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Do You Share These 4 Habits of the Wealthy?

In his book “Rich Habits: The Daily Success Habits Of Wealthy Individuals,” author Thomas Corley outlines what he learned when he surveyed both wealthy and struggling Americans about their habits and attitudes.

Here are a few “rich habits” he identified that are worth integrating into your professional, financial, and even personal life, to help you on the road to achieving your own goals.

The Wealthy are Goal-Oriented

Corley found that 67% of the wealthy people he surveyed put their goals in writing, 62% of them focus on their goals every day, and a whopping 81% keep a to-do list.

It’s hard to reach your goals if you’re not focused on them and they’re not your top priority, and it can be daunting to have too many goals (one reason so few people are able to keep their New Year’s Resolutions.)

A more productive approach is to prioritize one important goal, create a plan of actionable steps that help you accomplish that goal, then add those steps, tasks and habits to your daily to-do list. These three simple steps will give your increased focus and will help you move closer to that goal.

Once you’ve incorporated them in your daily routine, identify a second goal and follow the same plan. The key to success is taking it one step at a time!

The Wealthy Use Downtime Wisely

At the end of your workday, do you like to relax with Netflix, video games, or YouTube? According to Corley’s data, 66% of the wealthy said that they watch less than an hour of television a day, 63% spend less than an hour a day on the Internet unless it is job-related, an impressive 79% say they read career and educational material each day, and an equally impressive 63% said “I listen to audio books during the commute to work.”

While we all like to relax and recharge with entertaining media, that time can never be recovered for things that help you become a stronger, more successful individual like reading, networking, exercising, or volunteering for a cause you believe in.

Time is the great equalizer: we all have 24 hours a day. What you choose to do with that time can either help you to reach your financial and life goals, or distract you from it, so choose wisely!

The Wealthy Invest in Their Future

Corley’s research also showed that the wealthy live within their means, pay themselves first, and don’t overspend.

Building wealth is not accomplished by upgrading to each new electronic gadget, leasing the newest model car, and living in an extravagant home. The wealthy, according to Corley, spend less than they earn, own and maintain their cars for many years, and save a significant portion of their income. While saving money and living modestly is not as sexy as a flashy smartphone, it will go a lot further toward providing a comfortable future.

Living within your means also includes not carrying credit card balances or heavy debt. When you are carrying debt, what you earn today is paying for yesterday’s expenses. Living within your means while saving and investing a portion of your income lets you invest in tomorrow, rather than yesterday, while learning to be satisfied with what you have today.

The Wealthy are Willing to Take Risks

Another fascinating finding of Corley’s research is that 63% of the wealthy people he interviewed said they that they had taken risks in search of wealth, while only 6% of the struggling Americans he interviewed said that they had taken risks.

For many, fear of failure is a great de-motivator and can be paralyzing. When you do not fully understand something, whether it’s a challenge, a potential project, an investment, or even a social problem, it can be easier to do nothing than to act. But without risk, there is often no reward.

What Corley discovered is that, instead, rather than fearing failure, the wealthy consider failure to be part of the process and – most importantly – an opportunity to learn.

How can you face risk without fear so that you can seize potential opportunities? Educating yourself is the key step. Researching the investment, the project, or the choice, and learning about the options and risks, help keep fear and anxiety about the unknown from clouding your decision-making process.

Even with the best preparation though, choices don’t turn out as envisioned. When that happens, take a page from the wealthy: learning from those failures and experiences will lead to more opportunities and better choices down the road!

Are Your Own Habits Setting You Up for Success?

While following each of these habits may not make you rich, they will certainly help you get into a success mind-set. 68% of the Americans on Forbes billionaire list consider themselves to be “self-made billionaires,” which means that they worked hard to reach their own professional and financial goals. The true route to financial success is through discipline and steady habits that grow your net worth over time.

