tag:blogger.com,1999:blog-34564377503049416662024-03-12T23:07:08.986-07:00Let's Make SenseThrough this blog, we hope to raise awareness on a broad range of personal finance and investing topics - and even share an opinion every once in a while.Anonymoushttp://www.blogger.com/profile/11303955437338915602noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-3456437750304941666.post-79869581285422626392014-09-15T11:07:00.000-07:002014-09-15T14:17:32.555-07:00Let’s Make Sense - Six Keys to Smart InvestingWhat’s smart investing? How would you define it? Is it an uncanny ability to pick the right stock or interpret financial data and economic indicators? Does it require the use of elaborate or sophisticated investments? Maybe it’s outperforming the S & P 500 on an annual basis? All this depends on your point of view I suppose - but to me you can’t answer this question without considering another important question – why do we invest?<br /> <br />For most of us, investing is a means to an end. That is, we invest our money hopefully to accumulate additional wealth for accomplishing personal financial goals. Being a great stock picker might make you skillful (or perhaps even lucky), but it doesn’t necessarily translate to smart investing. So what’s smart investing? Well, here’s my list of 6 things all smart investors do. <br /> <br /><i><b>1. They develop a financial plan based on “clearly defined” financial goals</b></i><br /><br />All smart investors have a purpose - they know what their trying to accomplish and they plan for it. A good financial plan starts with clearly defined goals. For example just saying that you’re “saving for retirement” is too vague – but saying that you’re “anticipating a need of xx amount of dollars to cover retirement expenses annually beginning at age 65” clearly defines your retirement goal. Then it just becomes a matter of developing a realistic “game plan” (i.e. how much to invest, where to invest, when to invest, etc.) and implementing it.<br /><br /><i><b>2. They use a sensible investment approach</b></i><br /><br />Smart investors know that every dollar invested introduces an element of risk. That’s why they invest sensibly and diversify accordingly to avoid unnecessary exposure to risk. They’re clear on what they need (quantified goals) - and try to get it in the safest possible way! <br /><br /><i><b>3. They plan for the unexpected</b></i><br /><br />The loss of a job or loved one, or dealing with major medical costs can wreak havoc on personal finances. Smart investors are never blind-sided because they always plan for the unexpected!<br /><br /><i><b>4. They revisit their financial plan annually and keep it up to date.</b></i><br /><br />All smart investors are forward thinkers. Revisiting their financial plan each year allows them to monitor their progress and stay focused on the future. They also recognize the importance of keeping their plan up to date – for example, the sale of a home, the birth of a child, new expense items or changes to financial goals could all require changes to existing planning strategies. Smart investors know that proper planning is an ongoing process.<br /><br /><i><b>5. They never invest in something they don’t understand. </b></i><br /><br />Smart investors never invest in something they don’t understand. They ask questions - and if they still feel uncomfortable, they have no problem saying “no.” <br /><br /><i><b>6. They try to minimize the total cost of investing.</b></i><br /><br />All smart investors are cost conscious because they know that over extended periods of time, large annual fees can pose a serious threat to their investments. That’s why they request written confirmation of all fees/charges from a financial advisor or other representative of a financial institution before investing their money. Smart investors expect value for their money and seek to reduce/eliminate any nonessential fees. <br /><br />There’s really nothing glamorous here - doing these things just makes sense. So if you’re investing money to someday have the retirement you’ve always dreamed about, then I can assure you that focusing on these things will help increase your chances of success – and that makes you a smart investor! Anonymoushttp://www.blogger.com/profile/11303955437338915602noreply@blogger.com2tag:blogger.com,1999:blog-3456437750304941666.post-70601984124976430992013-06-19T12:22:00.000-07:002014-02-06T18:39:17.254-08:00Your Money, Your Interests<div style="width: 612px;">
<div id="ctrl-68841787">
