Overview: Tune into this week’s episode of Launch Financial as we discuss a big rally in the stock market, with the Dow and S&P500 reaching records highs, and the Dow crossing 43,000 for the first time. All eyes continue to be on bond and stock market, especially as the Federal Reserve gears up for their next interest rate meeting.
Show Notes:
In today’s dynamic economic landscape, an emerging demographic has emerged: HENRYs, or High Earners Not Rich Yet. These individuals, typically professionals in their prime earning and accumulating years, are not yet High Net Worth individuals. HENRYs possess a unique opportunity to not only save but also grow their wealth substantially. Let’s explore how HENRYs can leverage their financial situation to secure a promising financial future.
HENRYs are characterized by their robust incomes, often exceeding national averages, yet their wealth accumulation is not where they might want it to be. These individuals, typically in their 20s to 40s often times despite the high income, face obstacles such as student debt, lifestyle inflation, and delayed financial planning, hindering their wealth-building efforts. So it’s extremely important that they implement smart financial habits early on, build a financial plan, and automate the process to accumulate their wealth and make smart financial decisions.
So, let’s take a look at some places where HENRYs can improve their financial habits. First, budgeting. HENRYs can harness their considerable incomes by implementing strategic budgeting and expense management techniques. By setting up an accountable and accurate budget, they can redirect resources towards savings and investment. For those with student loan debt or other debt, creating a strategic debt repayment strategy is prudent. Given the higher interest rate environment we have been living in, there are tactical moves debt goers can make to keep their financial plan in line.
Next, let’s discuss investing. HENRYs have the perfect opportunity to leverage their wealth by investing wisely and early. By allocating funds to diversified portfolios, including retirement accounts, taxable accounts, and other diversified assets, they can grow their wealth overtime to achieve their short, medium, and long-term goals.
If you’re a HENRY, but are not quite sure where to get started on your financial journey, consider seeking advice from a financial advisors or professional who can provide you with customized strategies to optimize your financial situation. Here at Sherman Wealth, we build out personalized solutions and financial plans to help all clients, including HENRYs make smarter financial decisions and strategically grow their wealth. Professional guidance helps navigate complex investment decisions, minimize tax liabilities, and plan for future milestones.
As discussed in this blog, HENRYs have a vast opportunity to maximize and optimize their financial future. Building a solid foundation early in their careers lays the groundwork for long-term growth and financial security. If you are a HENRY and are seeking financial guidance, email info@shermanwealth.com or schedule a complimentary intro call here.
With October being financial planning month, it gives us a prime opportunity to refocus our attention on our financial well-being. This month serves as a reminder to take a step back, evaluate our financial goals, and make necessary adjustments to secure and realign our financial plan and journey. In this blog, we’ll explore why Financial Planning Month is a great time to revisit your plan and what financial planning items to focus on.
October presents an excellent chance to set or refine your financial goals. Whether you’re looking to build an emergency fund, pay off debt, save for retirement, or invest in your dream home, setting specific, measurable, achievable, relevant, and time-bound (SMART) goals is essential.
To effectively plan for your financial future, it’s crucial to have a clear understanding of your current financial situation. Review your income, expenses, debts, and investments. Take the time to create or update your budget, assess your net worth, and review the bigger picture. Understanding where you stand financially is the first step toward making informed decisions. Remember that open enrollment season is right around the corner, so evaluate your blin spots or wrk with an advisor to help spot what’s missing and where you can improve.
With the holiday season just around the corner, October is the ideal time to start budgeting for holiday expenses. By planning ahead and setting a budget for gifts, travel, and entertainment, you can avoid overspending and prevent post-holiday financial stress.
As the year draws to a close, October is an excellent time to start thinking about tax planning. Work with your financial advisor in conjunction with your CPA to run tax projections and consider ideas to minimize your tax liability. Being proactive in your tax planning can lead to substantial savings when tax season arrives.
Retirement planning is a critical aspect of financial planning. October serves as a reminder to assess your retirement savings goals and contributions. Whether you’re just starting your retirement savings journey or nearing retirement age, use this time to evaluate where your contributions are for the year and make the applicable changes.
Financial Planning Month serves as a timely reminder to take control of your financial future. By setting clear financial goals, reviewing your current financial situation, budgeting for the holidays, and addressing tax and retirement planning, you can make meaningful strides in your financial life. Consider working with a financial professional to help seamlessly approach this financial reset and evaluation. If you have any questions on how to get started, email info@shermanwealth.com.
Overview: Tune into this week’s episode of Launch Financial as we discuss financial planning month, as well as a big week in the bond market, with yields spiking up to the highest levels in a few months. As we prepare for year end, there are many financial planning items to check off your list, so tune in to hear our top hits!
