Don’t let Financial Differences Lead to Divorce

Divorce

Financial differences rank among the leading causes of divorce among couples, both young and old. The statistics are alarming, but perhaps not surprising. How we handle money is not usually a topic of that comes up while we are dating. As a result most couples don’t discuss financial compatibility before saying “I do”. When the honeymoon is over, though, and the bills start rolling in, couples often experience a reality check. While love is grand, it can’t pay the bills so it may not take long before fights erupt over different money habits.

Part of the problem is that it is simply uncomfortable to talk about money. Whether we like it or not, we tend to tie our own feelings of self-worth to money matters. It’s not uncommon to see how much money we make as a direct reflection of how much we are contributing to the relationship. These feelings can become further complicated if there have been financial missteps along the way. While avoiding conversations about money can allow us live in a blissful state of denial for a while, the long-term consequences can be life-altering.

The good news is that it is never too late to make meaningful changes and save a marriage that is threatened by financial discord.

According to financial planners who work with couples, money conflicts fall under five main categories:

  • Differences in spending and saving habits
  • Disagreements about who should control the money
  • Differences in priorities
  • Dishonesty about debt and habits
  • Differences in risk profiles

Whether you are experiencing frustration around one of these issues or all five, there are ways to build better financial health as a couple and avoid relationship problems.

Effective Communication Leads to Greater Financial Success

Effective communication can make a world of difference when it comes to financial matters. Establishing trust, which is cultivated through honest communication, is key. Trust is built when each partner commits to openly expressing their feelings about money and listening to what the other partner has to say. This includes being willing to reveal financial failures, knowing that your partner will be forgiving and withhold judgment.

Be Willing to Compromise

Although it is easier said than done, another key to resolving money issues is compromise. The first step is for both partners to sit down and agree on a common set of financial goals and what steps they will take to meet those mutual goals. Establishing a family budget – and committing to it – is critical. That budget should include some freedom for spending on things that are important to both partners, regardless of who is earning more money.

Be Patient

As you begin the process of rehabilitating your financial health and establishing clear lines of communication with your partner, remember to be patient. Keep in mind that spending habits are deeply ingrained in each of us. Both you and your partner have been influenced by your parents’ habits and your approach to money has been formed over a lifetime of experiences.

Enlist the Help of a Financial Planner

Whether you need help mediating tough conversations or you want expert advice on how to establish a budget that will help you meet your financial goals, don’t try to go it alone. Work with a financial advisor who can offer helpful insights and steer you in the right direction. With the right help, you can get back on track financially and strengthen your relationship. If you are to the point where money issues are creating such a strain on your marriage that you are considering divorce, outside intervention from an experienced financial advisor can be critically important in finding solutions that work for both of you.

Avoid Conflict

Often couples will argue about whether they should give or loan money to family members. While each case is different, and very personal, it is generally a good idea to try to avoid making these kinds of loans. Once that first loan is made, you have set a precedent and you are more than likely to receive follow-up request for additional money. While it can be difficult to say no to friends and family, it is always in your financial best interest to avoid these types of transactions.

A Happy Ending

Even in the best marriages, there are bound to be differences over finances, but those disagreements don’t have to drive a wedge between you and your partner, or worse, lead to divorce. If you actively work to establish trust through open and honest communication and recognize when it is time to seek outside help from a fee-only fiduciary financial advisor, you are taking important steps to letting your financial life be a solid foundation for your marriage – and not the wall between you.

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This post originally appeared on Investopedia.
The views expressed in this blog post are as of the date of the posting, and are subject to change based on market and other conditions. This blog contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
Please note that nothing in this blog post should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax or legal advice. If you would like investment, accounting, tax or legal advice, you should consult with your own financial advisors, accountants, or attorneys regarding your individual circumstances and needs. No advice may be rendered by Sherman Wealth unless a client service agreement is in place.
If you have any questions, please Contact Us.