<span style="font-family: Georgia, Times New Roman, serif;">Is your advisor acting solely in your best interest? What exactly does this mean – and does it really matter? Today unfortunately, many investors may not understand the <b><i>significance of these simple questions</i></b>. First, to provide some context - it’s important to recognize that it all starts with you – the families, individual investors and small businesses. Without you there wouldn’t be a financial services industry and financial advisors! You have personal finance goals and needs; you have money to invest – and that’s why we’re here. But it starts to get a little more complicated when you consider that financial advisors and financial services companies have needs as well. Advisors need to be paid and remain employed – and financial services companies, banks and insurance companies need to be profitable. So now let’s return to our original question. An advisor acting <b><i>solely</i></b> in your <b><i>best interest</i></b>means that he, or she, is committed to focusing <b><i>only </i></b>on your needs - <b><i>all others</i></b> should be set aside. It also means that if he or she provides you with advice or recommendations – they must (given all available options) truly believe it’s the <i>best solution for you! </i> This is what’s known as a <b><i>fiduciary standard</i></b>.</span><br />
<span style="font-family: Georgia, Times New Roman, serif;"><br /></span></div>
<div id="ctrl-68841788">
</div>
<div id="ctrl-68841790">
<span style="font-family: Georgia, Times New Roman, serif;">So, should all this really matter? There are many <i>within the industry</i> who say no, it shouldn’t. But I believe these naysayers may be missing the point. It’s not for them to decide – it’s for you to decide - because it’s your money! If you decide it’s not important – then fair enough. But if you decide it is, then being proactive in your search for an advisor is the key. You can always ask any advisor if they will agree to “act solely in your best interest.” You can also ask if they will agree to “act as a fiduciary.” Even better – you can ask to have them put it in writing. But as the old saying goes –“actions speak louder than words” so here are a few other things to look for.</span></div>
<div id="ctrl-68841792">
<span style="font-family: Georgia, Times New Roman, serif;"><br /></span></div>
<ul style="margin-bottom: 0px; margin-top: 0px; overflow: visible; padding-left: 1.5em;">
<li><span style="font-family: Georgia, Times New Roman, serif;">To me, it <b><i>just makes sense</i></b> that someone acting in your best interest will not only listen carefully to your needs and make recommendations based on what they believe is <b><i>best for you </i></b>– they will also<b><i>take the time to explain why!</i></b> For example, today (in retirement planning) there are many different strategies, many different investments products – so there should always be some dialog as to why <b><i>any particular approach is the best for you</i></b>. </span></li>
</ul>
<div id="ctrl-68841796">
</div>
<ul style="margin-bottom: 0px; margin-top: 0px; overflow: visible; padding-left: 1.5em;">
<li><span style="font-family: Georgia, Times New Roman, serif;">Someone committed to acting solely in your best interest will also never pressure you to make a decision – and they will always take time to answer all of your questions.</span></li>
</ul>
<div id="ctrl-68841800">
</div>
<ul style="margin-bottom: 0px; margin-top: 0px; overflow: visible; padding-left: 1.5em;">
<li><span style="font-family: Georgia, Times New Roman, serif;">They will always<b><i> discuss</i></b> all the <b><i>potential costs </i></b>associated with any investment product (strategy) they recommend – because they know these costs are paid out of <b><i>your pocket</i></b> (or investment account) and that you have a right to know.</span></li>
</ul>
<div id="ctrl-68841804">
</div>
<ul style="margin-bottom: 0px; margin-top: 0px; overflow: visible; padding-left: 1.5em;">
<li><span style="font-family: Georgia, Times New Roman, serif;">They will be sure to discuss how <b><i>they are paid</i></b> (and how much they stand to make if you follow their advice) – because they know that it’s you (alone) who must judge whether the size of any payment/reward has potentially influenced the advice you’ve just received.</span></li>
</ul>
<div id="ctrl-68841808">
</div>
<ul style="margin-bottom: 0px; margin-top: 0px; overflow: visible; padding-left: 1.5em;">
<li><span style="font-family: Georgia, Times New Roman, serif;">Finally, if you have been working with someone and they haven’t made an effort to keep in touch – it’s hard to make an argument that your best interest was ever a priority.</span></li>
</ul>
<div id="ctrl-68841812">
</div>
<div id="ctrl-68841814">
<span style="font-family: Georgia, Times New Roman, serif;"><br /></span>
<span style="font-family: Georgia, Times New Roman, serif;">Remember – its’ your money, so make sure your advisor is taking care of your interests first – not their own.</span></div>
</div>
Anonymoushttp://www.blogger.com/profile/11303955437338915602noreply@blogger.com0tag:blogger.com,1999:blog-3456437750304941666.post-91206015785226242692013-02-17T15:40:00.000-08:002014-02-06T18:39:17.256-08:00Is Today’s Employee Getting the Short End of the Stick?<div id="ctrl-3625246" style="color: #0b205c;">
