We all have visions of our ideal retirement, and none of them include a terminal illness. However, sometimes life has other plans.
Today, we discuss the top concerns that are often overlooked for those facing a terminal diagnosis.
This is a difficult, yet important, subject to address. Investment strategies, tax strategies, and estate planning may not be at the forefront of your mind during this challenging time period, however, doing the legwork now will set your loved ones up for success after your passing.
You won’t want to miss this episode if you or a loved one has recently experienced a terminal diagnosis.
📬 Tips each month to help you reach your Ideal Retirement. Subscribe to the Financial Symmetry newsletter!
Retirement rules of thumb can give you a false sense of security.
Today you’ll learn why you should second guess these 4 commonly referenced retirement rules.
In this episode, we'll discuss:
Our expanded pre-retirement checklist is packed with common questions asked by our clients. Our new guide answers the 4 questions you should ask about Social Security, includes common tax planning tools used by retirees, and examines how your investing may change in retirement.
Download this newly revised and expanded checklist to help you best prepare for your retirement.
📗 Download the expanded Retire On Purpose Guide
📬 Tips each month to help you reach your Ideal Retirement. Subscribe to the Financial Symmetry newsletter!
What if you could take action now so that you have significantly more tax-free savings to utilize in retirement?
On this episode of Financial Symmetry, we’ll take a look at an often misunderstood tax planning opportunity.
The Roth conversion is a tool that can benefit you throughout different stages of your retirement saving journey. Today you’ll learn how to take advantage of Roth conversions during various periods of life. Listen in to learn the opportunities and pitfalls of Roth conversions.
📗 Download the expanded Retire On Purpose Guide
📬 Tips each month to help you reach your Ideal Retirement. Subscribe to the Financial Symmetry newsletter!
Have you ever wondered how your retirement preparations compare with others?
Short video recap: https://youtu.be/mNYvWKgO3MM
This is a common question that we hear as financial advisors. On this episode, we’ll take a look at data from a recent study about the 4 types of retirement journeys that people take. You’ll also hear about the risks and opportunities that stem from these 4 retirement paths.
People’s circumstances, attitudes, and ambitions can greatly affect their retirement experience. So, if you are on the cusp of retirement you may be wondering what type of retirement you will have. You can think of retirement as a Choose Your Own Adventure book. Each path has its own opportunities and lessons to learn. Which retirement adventure will you choose?
Which retirement stage are you in? Spoiler alert: the stages begin before you are retired. You'll also be surprised by some of the stats we uncover as we dissect findings in the latest Age Wave study on retirement.
Video Recap: https://youtu.be/8YeA6nSCenY
We've had the pleasure of working with hundreds of families as they have planned and transitioned into retirement. Let’s dive in to this episode to explore how you can maximize these 4 phases of retirement through financial planning.
How do you deal with a major financial transitions?
Video recap: https://youtu.be/2tWrduVAS14
When this happens there can be many choices that you need to make. Without the right decision-making framework, navigating these choices can lead to analysis paralysis.
Allison Berger joins me today to share some of what she has learned while studying for the CFT designation (Certified Financial Transitionist). The coursework for this professional title combines financial planning with cutting-edge research in neurology, sociology, and psychology. With her newfound knowledge, Allison will help us learn how to navigate the technical and personal side of major life decisions.
Listen in to learn how to build a framework that can help you navigate major financial decisions.
In a bear market, it can be easy to panic and forget that investor behavior drives results more than choosing the right investments. People tend to be their own worst enemy during these trying times. That’s why it is important to learn from those that have gone before you.
Video Recap: https://www.youtube.com/watch?v=VePid5UlQ1Y
Your Playbook to Market Volatility: https://www.financialsymmetry.com/staying-the-course-even-during-volatile-markets/
Check out this episode to discover the 4 typical investors that we encounter during market declines. As you listen consider who you have been like in the past. Which one are you feeling like now? Which one do you want to be in the future?
Most of us believe we’ll always have more time with our spouse, but when that time is cut short, we’re often left with too many questions and not enough answers.
Video recap: https://youtu.be/2jFmLDB3Xks
On today’s show, we tackle the emotionally challenging subject of losing a spouse.
Between planning a funeral, notifying people, and taking calls, it’s hard to find time to grieve, much less think about the financial consequences and tax changes you have to deal with in the coming weeks. Part of our responsibility during this difficult time is to walk you through the steps of navigating the administrative part of handling a loved one’s resources.
Listen to this episode to learn about the tax changes to consider when dealing with the death of a spouse.
Read more in the show notes here: https://www.financialsymmetry.com/tax-changes-to-consider-after-the-death-of-a-spouse-ep-166/
Do you have an estate plan?
