Brad, Author at Sherman Wealth Management

5 Big Picture Things Many Investors Don’t Do

These simple strategies can make a big impact on your long term portfolio.

Investing and finances can be overwhelming and confusing. Having so many options available, how is an investor to choose which direction to go. For those who seek to understand, it can become paralysis by analysis, where the more you study, the more you realize you need to know. With all of its complexity, simple investment strategies can be very effective, if the right choices are made.

Here are 5 Strategies most average investors don’t focus on, but should.

Have a thought out strategy with a purpose. A common mistake of investors is to put money in an account without a lot of thought as to the goals you want to achieve. Starting an investment fund without goals is like driving in a car with no destination in mind. Without a purpose for the money, it is impossible to measure the success or failure of the investment.

Start Early with a Time Horizon. Starting early gives your money more time to grow. The longer the money is invested, the better it can weather market fluctuations and the more likely you are to successfully reach your goals. Along these same lines, set specific goals around a time horizon. How long will each bucket of money be invested? This is a very important piece to your overall strategy because it will help evaluate the specific investments that will be most beneficial. If you are 15 years away from your goal, investment choices will be much different than if you are 5. The closer you get to the destination, the less able you are weather market fluctuations. This should be considered in your overall strategy.

Increase The Amount Invested Each Year. When looking over your investment strategy, separate the performance and the contributions. The performance is how much your money has grown through your investment strategies. Contributions are the dollar amount that you have added to your investment accounts. These two factors make up the total growth of your portfolio. Both of these numbers are important to your overall strategy. The account performance should be reviewed independent of contributions to help you stay on track with the right investment choices for your risk tolerance and time horizon. The amount you have added in contributions is what you have built into your budget for long term financial goals. When you increase those contributions each year, your account should grow significantly faster. Small increases are often not felt in the monthly budget.Let’s say you currently contribute 6% from your paycheck into your 401k. In addition to that you are putting $50 a month into your IRA and $50 a month into a college fund. At the beginning of the year, increase your 401k contribution by 1%. Now you are putting away 7% in pretax dollars for retirement. Then the next quarter increase your IRA contribution to $75 a month and the quarter after that, increase your college fund contributions by $25 a month. These small increments will barely be noticed in your monthly budget. The $25 a month increase is less than $1 a day. If you are earning $50,000 a year, the 1% increase with your 401k is only around $21 a paycheck if you get paid bi-monthly, in pretax dollars. Meaning your paycheck will be reduced by less than $20 a paycheck due to the pretax allocation. If you increase the contribution at the time of your annual raise, it will only be noticed in the form of larger investment accounts.

Review your asset allocation as a whole picture. When you have separate investments for different financial goals, it is more of a challenge to see your portfolio in a complete picture. Having investments with different companies can increase these challenges. When you have a 401k at a current job, and maybe one or two from previous jobs, they are more difficult to keep up with. Then you might have current investments for retirement, college and savings for your first home. Taking a holistic view of all your investments will help to ensure you have the best asset allocation possible. When your allocation gets out of whack, you might end up taking on more risk than you are comfortable with, without realizing it. It is not always possible to have all your investments under one roof, especially with a current 401k. However, including these investments in all financial reviews will help you stay on track for your overall investment goals as well as ensuring your asset allocation and risk profile are appropriate.

Understanding what you can control. In life we like to have control over our current and future destinations. Happiness and success often come from recognizing what we can control and focusing on that. Investing is no different. We cannot control the markets and we cannot control the economy. There is a host of circumstances and events that are outside of our control. Stressing and worrying about those things is not beneficial. You can control spending and investment rate. You can control which investments you choose and the amount of risk in your portfolio. Staying focused on these elements will lead to higher comfort levels which will encourage staying the course.

Financial investing success has more to do with implementing sound strategies, rather than luck or great market timing. It is more about staying the course, than picking the “hot” stock that will make you a millionaire.

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Mitigating Your Investment Volatility

Volatile markets can be unsettling. You work hard for your money and even losing money on paper, to market fluctuations, can make you want to put all your cash under the mattress. In reality most investments will have volatility. Fixed rate products like CD’s may not have volatility, but will have their own risk of not keeping up with inflation. Currently 1 year CD’s are paying around 1%, and 5 year CD’s are only paying around 2%, according to Bankrate. This makes it necessary to have investments in your portfolio, which will fluctuate in value, in order to potentially have the needed funds to pursue your financial goals.