Do you already share these four habits of the wealthy? If so, congratulations on your focus and your commitment to success. If not, try adopting one – or all four – of these important habits and see if it doesn’t get you closer to achieving your own goals!

With over a decade’s worth of experience in financial services, Brad Sherman is committed to helping his clients pursue their financial goals. Contact Brad today to learn more about how you can better pursue yours.

Learn more about our Financial Advisor services.

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Not Investing Yet? Here Are 4 Simple Steps To Get You Started

Close your eyes for a moment and envision where you’d like to be in 30 or 40 years… Are you sailing to Tahiti? Writing that book? Running your vineyard? Building a new company?

If you had trouble envisioning where you’d like to be, you’re not alone. But unless you can visualize it, unless you’ve got your destination planned, it can be hard to get there. That’s why it’s so important to start thinking about what your goals currently are – whether it’s for yourself, your career, your startup, your art, and/or your family – and take the first – or the next – steps to invest in your future.

What does investing mean? Very simply, it means putting your money somewhere you expect it to grow. It can be traditional stocks, bonds and mutual funds, or real estate, collectibles, annuities, and other things that are expected to gain value over time.

When you’re just starting out, thinking about – and setting aside money for – your future can feel like a challenge; when you’ve just set up your first lemonade stand and barely breaking even, it’s hard to think about re-investing part of your profits in lemon groves that will someday produce income for you.

The trick is to overcome inertia, get started, and make a commitment, even if it’s just a tiny first step.

Inertia is not your friend

Inertia is one of the biggest reasons people waste opportunities to started investing when they’re young.

Objects at rest tend to stay at rest:

If you’re not investing yet, or if your money is sitting in a non-income producing bank account it can be hard to get started or get moving.

Objects in motion tend to stay in motion:

If your money is constantly in motion, if you’re spending everything you make, or if your money is following the crowd to the next big glamour stock, it can be hard to slow down and take stock with a Financial Planner to build a solid foundation.

A study by Hewitt Associates found, for instance, that only 31% of employees in their 20s invest in their company’s 401K plan¹. That means almost 70% of young employees who could be investing in a matching 401k plan haven’t started taking advantage of what is essentially free money. Whether inertia is keeping them from getting started, or inertia is keeping their money in motion so that there’s none left over to invest, they are not only leaving free money on the table, they’re not letting that money grow through compounding.

According to an article in US News and World Report, if you start investing just $100 a month in your 20s, increase contributions as your income increases, and make good financial decisions along the way, you are on your way to potentially retiring with over 1 million dollars.²

How Do You Get Started?

Here are four simple steps to get you past inertia and get you started.

Find your motivation

We are all passionate about certain things. The more you care, the more focused you are about achieving your goals. Make a list of the things that are important to you and the things you want to achieve.

Find extra money

There are only two ways to “find” money – spending less or making more. While it may seem daunting – inertia again! – you’d be surprised by how easy it is to discover places you can cut back a little or spend a little less. And, while you have a lot more control over your spending than your earnings, you can also look for ways to find extra sources of income, work more hours, or even get a better paying job.

Move financial goals up

If you plan to save “whatever you have left” or “whatever you’ve saved” at the end of each month, don’t be surprised by how little that actually is. We all have a tendency to spend what we have, and spend more as our income goes up. You can avoid that pitfall by paying yourself first. When you prioritize saving in your budget and take that money “out of circulation,” your spending will fall in line.

Get advice from an adviser you trust

The world of finance and investing can be complicated and confusing. Don’t let fear of the unknown keep you from getting started. You don’t need a large amount of savings to meet with an adviser who can answer a lot of your questions. Getting a roadmap from someone who knows the territory will help you get started and may allow for a smoother journey.

Investing in your future is an investment in yourself. If you take these four simple steps, even with limited assets, you’ll be laying the foundation for a lifetime of investing in your own plans and goals, and your own vision of financial freedom.