Your Financial Plan Depends on More Than Your Age

financial plan

Your Financial Plan

We live in a time of great personal freedom when we have the opportunity to choose our own life goals and paths.

While it’s true that very few 26-year-olds are likely to be retiring, you might be that lucky one who just sold an app to Facebook and is considering philanthropy. While most people start families in their 20s or 30s, you might be that 40-year-old who’s just about to adopt a first child. And while most 60-year-olds have hopefully accumulated some retirement savings, you might be that entrepreneurial baby boomer who is moving to Detroit to launch a startup or open a coffee bar.

In spite of this brave, and exciting, new world of personal choices, what’s the first question a financial advisor or online financial site generally asks you? Chances are it’s your age. Then that answer determines the next question, and the next.

Too many financial planners and investment sites, unfortunately, use age to make assumptions that then dictate investment recommendations.

The internet, too, is filled with articles like “Financial Planning Tips Every 30-year-old should know” and “The best financial goals for every age.” There are books and studies that break your life down into age-based phases like “early career phase” and “peak accumulation phase” then make generalization based on those neat buckets.

What’s more important than age?

We’re all individuals, with different dreams, goals, and life situations and when it comes to financial planning, age is not as important as it used to be.

Your goals and your risk tolerance should be the factors to consider first in devising a personalized financial plan or investment plan that works for you.

Is your primary goal buying a house, is it wealth creation for early retirement, is it having income so you can bike around the world for a year? Those answers are more important than the fact that you are 32.

Does a volatile stock market make you anxious? Do you prefer slow and steady to winner takes all? While it’s generally assumed that young people can afford greater risk and volatility because they have time on their side, you may be that 24 year old that wants or needs to preserve savings first and foremost.

Goals differ and investment always involves a certain amount of risk. That’s why a fee-only fiduciary financial advisor works with each client individually to manage goals and risk in a way that works for them. It is vital for success to determine the level of risk each client can afford to take, how much risk is necessary to help them achieve their personal goals, and how much risk and volatility they can comfortably live with emotionally.

You Are Unique

Each of us is unique and that means that no two people will have the exact same goals + risk profile, in spite of being the same age. Yes, living off retirement savings is different than living off a first salary, but the amount may be the same. And paying off student loans is really not all that different from paying off a mortgage.

What’s important is that you find a good fee-only fiduciary financial advisor who looks beyond pre-programmed, one-size-fits all recommendations for 20-30 year-olds or 60+ year-olds and focuses to your goals, your risk preferences, and your uniqueness to create a personalized plan that works for you and evolves as you evolve, not one designed for an entire generation.

 

This article was originally published on Investopedia.com

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The views expressed in this blog post are as of the date of the posting, and are subject to change based on market and other conditions. This blog contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
Please note that nothing in this blog post should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax or legal advice. If you would like investment, accounting, tax or legal advice, you should consult with your own financial advisors, accountants, or attorneys regarding your individual circumstances and needs. No advice may be rendered by Sherman Wealth unless a client service agreement is in place.
If you have any questions regarding this Blog Post, please Contact Us.

 

 

 

 

Know the Difference between Fee-only vs. Fee-based Financial Advice?

Fee-Only Financial Planning

Confused about the difference between Fee-Only Financial Planning and Fee-Based planning? You’re not alone. Financial planning jargon can be daunting when you’re just getting started.

Understanding the difference between Fee-Only and Fee-Based, however, is important and could be the key to your long-term planning success.

What is Fee-Only Financial Planning?

Fee-Only financial planners are legally registered as investment advisors and have a fiduciary responsibility to you to create a plan in your best interest. Fee-only advisors cannot accept any compensation as a result of product sales. In other words, they can’t make a commission from specific investments they recommend you purchase. They are paid directly by you – and only by you – either through an hourly fee, a retainer fee, or an agreed-upon percentage of your assets that they manage.