With inflation averaging 3.22% per year from 1913 to 2013², it is easy to see that establishing an investment portfolio that provides higher returns than inflation is essential to any long term plan. Investors look to mitigate the risk of the volatile markets, while seeking a return that will build investment values.

For all its Bull and Bear markets, runs and crashes, stock market investments in the last 100 years has been positive when looking at any 10 year period from 1903 to December 1912³. The average stock market return since 1932 is around 7% and when inflation is taken into account the average return is over 10%⁴. So while the markets do go up and down on a daily basis, the overall market pattern has a consistent upward trend. However, past performance is not indicative of future results and your investments selection(s) and time horizon will affect your results.

Investing With Your Risk Tolerance in Mind

Investment risk, by definition, is the likelihood of losses in relation to an expected rate of return for a specific investment. All investments have some investment risk. The challenge for you is to determine which investments have risks you are willing to accept, and may be potentially rewarded with higher returns on a consistent enough basis.

This is where a Sherman Wealth Management financial professional comes in. They work with you to determine a level of risk that is suitable for you and provide the potential growth needed to pursue your financial objectives. This requires not only understanding specific investments but also having a good pulse on what you, as an investor, need.

In order to give the best advice, it is necessary to truly understand the client’s needs. Just asking, how much risk are you comfortable with, is not enough. Educating and teaching you about risk and what it may mean for your future, is the goal. This allows you to select investments that reflect your risk tolerance and financial aspirations.

Taking a high level of personal interest in the changing needs of our clients is our goal. We believe this is the best strategy for maintaining an investment portfolio that is designed to have the appropriate amount of risk to pursue your financial goals, while striving to minimize the risk taken on individual investment choices.

Each investor has individual needs and no investor’s taste for risk is the same. You need recommendations that take all of your circumstances and life goals into account. Added risk might lead to higher returns, but not always.

If you have a lower tolerance for risk, building an investment portfolio that is designed to withstand market turmoil is more appropriate. These strategies still experience ups and downs, but the right blend of investments potentially moderate the fluctuations to align with your tolerance for risk.

The stock market offers investments that carry various levels of risk. There are value, dividend paying stocks that have a lower volatility than emerging small cap stocks. Bonds are also available at various risk levels, allowing you to manage risk and performance within the portfolio.

Asset Allocation for Mitigating Volatility

Another method to help mitigate market risk and volatility is through Asset Allocation. This is the process of using several asset classes within an investment portfolio by apportioning a portfolio’s assets according to the individual goals, risk tolerance and investment horizon. Stock market investments have the general categories of stocks and bonds.

Stocks are broken down further between value stocks and growth stocks, with value generally being more conservative. Stocks that pay dividends are usually more conservative than stocks that do not, because investors are getting some return while they still hold the position. Stocks are also broken down by company size. These are denoted as large cap, mid cap and small cap stocks. Large cap stocks include companies like Microsoft, Apple, Bank of America and national names we all recognize. Small cap companies are those with 300 million to 2 billion in revenue, and mid-caps are between these two. The last large category is US companies and International or global companies.

Bonds are rated much like individual credit is rated. There are consumers that are a much lower risk than others and this is measured through individual credit scores. Bonds operate in a similar way. There are independent credit agencies like S&P and, Moody’s which rate company bond offerings. Bond ratings are expressed as letters ranging from ‘AAA‘, which is the highest grade, to ‘C’ (“junk“), which is the lowest grade. Different rating services use the same letter grades, but use various combinations of upper- and lower-case letters to differentiate themselves. Lower ratings represent higher default risk and thus higher interest rates to investors.

Selecting the best mix of stocks and bonds is a delicate balance. Spreading your investments choices across different categories may provide an effective way to reduce the overall volatility of a portfolio. As the market fluctuates not all stocks and bonds move up and down at the same rate or the same time. When asset allocation is used correctly there is a designed buffer against losses and the overall risk of the portfolio should be reduced.

