What To Do With Money You Need In The Short Term

There are always lots of money management questions when it comes to investing and saving. Both of these actions are crucial in building your wealth and are stepping stones to reaching your financial goals. One common question we typically get asked by prospects and clients is, “What should I do with money that I will need in the near future?”. This is a great question, because while there is no one right answer due to the fact that everyone’s financial situation differs, there are a few financial tips we can discuss.

Typically, money you will need in the near future is for a large purchase or goal, or an emergency fund you like to keep at arm’s length. Regardless of the reason, for dollars you don’t want to invest for the long-term, think about opening a high-yield savings account. 

High-yield saving accounts differ from traditional saving accounts as they provide significantly higher interest rates, allowing you to earn more money and keep pace with inflation. Your traditional savings account is probably earning you close to zero each month, whereas some high-yield savings accounts are offering rates close to 1%.

The process of opening this type of account is extremely simple, and will only require a few clicks on your computer. So why not make this easy change and take advantage of this great opportunity? While there are other options available when thinking about investing your money for the short-term, high-yield savings accounts are a great start. Click here for CNBC’s top pick’s for high-yield savings accounts and let us know if you have any questions about your particular financial situation. As mentioned earlier, since everyone’s financial goals, priorities, and backgrounds are different, it’s always a good idea to speak with a financial professional about how to make the best decisions for you and your family. If you have any questions for us or want to schedule a complimentary 30-minute consultation, book some time now! 

Inflation Rose 7% in The Past Year, the Highest in 40 Years!

Have you been feeling the impacts of inflation? I’m sure you have. The Labor Department reported on Wednesday that inflation rose 7% over the past year, the highest in 40 years! And on a monthly basis, they reported that CPI rose 0.5%. “The annual move was the fastest increase since June 1982 and comes amid a shortage of goods and workers and on the heels of unprecedented cash flowing through the U.S. economy from Congress and the Federal Reserve,” according to CNBC. Not only will this data continue to affect the prices of things we buy and purchase everyday, but it will also have a dramatic impact on interest rates and as we talked about last week, the 10-year treasury as well.

 

These inflation numbers are quite notable as they will affect aspects of life and personal finance dramatically, in contrast to the declining rate environment we have been in the past few years. Make sure you are understanding the impacts of the Federal Reserve increases and rising rates on your life and portfolio. If you have any questions about how these increases and economic data will affect your personal financial situation and smart financial moves to make, reach out to us at info@shermanwealth.com or schedule a 30-minute complimentary meeting 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.

2021 At Sherman Wealth

As we look back on the last twelve months, we can certainly say 2021 was quite a year. We continued to battle COVID-19 and re-assimilate into pre-pandemic life, we saw lots of market volatility and corrections, and helped many of our clients achieve major financial milestones. 

As we wrap up the year, we want to take a moment to discuss how grateful we are at Sherman Wealth to be able to do the work we do and love and help our clients reach and exceed their financial goals. So what are these financial milestones we are referring to? Let’s check out some of the amazing financial milestones some of our clients hit: 

  • With historically low interest rates this year, we assisted over 25 clients with their refinancing! And 5 went house shopping and ended up with a new home! 
  • Eleven families had children this year! And for those who already have children, 45 of them contributed to their children’s 529 plans to save for their college tuition. 
  • Charitable giving is always top of mind. At Sherman Wealth, we always are looking for ways to get involved in local givebacks and serve the local community. In fact, Brad Sherman was named Board Member of the Year 2021 at So What Else, which was extremely exciting for the Sherman Wealth team. Others were spreading the love too, with 11 clients contributing to their donor advised funds or donating stock!
  • While COVID-19 taught us the importance of having a solid financial foundation in place, it also proved that life insurance, wills, medical derivatives, and powers of attorneys are crucial in such unfortunate times. Many took this up, with 28 clients planning or updating their estate.
  • We always say retirement planning is key, so shout out to almost all our clients who maxed out their retirement contributions for 2021 (And if you’re reading this before the end of the year, you still have time!) 
  • 75 clients got a raise! 
  • 13 clients put their entrepreneurial skills to work this year and started their own company! 

Look at all these amazing accomplishments your peers, family members, and friends achieved this year! While these are just a few of the financial milestones we saw this year, we want to stress the importance of financial independence and that you are only a few steps away from financial freedom. While these goals won’t be accomplished overnight, setting up a financial plan to achieve them is a great place to begin. It’s never too late to start on your path to achieving your future financial goals.