Is it up to date?
Was it prepared by an estate planning professional?
Video link: https://youtu.be/c7XO462BOcg
If you answered "no" to any of these questions, this episode is for you.
On the show this week, we welcome Adam Tarsitano, an estate planning attorney in Raleigh, NC, to discuss why it is so important to have a professionally prepared estate plan in place.
Listen in to hear the difference between a professional estate plan and a DIY estate plan and what could happen to your assets if the state decides what to do with them.
Stocks are now in a bear market. Rising interest rates mean bonds are having a horrible year. Inflation reached a 40-year high. Headlines like these makes it tough to have confidence in your investment strategy.
Youtube video: https://youtu.be/dNb2jmLW_OU
This is why today, we are reviewing how to create a retirement plan that provides peace of mind through an investment roller coaster. If you are worried about the future of your money, our goal this week is to provide you a game plan for volatile markets.
Press play to listen in or check out the video with the slideshow on our YouTube channel.
If you recently filed your tax return you may have noticed some unexpected surprises.
Video recap: https://youtu.be/G9q8k5fRNdQ
Since tax planning and preparation is an important part of what we do at Financial Symmetry, we wanted to make you all aware of the top 10 tax surprises that we see in our office. Listen in to hear if you are familiar with any of these tax prep surprises.
Deciding to retire is just the beginning of your retirement decision-making. From tax planning to Social Security decisions, finding the best strategies for you requires regular analysis.
Video recap: https://youtu.be/TleOZ8CwYXw
Today’s question comes from a client who recently read an article from Rethinking 65 titled Why Trying to Quantify Roth Conversions Is Futile. After reading the article the client wanted to know if they should take advantage of Roth conversions. As we explore this question today, you’ll learn how you can decide whether Roth conversions would be a good fit for your retirement situation.
Many people that listen to retirement podcasts and read financial articles are fantastic savers. If that sounds like you, congratulations!
Video recap: https://youtu.be/pUvfv1815fw
You have done the hard work to accumulate plenty of assets and be on track to reach your financial retirement goals.
However, after a lifetime of accumulation, you may discover that you have a hard time letting go of your assets. I recently came across an article in Barron’s magazine called Retirees Aren’t Spending Enough of Their Nest Eggs. Here's Why. On this episode of Financial Symmetry, Allison Berger and I will discuss the reasons that some retirees are reluctant to spend their savings and explore strategies that you can use to ensure that you have a successful transition into retirement.
Financial planning is a powerful tool that can help you not only anticipate risks and opportunities but also help you envision your future to ensure that you can retire the way you want to retire.
Video recap: https://youtu.be/hKJRvl-_RlM
As Howard Marks says, “You can’t predict but you can prepare.”
As you prepare for retirement it is helpful to stay up to date with the latest retirement trends. This is why we're excited to share our takeaways from the JP Morgan Guide to Retirement with you. You may be curious about how you are doing compared to others in your demographic and guides like this one can help you more deeply understand where you stand in your retirement planning journey.
Video recap: https://youtu.be/4FjSIJw8a6A
Listen in to discover how you can accelerate women’s equality by overcoming or breaking through these biases.
This first bias is simply untrue. Actually, women are more likely to take calculated risks than men. Women are also more likely to hold an appropriate amount of investments when compared with their cash savings.
Men and women are equally fearful at the beginning of their investing journeys. However, since women are more cautious about things that they are unfamiliar with they often become more educated about investing so that they feel more comfortable.
In the long term, women’s investments often outperform those of men. This could be due to women having more intentionality, self-control, and a higher savings rate than men. Since women are often playing catch up with their investing, they are usually excited to get started. Investment and retirement planning is especially important for women since there are so many preconceived notions that surround women and money.
On average, women make about $0.84 to a man’s dollar. This is often due to the way compensation is structured. Women often ask for less, negotiate less, or don’t negotiate at all. This means that women have less to contribute to their retirement savings.
Knowledge is the power to overcome this bias. To improve your salary it is important to understand the average salaries for your area of the country and, specifically, for your field. Use websites like Glassdoor or Salary.com to help you research. Don’t be ashamed to discuss this topic with friends, family, and colleagues to learn more.
Once you’ve done your research, consider your next salary negotiation. Set a range that works well for you and shoot for the top of that range. Remember that you are selling yourself, so consider the value that you have added to your role. Come up with a list of your accomplishments. Listen in to hear all the tips that this bright group of women brings to the table. With a bit of preparation, you may be pleasantly surprised by your next salary negotiation.
