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We won’t settle for average. We continually seek top managers or securities and meld them into superior custom portfolios. Each palette of investments is carefully tailored to personal or family goals. We enlist excellent managers, research, resources, and effort for our clients. Don’t settle for average. You deserve excellence.
Please search our blog posts for answers to common investment questions, and we look forward to sharing our knowledge and experience with you first-hand.
Dan Danford Shares How Financial Planning is Different for Each Employee
When the Harley Davidson plant in Kansas City closes its doors next year, approximately 800 workers will experience a life-changing event. Financial planning is important for everyone, but when losing a job, it becomes crucial.
As Dan Danford, CEO of Family Investment Center, said in an op-ed in the Kansas City Star, the next steps these employees take will be critical.
Different ages, different number of family members, different financial needs and other aspects make each situation unique. The approach an individual takes to this situation will not be a one-size-fits-all scenario. In fact, Danford notes that it’s a mistake to follow the lead of a colleague.
“Good choices depend on thoughtful analysis of some personal issues,” Danford said.
For example, current financial status must be taken into consideration: Is the person married or single? Do they have other family income, such as a spouse who works and can take care of health insurance? Is there an emergency reserve in the bank they can count on until another job is secured? If a job isn’t immediately available, how long can they go without a steady paycheck? These are all important financial planning questions.
“Younger workers may face a big mortgage and a houseful of children,” Danford said.
“Older workers may have health limitations or fewer job prospects. Some workers nearing retirement age anyway may choose not to seek another job.”
Taking Care of Health Insurance
COBRA benefits offer a short-term solution for health insurance, but it comes at a price and it’s not very flexible. Because Harley Davidson offered good insurance, former employees will probably face a situation where their premiums will be high in comparison, which will impact the budget.
Young workers will have access to individual policies that don’t have all the bells and whistles older folks require, so they can probably save some money there. However, anyone with a spouse and children will need something more extensive, and COBRA only covers them for around 18 months.
The Retirement Plan
While it’s tempting to dip into that 401(k) plan while unemployed, it’s not recommended because the costs are high in a number of ways. As you likely already know, you’ll have to pay taxes, state and federal, on funds you withdraw. Second, when you pull money out of your 401(k), you’re negatively impacting the ability of that vehicle to build up compound interest, which sets you back months, if not years. A better choice would be to borrow money elsewhere.
Adjusting the Budget
Danford notes that it’s always tough for workers to scale back a comfortable lifestyle. However, given the fact that these employees will have had many months to prepare for this situation, they can begin gathering information.
“How much adjustment is needed?” Danford said. “Where can you adjust without disrupting your lifestyle and needs? Are there things you can do to boost your emergency fund or savings? Can you sell unused items? Empty the garage or basement, perhaps?”
Finally, Danford offers that, “trauma is likely to be short-lived. Unemployment in the United States is low and good workers are in demand everywhere. It is likely employees will find new work faster than it seems.”
For more information about financial planning for you and your family, contact Family Investment Center today.
Don’t be Part of the 70 Percent Who Lose Their Wealth Within Seven Years
The recent record Powerball jackpot of $1.5 billion got many people talking about money. The National Weather Service says the odds of being struck by lightning in a given year are one in 1.19 million, which are actually better odds than winning a Powerball jackpot. However, when it comes to wealth advising, the recent jackpot opened the door for discussion about what to do with sudden wealth.
A more likely scenario for you is that your windfall will be much smaller, and likely arrive through an inheritance. Here are some tips to remember for investing wisely when you receive a windfall:
· Take the time to consider where you are in life right now and how you’d like to be living in 20 or 30 years. Are you providing for extended family? Take that into account, as well as travel expenses that may be part of your retirement plan.
· Set goals and stick to them. Now isn’t the time to spend randomly. Around 70 percent of people who become suddenly wealthy lose it within seven years, according to the National Endowment for Financial Education. Avoid this scenario by investing for your future instead of focusing on what you can purchase with your newfound wealth.
· Ask for guidance from an investment expert whose style of wealth advising fits your situation. For example, choosing a commission-free advisor may make the most sense to you because it helps to ensure that the advice will be unbiased.