Advantages of Dollar Cost Averaging

Dollar cost averaging is an investment strategy where you invest a fixed dollar amount on a regular schedule, regardless of the actual price of the stock, bond or other investment vehicle. There are several advantages to using this strategy.

Smaller amounts can be invested providing potential benefits of growth over time. Time in the market is much more important than market timing and dollar cost averaging gets you in the market on a regular basis.

Buying more shares when the stock has a lower price and less shares when the price is higher. . Even the best companies will see stock prices fluctuate based on a current news reports, events that impacts the industry, or seasonal fluctuations.

Dollar cost averaging helps reduce the risk of the overall portfolio because you are investing at regular intervals and buying more shares when the prices are low. This can be an effective way to grow your portfolio. Studies have shown that those who invest in regular intervals are more consistent with their investments, providing better overall growth, according to Morningstar⁵.

Dollar cost averaging does not protect against a loss in declining markets. Since such a plan involves continuous investments in securities regardless of the fluctuating price levels, the investor should consider his or her financial ability to continue such purchases through period of low price levels.

Financial strategies require a long term strategy. As such, volatility must be considered in your investment choices. Avoiding volatility because of fear can result in negative returns, when adding the impact of inflation. Working with a financial professional who understands volatility and uses strategies designed to enable you to build a portfolio which is suitable to your risk tolerance. Let us help you determine which investments are appropriate for your financial goals.

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Behavioral Investing: Men are from Mars and Women are from Venus!

While no person falls neatly into statistical averages, as humans, we are all emotional beings and subject to all different kinds of behavioral biases when it comes to investing. There are three major ways in which men and women differ when it comes to behavioral investing.

Investment Goals and Strategies: According to the Wall Street Journal, finance professors Brad Barber and Terrance Odean, women tend to focus more on longer-term, non-monetary goals. Women generally associate money with security, independence and the quality of their life and their families’ lives. Women have a ‘safety first’ mentality. Generally speaking, women are more inclined than men to wear seat belts, avoid cigarette smoking, floss and brush their teeth and make regular doctor visits. They even have been shown to be 40% less prone than men to run yellow traffic lights. Men, on the other hand, who tend to be more competitive and thrill-seeking by nature, often focus on the short-term track records of their portfolios, incurring larger overall returns, and tend to be more risk tolerant. In contrast, women tend to be more averse to risk and are more skeptical. When it comes to investing and planning for their future, women shy away from uncertainty and will take a longer time to make investment decisions, are more methodical in how they go about research, and ask more questions.

Both men and women should make sure that their investment styles and horizons match their overall financial goals. For women, this may mean taking on more risk. As they become more familiar and understand the ups and down of the stock market they will naturally become more risk tolerant. For men, this may mean focusing more on longer-horizon goals, rather than on short-term trading track records and larger gains.

Prudential’s study Financial Experience & Behaviors Among Women

The Learning Curve: A 2012-2013 Prudential study on women investors reveals that women are more receptive to financial research and advice than men. Women seek help more often. Men tend to enjoy learning on their own and take a more independent approach, like the internet, while women prefer learning in a group setting. Women rely more on personal networks with friends, family, financial planners, and they take a networking approach to gathering information. They often require more of a financial advisor’s time and resources, but are looking for a trusted relationship to be established, one they can rely on long term. Men, however, prefer to teach themselves and are more self-directed learners, using the Internet (more often than women) to gather information and are more likely to claim they understand financial matters than women. In actuality, knowledge levels are not high for either gender.

Thus far, evidence does not support, however, whether one source of information or learning technique is more or less effective than another.

Information Sources Used By Men Vs Women — Source: Source: Women & Investing, Gender differences in investment behavior. FINRA Report August 2006

The Confidence Factor: Women tend to be thorough and take more time to make decisions than men. Several studies, including a national survey by LPL Financial, show that women tend to research investments in depth before making portfolio decisions, and the process, as a result, tends to take more time. Women also tend to be more patient as investors and consult their advisors before adjusting their portfolio positioning, whereas men are more prone to market timing impulses. Men veer toward overconfidence while women lean towards indecisiveness and insecurity.