All investing involves risk, including the possible loss of principal. There can be no assurance that any investing strategy will be successful. Investments offering higher potential rates of return also involve a higher level of risk.

Learn more about our Investment Management services.

Related Reading:

What is Dollar Cost Averaging?

5 Things Investors Get Wrong

5 Big Picture Things Many Investors Don’t Do

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

¹http://www.bankrate.com/finance/financial-literacy/retirement-planning-for-20-somethings-1.aspx#ixzz3JfVGNIYk
²http://money.usnews.com/money/retirement/articles/2012/07/30/7-ways-to-retire-with-1-million

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Are You Making These Two Critical Investment Mistakes?

It’s no secret: getting an early start on saving and investing is one of the most important things you can do for your future! Putting money into the market when you’re young – even small amounts – gives your investments time to grow and compound over time.

Unfortunately, too many millennials haven’t gotten started yet. A recent survey by Bankrate found that only 26% of Americans under 30 were invested in the stock market, compared to 58% between the ages of 58 and 64. (1)

While the stock market has historically seen positive returns over the long run, it’s not hard to understand why many millennials are wary of it. Millennials under 30 have seen two major market crashes: the tech bubble of the late 1990’s as well as the 2008 economic crisis. Many saw how family members and friends lost years worth of savings and were often financially devastated by what happened.

The result: a deep distrust of Wall Street and a desire to avoid the market altogether.

While it is understandable that millennials are wary about putting their earnings into the market, it’s also unfortunate.

In spite of the two crises of 1990 and 2008, if you had invested in the S&P 500 at the beginning of 1985, and kept that money in until the end of 2014, you would have earned over 25 times what you had initially invested. (2) (3)

Even saving just a small amount each week or month would have made a tremendous difference in your retirement savings.

The Second Mistake

While many millennials make the mistake of investing too little in the market, others make another critical mistake. While they may be making regular contributions, they may not be invested in a wide enough variety of securities.

The youngest generations have grown up with access to the internet, social media, online financial media, and the tools to invest in any publicly traded security that they choose and they feel empowered to make investment decisions on their own, without consulting a professional. They’re also able to trade information with friends and make changes to their portfolio in a matter of seconds using their smartphone or computer.

Because of this, millennials are often invested in individual hot stocks, companies they believe in, or companies that sell products they use and like. This can (and will) work for some investors sometimes as a result of sheer luck and the law of large numbers, but it is not a consistent – or wise – strategy to rely on.

Buying What’s in the News

In 2007 researchers at UC Berkeley and UC Davis published a paper where they showed that individual investors have a tendency to buy stocks that had recently been in the news, or that had share prices that had recently gone up (4). By buying these “hot” stocks, new investors were forced to bid up the price to a higher level than they were before the news story came out. The study showed that, because these investors were buying at an artificially higher price, their portfolios ended up performing poorly as a result of having bought these ‘hot stocks’.

Additionally many millennials choose to engage in “socially responsible” investing, avoiding stocks in companies that sell products they don’t believe in, or that engage in business practices they feel are undesirable, and putting their money in companies that they believe in and feel good about.

Unfortunately, this too can have a negative impact on their returns over the long run. By focusing so narrowly, their portfolios are missing a major piece of the market, which limits their diversification. Additionally social responsible investments can have higher fees than their non-SRI counterparts, because they have the added cost of screening out stocks based on certain criteria.

Along with the added costs, and the decrease in diversification that result in focusing only on SRIs, researchers from Princeton and New York University published a paper in 2009 that showed that ‘sin stocks’ have historically outperformed their non-sin counterparts. (5)

Whether you are choosing to invest your money in a single stock, or several stocks, or you choose to invest in a SRI investment, you are limiting your investment choices, which in turn limits your level of diversification and possibly your returns over the long run.

Bottom line: if you avoid these two critical mistakes by starting to save – and invest – early, and by making sure your portfolio is diversified, you’ll be setting yourself up to watch your money grow over time.