· Be ready to pay taxes. Inherited IRAs and annuities have tax implications that you will probably need assistance handling. Consider seeking help from a tax professional.
· If you’re going to share your wealth, know the implications related to the gift tax, which could substantially diminish your wealth.
· Prepare an estate plan to protect your family after you’re gone. The most popular plans include a trust, will, medical power of attorney, and advance directive or living will.
Remember, most things in moderation are okay, which means you can splurge some with your newfound wealth. Just make sure you’re not eating into the principal too much or too quickly, which is a mistake that has negative implications on your ability to see compound interest over time.
When you seek out wealth advice, look for a fee-only investment advisor. When you connect with a fee-only advisor, you’ll receive advice from a professional that doesn’t take a commission, which means what they’re advice is for your benefit first and foremost – not for their profit.
Family Investment Center is a trusted, fee-only advisor that can help you manage your financial windfall – as well as the wealth you’ve built up over decades of hard work. Contact us today and let’s discuss how to get started on planning the future you have in mind.
Easy Planning Decisions That Can Lead to a Better Future
Investing, in essence, is about planning for the future. While making financial planning or investment decisions, laying the groundwork can start with some basic questions and basic adjustments that you can implement today.
How should I approach the process? Investment planning involves thinking about what you want out of life, what’s most important to you, and what you’re willing to do to get there. Many first-time investors have a tough time figuring out where their money should go: how much should be in checking and savings and how much should go to a retirement account like an IRA or a 401(k). The equation is going to be different for everyone, but a starting point may be to allot around 35 percent of your income on housing and utilities, 10-15 percent on savings, and then plan out the rest of your budget from there.
Where should I place my priorities? When it comes to paying for a roof over your head, it’s a given that you will have that expense. You should have the same thinking when it comes to paying yourself for the years you want to enjoy down the road. This may mean altering your spending. For instance, if you’re buying a $4 Starbucks coffee every morning before work, that equates to $20 a week and $80 a month. If that money were invested, by the time you’re retired, that coffee could have been traded to help purchase a vacation condo.
How do I budget properly? Investment planning is part of the classic principle of living on a budget so you know where the dollars are going (rather than wondering why they’re gone). Once you know where your money is going, you can take the necessary steps to patch the holes and start putting more in investments from which you will reap rewards later.
What options do I have in retirement investments? A few popular retirement options include employer-sponsored 401(k) accounts, many of which have the perk of an employer match. With 401(k)s, you contribute through your working years and you often have the option to borrow against your 401(k), although that’s not advised. There is also the traditional or Roth IRA to consider. As of 2015, you can put up to $5,500 per year ($6,500 if you’re 50 or older) in these accounts and, depending on your income, there is a chance you will be eligible to use traditional IRA contributions as a tax deduction. There is a wide range of other investment choices to choose from depending on your goals for retirement. It can be difficult to know which type of account is best, so working with a professional investment advisor can help these choices seem much less complex.
Family Investment Center is ready to walk you through every step of the investment planning process, whether you’re just getting started on your investment journey or if you’ve got millions in investments and need guidance on next steps. As a fee-only investment advisory firm, our team can focus on what matters most to you – rather than trying to earn commissions. Contact us to today and let’s get started.
The idea of sitting down together to pour over a spreadsheet about your financial health may not sound totally appealing at first – but sometimes couples need a new approach to financial planning, as shared recently by Money magazine.
The topic remains popular, and author Jonathan Rich recently wrote a book about couples and how they can approach money topics in a more romantic fashion. The psychologist says money talks are about long-term plans, which involve both partners and should be considered a romantic situation. Here are a few things couples can consider when they approach the conversation:
· Start with identifying shared values. If you have children, you’ll likely begin with them – their education, trusts for them after you and your partner have passed on. Take into account your religious affiliations and any social causes you are passionate about. Most couples can find common ground in these areas.
· Next, come up with a list of goals related to your shared values. Write each goal on individual pieces of paper. These will include goals for your children, vacation goals, retirement goals, etc.