Overconfidence can lead to taking too much risk. While women risk missing out on some investment opportunities in taking more time to make decisions, men’s generally higher impatience when it comes to seeing investment returns makes them more likely to attempt market timing, and prone to loss when the timing is off. Women are less afflicted than men by overconfidence, or the delusion that they know more than they really do and are more likely (than men) to attribute success to factors outside themselves, like luck or fate.

Yet, taking too little risk, due to lack of confidence, can hurt your investment goals just as much as overconfidence. When it comes to investing for the long term, taking risk is not a luxury. Insecure investors can confine their results by investing too conservatively, nearly as much as their overeager counterparts could do by excessive trading and risk-taking.

Meanwhile, to help avoid rash decisions and market impulses, men may benefit from implementing a systematic investment strategy and a periodic, rather than continuous, review of their accounts and rebalancing. They may want to consider becoming even more open to professional financial advice. Women may also want to review the efficiency of their investment allocations across their portfolios to counter the negative impact of mental accounting. In addition, they may want to consider attending financial education seminars to help boost their confidence levels and ability to make timely, well-informed investment decisions.

Men Vs Women Confidence Level — Source: Women & Investing, Gender differences in investment behavior. FINRA Report August 2006

Call Brad Sherman at Sherman Wealth Management for information on what investment strategy is right for you.

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YOLO (You Only Live Once) So You Need A Retirement Goal

When you read through blogs or scroll through hashtags and memes on social media, there is a recurrent theme among millennials regarding the live-for-today sentiment. Whether it’s the acronym, #YOLO (You only live once) or the older, maybe not-so-cool phrase, ‘Carpe Diem,’ we are constantly reminded that we should stop worrying about the future and focus on today. But when it comes to your finances, is society sending us a detrimental message?

When addressing one’s plans for retirement, it is sometimes difficult to find a happy medium between the avoidance of financial responsibilities and the overwhelming, anxiety-inducing worry over one’s financial future. Below are two very common thought processes that I see often.

1) I am not worried about the future now, I’ll deal with it later

Unfortunately, our day-to-day pressing needs and our live-for-today goals become the priority and we cannot focus on or visualize what is not right in front of us. We tell ourselves, ‘I’ll do it tomorrow.’ Whether it’s not participating in a 401K because the extra monthly money is needed for utility bills or prolonging the start of a college savings fund for your child because you have mortgage payments to make, you are setting yourself up for a worrisome retirement.

It is important that you stop and visualize, in vivid detail, a big retirement goal. Are you visualizing being able to enjoy the finer things in life or are you just hoping to maintain the lifestyle that you are living today? What details do you see when you make this visualization?

Consider these important factors while you are visualizing:

If I continue at today’s rate-of-saving, what will my savings be at retirement?

Do I have children? Do I plan to have more children?

Do I plan to send my children to college?/Can I afford college tuition?

Do I own a home? Do I have a mortgage?

Have I planned for rising health concerns as I get older?

If something should happen to me, will my family be taken care of?/What kind of debt will they incur?

2.) I worry so much about my future financial position, that I sacrifice my daily happiness

Studies have shown that intense worrying about money or financial situations can affect many aspects of your life from mental health, to relationships, to career. When consumed with worry over your finances, it can inflict on your ability to focus thus creating a distraction and inability to enjoy the present.

While it is important to plan for the future, it should not be so overwhelming that it interferes with one’s day-to-day abilities. Ask yourself:

What am I really worried about?

Is it something in my control? If so, am I taking the necessary steps?

If it is not in my control, what steps can I take to ease my anxiety?

Do I have a financial advisor that can help to address financial concerns and alleviate unnecessary worry?

Whether you identify more with the first or second way of approaching your finances, or possibly somewhere in the middle, it is important to address your financial concerns with a trusted financial advisor. Unnecessary worry can cause you to feel paralyzed, out of control, and unable to make the right financial decisions concerning your retirement. However, failing to address future financial responsibilities, and avoidance altogether, can prove to be counterintuitive, creating anxiety and worry at a later date. Suddenly financial responsibilities show up at your door and you no longer have the option to ignore or put off. In taking small steps along the way, you can gain control of both your finances and your worry.

Call Brad Sherman at Sherman Wealth Management today and set up a no-cost financial consultation.