Broad-based investment vehicles with low fees and high levels of diversification, if appropriate to their specific circumstances, is one strategy to help clients toward their goals.

http://www.cnbc.com/id/102602094
http://www.moneychimp.com/features/market_cagr.htm
The S&P 500 index is representative of domestic markets and includes the average performance of 500 widely held common stocks. Individuals cannot invest directly into an index.
http://faculty.haas.berkeley.edu/odean/Papers%20current%20versions/AllThatGlitters_RFS_2008.pdf
http://pages.stern.nyu.edu/~sternfin/mkacperc/public_html/sin.pdf

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5 Important Planning Tips for New Parents

Expecting a visit from the stork soon or has it already dropped off a new bundle of joy? If so, you know the full range of emotions that come with a growing family. Along with the love and excitement you feel with a new baby boy or girl, comes the pressure of new responsibilities and additional financial obligations.

Babies change your life in many ways, including requiring large amounts of time and money. While you may already be thinking about childcare costs and options, or about paying the medical bills that accompanied your new child, there are several other – important – financial considerations you should be thinking about even before the new baby arrives.

Evaluate Financial Priorities. It’s important to consider both short-term and long-term expenses that come with the addition of a new family member. It is a natural impulse, for instance, to want to put your child first and redirect retirement savings into college savings. But remember, you can borrow for college but you cannot borrow your way through retirement. It’s also important to balance long-term goals, like retirement and college expenses, with current financial needs, to help you allocate resources in an appropriate way.

Update Insurance Needs and Your Will. With the expansion of your family, insurance needs can change significantly. Having enough insurance is important in feeling confident about your family’s financial future. Adding your child to your health insurance policy can usually be done with a phone call. Making sure you have enough life insurance for both parents can help ensure you have the funds to raise your child if the unthinkable happens. Short-term disability insurance provides benefits if you have an accident that takes you out of work temporarily. Long-term disability insurance is critical in case a major accident has a permanent impact on your ability to work and earn. While some companies offer disability insurance, it can also be purchased independently.

Updating your will or creating a trust can provide care instructions for your child and allocate resources for their upbringing. Without a will or trust, if you and your spouse die, the state will decide who will raise your children. A will establishes your wishes for who will care for your child. A trust can direct funds specifically earmarked for raising your children and can be an effective way to cover financial expenses and provide for college expenses.

Start Planning For College Early. The sooner you start the better. While it is impossible to know exactly how much you’ll need to save – given that you don’t know what kind of college your child will choose – consider that in 2013-2014 the cost of a moderate in-state public university was $22,826 per academic year and the cost of a “moderate” private university averaged $44,750, according to a College Board survey. ¹

For new parents this means that college could cost over $100,000 for a public college and more than double that number for private school. Instead of trying to fund the entire cost of their education, determine how much you want to contribute. Having children be responsible for a part of their education is often a good lesson in work ethic, even if you can afford to pay for everything, and a critical life lesson if you can’t.

Keep Spending and Debt under Control. When you have an adorable child it’s very easy to overspend. You want them to have the best of everything. Setting a budget and sticking with that can help you keep your spending in line with your established budget. This can also help you maintain the discipline needed to continue contributions to long-term financial goals like retirement and their college education. And remember, the best gift you can give your children – your time and attention – is free.

Another important consideration is debt. When you carry debt, you are paying today for yesterday’s bills. Investing potentially allows you to pay today for tomorrow’s bills. By keeping yesterday’s bills settled and debt to a minimum, you lay the foundations for having enough to enjoy today with your children and plan for tomorrow.

Teach Children About Finances At An Early Age. Finances are a part of our daily lives. When you involve children early on they gain an appreciation for what things cost and how to choose what we want and what we can live without. As soon as your child old enough, start helping save their pennies for something they really want, and teach them that work is part of the process of earning money. These skills, if taught early, can lead to a lifetime of responsible money management.

