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, the Financial Symmetry advisors 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 Financial Symmetry is a Raleigh Financial Advisor. Proudly serving clients in the Triangle of North Carolina for over 20 years.
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Jun 3, 2019

You may have seen more news stories mentioning Opportunity Zones of late, but there are still plenty of questions surrounding this part of the latest tax reform. Today we're discussing the ins and outs of investing in Opportunity Zones to help you understand how, in the right circumstances, they could help you save thousands on your taxes. We’ll discuss what opportunity zones are, why they were created, what the tax benefits are and how to spot the risks involved when investing in opportunity zones.

What are opportunity zones under the new tax law?

The new tax law was created to spur economic investment in low-income areas throughout the U.S. by providing individual investors with tax incentives for investing in impoverished communities. The low-income areas are called opportunity zones and are identified by governors of each state. Although it was rolled out in 2017 it wasn’t until recently that the IRS updated investors on how the program is actually going to work. This program is geared toward long-term private investors with a high net worth. There are 3 benefits to the tax side of this law: tax deferral, tax reduction, and tax elimination for an investment held for more than 10 years. The primary purpose of the reform is to help economically distressed communities and in turn, it can help you save thousands in taxes. Find out how by listening to this episode of Financial Symmetry.

What are the benefits of the new tax reform law?

Under the new tax reform law, you can defer capital gain tax from the sale of real estate, a business, or stock. You can also reduce your taxes on something you recently sold and even completely eliminate taxes by reinvesting.

Here’s an example:

You sell something and earn a million in capital gain. Normally you would pay $240,000 in taxes on that capital gain. Now with the opportunity zones if you reinvest your capital gains into a qualified opportunity zone fund within 180 days you get to defer the capital gain tax on the million dollar sale. So instead of paying those $240,000 in taxes in 2019, you won’t have to pay that until 2026. Then in 2026 if you continue to hold that investment in the opportunity zone then you only pay tax on $850,000 of the million dollar original capital gain. So you’ll save about $36,000 there. But the biggest benefit overall for the program is that if you put that money into a new investment for 10 years or more you’ll pay no capital gains tax on the original investment.

What can you do to do to take advantage of the new tax reform?

To invest in opportunity zones and save on capital gains taxes you can invest in a qualified opportunity fund. A qualified opportunity fund is a corporation or partnership that is created for the purpose of investing in qualified opportunity zone property and holds at least 90% of its assets in qualified opportunity zones. The typical investment options are real estate, such as multi-unit apartment buildings, or a business located in a qualified opportunity zone.

You have to spend 100% of the purchase price in the first 30 months. So if you purchase a property for $800,000 then you have to spend another $800,000 within 30 months. The idea is that you are substantially improving the property for the amount that it is valued at. If you buy a business the same rules apply. You have to improve it somehow for that purchase amount. Remember, this is not an investment in the stock market, there is a higher degree of research involved.

What are the different risks involved?

There are different risks involved in taking advantage of the new tax reform law. As with all investing situations, attention to detail is key. Here are some of the risks with this type of investment.

  • What happens if there is a political change? If Congress changes its course over the next few years they could overturn this law.
  • You are invested in a limited partnership so you have to pay fees to the managers of the funds. They may charge 2% or you may pay a percentage of the profit. The fees involved may eliminate the tax benefits completely.
  • The money isn’t liquid. You have to hold it in the investment for at least 10 years and you won’t receive the benefits if you pull out early.
  • You’ll have to be an accredited investor.
  • You must not only buy but improve the property.
  • The 180-day rule may spur some people to rush into an investment rather than do their research into the options.

Many people don’t take advantage of things because they don’t know about it. We’re here to give you ideas and strategies that you may not be aware of. The overall goal of the new tax law is a great cause but the investment options are still pretty new. This was just an overview of rules and regulations, so do your own research. Don’t let taxes decide your investment decisions. Remember a bad investment is still a bad investment no matter what the tax benefits are.

Outline of This Episode

  • [4:07] How should the tax strategy be implemented
  • [9:19] What do you need to do to take advantage of the new tax reform?
  • [12:03] There are 3 benefits to the tax side
  • [13:45] What are the risks involved?
  • [20:27] What are other alternatives for capital gains?

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May 20, 2019

Rolling over your 401K is a complicated process so we brought in a few experts that have helped our clients rollover hundreds of 401K’s. Understanding the unexpected roadblocks surrounding a 401K rollover is a vital step in making the best decisions with your money. So listen to this episode to hear steps of how to properly rollover a 401K quickly and efficiently.

How to rollover a 401K?

Maybe you just left a job or maybe you need an in-service rollover but you are at the point that you need to rollover your 401K. So how do you do it? Unfortunately, there isn’t only one way. It depends on the type of account you have and where you want the money to go. If you have a brokerage account linked to your 401K it will make the task a bit easier. Brokerage links give you the opportunity to invest in funds at a lower cost. If you have just quit or left your job you need to ensure that all of your contributions and your employer contributions have settled before you move your 401K or you will have to redo the process again once it does settle.

How do you tackle the 401K rollover paperwork?

401K rollover paperwork can be quite daunting. Nowadays there are many forms that you can fill out online, but there are still actual papers that must be completed in person. The paperwork can be a bit confusing and overwhelming, but it is important to fill everything out correctly. Even if you mis-check just one box they won’t process your rollover and you’ll have to start the process all over again. Oftentimes you may need your spouse to sign, a notary to sign, and you’ll also need your plan administrator to sign. Sometimes finding the plan administrator can be tricky. If you know the right people to call the paperwork really doesn’t take much time. It can take a few days or even a few weeks to complete the paperwork. If you feel daunted by all the paperwork you might want to consider hiring a professional to help you out.