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Millennials: The Fiscally Conservative Generation

Millennials Investors-Fiscally Conservative

As the Millennial Generation continues to get more work experience under their belt, statistics from a UBS Wealth Management survey show that this generation is the most fiscally conservative generation since the Great Depression. With most recent generations, the advice that has served them best is to invest their money. With this generation, more and more people are listening to the advice that tells them to save their money in CDs or bank accounts.

Because interest rates are at nearly rock-bottom, investors who play it too safe will very likely lose money due to the effects of inflation. According to Judy Martel in her recent blog “Cash is King for Millennials”, Millennials allocate an average of 52 percent of their portfolio to cash, compared with 23 percent for investors of other generations.
Many companies are promoting the merits of starting a 401(k) program and giving their clients tips on 401(k).

Tips for the fiscally conservative

• Don’t opt out, opt in

• Don’t reduce your company match, find out how to potentially maximize it

• Adjust your investment allocations as you age• Do not borrow or withdraw money from your 401(k) until you are retired

and, most importantly…

• Start saving and investing now

Informative data at your fingertips.
Sherman Wealth Management

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401k plan Millennials retirement Wealth Management

Financial Strategies for Individuals with Brain Injury

By Brad Sherman, President of Sherman Wealth Management.

Individuals who have sustained a traumatic brain injury (TBI) often have difficulties that can affect all aspects of their lives and, more specifically, can impair their ability to manage financial affairs. Navigating your finances after a TBI can be overwhelming and intimidating when there are different directions to take and so much information to digest.

Finding the right financial professional to assist you and guide you on a path unique to your specific needs is important. The right partner will help individuals with TBI create a strategy to cope with the anxiety that often comes with managing one’s finances. With access to the right assistance, information, and tools, one can address financial concerns and develop a path to achieving financial stability. The assistance that is required depends on the distinct needs of the individual and can range from providing management of day-today financial affairs to creating and addressing goals to obtain present and future financial security and well-being.

When looking for a money management professional, it is important to seek a collaborative partnership with someone who specializes in a fully customizable, personalized approach to managing finances, not a one-size-fits-all approach. Together, you can establish a tailored plan that is right for your financial situation.

A money manager can provide you with the most relevant resources and tools to fit your unique goals, whether you need guidance to make your own financial decisions or a trusted partner to do so on your behalf. In doing so, a money manager can help you understand the information given to you so you can make the most informed decisions regarding your personal finances.

The right money management professional can provide assistance with the following:

What to expect when awarded a financial settlement:
How to manage a lump sum of money while protecting and maintaining your lifestyle;
How to communicate with family and friends after you’ve received a settlement while keeping the monetary value confidential.

The options available to support yourself if you are unable to work due to TBI:
Budget planning
Income-producing security investments

Day-to-day assistance:
Opening and closing accounts
Making large or small purchases and transactions including household needs, property, and automotive

Financial planning including:
Low-fee and tax-efficient investments
Life insurance
Retirement planning

A network of trusted professionals:
Legal professionals who specialize in estate and trust planning, guardianship, power of attorney, and beneficiary rights
Accounting professionals

An inviting, objective, and trusted environment where you can express your financial concerns:
If you are living with TBI, it is important to have an advocate you trust to help you avoid being exploited

Availability:
Face-to-face, personalized attention, unique to your specific needs
A collaborative partnership

There are enough difficulties and roadblocks if you or a family member are living with TBI. Managing your finances does not have to be one of them. A money manager can help address the concerns you feel surrounding your finances. With the right professional assistance, your goals and wishes will be the top priority. You will have access to expertise and experience as well as a network of financial professionals and resources to assist you in managing your finances efficiently. With a collaborative partnership, you can create a present and future that you are comfortable with and can enjoy.

Transparency on Both Sides

According to a recent survey, only 40 percent of investors indicated that their financial advisor(s) clearly explained how they are compensated. In this same survey – the Envestnet Fiduciary Standards Study – 52 percent of investors did not believe that all financial advisors were bound to a standard requiring them to act in the client’s best interest. In the post-Great Recession era, these findings are exceedingly troublesome.

Brad Sherman, president of Sherman Wealth Management, serving clients in the greater Washington, D.C. metro area, has built his practice around improving those statistics.