As a result, in most cases, Fee-Only advisors have fewer conflicts of interest. They are more focused on your needs, rather than on selling you specific investments, since their compensation is not determined by sales volume or choice. A Fee-Only advisor will not try to steer you toward commissioned annuities; a Fee-Only planner’s advice must be completely free of attachment to financial products. The role of Fee-Only advisors is to only provide you advice that fits your current financial situation and your goals and therefore not recommend products and services that don’t support that goal and that are not the best choices for you.

What is Fee-Based Planning?

“Fee-Based” is a category the brokerage community has created to take advantage of the success – and attractiveness – of Fee-Only advising. Because the terms sound so similar, it’s easy to think they are similar, but there is a major difference between Fee-Based planning and Fee-Only planning.

In Fee-Based planning, the advisor is compensated with a set percentage of your assets instead of a retainer or a flat hourly fee. In addition to that percentage, Fee-based advisors can also accept commissions from financial products, annuities, and insurance products they sell you. Each time you purchase one of those products, their earnings increase.

This leads to a fundamental conflict of interest. Your advisor wants to earn as much as possible while you want someone to provide honest and trustworthy guidance.

If one fund offers advisors a significant commission and another one doesn’t but is better for you and your financial goals, how likely is it that the advisor will forego the opportunity to earn the commission by recommending the better fund?

That is why the legally-binding Fiduciary Rule that Fee-Only Advisors follow is so important: the definition of a fiduciary relationship is one based on trust.

How to Make Sure Your Advisor is Fee-Only

Before selecting an advisor, ask how and what their compensation plan looks like. Ask them to disclose what their compensation fees are in writing and whether or not they accept commissions. By choosing an advisor who provides Fee-Only services, you stand a greater chance of avoiding any conflicts of interests. Remember, Fee-Based advisors are obligated by their brokers or by specific deals to sell certain products. Fee-Only advisors are under no such requirements and have a legal, fiduciary, obligation to work for you, and you only.

This article was originally published on Investopedia.com

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The views expressed in this blog post are as of the date of the posting, and are subject to change based on market and other conditions. This blog contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
Please note that nothing in this blog post should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax or legal advice. If you would like investment, accounting, tax or legal advice, you should consult with your own financial advisors, accountants, or attorneys regarding your individual circumstances and needs. No advice may be rendered by Sherman Wealth unless a client service agreement is in place.
If you have any questions regarding this Blog Post, please Contact Us.

 

 

 

 

Should you “Inaugurate” a New Financial Plan on January 20th?

new financial plan

Time for a New Financial Plan?

The market’s wild ride after the presidential election might have you wondering if a change in leadership should mean a change in your financial strategy.

While no one can ever predict with certainty what will happen to the market – or even on Twitter these days – there are two important points to remember.

It Matters Less than We Think

The first is that there has been a long-term upward movement in the market through many changes of administration.

Ironically, who’s in the White House makes less difference than we think it will in terms of overall market performance: markets are driven by market conditions more than by the policies individual Presidents advocate. As Barry Ritholz noted in an excellent piece in the Washington Post last week, during President Grover Cleveland’s first term stocks rose 53 percent while in his second term they fell 2 percent. That wasn’t because President Cleveland forgot how to make stocks go up – it was overall market drivers that made a difference. So for medium and long-term goals – like saving for retirement or your children’s education – taking the long view with your investments is critical.

How Much Risk is Too Much?

The second point is that everyone has a different level of risk tolerance.

That is why it’s critical that you have access to a sophisticated risk tolerance tool that really drills down to who you are, instead of only generic questions about age, income and whether or not you call yourself “aggressive” or “cautious.”

If you’re risk adverse and you’re anxious about a crash or a downward trend that may affect your short term plans, you can always use January to re-balance your portfolio and lock in profits. As a wise investor once said: “no one ever lost money taking a profit.” If your risk tolerance is higher, you can view the volatility as an opportunity to maximize the possible potential for your investments. By continuing to contribute regularly to a savings or investment plan, you take advantage of the power of dollar-cost averaging and compounded interest to make your money work for you. If you had sold in the sharp downturn last January, for instance, instead of sticking to your plan, you would have lost out on the dramatic returns afterwards.