Parenting is an amazing adventure that changes the way you see yourself and the world. Keeping an eye on finances can provide you with the confidence you need to not only enjoy your growing family but help lay the foundations for a stronger future.

¹ http://www.collegedata.com/cs/content/content_payarticle_tmpl.jhtml?articleId=10064

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Four Things Entrepreneurs Can do Now to Save for Retirement

While retirement may seem a long way off when you’re young and just starting to build a business – or older and rebooting – it’s important to have a retirement savings plan and stick to it to create the future you want.

Retirement planning can be difficult for anyone, but entrepreneurs and small business owners can face unique challenges. According to a 2013 American Express survey, 60 percent of small business owners said they weren’t saving enough for retirement, and over 73 percent said they were worried about not being able to afford the lifestyle they want in retirement.

While many employees can choose to make automatic deductions from their paycheck towards a 401k, for instance, entrepreneurs have to make a conscious decision to sock away money for retirement, as well as find plans that work for them.

Fortunately there are several things that you can begin doing now to contributing to your long-term financial future. As always, please review these and other options with your financial planner to see what strategy may be most suitable for your individual situation.

1) Open an IRA

If you haven’t already, now may be as good a time as any to open an Individual Retirement Account (IRA). IRAs are long term investments that allow you to save money for the future in a tax efficient way. They also offer catch up contributions if you’re over 50.

Traditional vs. Roth

Traditional IRAs allow you to deduct contributions the year in which they are made, then pay taxes when you withdraw the money. A Roth IRA allows you to pay taxes on your contributions now, rather than upon withdrawal and earnings and distributions may not be taxable if held in the Roth IRA for up to 5 years.

For older investors who are approaching retirement, traditional IRAs probably make more sense, as their tax rate may likely be lower in retirement than it is currently. Younger investors, however, may want to consider a Roth IRA if they believe their tax rate could be higher in the future than when they make their contributions.

Contribution Limitations

Regardless of whether you elect to contribute to a Roth or Traditional IRA the IRS sets annual limits each year stating the maximum individuals can contribute to their IRA based on their annual earnings. For instance, in 2015 you are limited to a maximum of $5,500 annually (or $6,500 if you are 50 or over).

Finally, with either type of IRA, there are penalties and taxes for early withdrawals prior to 59 ½ years old!

Please consult your tax professional regarding your specific situation and the specific rules that apply to you.

2) Consider alternative forms of IRAs to increase your contribution limits

If you are your company’s only employee, or you only have a couple of other employees, you may want to look into setting up either an SEP-IRA or a SIMPLE-IRA.

SEP-IRA

SEP-IRAs allow you to contribute up to 25% of your salary, or $53,000 (as of 2015) whichever is smaller. This is significantly more than what non-SEP-IRAs allow for.

Setting up a SEP-IRA may be an easy choice if you and your spouse are your only employees, but there can be other costs associated if you have other people working for you.

SIMPLE-IRAs

SIMPLE-IRAs provide an alternative that is cheaper for companies with several employees.

With the SIMPLE-IRA, the employer creates an IRA for each employee. Employees have the option to contribute a certain percentage of their income to their IRA. Employers are then required to match that percentage up to a maximum of three percent of the person’s salary, or contribute two percent of each person’s salary into the IRA.

By creating a SIMPLE-IRA the owner is then able to contribute an additional $12,500 ($15,500 for those 50 and over) to his or her own IRA.

If you have only a few employees working for you and you expect to contribute either the full $12,500 or a large portion of it, there is a good chance that your tax savings may more than pay for the cost of contributing to your employee’s IRAs. Please consult your tax professional for more specific information about how this could affect you and your employees.

3) Setup Automatic Deductions

Unfortunately, we all have a tendency to procrastinate, and thinking about retirement is often not at the top of our priorities! It’s easy for entrepreneurs and small business owners in particular to become distracted and forget to contribute to your retirement account(s). Automatic deductions solve this problem.