<span style="background-color: white; color: #202020; font-family: Georgia, Times New Roman, serif;"><b>Remember the 40 hour work week?</b> How about pay raises and job security – or pension plans and comprehensive medical benefits? Times have changed – and so has the employer – employee relationship. Right now we’re grappling with some serious economic challenges; still trying to adjust to the rippling effects of globalization – but have employers gone a little too far?</span></div>
<div id="ctrl-3625247" style="color: #0b205c;">
<span style="background-color: white;"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
<div id="ctrl-3625249" style="color: #0b205c;">
<span style="background-color: white; color: #202020; font-family: Georgia, Times New Roman, serif;">If you’re fortunate enough to have a stable job you’re probably being asked to do more with less – put in those extra hours. They use to call this <i>strong work ethic</i> – now it’s expected – the new norm. So employers are rewarding people for carrying larger work-loads, putting in that extra time – right? Not so much. According to the United States Census Bureau, median household income (adjusted for inflation) dropped 1.5 percent – from $50,831 (in 2010) to $50,054 (in 2011). Even worse – it’s roughly where it was during the mid 90’s. Many employees also find themselves paying a larger portion of their health benefit premium - but still have substantial out-of-pocket medical expenses. Am I missing something here?</span></div>
<div id="ctrl-3625250" style="color: #0b205c;">
<span style="background-color: white;"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
<div id="ctrl-3625252" style="color: #0b205c;">
<span style="background-color: white; color: #202020; font-family: Georgia, Times New Roman, serif;">What about employer sponsored retirement programs? Not too long ago, there was a sense of loyalty implicit in pension plans. If you worked hard, stayed with your employer for x number of years – you were rewarded with annual pension payments when you retired. The message was pretty clear – <i>thanks for contributing to our success. </i><i> </i>Somewhere along the way these plans were scrapped for the more cost-effective 401(k) plan. In this plan, the employer allows the employee to contribute part of their own salary to a taxed advantaged investment plan – the employer is not obligated to make a contribution. The message here is clear as well – <i>you’re on your own.</i></span></div>
<div id="ctrl-3625253" style="color: #0b205c;">
<span style="background-color: white;"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
<div id="ctrl-3625255" style="color: #0b205c;">
<span style="background-color: white; color: #202020; font-family: Georgia, Times New Roman, serif;">I’m not suggesting that employers should not find ways to cut costs. Nor am I suggesting that they shouldn’t continue to “raise the bar,” drive productivity or expect excellence from their employees. In the past some of the most successful corporations accomplished this through empowering their employees – not driving them into the ground. They recognized the importance of building strong corporate cultures – and knew how and when to invest back into their people.</span></div>
<div id="ctrl-3625256" style="color: #0b205c;">
<span style="background-color: white; color: #202020; font-family: Georgia, Times New Roman, serif;"><br /></span></div>
<div id="ctrl-3625258" style="color: #0b205c;">
<span style="background-color: white; color: #202020; font-family: Georgia, Times New Roman, serif;">You have to wonder what (perhaps) this says about the people “at the top” – the ones setting corporate policy. From a business perspective, an unwillingness to reinvest in the people that have made you successful is truly perplexing – it’s also short-sighted and a poor way to conduct business – just my opinion. Maybe it’s about being more competitive, about becoming global – or just maybe it’s the times we live in.</span></div>
Anonymoushttp://www.blogger.com/profile/11303955437338915602noreply@blogger.com0tag:blogger.com,1999:blog-3456437750304941666.post-46772467473735115942013-02-15T17:14:00.000-08:002014-02-06T18:39:17.251-08:00Sensible Investing – Become Cost Conscious<div id="ctrl-3810480" style="color: #0b205c;">
<span style="background-color: white; color: #202020; font-family: Georgia, Times New Roman, serif;"><b>Would you ever consider buying something without knowing exactly what it was going to cost?</b> As much as I dread that total at the supermarket checkout line, hearing that final tally catches my attention and forces me to think a little more about what I’m about to buy. Lately my frugal side’s been kicking in a bit and I find myself asking more questions about these food prices.</span></div>