We’ve all heard this myth perpetuated; however, spending doesn’t have a gender. Either partner in a relationship can be the big spender, but since women are often the ones buying for the family, it can seem like they spend more than men.
Budgets are an important part of the financial health of any relationship so that both partners understand how much they can safely spend. Typically, one partner is more of a saver and the other is more of a spender, but the ideal is to strike a balance between the two.
Since women have been shut out of the financial conversation for so long, they often don’t know where to begin the conversation. Here at Financial Symmetry, we encourage both partners to come to the table, even if it takes an extra conversation to understand and address all of the issues or concerns.
As you approach International Women’s Day, consider whether any of these financial biases have come up in your life. You can research more biases surrounding women by using the hashtag #BreakTheBias.
From data breaches to text messages, emails, and phone calls, scammers are always looking for new ways to commit fraud.
Video recap: https://youtu.be/_PwxMMqnjNk
Fraud can devastate retirement plans, so it is important to stay one step ahead of scammers and keep your guard up to protect yourself and your retirement.
On this episode, we discuss types of scams to be on the lookout for and how you can protect yourself from the conmen that are constantly devising new ways to ruin people’s lives.
Do you have concentrated stocks in your portfolio?
Video recap: https://youtu.be/g5oDev7Ns84
You may have inherited stocks from a loved one or maybe you receive stock options as part of your pay structure or a compensation package. Whatever the reason you have concentrated stocks, if you own more than you think you should of one company, it is important to understand what you could do with it. You may be surprised to hear all of the options that you have available, so listen in to hear what your choices are.
You may be wondering if any of the stocks that you own would be considered concentrated stocks. Deciding whether you own any is easy. You don’t need to look at the percentage of the stock in your portfolio. It doesn’t matter if that stock is 5%, 10%, or even 50% of your portfolio. What matters is what would happen if that stock went to zero. If that would affect your financial life then you do own a concentrated stock.
You may argue that the richest people in the world gained their wealth through concentrated stocks, but you don’t hear about all those that have lost their wealth from putting all their eggs in one basket.
Individual stocks are volatile. Over a 40 year time period, 40% of individual stocks experienced negative absolute returns. The reason we choose to have a balanced portfolio is to balance the winners with the losers.
There are different reasons that people choose to hold on to stocks for longer than they should. If the stock is from their employer, they may have a bit of bias thinking that they know their company and it will outperform the rest. Some people got into a position early and rode the wave. Others feel an emotional attachment to the stock and are hesitant to let it go.
Whatever the reason you may be hanging on, it is important to analyze your holdings to see if they fit into your overall financial plan. If not, it is time to find a strategy to divest from your position.
Coming up with a strategy that fits into your overall financial plan requires some thought. The easiest thing to do when you aren’t sure of the right choice is to do nothing, but that, of course, is the worst thing you can do.
There are 4 options available to you when you own concentrated stocks: sell, hedge, diversify, or transfer the wealth.
This episode has some advanced strategies to consider, so if you are wondering what you should do with your concentrated stocks you may want to listen twice or take notes as you listen so that you can discover what to do with your concentrated positions and how it could fit into your overall financial plan.
If you still think you need help coming up with a strategy, reach out to us so that we can help you come up with a financial plan that is right for you.
Tis the season to prepare your taxes!
Video recap: https://youtu.be/mWYWaKeP6-o
Whether you do your own taxes or you are gathering information for your tax preparer, you’ll want to make sure that you don’t miss a thing. Listen to this episode to ensure that you think about everything you need to do to prepare this year’s tax documents.
As you start your tax preparation journey by gathering documents and ensuring that you have everything in order, you may end up forgetting the obvious. Did you move in 2021? You’ll need to report the sale of your prior home if that was the case.
Also, if you use tax preparation software, be careful with the autofill feature. If you have used it before, your tax software will automatically fill in the information that you used last year. It is important to type in the correct address so that you don’t miss any communication with the IRS.
If you changed jobs in 2021 you may have multiple W2s. Make sure that you have them all together before you start your tax preparations. You’ll also want to look out for the forms if you made any 401K or Roth rollovers.
For the 2021 tax season, you’ll need to look out for the usual documents like W2s, 1099s, 1098s, or K1s, but you’ll also need to be watching out for the letter from the IRS if you received an advanced child tax credit. If you did receive an advance on your child tax credit, you may or may not receive any more or you may have to pay some of it back depending on your income in 2021.
Once you have all of your documents ready, then it is time to start thinking outside the box. Do you have your receipts or transaction history for charitable donations? What about real estate and property tax forms? Do you have a record of how much you spent on child or dependent care? Make sure to have a record of any crypto transactions and business and rental expenses.