For those of you who are close to hitting your end-of-year 2021 goals, there are still a few weeks left before the end of the year to fund those HSA’s, 401k’s, and 529 plans. If you have any questions about your financial situation or setting up a plan to hit your financial goals, email us at info@shermanwealth.com or schedule a complimentary 30-minute meeting here. 

 

Get Started On Your Estate Planning Checklist

We’ve seen and learned a lot over the past year and living thru a pandemic. One action taken out of the pandemic has been estate planning and writing wills. Most of us might not think we have enough money to be eligible and qualified to have an estate plan.

According to a 2020 survey by online legal documents company LegalZoom, “Thirty-two percent of the adults under 35 who wrote a will said it was because of the Covid-19 pandemic.” While many think they don’t have “enough” assets or are too young for a will, keep in mind that medical directives and powers of attorneys are great to have in place from a young age. Just know that it’s never too early to plan to protect your assets and estate. Your estate plan will help clarify your wishes for after your death and simplify an already difficult time.

While these decisions are often-times difficult and not always top-of-mind, we have created a checklist that will help simplify the process for you. In addition, we have recently recorded a podcast episode with Head of Trusts and Estates Practice at BBS&G, Adam Moskowitz. Click here to check it out. 

  1. Last Will and Testament 

A last will and testament is a legal document that states one’s wishes as to how their assets and property is to be distributed after their death and as to which person is to assume and manage those responsibilities.

  1. Powers of Attorney

Choosing your powers of attorney is a crucial part of estate planning, as you are deciding who will be handling your affairs for if and when you become incapacitated. For example, if you are no longer able to handle your assets, you can designate that role to someone else for them to act on your behalf.

  1. Advance Directive 

An Advance Directive or a Living Will, is a document that allows you to chose the more medical related decisions for once you are incapacitated. By establishing this, whoever you chose will know how to respond to your doctors based on your health care wishes. 

These are just a few documents and matters you should be familiar with as you start thinking about estate planning. To explore all of the estate planning documents you will need in your specific situation, we recommend contacting an estate planning attorney or professional to assist you. Estate planning is not something you should take lightly; it takes thoughtful consideration about who will respectfully live out your wishes once you are gone. If you have any questions about how to make these decisions for your future, email us at info@shermanwealth.com and we are happy to discuss your options with you. 

 

 

Launch Financial-How To Make The Most Out Of Your Charitable Giving This Year With Elizabeth Goldstein

With everyone having increasing gains and thinking about giving back to charity given COVID-19, donor advised funds have become increasingly popular. To uncover how donor advised funds can benefit you and better your financial plan, we brought on expert Elizabeth Goldstein from the Jewish Federation of Greater Washington to Launch Financial to discuss donor advised funds. Click here to listen now! 

The United Jewish Endowment Fund (UJEF) is the planned giving and endowment arm of The Jewish Federation of Greater Washington. UJEF provides you with the opportunity to establish a legacy that will shape and improve Jewish life for generations. Gifts to UJEF can be made outright during the donor’s lifetime or through one of the planned giving vehicles. Your gift can be added to an existing endowment fund or create a new fund to support a specific field of interest, the annual campaign or unrestricted needs. UJEF allows our community to maintain a permanent, self-sustaining source of income to support existing programs of Federation and to develop new approaches to address emerging needs here and overseas.

More information about UJEF funds, gifts and programs.

For more information on opening a Donor Advised Fund at Federation’s United Jewish Endowment Fund, contact:

Elizabeth Goldstein, Esq.
endowment@shalomdc.org
301-230-7228

2022 FAFSA Updates for Grandparent-Held 529s

With Thanksgiving and Giving Tuesday behind us and the end of the year only a month away, grandparents might be thinking about boosting up their grandchildren’s college savings accounts before 2022. It’s important to know that there are a few exciting changes to FAFSA rules for grandparent-held 529 accounts that will be happening in the near future. 

So what are these changes? The major change is that students will not be required to report any cash support they receive, including funds they receive from grandparent-held 529 accounts. This means that grandparent 529 dollars won’t be counted at all and students will not have to count 529 distributions from grandparents as untaxed student income the next year. This is exciting news for both parties involved, allowing grandparents to contribute to help cover the high costs of higher education without impacting students’ financial aid opportunities. 

Even with this new proposed change in place, grandparent-held 529 dollars are still being used on the CSS profile, another financial aid form used by private institutions. It is unclear how this will play out in the future, so stay tuned for updates. The new FAFSA form is currently being constructed and is said to be released later than the October 1 deadline, so it’s important to keep an eye out for when this new rule will apply to your situation and plan. We will continue to follow the FAFSA changes for you, and be sure to report any further changes as they arise.