· Your goals might differ slightly (or by a large margin) from your partner’s goals. Compare and contrast these goals now by putting each individual goal on the table for the other to see and rank them and list how much money you believe should be attached to each goal.
You will probably find out when you go through this scenario that you can make compromises more easily when everything is laid out on the table and everything is ranked, with some dollar values presented. You’ll discover where you need to start cutting back on spending, how much you need to direct toward savings and investments, and how you can reach your financial planning goals in a more timely manner.
This is excellent groundwork to lay down before visiting with a trusted investment advisor for feedback. When you’ve aligned your goals, you can take them to an advisor who can help you tweak various investments and offer advice on how you can reach your goals quicker. Maybe you’ve still got some unresolved issues on the table. Not every goal will be met with total acceptance from the other partner. In some cases, it’s simply a matter of preference, but when it’s a matter of what makes more sense as an investment, an advisor can bring a qualified, unbiased viewpoint to the table, which can help resolve ongoing issues. After all, this is what they are experienced and trained to do; professional advisors help individuals and couples make these decisions daily. Let one take the hassle off your mind so you can carve out time for other tasks you might be the expert at.
Choose your advisor wisely. Pick one that has experience dealing with family matters and can bring an objective viewpoint to the financial planning discussion – including one that doesn’t overtly favor one opinion over another unless it makes the best financial sense. It may also be helpful to consider if you’re looking for a commission-free investment advisor, because if so, this means the advisor’s motivations to “make the sale” are set aside.
Family Investment Center is a team of experienced, professional advisors who know how to communicate with each member of the family, from young adults just starting out to retired investors who continue to seek advice on growing their nest eggs together. Contact us today to learn more about our unique education and experience.
Fidelity Investments surveyed more than 5,000 physicians about their portfolios and looked at where they allocate their assets in 401(k) plans. The report revealed that physicians often show too much confidence in their investments, affecting how they allocate their funds.
There are other factors at play that could negatively affect physicians’ investments. First, after more than a decade in school, many enter the workforce at a more advanced age, which means their portfolios can be quite small when people choosing professions requiring less school have seen a decade or more of growth in their investments.
After all of those hours studying, some doctors will come into their profession ready for a few nice things…such as a nice car, nice home, and memberships that come with a heavy price tag. Financial planning for physicians should include steps to plan for a variety of situations.
Professional advisors may recommend that physicians max out their 401(k)s, but the Fidelity research shows that many don’t. (Instead, they may opt for nicer purchases). Utilizing the $18,000 maximum contribution (in 2015) for 401(k) could make a tremendous difference in retirement and could help make up for all of those years finishing a professional medical education.
The Fidelity study also looked at stock investments physicians made compared to the target-date funds that were recommended for people in their age group. Some investment advisors may recommend the target-date funds because they start off investing aggressively and then move to less aggressive investments later in life, but physicians make more money than many other professionals, which means their involvement might not be as heavy in target-date funds. Fidelity found that nearly 40 percent of physicians have around 77 percent of their investments in equities while they’re in their 30s.
Financial planning for physicians may require more direction from trusted sources that know the risks, the flexibility, and the course that investments should take over a lifetime. For many doctors, this plan includes investing more aggressively at an older age and working part-time in retirement. However, they can’t be too risky, which is another fact Fidelity discovered in its study – many doctors aged 60 to 64 have nearly 65 percent of their portfolio in equities, which could be too aggressive.
Regardless of your profession, knowing exactly what to do with your money is a difficult task, which is why financial planning for physicians should include bringing a professional investment advisor into the mix. Family Investment Center is experienced in this area. In fact, Dan Danford, Chief Executive Officer, was twice named to the Medical Economics magazine list of "150 Top Financial Advisors.” Medical Economics accepts nominations from doctors, medical organizations, and other professionals, then spends six months screening the candidates on a variety of criteria including education, expertise, experience, compensation, recommendations, and service to the medical community.
Third-party rankings do not guarantee future investment success or that you will experience a higher level of performance. Rankings are based on information supplied by the advisor and should not be construed as an endorsement by any client. Not all advisors apply.