Of course every January is a good time to meet with your advisor to rebalance your portfolio based on your own changing circumstances, tax needs, and risk tolerance. But, fundamentally, your plan is still your plan, no matter who wins the presidential election. Your goals are still your goals and compound interest still compounds. If you have worked with a good – fiduciary, fee only – financial advisor to create a workable plan based on your life goals and your circumstances, then staying the course – with minor adjustments – is very often the smartest plan. Data overwhelmingly shows that it’s “slow and steady” investing – not playing a guessing game by jumping in and out of investments – that ultimately wins the race.

Other Sources:
What is a Financial Plan?
The Importance of Personal Finance Knowledge
Financial Planning for Millennials: Overcoming the Fear Factor

 

This article was originally published on Investopedia.com

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The views expressed in this blog post are as of the date of the posting, and are subject to change based on market and other conditions. This blog contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
Please note that nothing in this blog post should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax or legal advice. If you would like investment, accounting, tax or legal advice, you should consult with your own financial advisors, accountants, or attorneys regarding your individual circumstances and needs. No advice may be rendered by Sherman Wealth unless a client service agreement is in place.
If you have any questions regarding this Blog Post, please Contact Us.

 

 

3 Ways to Make Budgeting a Success in the New Year

developing a financial budget

At the end of each year – and the beginning of the new one – most of us think about things we’d like to accomplish in the coming year. It’s a time we engage in self-reflection, ideas for self-improvement, and new – or ongoing – resolutions and goals.

One of the most common resolutions is losing weight, but we all know how that goes: crowded gyms in early January, inevitable drop-off when February rolls around. In fact, a study done by the University of Scranton shows that only about 8% of people actually achieve their resolutions.

Financial resolutions often include starting – or finally sticking to – a budget. Unfortunately, that resolution is all-too-often hard to stick to as well. (For related reading, see Financial New Year’s Resolutions You Can Keep.)

Why do so many people have trouble sticking to their resolutions? One of the main reasons is having unrealistic expectations. Overconfidence doesn’t just affect fitness goals, it affects investors’ behavior as well.

How can you make this the year you stick to your goals?

Take Baby Steps

Be reasonable in assessing where you are with your finances and don’t try to tackle everything at once. Start by listing all the areas of your financial situation you would like to improve. Then prioritize the individual elements in order of importance to you, and start by taking on one or two at a time. (For related reading, see: Achieve Your Financial Goals With a Financial Plan.)

If one of your goals is to start – and stick to – budgeting, don’t give yourself super-strict boundaries. Instead, start by creating good habits one at a time. If you want to pay off all of your credit card debt, for instance, take a look at how much debt you have and create a realistic weekly or monthly plan to start paying it off. If you want to buy a house in five years, you could decide to spend less now on something that you currently enjoy. (For related reading, see: Got a Raise? Here’s How to Avoid Lifestyle Creep.)

Focus on one or two goals at a time, see how it goes, and make progress – and adjustments – to stay on track.

Be Specific

Instead of saying “I am going to save more this year,” or “I am going to save $5,000 this year,” try to specify exactly how you plan to do it. Start with something like: “I will take $100 from each paycheck and put it into a savings account.” By giving yourself a tangible – achievable – steps, you’ll be better able to track how well you are sticking to it.

In addition, try to think about what it is that you are trying to accomplish. Why do you want to save an extra $100 each paycheck? Are you saving up for a car? Trying to pay off debt? Building up an emergency fund? When you add purpose to your goals, it makes it more compelling and easier to accomplish. (For related reading, see: Why Investors Can Be Their Own Worst Enemy.)