<div id="ctrl-3810481" style="color: #0b205c;">
<span style="background-color: white;"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
<div id="ctrl-3810483" style="color: #0b205c;">
<span style="background-color: white; color: #202020; font-family: Georgia, Times New Roman, serif;">Investing has costs as well and they come in many different forms. The good news is they can be controlled – the bad news is they can be very difficult to get your hands around. In fact very often they go completely unnoticed. The problem is there are <i>no “price tags” that capture our attention<b>, </b></i>and many times investment costs are not communicated directly or in a way that’s easy to understand. You have to know they exist (it’s the people who don’t know that may inadvertently surrender thousands overtime) – more on this in a moment.</span></div>
<div id="ctrl-3810484" style="color: #0b205c;">
<span style="background-color: white; color: #202020; font-family: Georgia, Times New Roman, serif;"><br /></span></div>
<div id="ctrl-3810486" style="color: #0b205c;">
<span style="background-color: white; color: #202020; font-family: Georgia, Times New Roman, serif;">So what are some examples? Mutual funds, a popular type of investment, include expenses which are<b><i>deducted</i></b> from your account <b><i>annually</i></b>. Year after year they are used to pay for the management and administration of the fund along with marketing and advertising. Exchange traded funds, another popular investment, have annual fees as well - albeit generally on a smaller scale. You won’t find these deductions on your investment account statement because <b><i>they’re not shown</i></b>. Mutual fund expenses can vary from fund to fund and are listed in the fund’s prospectus. They should appear under the “Fees and Expenses” section listed as <b><i>total annual operating expenses</i></b>. There are many good funds with expenses below 1% – so there’s really no reason to pay more.</span></div>
<div id="ctrl-3810487" style="color: #0b205c;">
<span style="background-color: white;"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
<div id="ctrl-3810489" style="color: #0b205c;">
<span style="background-color: white; color: #202020; font-family: Georgia, Times New Roman, serif;"><b><i>Variable-deferred annuities, </i></b>sold by many financial services professionals generally add <b><i>additional</i></b>layers of expenses. These insurance-based products allow you to invest in mutual funds while offering additional protection features such as future guaranteed income for life. They slap-on an additional annual fee known as a <b><i>mortality and expense</i></b> charge, along with charges for any other feature that you choose. Of course all this gets tacked-on to the mutual fund expenses described above. By the time you’re finished adding everything up, you can find yourself paying in excess of 3 ½ to 4 percent (of your investment account) annually. </span></div>
<div id="ctrl-3810490" style="color: #0b205c;">
<span style="background-color: white;"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
<div id="ctrl-3810492" style="color: #0b205c;">
<span style="background-color: white; color: #202020; font-family: Georgia, Times New Roman, serif;">Make sure you read the product prospectus carefully and tally-up all the costs. <i>Becoming cost conscious with your investments </i>may provide you with a few distinct advantages. First, it will more than likely make you think more about where (and how) you’re investing your money. Second, you may find yourself looking for more cost effective alternatives – potentially saving quite a bit over time. Finally if you’re going to be asked to pay more, you’ll no doubt want to understand exactly <b><i>what you’re receiving </i></b>in return for the increased expense - and if it’s worth the additional outlay. Remember, you won’t see the money being deducted from your investment account each year – out of sight, out of mind. Imagine what it might feel like if instead you had to<b><i> write a check</i></b> for that extra 2 or 3 percent of your investment account each year – how many of us would be happy with that?</span></div>
Anonymoushttp://www.blogger.com/profile/11303955437338915602noreply@blogger.com0tag:blogger.com,1999:blog-3456437750304941666.post-33191966953290720352013-02-15T17:02:00.000-08:002014-02-06T18:38:52.686-08:00Getting Advice To Buy a Variable Deferred Annuity? – Not So Fast<div id="ctrl-934473">
<span style="background-color: white;"><span style="font-family: Georgia, Times New Roman, serif;"><b>Have you recently received advice to buy a</b><b><i> variable deferred annuity</i></b>? Financial services professionals trying to sell these products will use phrases such as “guaranteed income for life” – “won’t outlive your assets” – “a win-win situation.” While on the surface this may sound very appealing, the fact is they’re extremely complex investments that require a great deal of scrutiny. Many times they land up being better deals for the people who sell them (and receive a commission) because so many investors don’t understand what they’re buying! </span></span></div>