Show Notes:
As we conduct our fall financial clean up and individuals are revisiting their cash flows and budgets, some may be considering their charitable giving strategies and contribution amounts for the year. One powerful and flexible tool gaining popularity is the Donor Advised Fund (DAF). This innovative approach to philanthropy not only simplifies the giving process but also offers substantial tax incentives and benefits for those who are charitably inclined.
What is a Donor Advised Fund (DAF)? A Donor Advised Fund is a philanthropic vehicle that allows donors to make contributions to a fund, receive a tax deduction, and then donate stock from the fund to their favorite charities over time. Essentially, it’s like having a charitable savings account that can be strategically managed to giveback to causes near and dear to the donor.
As you start your tax planning for tax year 2024, you want to ensure you are thinking about all your options to mitigate and strategize your tax liability between now and the end of the year. With a donor advised fund, you are typically eligible to take an income tax deduction of the full fair-market value of the asset, up to 30% of your AGI. Furthermore, there are several strategies to mitigate or eliminate capital gains tax on long-term appreciated stock, if they’ve been held for more than a year. This is a strategy that many charitably inclined individuals with long-term appreciated stock like to implement into their tax and charitable giving strategy.
Some other benefits DAF’s provide is flexibility, because donors can take their time in recommending grants from the DAF to qualified charitable organizations, meaning they do not have to donate the grants right away or even at a specific time. This flexibility allows for strategic, thoughtful giving, especially during times of urgent need or for long-term projects. DAFs provide an opportunity for family involvement in philanthropy, it is a great way to continue generational contributions and get your children involved in charities they want to support. For those who prefer anonymity, donors have the options to remain anonymous when making grants from their fund as well.
Donors can invest the funds within the DAF, potentially allowing them to grow over time, allowing the potential donation to grow in size as well. Lastly, donor advised funds are a great way to streamline the record-keeping process of charitable giving, allowing them all to stream through the DAF and simplifying tax records and documentation. While these are only a few of the many advantages donor advised funds provide, discuss with a financial professional on the account opening process and if it makes sense for you.
Given the time of year, we like to discuss financial strategies as it relates to charitable giving. As we are now well underway approaching year end, contributing to a DAF becomes a particularly prudent strategy for those looking to maximize their charitable impact while optimizing tax benefits for the current year. If you have any questions on donor advised fund and their process, email info@shermanwealth.com.
Overview: Tune into this week’s episode of Launch Financial as we wrap up a strong September, Q3, and start to the year, as the S&P500 and all major averages marked recent record highs and a rally to end the month and quarter off on a positive note. As we head into Q4, we are discussing many year end financial planning tips and tools to ensure you end the year off on the right foot.
Show Notes:
Hurriance Helene Relief Resources:
https://www.nytimes.com/2024/09/30/us/hurricane-helene-victims-aid.html
October is Breast Cancer Awareness Month
As the Federal Reserve has shifted its stance from raising interest rates to cutting them, many investors and savers are wondering where to put their cash to get the most out of it. As we just witnessed the first 50-basis point interest rate cut and the Fed is anticipating more rate cuts between now and year end, variable rates such as high yield savings and CDs are set to subsequently fall. So, given this outlook it’s essential to strategize and optimize where you store your money to make it work harder for you. Let’s explore some options to consider in this new economic environment.
As we’ve been discussing for over two years now, FDIC-insured high-yield savings accounts offer significantly better interest rates than traditional money center bank savings accounts, and have been a great place to park cash. Though their rates will ultimately drop in line with Fed cuts, they typically still offer better returns than standard savings. These accounts are still ideal for emergency funds or cash you need to access easily.
Certificates of deposits, CDs, as well as U.S. Treasury securities, including Treasury bills (T-bills), notes, and bonds, are government-backed investments have also been attractive higher rate vehicles, offering a fixed interest rate for a set period, making them a good option for individuals locking up cash. Despite falling rates, locking in a good CD or Treasury rate while they’re still around is a good idea and can help you maintain a higher return, especially if you open it before rates fall further.
Given the higher interest rate environment we’ve been living in for over two years, some individuals took a different approach to paying down low interest rate debt when they were earning higher interest on their cash. As interest rates fall, it may be important to re-analyze your debt, to make sure your debt repayment strategy still makes sense for you. For example, in some cases, excess cash to pay down high-interest debt may be a prudent financial move in a falling interest rate environment.
In a falling interest rate environment, optimizing where to place your cash can help preserve its value and even generate some return. Ultimately, when making cash allocation decisions, it’s prudent to align with your specific and personal financial goals, risk tolerance, and liquidity needs. Diversifying your approach by spreading cash across several of these options may help you weather the current rate cuts while keeping your financial future on track. If you have any questions on the best areas to allocate your cash amid a falling interest rate environment, email info@shermanwealth.com or schedule a complimentary intro call here.