Stay Accountable

Know yourself: accept who you are and what that means. Are you someone who might let things build up then feel too overwhelmed to jump back on track? Think about sharing your goals with a friend or family member and set times to check in with them and go over your progress. If you want to go to the gym three days a week, think about getting a workout partner. If you want to save an extra $100 from each paycheck, see if there is a friend that has the same goal and you can do it together, comparing how it’s going throughout the journey.

Most importantly, understand that this is a process. Some weeks will be better than others, but, if you can follow these three steps – set realistic goals, set specific goals, be accountable – hopefully you will be part of the 8% that gets it done this year. (For related reading, see: The Importance of Personal Finance Knowledge.)

To read more about budgeting:

Financial Budgeting and Saving

Should You Start to Save… or Pay Down Debt?

This article was originally published on Investopedia.com

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The views expressed in this blog post are as of the date of the posting, and are subject to change based on market and other conditions. This blog contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
Please note that nothing in this blog post should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax or legal advice. If you would like investment, accounting, tax or legal advice, you should consult with your own financial advisors, accountants, or attorneys regarding your individual circumstances and needs. No advice may be rendered by Sherman Wealth unless a client service agreement is in place.
If you have any questions regarding this Blog Post, please Contact Us.

The Problem with “Buy Low, Sell High” Advice

Buy Low Sell High

Of the many common sayings in the finance industry, the most popular is undoubtedly “buy low and sell high.” While it sounds simple enough, it’s actually significantly more complex than it seems.

Not Following the Herd

Buying low comes from an investment philosophy known as value investing. The basic concept of value investing is to buy investment instruments when they are “on sale.” That means buying when everyone else is selling (and prices are down) and vice versa. A bargain-hunting value investor looks for what they consider to be healthy companies that are – for whatever reason – severely undervalued. A smart value investor buys low, then patiently waits for the “herd” to catch up. Unfortunately, most investors tend to do the exact opposite. We tend to chase trends and follow the herd. (For more, see: Don’t Let Emotions Hinder Your Investing Goals.)

Sounds Easy. So Why is it Hard?

A huge part of smart investing is psychological and this chart illustrates of one of the many psychological roadblocks we have as investors.

We may want to buy low and sell high, but that goes against our instincts and biases. When a stock is falling, we dump it. When a stock is rising, we buy it. We sell a company when the price is falling because we are afraid of losing more money; we buy a stock when it is rising because we have a fear of missing out. To compound the problem, most investors are not experts at realizing when something high or low “enough.”

At times, investing can feel like quicksand: the more you do and the harder you try, the more you sink. It requires effort to overcome the psychological biases that often prevent us from acting in our own best interest. It is human nature, for instance, to continue to make the same mistake over and over again, or to not let go of stocks when we should through either familiarity bias or disposition effect.

Goals and Risk Tolerance

So what can you do to avoid to avoid the pitfalls of trying to buy low and sell high?

  1. Understand your goals and risk tolerance: before you get started investing, it is critically important to understand what it is you are trying to accomplish and how much risk you are comfortable taking. Once you have that figured out, you can create an investment plan that is appropriate for you and comfortable enough to keep you from impulse buying high and panic selling low.
  2. Avoid market timing: instead of trying to time investments perfectly and squeeze every last cent out of each one, focus on building a diversified portfolio of stocks and bonds that give you the greatest chance to succeed over the long term.
  3. Leverage your resources: having a great financial plan and a diversified portfolio is irrelevant if you don’t follow through and stick to it. Becoming self-aware of the pitfalls is a great first step. Having a good financial advisor is a good step too. Just make sure that they are a fee-only fiduciary, so that they have your best interests in mind at all times.

Think about it: if it were easy – if everyone bought low and sold high – there would be no high or low because the market prices would be continually correcting. Bargains do exist and sometimes the wisest choice is to lock in earnings. The safest financial plan for the long run, however, is to understand your goals and risk tolerance, then work to create an investment plan that builds on gains over the long term, rather than continually outguess the market.