Having this information together will decrease the legwork when the time comes to file your taxes.
Not all financial advisors focus on tax preparation, but at Financial Symmetry, we see tax season as an opportunity to generate ideas to improve your financial situation. Whether it is through improving your tax situation or taking advantage of missed opportunities, tax preparation is something we focus on to enhance your today and enrich your tomorrow.
Our clients have the opportunity to use the document vault in our Client Center portal as a type of digital file cabinet. Keeping documents together like this takes away some of the anxiety surrounding tax season.
Once you get everything you need together, take a step back and reflect. If you haven’t been keeping the best records now is a good time to implement a system to help you stay organized.
Listen in to hear how we can help you prepare for the upcoming tax season and beyond as Financial Symmetry clients. You’ll also hear why it doesn’t always make sense to file early. Learn why sometimes filing for an extension could be a better option.
The biggest financial threat to your wealth is not the market; it is your brain.
Video clip with Money Egg example: https://youtu.be/PJ4Zryp2w8Y
Human behavior surrounding money varies greatly and can be fascinating to study. Allison Berger has been studying financial behavior in more detail over the past year in the Certified Financial Transitionist coursework.
On this episode of Financial Symmetry, we delve deeper into the common money scripts that drive financial behavior. Our conversation is inspired from the book Wired for Wealth by Brad Klontz, Ted Klontz, and Rick Kahler.
When you listen you’ll learn what a money script is and how it can impact your financial wellbeing. You will also learn 5 steps you can take to help you improve your money mindset.
Markets go up and down but one fact holds true: the money scripts you play in your head will determine your financial well-being. The things we do surrounding money are defined by the money scripts we learned in childhood.
Money scripts come from the explicit or implicit messages we received about money as children as we were trying to make sense of the world. Usually, these ideas are partial truths based on our parents' teachings and actions around money. We have internalized these money scripts and unconsciously follow them as adults as the logical response to what we saw as children.
Here are common examples of money scripts: money doesn’t grow on trees, money can’t buy happiness, rich people are shallow, money is the root of all evil.
Your money scripts can become roadblocks in your thinking about money, so it is important to think about how they may be affecting your life. At their worst, money scripts can contribute to financial disorders like financial infidelity, compulsive buying, pathological gambling, compulsive hoarding, financial dependence, and financial enabling.
These are examples of money scripts that will keep you poor: your self-worth equals your net worth, it's ok to keep financial secrets from your partner, if you are good your financial needs will be taken care of.
These negative money scripts can be linked with overspending, compulsive shopping, or workaholism. As people edge closer to retirement the more they tend to stick with the money scripts that have led them through life. However, retirees may need to embrace new ideas to be able to reach their financial goals. If you are struggling with your money mindset, try reaching out to an objective third party for help.
Money should be saved, not spent. You can never have enough financial security. Money that I did not earn is not really mine to spend. These are a few examples of money scripts that can cause people to underspend. Scripts like these can lead to hoarding wealth and workaholism.
A financial plan can help you break free from your money scripts. Without a financial plan in place, you don't know how much you can safely spend. A financial plan will ensure that you look at the details and the reality of your spending situation. You want to make the most of your money and your life especially as you transition into retirement.
You can change your mindset surrounding money and the book recommends 5 steps to overcome your limiting financial beliefs.
These are not quick, easy steps to take. They require a bit of soul searching to get to the heart of your issues with money. However, if you find yourself with a money mindset that is not serving your goals you’ll want to do what you can to solve your problems.
If you think that you may need help changing your money mindset, reach out to us to see if we can help you. Head over to FinancialSymmetry.com and click talk to an advisor.
At the start of every year, people are more motivated to get off on the right financial foot. This might mean contacting a financial advisor for the first time.
Video recap: https://www.youtube.com/watch?v=hEB2z530-Zc
So we put together a list of 5 questions we hear from those looking to hire a financial advisor.
If you are considering working with a financial advisor this year, you may want to use these questions to help you understand how the financial advising process works so that you can feel comfortable choosing the right advisor for you. Listen in to hear the most frequently asked questions and our answers.
Thankfully, the word fiduciary has gotten more publicity lately, so more people understand what it means. A fiduciary is a financial advisor that puts their clients’ best interests first. It is important to ensure that your advisor is a fiduciary so that you know that they will put your well-being ahead of the myriad conflicts of interests that can arise in this industry.
The first question most clients have is how often we will review their finances. This usually depends on the client’s situation, but we usually review a specific financial area for every client each quarter. The specific areas that we focus on regularly are taxes, estate documents and financial plans, and of course, portfolios.