Sherman is a big believer in full disclosure and complete transparency for his clients regarding his fees and how he works with their accounts. He’s also a big believer in total transparency from the client. “For the relationship to fully benefit the client, there has to be transparency on both sides of it,” Sherman said. “I have to provide a completely transparent structure so everyone knows what they are paying for what they are receiving – so that there are not any surprises to the client. On the other hand, the client has to fully disclose to me what their financial situation and goals are so I can make appropriate recommendations for them.”

He doesn’t have a firm minimum for his clients and in reality, most of his clients wouldn’t fit into the advisor marketplace niche requiring a quarter of a million to start. The bulk of his clients are his peers – people ranging in age from 25 to 40ish – who are starting careers, marriages and families. They are at the beginning of the accumulation phase of savings plans and many are buying their first homes.

“They are comfortable with me and with taking my advice, because I either have been just recently in the same situation or am still doing the same things they are,” Sherman said.

He started Sherman Wealth Management in January 2013 after spending 12 years working in financial services for other firms. He also had just completed his master’s degree in quantitative finance from American University, and it seemed like the appropriate time to hang out his own shingle. Since then, Sherman has taken on 50 clients and and wishes to develop relationships with additional clients seeking affordable, tax-efficient and customized advice.

Sherman said that his decision to become a registered representative with Lincoln Financial Securities Corporation Member SIPC gives him the flexibility to craft portfolios specifically matching the individual needs and goals of each client.

“Not all clients are the same,” he said. “That is why we customize every solution. Some of the bigger companies get into trouble by putting people into cookie cutter molds that may not be right for them. By representing Lincoln Financial in a fee-based model, there is no pressure on me to sell something that is not suitable for any of my clients.”

Learn more about our Financial Advisor services.

What’s your credit score?

Ok, while it may not be the most romantic pick-up line, there is something to be said for wanting to know a potential partner’s credit score. It’s the number that seems to follow you wherever you go and rears itself way more often than your SAT scores or your IQ score. While it’s something you may not think about often, it is always there. So you should be always be thinking about how to maximize your credit score. Your credit is a doorway to many aspects of your life. And if its not where it should be, those doors may remain locked.

Why Your Credit Score is important

With a higher credit score, you will be able to take advantage of lower interest on loans, pay less for credit, better deals on services and insurance and the opportunity to obtain better jobs and living spaces. Essentially, the higher your credit score, the less obstacles you will face in your day-to-day life.
Renting or buying a home First things first, you need a place to live, right? Well, before you rent, a landlord will often pull your credit report before allowing you to sign a lease. If you are looking to buy and need a bank loan, mortgage lenders will not only run your credit report, but will put a great emphasis on it in order to protect themselves from possible default. You will also need insurance on your home. Insurance companies are likely to check your credit score to predict the likelihood of you filing insurance claims. Your credit score can affect your eligibility and your rates.
Setting up utility accounts Once you have moved, now what? You need a phone, right? And cable? Well, what about electricity, garbage collection, and water? Yes, these are all accounts you will need to establish. If your credit score comes back too low, the utility companies may require a deposit in advance, or even a co-signer.
Finding a job In some states, employers are allowed to pull credit reports. Although they need your consent, wouldn’t it take some of the pressure off of the interview process and finding employment if you knew your credit score was at a decent level?
Financing a car Leasing a car is similar to leasing an apartment. Lenders want to be sure you will be able to pay your monthly bill. Not only will your credit report be checked for the lease, but also, again, for the auto insurance.
Opening credit cards You are planning an upcoming vacation and want to open a credit card that allows you to earn miles. If your credit score is not up-to-par, most likely you will not be offered credit cards with these types of perks.

I’ll tell you mine if you tell me yours

There are different ranges of credit scores based on a mathematical equation that analyzes your credit reports which include factors like payment history, debt levels, age of accounts, income etc.