(For more, see: Which Investor Personality Best Describes You?)

This article was originally published on Investopedia.com

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The views expressed in this blog post are as of the date of the posting, and are subject to change based on market and other conditions. This blog contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
Please note that nothing in this blog post should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax or legal advice. If you would like investment, accounting, tax or legal advice, you should consult with your own financial advisors, accountants, or attorneys regarding your individual circumstances and needs. No advice may be rendered by Sherman Wealth unless a client service agreement is in place.
If you have any questions, please Contact Us.

403(b) Plans: The Flaws Teachers Should Know

Teachers 403b

It’s no secret that many teachers are underpaid, in spite of the vitally important work they do. I know first hand: my mother was a public school teacher and a single mom. While some teachers may have other assets and savings they can draw on, a great number of teachers will rely on the retirement plans commonly used by teachers, known as 403(b) plans, as a source of income once they retire.

This Is Money Teachers Will Need

In a recent series, The New York Times detailed many issues with the 403(b) plans so critical to a comfortable retirement for teachers. Their first piece, “Think Your Retirement Plan Is Bad? Talk to a Teacher” makes many of the same points we touched on previously in Teachers: Who is Managing Your 403(b)?

As the Times correctly points out: “Teachers in about a dozen states may not qualify for Social Security. And while public school teachers often are offered decent pensions, many of them do not work for the decades required to qualify for a full payout. And pension formulas are becoming less generous for newer recruits.”

Unlike 401(k) plans that are overseen and regulated by federal law based on the Employee Retirement Income Security Act (ERISA) of 1974, many 403(b) plans fall outside of ERISA oversight and protection.

Who Can Teachers Trust?

Instead of having access to a financial advisor who is a fiduciary, someone who exclusively – and always -must have the client’s best interests in mind, teachers are often presented with salespeople from insurance brokers who earn commissions for recommending certain products. As one teacher recounted in part two of the NYT series: “From the teacher’s standpoint, they really miss out getting quality advice,” said Mr. Bergeron, 27, who sold the plans for Axa Advisors’ retirement benefits group. “People who are in the schools pitching them and positioning themselves as retirement specialists are really there just to sell them one product.” (For more, see: An Investor’s Guide to the New Fiduciary Rule.)

Fee-only fiduciary advisors are advisors who only recommend investments that are the best for their clients, not ones that reward themselves. Fiduciary financial advisors aren’t trying to hit a quota or working for sales commissions on the products they recommend to you. Fiduciaries are committed to providing the best advice to investors – like teachers – looking to build a strong foundation. These advisors grow with you, not at your expense by profiting off the products they recommend to you.

Many of the millions of employees in this country have access to 401(k) plans through their employer that are approved and monitored by the employer in some way, ensuring at least some oversight of the plan itself. Unfortunately, public school teachers as well as some teachers working for nonprofits and religious institutions are easy prey for companies trying to sell high-cost products because their retirement plans often don’t have the same oversight. Given the loosely regulated industry, the insurance salespeople or “advisors” pitching to teachers can recommend investment products that best for their own pockets, not the plan owners’.

The Costs and Confusion

While 401(k) plans are not perfect either, as we have pointed out before, the majority of them offer more traditional investment options, such as mutual funds or stocks and bonds, making it easier to understand how your money is invested. In contrast, 403(b) plans are often held inside annuities, which can be confusing even for the most intelligent individual investors. Discussing Axa Advisors, a broker that often tries to sell annuities, The New York Times writes: “The most popular version of the Equi-Vest annuity has a total annual cost that can range from 1.81 to 2.63%, according to an analysis from Morningstar. In contrast, large 401(k) plans usually charge an annual fee of less than half a percent of assets, according to a May report by BrightScope using 2013 data.”