We also have an automated system that checks each client’s portfolio every day. Our clients feel comfortable with these automated daily inspections. Our Client Center is another way that Financial Symmetry clients can assess their portfolios at their convenience.
At Financial Symmetry, we are fee-only financial advisors and completely open about what we charge. All of our fee information is available on our website. Our wealth management clients are charged quarterly whereas other clients choose to work on an hourly basis. Make sure you understand the fee structure of any financial advisor that you choose to work with.
Typically, in-person client meetings are held once a year, but of course, Covid changed everything. Communication can be had through phone calls, emails, or video conferencing. The frequency of meetings depends on the complexity of the situation.
Every advising firm has a different setup and who you meet with initially may not end up being your primary source of information that you work with. At Financial Symmetry, you’ll have the opportunity to work with a team of 2 advisors plus one other staff member. Listen in to hear why we work this way.
If you are thinking of hiring a financial advisor, make sure to add these 5 questions to your list of questions.
2021 has been a wild ride! But like with any roller coaster, we've learned that the most important thing to do is to stay in your seat so that you don't get hurt.
Video recap: https://youtu.be/4fuYYZNDALQ
On this episode, we recap our views on the top 10 economic stories from 2021 and the lessons they hold going forward.
Social Security remains a critical component of retirement income for most senior citizens. To ensure retirees maintain purchasing power through their golden years Social Security benefits are subject to an annual Cost of Living Adjustment (COLA) based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Due to rising prices and persistent inflation concerns, the COLA for 2022 will be 5.9%, the highest upward adjustment in decades.
If you are 62 or above and delaying benefits for your higher FRA or age 70 payment, you will also benefit from this adjustment. The Social Security COLA applies to estimated future payouts for anyone who is 62 or older in 2022, even if you have not yet filed for benefits.
While the higher COLA for 2022 is positive news for today’s Social Security recipients, retirees also need to consider how inflation may impact their other retirement income sources. Maintaining an investment portfolio with a healthy allocation to assets likely to outpace inflation over the long term remains critical to sustaining your standard of living.
Along with the rapid increase in energy and food prices, housing costs have contributed to an inflation rate that is at its highest level in more than 30 years. Low interest rates, low inventories and a strong increase in demand are driving home prices to record highs. The Raleigh housing market has been one of the hottest in the country. According to Zillow, the price of a home in Raleigh has gone up by 26% over the last twelve months! Large employers like Apple and Google have announced plans to expand their operations in the Triangle area which will add thousands of high paying jobs and bring even more demand to the local housing market. The last time housing prices were rising like this was in 2007 before the housing bubble popped. However, there are fundamental differences this time – lower interest rates, stricter loan underwriting standards and homebuyers with stronger balance sheets. Nonetheless, it’s likely that home price increases will stabilize, especially if we get a spike in interest rates. This will be a story to watch closely in 2022.
Almost every year there seems to be substantial concern over the amount of US government debt and 2021 was another one. It is notable that concerns tend to become louder when there is pending legislation or upcoming elections, but the concerns tend to involve some fundamental misunderstandings.
One of the most common arguments is that the US government should operate like a household and not have so much debt. Two of the problems with that argument are:
Another misunderstanding is that high government debt leads to hyperinflation. We can see that the argument is weak since Japan has had much higher government debt than the US for the last 20+ years with extremely low inflation.
But there are cases where high government debt and hyperinflation occurred and looking at the difference in those cases compared to Japan demonstrates the misunderstanding.
In Japan’s case, their debts are denominated in their own currency, the Yen. In the hyperinflation cases, the debt is owed in some other country’s currency. When a nation owes debts in another currency, if their own currency declines, the debt becomes bigger when translated back to their own currency.
This can lead to a spiral where the debt becomes harder to pay, which causes more loss of confidence in the borrower’s currency, which leads to falling currency and this spiral can continue until the borrower’s currency becomes effectively worthless and the foreign currency debt cannot be repaid.
Fortunately, the US government is a very reliable borrower, so all US government debt is denominated in US dollars.
Starting all the way back on the run on toilet paper to the shortages at your local Chick-Fil-A , supply chain scares have existed since the beginning of the pandemic. COVID outbreaks at various distribution centers and manufacturing plants sent ripple effects throughout the supply chain system which are continuously being felt to this day. Auto dealers lots have been empty of new cars for over a year now with the chip shortage, loaded cargo ships sit backed up off the coast of California, and basic items at your local grocery randomly seem out of stock (no individual packaged gold fish snacks is really bugging my two toddlers 😊). Of course with high demand and low inventory, prices have risen as you’ve seen if shopping for a car, or even just the increase in value of your current used car sitting in the driveway. The supply chain system that once seemed so smooth is now unpredictable and impacting every aspect of the lives of consumers.