<div id="ctrl-934474">
<span style="background-color: white;"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
<div id="ctrl-934476">
<span style="background-color: white;"><span style="font-family: Georgia, Times New Roman, serif;">If you receive advice to buy one, make sure you take the time to gain a basic understanding of the features and benefits so you can truly decide whether investing in them is worth <b><i>the cost</i></b>. That’s right, you pay a price – and you pay it annually (deducted straight from your investment account). Traditionally the tab for these products has been quite high, but there’s nothing wrong with paying more – as long as you’re given a <b><i>fair chance</i></b> to understand what it is you’re buying! You should be given what’s called a prospectus. This is the document that describes all the <b><i>details of the annuity, along with the costs</i></b>. So if someone tells you that you’re going to get “guaranteed income for life,” - read the prospectus carefully to understand exactly what this means. For instance look for more details that can help answer some of these questions:</span></span></div>
<div id="ctrl-934477">
<span style="background-color: white;"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
<div id="ctrl-934479">
<span style="background-color: white;"><span style="font-family: Georgia, Times New Roman, serif;">How big will the income payments be? How are the payments calculated?</span></span></div>
<div id="ctrl-934480">
<span style="background-color: white;"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
<div id="ctrl-934482">
<span style="background-color: white;"><span style="font-family: Georgia, Times New Roman, serif;">Can I control the size and timing of my income payments?</span></span></div>
<div id="ctrl-934483">
<span style="background-color: white;"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
<div id="ctrl-934485">
<span style="background-color: white;"><span style="font-family: Georgia, Times New Roman, serif;">How much will this feature cost me?</span></span></div>
<div id="ctrl-934486">
<span style="background-color: white;"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
<div id="ctrl-934488">
<span style="background-color: white;"><span style="font-family: Georgia, Times New Roman, serif;">What happens to my investment account once I start receiving these payments?</span></span></div>
<div id="ctrl-934489">
<span style="background-color: white;"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
<div id="ctrl-934491">
<span style="background-color: white;"><span style="font-family: Georgia, Times New Roman, serif;">What happens to the payments when I die?</span></span></div>
<div id="ctrl-934492">
<span style="background-color: white;"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
<div id="ctrl-934494">
<span style="background-color: white;"><span style="font-family: Georgia, Times New Roman, serif;">Thumbing through (and trying to make sense of) a 150 page prospectus may not exactly be your idea of a “fair chance” – <b><i>but take the time to do</i></b> it before you decide to sign on the dotted line – it’s that important! <b><i>Do not </i></b>rely solely on the explanation provided by the individual trying to sell you the annuity<b><i>unless</i></b> they can reference it in the prospectus. If you still need (or want) some help, then seek a second opinion from a qualified professional (preferably one not in the business of selling these products). Also,if you don’t receive a written list of <b><i>all the costs </i></b>(including any applicable surrender charges), refer to the prospectus first and then request written confirmation from the seller. </span></span></div>
<div id="ctrl-934495">
<span style="background-color: white;"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
<div id="ctrl-934497">
<span style="background-color: white;"><span style="font-family: Georgia, Times New Roman, serif;">Once you start digging and asking some questions (based on the facts detailed in the prospectus) you’ll be in a much better position to decide if a variable deferred annuity is really right for you. Remember, products like these generally come at a high price – although you never see the money coming out of your investment account year-after-year; trust me it does – and it adds up.</span></span></div>
Anonymoushttp://www.blogger.com/profile/11303955437338915602noreply@blogger.com0Cherry Hill, NJ, USA39.926813 -75.02463119999998839.829370000000004 -75.185992699999986 40.024256 -74.863269699999989