Even if teacher realizes that they are paying excessive costs for their retirement investments, they are often locked into these annuities and required to pay a penalty if they want to make changes. If a teacher wants to transfer their assets out of the Axa Equi-Vest annuity into their own IRA, for example, they would have to pay a 5% penalty on the portion of that withdrawal that had been contributed within the last six years.

One of — if not the biggest — advantage of many retirement plans is tax deferral, which allows these accounts to grow and compound over a long time horizon. That ability to grown and earn compound interest is obviously compromised when you are paying excessive fees year over year.

Teachers are one of our most important assets and deserve to be rewarded for their years of dedication to our country’s children, and therefore our country’s future. All too frequently, however, teachers not given access to solid, low-cost and efficient long-term investment options in their retirement plans. Nor are they given access to a financial advisor they can turn to with questions, knowing that they can trust the answers they are given.

We encourage teachers to spend some time finding out more about their 403(b) retirement fund managers. It’s vital to find out whether they are a fiduciary, how they make money (fee-based or fee-only), and how personalized their investment strategy is.  (For more, see: 6 Questions to Ask a Financial Advisor.)

This article was originally published on Investopedia.com

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The views expressed in this blog post are as of the date of the posting, and are subject to change based on market and other conditions. This blog contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
Please note that nothing in this blog post should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax or legal advice. If you would like investment, accounting, tax or legal advice, you should consult with your own financial advisors, accountants, or attorneys regarding your individual circumstances and needs. No advice may be rendered by Sherman Wealth unless a client service agreement is in place.
If you have any questions regarding this Blog Post, please Contact Us.

Election Volatility Had You Spooked? Think of Your Goals

election volatility

Were you keeping an anxious eye on your investment accounts leading up to last nights’ election? Are you relieved they seem to be climbing again?

In spite of the plunge in the futures market last night as it became apparent that Donald Trump would beat favored Hillary Clinton to become America’s 45th President, much of the market has now climbed back even higher than it was yesterday and are close to their all time highs.

That’s important to note for several reasons.

As our friend Josh Brown put it, “it starts with understanding why you’re investing in the first place—a detailed financial plan with hard objectives and goals.” To do that, we work with our clients to focus on short-, medium- and long-term goals so that you can understand what your time frame is and what is needed to achieve it.

The short-term nature of much of the volatility that characterizes the markets is exactly why dollar-cost averaging is such a smart way to invest. If you stick to a plan of investing in new shares on a regular basis—no matter what the current cost is—you will be buying during dips as well as peaks.

The volatility we’re experiencing now—similar to the volatility we experienced earlier in the year during “brexit“—are also great litmus tests to determine whether you have a properly diversified portfolio and whether or not it’s an accurate match for your risk tolerance.

If you know your true risk tolerance and have already planned effectively, you’ll have a balanced portfolio that contains the right balance of stocks and other less volatile instruments before volatility sets in. With a fully diversified asset allocation strategy, there will be parts of your portfolio that go up, as well as other parts that go down, during times of stress. That way you’ll be comfortable sticking to your investment strategy and plan through peaks and dips. Not only that, but you will have purchased those less volatile instruments before pundits start shouting and everyone starts panic-purchasing, driving the costs up. (For more from Brad Sherman, see: Don’t Let Emotions Hinder Your Investing Goals.)

Volatility is what makes the stock market the stock market.

The one thing that is certain about the markets is that there will always be volatility and uncertainty.

Even if we are currently experiencing a bit more than just normal market volatility, remember that the markets have historically rebounded extremely well after corrections (drops of at least 10%).

If current market conditions or any paper losses you may be experiencing are making you feel uncomfortable—or keeping you up at night—please give me a call and let’s talk about re-allocating your assets

If not, just remember that dollar-cost averaging is a great long term strategy for your investments.

 

This article was originally published on Investopedia.com

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The views expressed in this blog post are as of the date of the posting, and are subject to change based on market and other conditions. This blog contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
Please note that nothing in this blog post should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax or legal advice. If you would like investment, accounting, tax or legal advice, you should consult with your own financial advisors, accountants, or attorneys regarding your individual circumstances and needs. No advice may be rendered by Sherman Wealth unless a client service agreement is in place.
If you have any questions regarding this Blog Post, please Contact Us.