Ahead of his inauguration, President Joe Biden proposed legislation that addressed funding for COVID-19 relief, social services, welfare, infrastructure, and the reduction of climate change effects – coined the Build Back Better Plan. The underlying components of this plan were much debated in Congress throughout 2021, with some parts of the plan passing through legislation after extensive negotiations from both sides of the political aisle. In March, Congress passed the American Rescue Plan, a COVID-19 relief package. In November, The Infrastructure Investment and Jobs Act was passed and included funding for broadband access, clean water, electric grid renewal and additional infrastructure maintenance and improvements. The Build Back Better Act, seen as the final component to the Build Back Better Plan, was passed by the House in November and now heads to the Senate to debate. In its current form, the Act includes additional funding for climate change provisions, increased funding for childcare, home care, housing and child tax credits, paid family leave, and extended Affordable Care Act subsidies. Much of this proposal would be paid for via a minimum corporate tax of 15% and increased taxes on the wealthiest taxpayers. As has been the case throughout the year, this Act will likely be much debated and revised in the Senate, and if passed, would then head back to the House for a second vote.
Inflation was the subject of many conversations in 2021 as well as one source of financial stress for many households. During the summer, monthly inflation started creeping higher, and many economists believed that the higher inflation would be short-lived. By October, 12-month inflation of 6.2% was at the highest rate since 1990 and higher than the Federal Reserve’s target of 2%. Some top contributors to this higher-than-desired inflation include supply chain issues, post-lockdown demand for goods and services, and increased prices on fuel and used cars. The effects of inflation will vary from household to household, with some feeling it more acutely than others. Inflation is a fact of life; no one can avoid it completely. Thankfully, stock growth has outpaced inflation over time. This is why it’s important to have your long-term savings invested in a well-diversified investing strategy to help your money grow faster than inflation.
GameStop is a company that sells video games, consoles, and assorted merchandise. It made headlines earlier this year when the stock price went from ~$20 to ~$483 in less than a month (January 2021). As of December 2, 2021, the stock down ~63% from earlier highs. What happened? Short story is a group of retail traders worked together (Redditt forum) to force professional money managers to buy the stock to cover their short position. This resulted in significant demand which drove the price up to levels no one expected. The summary is markets can be crazy and feel unfair in the short-run. The best way to reach your financial goals is not to avoid the markets, but to act and think long-term. Investment success is driven by patience and discipline, not gambling.
Yes, all-time stock market highs aren’t all that uncommon. In fact, we’re in the 9th year where the S&P 500 has set at least 10 new all-time highs during each of those years. In 2021, we’ve now seen 68 new highs as of November 20th. But, for many investors, all-time high prices can be a cause for concern. They worry if they’ve missed the run up. Or shy away because what goes up, must come down. While that tends to happen every six to seven years in the markets, what’s most important to remember is that all declines up to this point have been temporary. This is where evidence can help. Looking at the S&P 500 94 year history, even if you invested at all-time highs, you’d have enjoyed double-digit annualized returns one, three, and 5 years later. Another great example of how a durable, disciplined, and diversified portfolio can help you fight the temptation to try and time the markets based on headlines. We addressed this idea in a recent podcast and video here.
As we entered round two of the pandemic, headlines of yet another COVID-19 mutation known as the Delta variant took over our news and media feeds and quickly became a major economic topic of discussion for the year.
First detected in March of 2021 the highly infectious Delta variant became the predominant strain, eventually accounting for over 90% of confirmed cases across the globe this year. The variant's impact stretched across multiple economies causing businesses to scale back staffing capacity, delay workers returning to the office, and experience widespread supply chain disruptions worldwide.
Navigating an unprecedented pandemic remains a factor of concern for economic interruption as we adjust to new headlines daily. We look onward into 2022 for signs of improvement as our world economies adapt to strengthen economic resilience.
Bitcoin and Ethereum, the two largest cryptocurrencies, recently set new all-time highs in 2021. Although they’ve since experienced substantial drops in price, there is no argument that cryptocurrencies have continued to increase in popularity among investors, pop culture, institutions, as well as criminals. The first Bitcoin linked ETF made its debut on the NYSE in October and BlackRock, a global asset manager, added Bitcoin futures to two of its funds in January. Mainstream companies such as AMC will begin to accept Bitcoin payments and others like PayPal and Square are allowing users to buy it on their platforms while a number of companies have added it to their balance sheets. Lawmakers around the world and in the US continue to try to tackle laws and guidelines to make cryptocurrency safer for investors and less appealing to cyber criminals which could have varying effects on crypto in the future. One could speculate on the value of cryptocurrency could possibly hold for its investors in the short or long term but as a relatively new and speculative investment, its extreme volatility could take investors on a wild and bumpy ride.