At Sherman Wealth, we believe 529 plans are a great way to save for your children’s and grandchildren’s college expenses or K-12 private school tuition, while also receiving favorable tax benefits. If you aren’t quite sure what a 529 is or how to start one, be sure to check out our previous blogs discussing the components of 529 plans, as well as how and why you should start saving for your children’s or grandchildren’s education as soon as possible. If you have any questions about 529 plans and family contributions, email us at info@shermanwealth.com or schedule a complimentary 30-minute consultation here. 

 

Sherman Wealth & Launch Workplace’s Sock & Coat Drive To Support So What Else

Happy Giving Tuesday! Do you have a few old coats and socks laying around the house? If so, let’s do some good with them! Join Sherman Wealth and Launch Workplaces in our Sock and Coat Drive to support So What Else and their wonderful mission.

Drop offs can be made at 9841 Washingtonian Blvd #200, Gaithersburg, MD 20878 from today, November 30th, 2021 til December 17th, 2021, so let’s get donating! If you have any questions on other ways to get involved in giveback opportunities or volunteering at So What Else, email us at info@shermanwealth.com and we are happy to discuss and direct you to the right place.

The Financial Industry Is Changing, And What You Want Is Too

As generational wealth continues to transfer, we are seeing a shift in the way today’s consumers are wanting to conduct relationships with those who are managing their money. According to a recent WSJ article, rich customers are changing what they want; they are shifting away from these bigger public companies and are seeking niched start-ups and individualized advice and relationships. We are also seeing that those who only offer asset management services are becoming less desirable and holistic financial planners are the future. 

At Sherman Wealth, we have noticed similar attitudes amongst prospects and clients, those who are feeling ignored or unheard from their “Wall Street-esq” or parents’ financial advisor that they assumed a relationship with. With this ever evolving bifurcation of financial advice, clients are no longer interested in working with their parents financial advisor they may have an estranged relationship with, but rather are looking for evolved and all encompassing individualized wealth management and financial planning advice delivered at the ease of their fingertips. We’ve been seeing tons of clients and individuals getting organized under COVID-19, stressing to us the importance of finding the right person to walk them through their whole financial life. This is where we come in. 

We have long recognized this shift in financial service needs and are constantly battling financial stigmas and adapting the way in which we deliver unique and customized advice to our clients. We recognize that holistic financial planning is the future. This new way of navigating your financial life encourages those seeking an advisor to look for someone in line with this approach. With a financial concierge such as Sherman Wealth, your advice will stay current and constantly communicated, not getting lost or forgotten.

At Sherman Wealth we can help you with the following 

  • Goal Setting 
  • Cash flow analysis and budget planning 
  • Net worth analysis 
  • Debt strategy 
  • Student loan planning 
  • Retirement planning/projections
  • Work benefits 
  • Rent vs. buy mortgage strategy 
  • Education planning 
  • Investment management 
  • Tax planning 
  • Insurance need analysis 

We are a fiduciary to our clients, but we are also, in some respects, a concierge and a coach. What we mean is that we work with you in an all-encompassing way- ensuring your specific needs are being heard, understood, and proactively addressed. For further details on our philosophy and core values, click here to learn a little more about who we are and what we strive to deliver. If you feel that your financial needs align with our core values and philosophy or your current situation feels stale, email us to inquire about our services at info@shermanwealth.com or schedule a 30-minute complimentary intro call here.

Retirement Inflation-Adjustments for 2022

Happy November everyone! New retirement inflation-adjustments for 2022 have been released, and we want to provide you with a quick breakdown. Business owners and employees, this one applies to you, so don’t miss it.

See Below For Retirement Inflation-Adjustments for 2022

  • IRA/Roth IRA contribution: $6,000 (no change)
  • 401k/403(b)/457 deferral: $20,500 ($1,000 increase)
  • 401k/403b/457 catch-up: $6,500 (no change)
  • SEP IRA/PSP: $61,000 ($3,000 increase)
  • SIMPLE deferral: $14,000 ($500 increase)
  • SIMPLE catch-up: $3,000 (no change)
  • Also boosted for 2022: The income ranges for determining eligibility to make deductible contributions to traditional IRAs, Roth IRAs.
  • IRS also issued technical guidance regarding all of the cost of living adjustments

If you have any questions on how these adjustments apply to your financial situation, email us at info@shermanwealth.com.