How to weigh portfolio risk versus reward

Although often hidden in the background, risk is interwoven into every aspect of our lives. Given this inescapable reality, it is in our best interest to cultivate a sensible, and even cooperative, attitude toward it.   Toward this end it may be instructive to consider the Chinese symbol for “risk” which is a combination of two ideograms, the one being “danger” or “crisis” and the other “opportunity.”  In the West we know this as the risk/reward tradeoff. The goal is never to avoid risk altogether: because that’s impossible, given the realities of the world because without exposing ourselves to risk we cannot take advantage of the opportunities that it offers. So, the question becomes, “How much danger am I willing to court, and what can I expect as a reward for the amount of risk I have taken on?”  This question, and its answers, are at the heart of what we call “risk management.” As fiduciaries entrusted to manage people’s retirement portfolios, our duty is to get the best return on investments that we can while minimizing the portfolios’ exposure to danger.  In other words, what we do is “risk management.” One of the most important factors when it comes to managing risk in a retirement portfolio is time.  This concept of time is captured in our slogan “Investing for all seasons,” which refers to the seasons of one’s life; youth, maturity and old age.  Youth, or young adulthood, is the time to take the maximum amount of risk.  We leave home and either journey afar or begin a new endeavor such as starting a business or learning a craft.  We have energy, enthusiasm that has not been tempered yet by life’s inevitable “hard knocks” and most of all, time.  Time to recover from set backs and time to save for retirement.  Young adults can and should take on the maximum amount of risk in their portfolios because they have the time… | Read More »

Celebrating Life Insurance Awareness Month with love

We’re celebrating Life Insurance Awareness Month with love and we’re encouraging you to do the same. Take a look at the people you love and ask yourself if you’ve done enough to protect them from the “what ifs.”  What if something happened to you? Will your life insurance policy provide enough coverage for the family you leave behind? When is the last time you reviewed your policy? Now is a great time for a life insurance review. We can walk you through the options available to you to make sure you’re fully covered without overpaying for something you don’t really want or need. Life insurance planning needs to be done with a goal-based approach.  For example if you are only looking to cover a portion of time, maybe while you have dependent children, you shouldn’t over pay for lifetime coverage. Know your goal for any coverage that you are buying and then find the product that best fulfills that goal.  There are several types of life insurance including: Term insurance, which is cheap and meets short-term goals. Return of premium term, which is a little more expensive but gives you the option to take a paid-up death benefit or get a full refund of your premiums paid at the end of your level term. Universal Life in all of its variations can make sense for someone wanting coverage, flexibility, and the ability to grow tax friendly money within the policy. Whole Life insurance can be a good fit for the person who wants both permanent coverage and tax friendly growth ability. If you are worried about being a burden to your family because of Long Term Care needs and expenses there are even LTC riders (options) you can add to many types of life insurance. Group life insurance is a valuable asset and I believe, if you have it available, you should utilize it to a degree. I like group… | Read More »

Five things you need to know when your company closes its doors

Unexpected job loss can be traumatic, but there are important steps you can take to regain control. Here are five things you can do when you’ve found out your company is closing its doors. Take advantage of your state’s Department of Workforce Development. They can help you update your resume, search out comparable job offers and find educational opportunities. These transitional times can be perfect for expanding your skill set. Review your insurance options. Make sure you sit down with a human resources representative, take notes, and understand your COBRA options. It’s important to get started on this immediately because, with COBRA, you have 60 days to accept coverage or lose all rights to the benefits. Once you select COBRA coverage, you may have to pay 100 percent of the total insurance cost, plus a two percent processing fee. Because cheaper options might be available to you, it makes sense to sit down with an independent insurance specialist as well to make sure you’re getting the most coverage for your money. Review your 401(k) options. If you want to maintain the tax-deferred benefits of your 401(k) money, you have three choices: leave the money in your old employer’s plan, roll it over into another tax-deferred format like an individual retirement account, or, when you get a new job, transfer it into your new 401(k). IRA rollovers are a good move because they offer more choices and, in most cases, fewer fees than a 401(k). If you do decide to roll over your 401(k) into either a Roth or a traditional retirement account, it is extremely important that you roll it over directly. If you take your 401(k) in a lump sum, your employer will withhold 20 percent for income taxes in case you decide to cash out and keep the money. Generally, you have 60 days to move the money to another tax-deferred account. If you don’t meet that deadline,… | Read More »