Launch Financial with Brad Sherman Episode 20: Options for Your 401k When You Change Jobs

Brad and Charlie and Josh (now… with #Schwaber!) talk about 401Ks and switching employment. Do you have a long-neglected account?

In today’s world, it is normal for mid-level professionals to jump between a few different jobs early in their career as they try to figure out their passion and path. When leaving a job, we often take with us the knowledge we gained from our experiences and hopefully some friendships we made as well.

Link to the BlogPost: In today’s world, it is normal for mid-level professionals to jump between a few different jobs early in their career as they try to figure out their passion and path. When leaving a job, we often take with us the knowledge we gained from our experiences and hopefully some friendships we made as well.

Link to blog post: www.shermanwealth.com/401k-when-you-change-jobs/

 
 

Options for Your 401(k) When You Change Jobs

401k

Leaving one job for another to pursue your goals, follow your passion, or just make some interim changes? As you leave – taking with you new experiences, knowledge, and relationships – don’t forget one more important thing: your company 401(k) account.

In the midst of job – or life – changes, it’s all too easy to get distracted and forget to pay attention to a 401(k) from a previous employer. It could be because the plan stops sending statements, or it could just be that you’re focusing on what’s going on in your life right now. There may even be a few you’ve lost track as the years pass.

Consider too, that even if you have kept track of your old 401(k) accounts and know exactly what’s in each of them, you many not realize that you have other options besides just leaving the account and investments as is. (For related reading, see: 6 Questions to Ask a Financial Advisor.)

Know What You Have

Do you know what’s in each of your 401(k)s? A recent study in the Journal of Finance has found that conflicts of interest in 401(k) plans can lead to serious opportunity cost for individual investors. Your managers may be prioritizing the profits of their institution by investing your money in their own funds, even if that is not the best investment option for you. As John Oliver recently demonstrated, these conflicts of interest can cost millions over the course of a single retirement plan’s life. Awareness is key. Make sure you look at old 401(k) statements from past employers to determine if they are being managed properly according to your needs and situation.

What Are Your Options?

If you do determine that your 401(k) plan from a previous employer is not being managed properly, or as beneficially to you as it could be, the good news is that you have options. You can roll the funds into a new employer’s 401(k) plan or into an IRA account that you already hold. Rolling over a 401(k) into an IRA has potential benefits that could include:

  • Lower management and expense fees
  • A wider range of investment options
  • Consolidating multiple accounts into one retirement account
  • The option to work with a fiduciary financial advisor with whom you are comfortable and whose recommendations are in your your best interest at all times

Can’t Find Your 401(k) Statement?

If you have lost track of an old 401(k) account, don’t worry, there are ways to search for it. Here are a few suggestions:

  • Contact your old employer’s HR department: if they can’t help you, they may be able to direct you to someone who can.
  • Search The National Registry of Unclaimed Retirement Benefits to see if your account is listed.
  • Ask your financial advisor to help you track it down.

A well-managed 401(k) plan can be the gift that keeps on giving. But once you’ve left a company, take a good look at your plan and decide if it makes sense for you to leave the funds there, move them into a current plan, or move them into an IRA where you, and a Fee-Only fiduciary financial planner, can take advantage of a broader range of investment choices.

This article was originally published on Investopedia.com

***

The views expressed in this blog post are as of the date of the posting, and are subject to change based on market and other conditions. This blog contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
Please note that nothing in this blog post should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax or legal advice. If you would like investment, accounting, tax or legal advice, you should consult with your own financial advisors, accountants, or attorneys regarding your individual circumstances and needs. No advice may be rendered by Sherman Wealth unless a client service agreement is in place.
If you have any questions regarding this Blog Post, please Contact Us.