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Financial Symmetry: Balancing Today with Retirement

When considering retirement, do you wonder what financial opportunities you may be missing? Busy lives take over and years pass without taking advantage. In this retirement podcast, Chad Smith and Mike Eklund unveil financial opportunities, to help you balance enjoying today so you are ready to retire later. By day, they are fiduciary fee-only financial advisors who answer questions about tax savings, investment decisions, and how to save more. If you’ve been putting off your financial to-do list or are just not sure what you’ve been missing, subscribe to the show and learn more at www.financialsymmetry.com. Financial Symmetry is a Raleigh Financial Advisor. Proudly serving clients in the Triangle of North Carolina for over 20 years.
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Now displaying: Page 5
Apr 13, 2017

Saving for retirement often feels like the biggest and most-talked about goal of financial planning. And while there's a lot that goes into successful retirement planning - healthcare costs, keeping track of spending, and tax planning - there are some pitfalls that a comprehensive financial plan can help you avoid. 

Today we're doing one of our famous Top 10 episodes and counting down the top ten retirement mistakes to avoid. We cover everything from how you should budget your spending, to unanticipated costs, to the tens of thousands you could save with intelligent tax planning.

You can find show notes and more information by clicking here: http://bit.ly/2oypJDI 

Apr 3, 2017

Today we're talking about one of the larger purchases you might make: buying a car. 90% of consumers say that price is their most important consideration when buying a car, and that negotiating is the most painful part of the process. Big purchases can be stressful and confusing, but there's no reason your financial planner shouldn't be able to make them easier. 

We walk step-by-step through the process of buying a car, beginning with determining what you can afford. You'll also have to consider the functionality of your new purchase, and what owning a car really means to you. We also cover the question of buying vs. leasing, and where to go to get independent consumer reports about cars you're considering.

You can find show notes and more information by clicking here: http://bit.ly/2nxfDAj 

Mar 16, 2017

The word "fiduciary" is being tossed around a lot lately, largely because of the Department of Labor's oncoming regulations. We thought it would be a good idea to talk about what fiduciary advisors don't look like, so you can choose an advisor that always puts your interests first.

First we talk about what fiduciary means and why it only applies to retirement advice. Then we go through a list of five examples of non-fiduciary advice so you'll know it when you see it. We cover the importance of transparency, duty of care, and the difference between suitable and fiduciary advisors. 

You can find show notes and more information by clicking here: http://bit.ly/2na4Iif  

Feb 21, 2017

For many of us, our parents getting older is a tricky situation to navigate. How do you respectfully offer your help? Ensure they get the best care? Know what to do with their bills and other finances?

For our first-ever interview, we're speaking with Cheryl Theriault of LifeLinks Care, a group of nurses, social workers, care managers, and other professionals that specialize in helping families navigate elder care. We've worked with Cheryl and her team in the past, and thought she would be an excellent guest to talk about this sometimes-sensitive topic.

You can find show notes and more information by clicking here: http://bit.ly/2kBFFiW 

Jan 31, 2017

Mike's turning 40! As he hits this milestone, they guys explore the lessons he learned over more than 17 years in the financial services industry. Mike and Chad will reflect on the top 10 lessons learned from these experiences in this week's episode of the Financial Symmetry Podcast. 

Top 10 Investment Lessons Learned

  1. Following the crowd is not a recipe for investment success. It’s OK to be different.
  2. Sometimes saying no is the best decision.
  3. Making yourself more marketable and attractive to employers through personal development will only help you in the long term through increased earnings and job security.
  4. Limit your employer’s stock to no more than 5% to 10% of your portfolio.
  5. Take the emotion out of investing by setting up an automated investing schedule.
  6. Don’t get caught up in the short-term noise; focus on the things you can control.
  7. A diversified mix of stocks and bonds gives you a better chance of sticking with your investment plan than a 100% stock portfolio. Stocks may provide a greater long-term return, but if you sell at the bottom it doesn’t matter.
  8. Implement and follow an investment strategy and stick with it in good times and bad. If you don’t have a strategy, implement one or have a financial planner help you.
  9. If you can avoid pouring too much money into equities when the market is riding high (March 2009) or too little when it’s sinking low (October 2007), you’ll be better off. Studies by Vanguard, Morningstar and Dalbar show the average investor trails the market by 1.5% to 3% per year due to poor decisions caused by wanting to jump on the latest fad.
  10. Time is your best friend: Implement a disciplined investment strategy, be patient, focus on what you can control (savings, taxes, and so on) and avoid a big mistake. If you can’t do this, hire a fee-only financial planner to help you stay on track.
Jan 17, 2017

