

Show Notes:

Why you may need to work longer to afford retirement

Are You Reaching For Your Credit Cards?

Why You Should Open A High Yields Savings Account  

Check out this episode!

Are You Reaching For Your Credit Cards?

Have you been spending more this year than last? Total consumer credit rose by 10%, or $35 billion, in May, according to the Federal Reserve. What a big increase! 

“Economists had been expecting an increase of $18 billion”, according to a Market Watch Article. When the economy is good people tend to spend more money, but on the other hand, when the the economy is good and stimulated, prices too tend to rise, such as recent used car prices we have been watching sky rocket. 

“Last year the use of credit fell for the first time since the last recession in 2009. Revolving credit, like credit cards, increased by 11.4%. Non-revolving credit, typically auto and student loans, also rose 9.5%, according to an Experian Credit Card Report

With this data at hand, we want to emphasize the importance of protecting your credit score, maximizing utilizing your points, spending responsibility, and taking advantage of potential zero percent interest. If you find yourself financially heading in the wrong direction, consult with a professional to attempt to alleviate the situation. We’d like to hear how your spending and borrowing habits have changed over the last few months, as people are assimilating into post-covid life. We will continue to track these numbers and how they will affect you and your situation. If you have any questions for us or want to share what you are seeing, send us an email at info@shermanwealth.com

Why You Should Open A High Yields Savings Account 

​​Are you utilizing a high-yields savings account? If not, let’s explore why you should.  With much higher interest rates, high-yield savings account can help you build your wealth much faster than a regular savings account would. Here’s why you should open a high-yields savings account. 

You can make more money

The average yield on a traditional savings account is just around 0.09% or less per year. However, high-yield accounts have much higher interest rates, closer to 1%. 

There are options with no fees and minimum balance requirements

We know everyone hates accounts with fees and minimum balance requirements, so we want to let you know that there are accounts out there where this is not the case. 

Monthly fees, minimum balance requirements, and interest rates can all vary widely from one bank to another, so make sure to do your research before picking one that is best for you. Below you will find some of CNBC’s top picks for high-yield savings accounts. 

Your money will be better protected

Most major banks and credit unions are insured by the FDIC or National Credit Union, meaning your money is protected and will still be there if something happens. 

Many people don’t think twice before putting their money into a savings account. But when doing so, it’s crucial to consider and find a high yield savings account to maximize your savings and build your wealth. The big banks pay close to zero, so there’s no point in keeping your money at that type of  institution.  If you have any questions about opening a high yield savings account, reach out to us at info@shermanwealth.com or schedule a complimentary 30-minute intro-call here.