Change is the only constant. Although Greek philosopher Heraclitus said this more than 2500 years ago, it’s especially true today, particularly when we look at retirement scenarios. Financial headwinds– shrinking interest rates and rising inflation, taxes, Social Security and health care costs – continue to batter potential retirees. Most troubling for people trying to plan their golden years is the very real notion of change. Calculate a tax rate and, with the next election, you know it will change. Adjust your withdrawals based on health care costs and brace yourself for an unplanned medical situation that will wreak havoc on your insurance premiums. Unpleasant events including deaths, divorces, job loss, illness and accidents hover on the fringes of any financial plan and, in today’s financial environment, those troubles in a second generation generally impinge financially on retirees. Adult children are returning home in record numbers. Constant change also affects the global markets, where we’ve seen economic uncertainty, political upheaval and fragile monetary units challenge investors. With a sure cycle of change affecting family budgets, Wall Street investments and global economics, clients need to rely even more heavily on sound fiscal advice. We advocate active money management, in which an investment team meets daily to analyze investment opportunities and monitor markets to keep abreast of the constant change. We also strongly encourage a fiduciary relationship with an advisor who has a legal responsibility to act in his or her clients’ best interest. Contact us today to see how we can help you make the market’s constant changes work for you.
Wealth Management
Active money management means taking advantage of market volatility
At a financial planning workshop we recently hosted at MomCom Austin, we fielded the following question: with the stock market so unpredictable, should I be putting some of my money in cash? The easy answer is yes, you should always have some money in cash. We advocate having six times your paycheck, or three month’s salary, in a money market account for easy access. This is your emergency fund for unexpected expenses like car repairs and medical emergencies. Keep this account replenished. But that’s just the first level of the “should I move money to cash” conversation. We are strong believers in transparency in your investments and the continuous ability to move your money to cash positions when the market calls for it. This is the essence of active money management and it allows us to avoid being fearful of market volatility. This is important because we know that market downturns can yield attractive buying opportunities. The key is to stay poised for investment opportunities when they arise. Your age and your risk tolerance level will determine how much risk you should be taking in the equity market. In general, the closer you are to retirement, the less risk you should be taking. As an alternative to cash, we look at individual corporate bonds with less than two years to maturity. The yield to maturity rate plays a key factor in our decision to purchase these bonds. We steer clear of bond funds and we avoid long-term bonds as well because we don’t like to lock ourselves into a rate for more than two years Overall, though, we would caution against pure volatility being the deciding factor in moving your investments from the stock market to cash. By definition, volatility means the stock market is moving up as well as down and active money management allows investors to take advantage of that volatility. These conditions create opportunities for both purchases… | Read More »
Our financial advice for women? Invest in yourself!
You might as well live a great life because you’re going to have to put in the time anyway! The first step is to secure your health. Make wise meal choices but don’t be afraid of food, sweat a little every day, take long walks to clear your mind and reduce your stress. Get plenty of rest and check in with your doctor regularly. Don’t avoid your dentist. Honor your relationships. Nurture your friendships and allow yourself to love. Appreciate your family members and enjoy the time you spend with them. Tend to your finances. Take an honest look at your spending habits and create a reasonable budget. Invest in your future and find someone who will help you make you money grow. When you have a handle on your health, family and finances, you are free to design your own great life. Love to travel? Treat yourself to your dream vacation. Crave quiet? Block off time in your day that is just for yourself. Restless? Volunteer for one of the hundreds of worthy organizations that would love to have you. Stressed? Reevaluate your day and take it down a notch. Often, we’re so busy just putting one foot in front of the other as we wander through our days that we never really get anywhere. Sometimes, we need to take a step back and a thoroughly analyze the time we’re spending on this planet. Want a great life? Go get it.
The Legacy of an Honest Effort
One of the most important legacies we can leave our children is a solid work ethic. Often in our industry we see parents diligently create a financial plan that will leave their children a healthy estate. Less common is the parent who also instills in his or her child the means to handle that inheritance. A new normal is looming in the United States and we need to equip our children properly. Just as we make regular deposits into our 401(k) plans and college funds, we need to make consistent efforts to encourage healthy habits in our children. We need to teach them to be as proud of their sweat as they are of their medals. In the classroom, at the dinner table and on the sporting field, parents should demand an honest effort. Applaud the process before accepting the prize. Teach your children that there is value in hard work and honor in achieved goals. Don’t be afraid to allow them to struggle because they’ll find such joy in their own success. Many loving and well-meaning parents work hard to make life easy for their families. While I admire the effort, I think this is a mistake. Aspects I consider essential to include in your child’s portfolio of ethics are the courage to try new things, the strength to work hard and these three simple steps to success: 1) Say please and thank you 2) Do what you say 3) Finish what you start