Did you meet your New Year's Resolutions last year? Have you set goals for the New Year? In this episode, Chad and Mike discuss the five small steps you can take to make your resolutions attainable.

Dec 13, 2016

You likely would rather think about ANYTHING other than their taxes. And even though you want more tax savings, you rarely follow through with proper tax planning. Most people don’t realize the large amount of tax savings they could have by making a few simple tweaks. Instead they operate under the “penny wise, pound foolish” mantra. Missing substantial savings to save the cost of a professional. By performing professional tax planning towards the end of the year, there is often thousands in tax savings available. You can read more about our 10 tips to help you save more when filing your taxes this year.

Nov 29, 2016

Many people don't have a great idea of what do do with their bonus at the end of the year. Should you spend it? Invest it all immediately? Invest it over the coming year? In this week's podcast, Chad and Mike explore your options and help you decide how to end your year. 

 

Music this week: 

Celebration (Single Version) – Kool & The Gang from the Album Celebrate! (1980) 

Don't Stop Believin' – Journey from the Album Greatest Hits (1988) 

Used under Fair Use. 

Nov 8, 2016

Two-thirds of people admit to procrastinating when it comes to their retirement planning. In fact, the average person spends more time planning a vacation then than do planning for retirement. 

Non-urgent financial tasks love to find cracks in our to-do list, falling to the bottom fast. Mark Twain humorized this concept well with his quote, “Why do today what you can put off till tomorrow?”

Jason Zweig captured these problems in his book Your Money and Your Brain. He wrote “Unpleasant tasks often lead to pleasant results down the road. We often procrastinate the worst on things that are good for us [with] saving more in our 401(k)” being near the top. “So the problem is not that we don’t know what’s good for us. It’s just that tomorrow seems like a better time to do it than today.”

In this episode, we share some of the best reasons we’ve read, personal stories, and tips we’ve used to combat financial procrastination.

Strategies to Fight Financial Procrastination

  1. Research on why we procrastinate financially
  2. The implications & cost of continuing to procrastinate
  3. Quick ways to combat putting off what you know you need to do today financially

Facts and Links Mentioned In the Show

  1. People check email an average of 150 times a day. Peak amounts are 900 times a day. [Art of Charm Podcast with Greg McKeown]
  2. More than 2/3 of adults age 55+ admit to procrastinating on retirement planning. [Financial Engines Study 2015]
  3. This survey shows people say that 25 is the right age to start financial planning but in reality they started planning 10.6 years later. [Financial Engines Study 2015]
  4. Top 5 Reasons We Procrastinate
    • 50% blamed stress for their procrastinating
    • 40% said they had higher priorities, even though they were interested in retirement planning
    • 24% were worried about being taken advantage of
    • 23% were not sure how to go about it
    • 20% believed it was too difficult
  5. How to Beat Procrastination by Dr. Travis Bradbury [LinkedIn Pulse]
  6. Why Investors Keep Repeating Their Mistakes [ETF.com interview with Wait Buy Why Founder]

Stacking Benjamins Podcast

You can also check out Chad on the Stacking Benjamins Podcast on a special Halloween edition. He shared 5 horror stories we see regularly from when we first meet with people.

Connect With Chad and Mike

Subscribe To This Podcast

Apple Podcasts <> Spotify <> Google Podcasts

Oct 25, 2016

Can you really fail in retirement?

For most people, retirement is that time on the horizon when you get to do what you want, when you want. But surprisingly, it's not all that uncommon for people to retire only to go back to work or face other unexpected negative events that occur which people are not prepared for.