By setting up your IRA and other retirement accounts to take money directly out of your bank account or paycheck each week (or month,) you can ensure that you contribute as much money as you feel you can, up to the full tax deductible amount, each year. You no longer have to worry about forgetting to, or putting off, contributing.

With any IRA, think carefully about how much you can realistically contribute. They are considered long term investments and you cannot access the money prior to a specific age without incurring taxes and significant penalties for making early withdrawals. Please make sure you are carefully considering your short and medium term goals. And remember: starting to save early is a good way to get on the road to achieving your goals.

4) Speak with as Experienced Financial Planner to Help You Create a Plan

Taking care of long-term financial goals can be a challenge but fortunately you don’t have to go it alone. Financial planning professionals can help you create an individualized plan focused on your specific goals. Whether they are:

Saving for retirement
Saving for your children’s education
Buying a home
Having a baby

Financial planners are here to help you plan for the future you envision for yourself and your family.

Learn more about our Retirement Planning services.

It’s National 529 Day!

Friday, May 29 is “National 529 College Savings Plan Day,” to raise awareness about the benefits of college savings plans.

Surprisingly, nearly 70% of Americans are unsure of exactly what types of college savings plans are available. Are you one of them?

If you have children, a college savings plan should be considered as an important part of a diversified long-term savings plan!

With all 50 states and the District of Columbia offering at least one type of college savings plan, many states also offer state tax favored treatment of contributions to those who use their state’s plan. And, in honor of National 529 Day, many states are having promotional offers.

Don’t procrastinate when it comes to your child’s future. Sherman Wealth Management can offer further information and detailed explanations with regards to opening and contributing to a diversified college savings plan. With Sherman Wealth Management’s experience, you can start saving for your child’s future today.

Withdrawals from a 529 Plan used for qualified higher education expenses are free from federal income tax. State taxes may apply. Withdrawals of earnings not used to pay for qualified higher education expenses are subject to tax and a 10% penalty. Participation in these plans does not guarantee that contributions and the investment return on contributions, if any, will be adequate to cover future tuition and other higher education expenses or that a beneficiary will be admitted to or permitted to continue to attend an institution of higher education. The plan is not a mutual fund, although it invests in mutual funds. In addition to sales charges, the plan has other fees and expenses, including fees and expenses of the underlying mutual funds. The plan involves investment risk, including the loss of principal.

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Discussing Personal Finance is Difficult for Many – but Critical

Money can be a difficult subject for any of us to talk about, although it seems to be particularly challenging, statistically, for women.

According to a recent study released by Fidelity, 80% of women surveyed said that they had refrained from discussing financial issues with friends or family, despite the fact that over 92% of those surveyed expressed an interest in learning more about financial planning. Among those surveyed, some of the most common reasons given were that money was too personal a topic, it felt uncomfortable to talk about, or it was considered “taboo.” Additionally, women are also more likely to feel that they don’t know enough about the subject to speak about it intelligently. This is despite the fact that studies have shown that women tend to be better investors than men.

Money is, however, a critical subject that we all need to discuss – and discuss often – in relationships. A little while ago I wrote about the 7 Things Married Couples Should Discuss Today, where I talked about why it is critical that married couples go over their finances together. Marriage is not, however, the only relationship that requires having difficult conversations about money.

We need to communicate with our parents and children about money, and even friends, coworkers and extended family members in some cases.

With money playing such an important role in our daily lives, it’s critical that we learn to overcome our desire to avoid the topic and learn how to effectively and confidently communicate about financial matters.

Fortunately there are a few things you can do to make the topic of money easier to discuss:

1. Realize that difficult conversations are sometimes necessary

Whether you need to confront your parents about their retirement plans, your spouse about where to allocate investments, or your children about their spending habits money can be a difficult topic to talk about. By reminding yourself that these are conversations that you will ultimately need to have however you are setting yourself up for success.