Typical Credit Score rankings: Excellent: 750 plus Good: 700-749 Fair: 650-699 Poor: 600-649 Bad: 599 and below

Here’s how to maximize your Credit Score

Pay bills on time This is important. If you are late on your payments, not only will your credit score go down, but you will also most likely pay an unnecessary late fee which just adds to your debt balance
Pay more than just the minimum When you pay only the minimum, you are only paying the interest instead of paying down the debt balance. Creditors notice this. If you are unable to make payments that are larger than the interest, look for balance transfer offers from other creditors that may allow you to roll your balance over (for a minimal fee-usually 3%) in order to receive a zero percent APR for a set period of time (usually 6 months to a year). That will hopefully give you the opportunity to pay down the balance. (the pros and cons of balance transfers will be another blog post at a later date)
Apply for credit cards in moderation Although balance transfers are a possible option, make sure you don’t open too many credit cards at once. If you have balances on too many and continue to look for more, lenders will think you are credit-hungry and are a candidate for possible default.
Keep your credit card balance at 20% of the available credit or lower The lower the better.
Don’t close credit cards If you have paid off a credit card balance, do not close the account. A zero balance on the card will help boost your credit score. It shows good payment history and can help your debt ratio. And never close a card with an existing balance, as it will just drive your current score down.

Learn more about our Budgeting and Savings planning.

Rebalance Your Portfolio To Stay On Track With Investments

A drift portfolio 60% invested in stocks delivers risk comparable to a portfolio with greater market exposure, 80% invested in the stock market in the example of Figure III-2. This added risk from an unbalanced portfolio is not rewarded by a significantly greater return on your investment. Thus, a professionally balanced portfolio may help reduce risk that isn’t delivering a significant increase in return. Sherman Wealth Management understands that increasing potential risk without increasing the potential returns is unnecessary. It’s time to rebalance your portfolio to stay on track to help mitigate unnecessary risks.

“The S&P 500 Index is representative of domestic markets and includes the average performance of 500 widely held common stocks. This is a hypothetical example. Individuals cannot invest directly in any index and unlike investments, indices do not incur management fees, charges or expenses. Past performance is no guarantee of future results. The performance of indices would be lower if fees and charges were incurred.”

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Your 401K Program: A Little Savings Now Goes a Long Way

Though it may seem daunting, investing in your future is a positive choice. Your experience doesn’t have to be intimidating; I will be happy to serve as your financial planner to help guide you through the process. There is no better time to begin than now. The earlier you can begin to save, the greater earning potential you have at retirement.

Why a 401k program is essential

Assuming an average annual return of 8 percent, setting aside only $4,000 per year starting in your 20s could make you a millionaire by age 62, according to an article by Hitha Prabhakar in U.S. News and World Report. The article further explains that the Employee Benefit Research Institute reported in January 2014, that 30 years of 401(k) savings, combined with Social Security benefits, should generate an income that replaces at least 60 percent of per-retirement salaries.

In addition to putting away money on your own, many companies offer a “matching” program for retirement savings. Some companies may have avesting schedule, which means that the match is earned over time. However, if you don’t take advantage of a 401k program, you are passing up the opportunity for “free money” contributed to your retirement account by your employer.

We started this company with a goal to help educate investors, and guide them through an otherwise daunting experience. Sherman Wealth is happy to look at your 401(k) plan and give you ideas on how to best manage your money. Give us a call at (240) 462-5273 if you would like more information in creating a retirement savings fund. Your retirement may seem far away, but developing a savings plan early you can help ensure confidence in your financial future.

Find an accessible path to your financial future at Sherman Wealth Management.

Learn more about our Retirement Planning services.

5 Big Picture Things Many Investors Don’t Do

These simple strategies can make a big impact on your long term portfolio.

Here are 5 Strategies most average investors don’t focus on, but should.

Related Reading:

Mitigating Your Investment Volatility

Investing With Your Risk Tolerance in Mind

Asset Allocation for Mitigating Volatility

Related Reading:

Behavioral Investing: Men are from Mars and Women are from Venus!

Related Reading:

YOLO (You Only Live Once) So You Need A Retirement Goal

Related Reading:

Millennials: The Fiscally Conservative Generation

Tips for the fiscally conservative

Financial Strategies for Individuals with Brain Injury

Transparency on Both Sides

Related Reading:

What’s your credit score?

Here’s how to maximize your Credit Score

Related Reading:

Rebalance Your Portfolio To Stay On Track With Investments

Related Reading:

Your 401K Program: A Little Savings Now Goes a Long Way

Why a 401k program is essential

Related Reading:

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