You spend a boatload of time planning the financial side of retirement (at least we hope you did). But how much time do you spend planning how you'll spend your time.

In this episode, we share ideas from an intriguing presentation given at NAPFA National 2016 where Mitch Anthony spoke about his new book The New Retirementality. He describes 10 components in the "Return on Life Index" he developed. This index details all the other areas you get a return in life that you may not regularly think about through those lenses. This includes your contribution after work, leisure, health, education, and relationship building opportunities.

Remember, you don't stop investing after you stop working. You just find different areas of your life to invest in, besides your portfolio. Take a listen to find out more of what we learned during Mitch's presentation.

Ways You Can Fail at Retirement

  1. Facts that back up our claim that many people fail at retirement
  2. 4 Key Success factors that have been found to result in a successful retirement.
  3. Resources to help you as you decide if and how to retire.

Facts and Links Mentioned In the Show

  1. For those over 65, the official number of suicides is 14.9 out of 100,000 people per the Centers for Disease Control and Prevention. These numbers for over 65 may be under reported as overdoses are assumed to be an error.
  2. In 2014, people over 50 were twice as likely to get divorced than in 1990.
  3. The book Your Retirement Quest: 10 Secrets of Creating and Living a Fulfilling Retirement by Alan Spector and Keith Lawrence
  4. Retirement Mythbusters Presentation

Two Questions to Help Avoid Failing at Retirement

  1. Think through how are you going to spend your time?
  2. Secondly, how are you going to pay for it?

Connect With Chad and Mike

Subscribe To This Podcast

Apple Podcasts <> Spotify <> Google Podcasts

Oct 11, 2016

New regulations for 401k regulations are putting even more responsibility on the employer. Understanding these new laws can be a complex, and time-consuming task. Join Chad and Mike as they walk through the basics of what employers need to know to ensure they are ready for the changes. 

Sep 27, 2016

In this episode, Chad and Mike take another look at the 401k, and how important it is to your retirement plan.

Sep 13, 2016

Much is made about keeping our physical fitness in good shape. But what about your financial fitness? In this episode, Chad and Mike discuss why its important to regularly take a survey of your financial fitness, and how you can improve it once you do.

Aug 30, 2016

This week, we're back up with the conclusion of our college planning episode! Mike takes a look at financial strategies for the final few years before your child goes to school, and what you can do to maximize your funding during this time.

Aug 23, 2016

This week, we're covering one of Mike's favorite topics: college planning. Learn what to do during the early years of your child's life to ensure you have the resources you need to support their education.

Jul 19, 2016

This week, Chad brings on special guest Cameron Hendricks, CFP® to discuss his recent experience at the FPA NexGen conference, and why it is important for your financial advisors to attend conferences in general.

Jul 12, 2016

One thing is certain, there are always going to be panics in the market. Political turmoil, natural disasters and other factors will cause markets to move, and can make you wonder: should I sell all my investments and hope that it gets better? Chad and Mike discuss these issues to discover how you can avoid making common investment mistakes with uncertainty in the markets.

Jun 28, 2016

In this episode Chad and Mike discuss managing your 401k, and how to avoid common mistakes when saving in your retirement account.

Jun 14, 2016

In this episode Chad and Mike discuss the top 5 questions they hear from their prospects, with special guest Allison Berger, CFP®.

May 24, 2016

In this episode, Chad and Mike do a "Top 10 Ode to David Letterman" of little things you can do immediately to get your finances back on track.

May 10, 2016

In this episode, Chad and Mike discuss Prince's lack of estate documents, and offer advice for listeners who may not yet have considered the importance of preparing a will. You can read a text version of this post on Nasdaq.com.

Apr 26, 2016

This week, Mike and Chad take a look at the best financial gifts you can give a graduating high school or college student. 

Apr 13, 2016

Think about the last time you felt something surprised you.  If it was a pleasant surprise, the event likely exceeded expectations.  Then there’s the surprises that catch us off guard. A great example occurs around tax time each year as many people are surprised when they owe a large tax bill. It’s tough to find anyone that would describe that as a positive feeling.