2. Find someone knowledgeable about finances who you can trust

No one has all the answers when it comes to money, which is why it is often helpful to turn to others for ideas and suggestions. You should find someone – whether it’s a friend, family member or a financial advisor – who is knowledgeable, who you know has your best interests at heart, and with whom you feel comfortable speaking.

This will give you the opportunity to ask questions, bounce around ideas, and learn and grow. It will also give you the confidence to discuss finances with others.

3. Get educated

One of the best ways to feel comfortable discussing money with others is by learning as much about the subject as you can. Read books, ask questions, and get help when needed. By learning as much as you can, you feel more comfortable giving advice, making financial decisions and having what would otherwise be difficult conversations.

4. Don’t procrastinate when discussing finances

If there is a money-related conversation that you have been putting off, bring it up now or at the next time possible. Don’t wait!

Here are a few more suggestions for important conversation starters:

With your spouse:

Family’s budget
Retirement savings
Saving for children’s college fund
Where to invest money

With your children:

Allowance
Spending
Basic financial principles

With your parents:

Their retirement plans
Location of legal documents including wills, trusts and insurance paperwork

If you’re like most people, chances are there are many other subjects that you need to discuss with those you’re close to. It may be a good idea to contact a financial advisor to help you with these as well as other issues revolving around money.

Brad Sherman is a financial planner in Gaithersburg, Maryland who is committed to helping individuals and families achieve financial independence and gain confidence with regard to financial issues.

Call him today to see if his services are a good fit for your needs.

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Having the Money Conversation

Millennials have a tremendous advantage over their Baby Boomer parents because they are comfortable talking about money. Having grown up with social media and the internet, this generation is not as private as their parents and grandparents are, especially about subjects like money and finance. The advantage is that open conversations can reduce fears and increase understanding, which can result in better decision making.

Yet, with all this comfort in discussing financial matters, many Millennials are hesitant to meet with a financial advisor. It’s one thing to gather information from family and friends or read articles about investing, it’s another to discuss your personal information with a financial advisor. That’s when it moves from theoretical to personal and that can create a great deal of fear and discomfort.

Why Fear Gets the Best of Us

How Much Do You Really Know About Finances? As educated professionals, it’s common to feel like you should know everything. After all, if you don’t understand it, a few internet searches should provide the answers!

When it comes to money matters, though, many Millennials feel like a fish out of water. Internet searches can provide information that’s both confusing and conflicting, and that doesn’t answer individual questions about strategy and direction.

Then there is the question of what information can be trusted. Is the site legitimate and can the writer’s – and site’s – motivation be trusted? While financial information is plentiful, much of it’s either very general or coming from a sales site that promises a secret formula that will turn you into a millionaire.

Financial decisions by nature are very individual and personal. Because there’s no one-size-fits-all investing strategy, personal consultations are invaluable.

Advisor motivations. Can the advisor be trusted? A trusted advisor needs to understand your circumstances, goals, dreams, and aspirations. Once they do, they can help to create a long term strategy that will help to make those dreams a reality. But you must be able to trust that your advisor will make recommendations that are most beneficial to you, the client, not the best for them, the advisor.

Addressing these concerns in an open conversation will go a long way. No one wants to be sold a product. We all want to invest money in a sound strategy. Understanding the reasons for the recommendation will help you understand how it may benefit you and help you pursue your long term goals.

Fear of not being understood. As complicated individuals we want to appear like we have everything in order. In reality, sometimes we’re confident, other times not so much.

Financial advisors have seen nearly every level of financial preparedness. They have seen financial messes and worked with clients to get things corrected. They have seen strong portfolios, weak portfolios, no portfolio, and everything in between.

Even if you don’t feel you have all your ducks in a row, an advisor can help. If you’ve made bad decisions in the past, they can make recommendations for corrective action. If you’ve been unable to get things in order on your own, working with a professional can be the fastest way to get on track.