Everyone is talking about inflation. You can’t open a newspaper, look at your phone, or go to a barbecue without hearing about it. With all this talk, it can be easy to worry about your financial future.
Video recap: https://youtu.be/iZoqhqEVR1I
On this episode of Financial Symmetry, we’ll explore the causes of inflation, historical inflation, and what you can do to hedge against this silent enemy. Press play to educate yourself and ease your worries.
Inflation is different from market risk: it doesn’t show up in your bank or investment accounts. Instead, inflation presents itself at the gas station and the grocery store, so you do feel it in your pocketbook. Since it eats away at your buying power, inflation is often referred to as retirement’s silent danger.
If you recall your college economy class, you’ll remember that inflation is caused by supply and demand. When there is a limited supply and a high demand, then prices go up. We see that happening now with auto sales due to the offline chip manufacturers and supply chain issues. During inflation, people worry that prices will continue to rise, so they want to rush out and make their purchases now.
Although it is frustrating to see your purchasing power erode so quickly, it is important to remember that there are worse things that can happen in the economy. Deflation is actually worse for the economy than inflation. Stagflation is a type of inflation that occurs when prices go up but the economy is slow and there is high unemployment. Thankfully, we have the opposite happening now since employers are having a hard time finding workers. Even though it is difficult to watch your purchasing power erode, there could be a worse economy.
The question on everyone’s mind is: will this inflation last? Over the past 10 years, we have had historically low inflation that averaged about 2%. When comparing that average to this past year’s average of 6%, it's easy to understand why people are concerned.
One way to contemplate the future is by looking at the past. In the 70s the US experienced some of the highest prolonged inflation rates that were punctuated by the shock in oil supply. After WWI Germany experienced crippling inflation when it had to repay its debts in foreign currency.
The good news about our current situation is that the supply chain issues will eventually be resolved. The bad news is that higher prices are often the best solution to higher prices. Listen in to see how that works out in the long run.
The reason we invest in companies is to hedge against inflation. A varied investment portfolio with global stocks is one way to ensure that you retain buying power down the road. In addition to creating a diversified portfolio, you should limit the amount of money that you retain in cash. Try to keep your cash to emergency savings since your purchasing power erodes over time. Another way that you can protect against this silent risk is by investing in TIPS, real estate, commodities, or crypto currency.
Whatever you do to protect your wealth, don’t let the media dictate your financial decisions. Stick to your financial plan. If you don’t have a financial plan, reach out to us to see how we can help you weather all kinds of financial storms.
The end of the year is a great time to start tax planning for next year.
Video example: https://youtu.be/lzghkK2iP3Q
This week we are discussing the strategies you can utilize to enhance your tax situation before year-end.
You’ll learn which tools you can use and how the actions you take in one area of your financial life can flow into other areas.
When considering your pre-tax retirement account contributions there are a couple of aspects that you should consider. These contributions are a great way to reduce your tax burden, but you also need to examine your cash flow.
Do you maximize your employer match? If not, look at your budget to see how you could take advantage of this free money. You could also take your savings a step further to maximize the pre-tax retirement account contribution cap. In 2021, the yearly max was $19,500, but in 2022 that number rises to $20,500.
If you are maximizing your savings, it is important to review whether you are at risk of over-contributing both this year and next. After analyzing the amount that you want to save, then you can consider which account type is best for you to save in.
Another tax opportunity is to harvest capital gains and losses. Harvesting capital losses can offset any capital gains that you have realized over the year. This year it may be difficult to find capital losses; however, this is a concept that you can explore so that you can understand how it impacts your tax return. Harvesting capital losses creates an opportunity to reduce your tax burden.
The standard deduction changed in 2017 to $12,500 for singles and $25,100 for married people filing jointly and thus causing 90% of filers to utilize the standard deduction. There are 4 deduction categories to consider when calculating whether to take the standard deduction or to itemize deductions: state and local income taxes, mortgage interest, charitable contributions, and medical deductions.
Listen in to learn if you should take the standard deduction or whether it would make sense to itemize, you’ll also hear how you could receive a tax benefit of $600 for charitable contributions.
Roth conversions can be an exciting opportunity to take advantage of current tax rates and have your investments grow tax-free. However, you have to be careful about how you take them. The best way to consider whether to make Roth conversions is to zoom out and look at your overall lifetime tax plan.