If it stops at feelings, bad outcomes are generally avoided. It’s when events fall short of our expectations where our patience can run thin and our “do something” alarm begins sounding. When this type of decision making is applied to investing, it’s likely you find an average investor.

Who is the Average Investor?

The average investor is best described as a person attempting to time the market intentionally or unintentionally based on emotional influence.  By allowing their emotions to rule decision making, selling and buying of investments tends to follow the crowd.  This phenomenon is tied to research around the psychology from Daniel Kahneman who found that losses produce twice the mental anguish as an equivalent sized gain.

Cash flow data backs this up.  Studies show investors have more money invested in funds when they are doing poorly and fewer when they are doing well.

Most of us have either a personal story or a friend or family member experience of getting overly-exuberant in the tech markets of the late 1990’s or buying real estate just before the housing crisis in 2007.  The fact is we all have some of the average investor in us, which is why having a disciplined process in place is so important.

Common Behavior of the Average Investor

One of the most common identifiers around an average investor is the desire to chase performance of a hot area.  This plays out by investing in the best performing asset class over the last 12 months or selling all of your stock investments because a financial celebrity predicts a crash ahead.

This is one of the reasons, investor returns in Morningstar trail fund returns. A recent article by Morgan Housel, You May Be A Better Investor Than You Think, discusses how average investors don’t earn anywhere close to a benchmark.  The article uses the S&P 500 fund example and demonstrates how the 10 yr annual return is 6.3% while investor return is 4.4%.  Even further many are unfairly comparing their portfolio to the S&P 500 only when their portfolio is diversified across multiple asset classes.

A recent Vanguard study titled “Reframing investor choices: Right mindset, wrong market”, that demonstrates how behavioral performance chasing has a negative effect when investing across all asset classes.

Past performance has a huge impact on the average investor’s decision making.  This is demonstrated in every market bubble that’s existed from tulips in the 1600’s to technology stocks in the late 1990’s.  Many of us remember this vividly, as the excitement around the S&P 500 peaked after investors experienced 15-20 years of earning double digit percentage returns every year in 1999 only to experience a much lower result in the next 15 years (ending 12/31/2015).

There are many studies that demonstrate how the average investor typically is penalized anywhere from 1.2% to 3% annually by making emotional decisions around their investments.

Requires Discipline

Even mutual fund managers experience poor investor returns at points. But the best ones, trust their research strategy and stick it out.  Another study demonstrated that outperformance over the long term goes hand in hand with shorter periods of underperformance as 96% of 10 year outperforming mutual fund managers had at least one three year period when they underperformed, and 47% were actually in the bottom 10% over at least one three year period.

Average investors tend to throw in the towel at some point during that 3 year period of underperformance. This is when their FOMO or FOLIA takes control– the Fear of Missing Out or the Fear of Losing it All.

Learning how to manage these emotions and implement a disciplined process is the first step in minimizing average investor type behavior.

How Do You Avoid Being The Average Investor?

Avoid short-term temptations or reactions and focus long-term – Studies demonstrate the average individual stock could move 47% to -39% over the next year but that range shrinks to 7% to 17% annualized over a 20 year period. Many investors capitulate at the wrong time, resulting in a mistake that can be detrimental to their long-term picture.

Start with a plan – Implementing a savings strategy with a disciplined investment approach helps avoid ebbs and flows in short-run.  By focusing on what you can control, the daily headlines become easier to digest.

Hire an advisor – This gives you a calming voice that can ease the uncertainty by providing historical perspective.  There’s a reason even our financial advisors aren’t their own advisors.  Finding an independent, objective fee-only financial advisor is a great step to helping you minimize average investor like thinking when it comes to your investments.

Mar 29, 2016

Young advisors often have more passion, technical knowledge and a longer runway than older financial advisors.