Markets not doing as expected. This can go two ways. If you invest conservatively and the market takes off you might end up kicking yourself for not being more aggressive. If the markets are slow and you invest aggressively you can end up wishing you’d been more conservative.

When you meet with an advisor, you’re meeting with a professional who understands the investment business and who can make recommendations that are consistent with your financial goals. An advisor does not have a crystal ball; remember that long term investing is not about beating the markets, it’s about making strong financial decisions that over time will lead to increased confidence in financial matters.

Pulling the Trigger

The first step is always the hardest. This is true whether you’re trying to establish a workout routine, learn a new language, start a new job, or change your investing strategy. Resisting change is natural and we are creatures of habit. However, there comes a point when, in order to grow and progress, we have to stop making excuses and get started by meeting with a financial advisor.

Make the appointment. Even if you don’t think you know enough, have enough money to invest, have a good enough paying job, or whatever the excuses for delays have been.

Before you meet with the advisor, write down questions you have. What things have you heard and what things do you want to understand. This can guide the conversation as you begin to develop a relationship with an advisor.

A financial advisor at Sherman Wealth is someone you’ll want to get to know! You’ll want them to know everything about you and your family’s needs. As your advisor learns more about you, they’ll be able to make the appropriate recommendations as opportunities arise.

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What is Dollar Cost Averaging?

The concept of dollar cost averaging is investing a set amount of money at regular intervals. This might mean a percentage of every paycheck that is used for investing or a specific dollar amount. You might start with as little as $50 a month or $50 a pay period and that will begin to create a portfolio that pays for future needs.

Advantages of Dollar Cost Averaging

1) Establishes a habit of investing. One of the largest benefits is you begin to pay yourself first and take care of future needs today. Establishing a habit of setting aside a little money for tomorrow will help you live within your means, have more thoughtful budgeting, and be better prepared.

2) The investment is built into your budget, and you learn to live on what remains. The interesting thing about money and finances is that you tend to spend what you have. If there is a little less in the account each month you will adjust spending to accommodate for what you have. Even if it does not appear that there is money for investing you might be surprised how easy it is to “find” a small amount that can be earmarked for investments. A simple thing like bringing lunch twice a week instead of eating out can result in saving over $50 a month to use for investing.

3) Dollar cost averaging purchases shares at a set time each month regardless of where the investment price is. This means if the price is lower you purchase more shares. If the market is higher less shares are bought. The result is a greater tolerance for market fluctuations because you gain a better understanding that the markets move every day.

4) No Large Sums Required to Begin. Dollar cost averaging can be started with small amounts of money. One possible strategy is to increase monthly contributions at least annually. The more you raise the contribution amount the larger and faster your investments may grow over time.

5) Flexibility. Monthly contribution amounts can be changed at any time. The amounts can be raised or lowered depending on life events that impact your budget. In a perfect world the contributions would always increase, but sometimes that does not match real life events. The ability to adjust contributions reduces risk and allows for greater flexibility to meet current demands.

6) Great long-term strategy. Building a portfolio from the ground up can be accomplished through dollar cost averaging and regular contributions. Your investment should grow over time through both additional contributions and portfolio growth. As you receive bonuses or other financial windfalls you can make additional one time contributions as your finances allow.

When it comes to investing there are no short cuts. Starting early and making regular investments will help to provide financial security and accounts that will build over time. When you start early you are less tempted to take on more portfolio risk and are better able to reach long term financial goals.

The future is uncertain and setting aside a little each month to pay for long term financial needs is one of the soundest ways to pursue financial security.

“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.”

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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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The Second Mistake

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Four Things Entrepreneurs Can do Now to Save for Retirement

1) Open an IRA

2) Consider alternative forms of IRAs to increase your contribution limits

3) Setup Automatic Deductions

4) Speak with as Experienced Financial Planner to Help You Create a Plan

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

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