If you are in a higher tax bracket than you are projected to be in the future then taking a Roth conversion now doesn’t make much sense. You also need to consider how taking a Roth conversion now could trigger other events, especially if you are 63 or older. Listen in to hear how doing a Roth conversion at age 63 could trigger an additional Medicare premium.
Welcome to this bonus episode of Financial Symmetry with Allison Berger and Grace Kvantas. Grace and I bring you this episode as a special preview to the upcoming Women: A Force in Business Conference in Raleigh, North Carolina.
This episode and our presentation are targeted toward women professionals looking to build their retirement nest egg. Our goal is to help women achieve success and financial wealth. So if you are a woman or if you love a woman, listen in to hear how women can achieve more success and improve their financial well-being by harnessing their financial superpowers.
A recent study has shown that women are more worried than ever about their finances. ⅔ of women worry about money at least once per week and 40% suffer physically due to their financial stress. This is no surprise when you discover that the top emotion that women feel about money is overwhelm whereas for men it is confidence.
The pandemic has made women’s financial worries worse than ever since they were the hardest hit by layoffs. Once you compound women’s stress with the gender pay gap, a longer life expectancy, and a predominantly male financial industry then you realize that the odds are stacked against us.
It is a common misconception that men are better investors than women, however, this isn’t true. Women simply don’t talk about money in the same way that men do. Women are actually more likely to do well in the markets for several reasons.
Women typically spend more time researching investment choices which leads to better selections. Women also tend to buy and hold equities longer than men, this leads to less trading costs and fewer taxes on their investment income. Overall, women are more intentional investors than men.
You don’t have to carry so much financial worry. One way to ease that worry is by using your inner investing superpowers. Grace and I are here to help you to implement these superpowers so that you have a better investing experience and feel less stress when it comes to finances. If you can implement these superpowers you can come ahead financially and position yourself for a more secure retirement.
Listen in to hear what action items you need to take now to improve your financial well-being.
Anxiety-inducing headlines, all-time stock market highs and an economy still recovering from a pandemic, have left many people hesitant to invest their cash savings.
Video recap: https://youtu.be/YuytDPFD0wQ
None of us can make uncertainty disappear, but considering potential outcomes and evidence can make a huge difference in the returns you receive over your investing lifetime.
This week we are discussing strategies for how to fight the fear that comes when markets are near all-time highs.
When reading and watching the news, it can be hard to remember that financial headlines are are designed to pull at your insecurities.
Many of our everyday conversations now include inferences to supply chain issues, potential tax hikes, and inflation. The wall of worry can seem higher when crawling out of a pandemic shutdown and continues to impact investor’s confidence.
So naturally, record market highs have people wondering whether now is a good time to invest. The fear of an impending fall in the markets causes some to hold onto their cash instead of investing. Others don’t know what the right choice is for their money and are crippled by analysis paralysis.
By holding too much in cash, you’ll face the erosion of purchasing power over time due to inflation, but also experience the opportunity cost of stock market gains and the FOMO byproduct.
You don’t want to get stuck with analysis paralysis. A financial plan is key to understanding your investment strategy and helping you answer the question: should I invest my cash?
Walking through the financial planning process can help you create a disciplined and diversified strategy to provide added confidence in making your financial decisions.
By creating a financial plan, you can dial in your specific goals and time horizon. This helps you determine how much you’ll need in the short-run and how much you could afford to risk for the potential of higher expected returns in stock investments.
The potential for an immediate drop after investing is always a risk investors wrestle with. And if investing in March 2000 or October 2007, you’d have to wait roughly 6 years each time to see a new all-time high.
Alternatively, there have been at least 10 record highs achieved each year over the past 9 years. So if you waited to invest during that time, because what goes up, must come down, you could still be waiting. Paralyzed by the fear of an impending drop.
One way to combat that fear is to analyze the numbers. Let’s look at historical data.
Of the people who invested at all-time highs since 1926, 81% were better off 1 year later and 77% were better off 5 years later. That still leaves a chance that you will lose money in the short-run, which is why it is important to have a safety net. And to this point, all market declines have been temporary.
Investing is like a roller coaster ride. The only time you could get hurt is if you get out of your seat.
The average investor is susceptible to several common investing pitfalls.
One of these is recency bias. If a stock has performed well in the past then many assume that it will continue to do well. Rather than make this assumption you’ll need to study its performance over time.
Another pitfall is market timing. Many people get a feeling about the market and they try to time their entrance and exit, but history has shown that most people can not time the market accurately. Time in the markets is better than timing the markets.
Listen to this episode of Financial Symmetry to hear all of the perils that could arise by pressing play now.