If we look like we could be your son or daughter, then you are likely on the right track to finding a financial advisor to form a relationship with. While we may look young, that doesn’t mean we are inexperienced or harder to relate to. Let me explain:

We entered the financial planning profession during the age of the rise of the comprehensive financial planner and we’ve had the unique opportunity of learning from a team of high quality financial planners. Many firms over the last few years have emphasized the hiring and developing of young talent. Financial Symmetry is no different and has been hiring and promoting advisors from within throughout the 15 year history of the firm. Young advisors are developed through an increased level of responsibility as well as the chance to benefit from years of observing older advisors in the firm. We have seen what type of advisor we want to be and have determined what approach best fits our personality and goals. We therefore know what we want to communicate with our clients and how to do it.

Think about those you are associated with that you trust the most…likely friends and family top the list. You have built a relationship with these individuals over time and have trusted their recommendations whenever you seek their advice. I can attest that the FSI advisors strive for this type of relationship with their clients. We want to get to know you on a personal level as well as your family so we can best see and understand your financial goals.

It is also easier to relate to us than you may think. After all our parents are just a few years from retirement themselves. We have observed firsthand from them as well as their friends and co-workers what their needs and concerns involving retirement and overall financial planning include. We are accustomed to conversing and socializing with people older than us as well as our clients are accustomed to communicating and interacting with individuals of the younger generation such as their children.

Benefits of A Young Advisor

There are some common differences you will find though, but I think they actually benefit us in a way that they won’t for older advisors.

  1. Technology: Yes, the amount of time we check our phones and social media sites may be unimaginable to you. However given this new technology age, knowledge and industry influencers are right at our finger tips. Every day we learn new and innovative ways to help us serve our clients better through reading of blogs, market commentary, and even sharing and learning ideas with other financial advisors. We are able to improve our processes utilizing the latest financial industry technology in order to better serve our clients.
  1. Retirement: We aren’t retiring soon…and that’s a good thing! As a result of this when we engage in a relationship with a client, we intend it to be for the long haul. If you are closing in on your retirement and are working with an advisor who is in the same stage of life as you then “guess what?”…they are going to retire soon as well! The years prior to and immediately after retirement can be some of the most challenging years as you juggle financial decisions and you want to make sure you have a reliable advisor by your side throughout this process, not one that is thinking about their own retirement and may pass you off to a new advisor during this time of need.
  1. Passion and Knowledgeable: No client wants to feel as if they are just a number, which can often happen when there is a lull in the advisor/client relationship. With a younger advisor we are “hungry” and “passionate” and helping our clients achieve their best financial life is our primary goal.

When you combine this passion with knowledge this can be a dynamite combination that can truly be the defining mark of an advisor/client relationship. At Financial Symmetry all of our advisors have obtained the CERTIFIED FINANCIAL PLANNER™ designation. As a result we have spent years in study, obtaining experience, and practicing in a fiduciary manner in order to engage in practices that are in the best interest of our clients.

Mar 15, 2016

I’m not sure about you, but we haven’t met many people that wouldn’t love to lower their tax payments.

As we move in to the heart of tax season, do you find yourself wondering every year around this time, what other opportunities you may be missing?

Millions of people who file their tax return themselves overlook tax opportunities each year that could save them extra money in April but they hesitate to pay to have a professional prepare them.  The hidden secret is that tax planning should be done year round.  So we put together a list of a few things we see most often missed on tax returns.

 

Maxing Tax-Deferred Savings

One of the easier ways of avoiding tax now, is to save the maximum amount in all your tax-deferred accounts (401k/403b).  Many have a tough time reaching the maximum savings limit ($18k per person in 2016).  This often brings the focus back to your cash flow as overspending keeps many from hitting the maximum amount.  Those over age 50 have an extra benefit where they can save $6,000 more each year until they stop working.

 

Not Funding HSA accounts

This is an excellent retirement account that offers a triple tax saving opportunity.  Problem is many aren’t taking advantage of it. If you have a high-deductible health insurance plan, you have an opportunity to sock away savings tax-free, that can grow tax-free and then be withdrawn tax-free.

 

Non-deductible IRA contributions & Roth conversions

High income earners still have a way to make Roth contributions. It just takes a few extra steps and involves some monitoring to do it successfully.  If you already have nondeductible IRA contributions, this is a great opportunity to get these contributions in to a Roth IRA, assuming you don’t have a larger deductible portion already built up (consider the pro rata rule in this case).  Don’t forget to fill out form 8606 to keep an accurate record of your nondeductible IRA contributions.

 

Charitable Deduction Opportunities

If you have large capital gains from appreciated stock, it may benefit you to donate these shares instead of making cash charitable contributions. Another opportunity for those who are over age 70 ½, is to make a Qualified IRA Charitable Distribution which also qualifies as Required Minimum Distribution.  This benefits you by not increasing Adjusted Gross Income on your tax return which in turn helps with medical expense deductions, social security taxation and Medicare rates to name a few.

 

Missing Any Deductions?

Some of the more common we see left off of Schedule A are car taxes, investment fees, and charitable donations. Go through your potential itemized deductions.  Look at the prior year return for some guidance.  Also, if you made a 2014 estimated payment to the state in January of this year and/or owed when you filed your 2014 state tax return then you can add those payments as a federal tax deduction on this year’s return.

If in a low bracket, you may want to delay deductions and accelerate income instead.  When your AGI ends up in the 15% tax bracket, capital gains are taxed at 0%.  So realizing gains could be beneficial here.

High tax bracket earners have an opposite focus as they are looking to reduce income. Word of warning: watch the Medicare Surcharge (3.8%) on income over $200k for individuals and $250k for joint filers. If you find yourself in this area, you may want to look for ways to delay income depending on the control you have in your income.

 

AGI thresholds You Don’t Want to Miss

  • Child tax credit (begins phasing out at $110k).  Can you make a deductible traditional IRA contribution? This could actually reduce your tax bracket from a boosted higher rate as you are not only reducing the ordinary income tax but getting an extra benefit due to the credit.
  • Itemized deduction limitations over $309k (single $258,250) – especially if restricted stock or stock options are vesting and you are selling in that tax year.
  • American Opportunity Tax Credit phases out at $160k AGI ($80k single).  If you pay for the first $4k of college expenses, you can use this credit (mentioned below).

 

ACA subsidy tax bubble

Many retirees who no longer have an employer continued health plan and haven’t yet reached 65 now have a new option – buying medical insurance through the health insurance marketplace.  Depending on the tax diversification in your investment accounts, some early retirees are receiving premium tax credits.  But be careful, if receiving the credit and your income rises above 400% of the Federal Poverty Level for the number of people in your household, you could lose all the credit.

In this situation, managing tax brackets become vital.  But to do so, you need to have saved in accounts with tax flexibility.  Tara Signal Benard summarized a breakdown of this strategy in a New York Times article titled, “Devising a Tax Strategy After the Paycheck Is No More.”

 

Don’t Forget About Other Credits

  • Pay for first $4k of tuition first to get AOTC – 3 million people missed this credit in 2014.
  • Residential energy credit for any HVAC replacement or energy efficient upgrade to house
  • Foreign Tax Credit – you lose this credit with foreign stock in IRA accounts. This is why asset location is important. Vanguard found this can add up to 0.75% per year in performance.  $7,500 for a $1 million portfolio.
  • Dependent care credit – If both spouses are working, don’t forget to include summer camp costs as this is very likely a deduction.

 

Feeling Like you Missed Something?

If you feel a bit lost after reading these examples then look to hire a professional.  Tax return for families can range from $300 to $500 depending on your situation.  Could be money well spent if they find tax savings you overlooked.

When digging in to the numbers CNBC found the more you make the more interesting IRS auditors find you.  The IRS begins to get more interested in those earning more than $200k.  According to turbotax – only 1 percent earning less than that are audited.  If you are over the $200k threshold, then 4% of your group will be audited.  It’s not until you begin earning more than a million, to where 12.5% get an audit notification letter.

If you feel like you would like a second look, we’d encourage you to find a fee-only financial planner who has knowledge in the tax planning area.  It’s very likely it could be worth it.

Other Links Mentioned During the Show

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