What are some problems that can arise with a 401K rollover?

It's important to reduce your risk of being out of the market. You want to ensure that your money is out of the market for as little time as possible. Pay careful attention to the timing and ensure that you have all your ducks in a row first. This means that you need to have the accounts where the money is going set up beforehand. If you have a brokerage link you can reduce the time out of the market. You’ll also want to double check where your allocations are in case you need to change those settings. There are many steps involved in moving your 401K and you may have to contact different service representatives to get all of your questions answered.

How can you reduce your risk?

Having your money pulled out of the market for any amount of time can be costly. If there is a way to expedite getting your check you’ll want to do it. Think about it, if you have your money out of the market and it goes up a few points you’ll be losing out trying to get it all back in. Getting the money back in as quickly as possible is important. Having a brokerage account linked to your 401K can give you the opportunity to invest in funds at a lower cost. Listen to the experts, Heather and Angela, to help you understand how to rollover a 401K to make your transition run as smoothly as possible.

Outline of This Episode

  • [1:27] How do I rollover my 401K is one of the most frequent questions
  • [6:16] How do you tackle the paperwork?
  • [7:24] How much time does it take?
  • [11:03] What are some problems that can arise?
  • [17:05] Where does the money go?
  • [27:07] What can go wrong?

Resources & People Mentioned

Connect with Heather Gudac and Angela Keeley-White

Connect With Chad and Mike

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May 6, 2019

What does your financial future look like? Do you feel it is secure and well planned out or are you just winging it? Winging it is a great idea for a Sunday afternoon drive or deciding to what to eat for dinner, but winging your financial future is a dangerous decision that will put your future stability at stake. Learn why people decide to wing it and what you should be doing instead, on this episode of the Financial Symmetry show.

Short video recap here:

What are the numbers and why are people winging their financial future?

We love numbers on this show. They help to illustrate the point we are trying to make and sometimes they are truly shocking.

  • 75% of Americans are winging it when it comes to their financial future
  • Less than half of Americans cannot cover a $1000 emergency
  • Most people feel they make about $1200 worth of financial mistakes per year
  • 4 out of 10 Americans simply guess how much they will need to retire.

Why do people do this to themselves? Why do they choose to leave their financial future up to chance? I think there are 3 main reasons.

  1. They don’t want to pay for professional advice.
  2. They can’t afford professional advice (or think they can’t afford it).
  3. They think they can handle the work themselves

Are you letting overconfidence power your financial decision making?

Are you overconfident about your ability to handle your finances? 57% of adults feel more confident today than they felt 3 years ago about their finances. Do you feel a bit overconfident due to the recent success of the financial markets? Overconfidence is a villain when it comes to good decision making. Usually the more intelligent you are the more overconfident you are. Mark Twain had a powerful quote that sums up overconfidence well, “It ain’t what you don’t know that gets you in trouble. It’s what you know for sure that just ain’t so.” A great way to ensure that you aren’t being too overconfident in your financial decisions is to hire a financial advisor. Having an objective 3rd party view of things can really help you keep things in perspective.

Is your confirmation bias affecting your financial future?

The internet is starting to play a major role in creating greater confirmation bias. People tend to follow their own views and they will seek out news that confirms what they already think about something. If someone has a negative worldview and they read an article about how the market will be crashing they will nod their heads and think, yes this is the truth. To combat confirmation bias think of the acronym WRAP from the book Decisive by Chip and Dan Heath.

  • Widen your options
  • Reality test your assumptions
  • Attain distance before deciding
  • Prepare to be wrong

Recency bias can affect your thinking about the future

People think they know more than they do about how the future will unfold. More often than not, the future will surprise us. Our conclusions about the future are often based on our emotions. They can also be affected by recency bias. Recency bias is a bias based on the fact that people tend to think that what happened to them recently will happen to them in the future. This can be seen frequently with finances for instance, if you have received a big bonus, or especially when it comes to stocks. Are you allowing recency bias to affect your financial future?

Outline of This Episode

  • [5:27] Overconfidence can spoil your financial decisions
  • [11:15] Are you allowing confirmation bias to affect your financial future?
  • [13:46] Recency bias affects many financial decisions

Resources & People Mentioned

Connect With Chad and Mike

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Apr 22, 2019

Financial advice has long been a male dominated industry.  Women represent 51% of the US population, but only 23% of CFP® professionals are women and this percentage has stagnated over the past decade.  Why is there a feminine famine in financial planning?  Today we’ve invited Allison Berger and Grace Kvantas back on the show to discuss the 6 main challenges that prevent women from becoming financial advisors. As we shed light on these topics, we share ways we are fighting against these stigmas.  We also celebrate Grace as the latest partner of Financial Symmetry. Listen to this episode to hear why there aren’t many women in financial planning but also why that should change.

See show notes here:

Why did Grace become a financial advisor?

Grace is a rarity among women in the field.  She knew that she wanted to become a financial advisor at the age of 15.  Her dad was a CFP® and it was at that young age that she realized that she was taught money lessons at home that many others never received.  She wanted to help others learn what her dad had taught her. In college, she learned so much more about finance, but she still didn’t understand the depth of what one learns as a CFP®.  It was only on the job that she began to understand all that a financial advisor really does.  Listen to this episode to hear about Grace’s journey to becoming a CFP®.

What does it take to become a CFP®?

Many people don’t know the difference between a financial advisor and a CFP®.  The CFP® designation is the standard of excellence in financial planning.  Becoming a CFP® takes a bit of work. You must have a bachelor’s degree and take the coursework first prior to taking the CFP exam. Candidates also need to have 3 years of qualifying experience or 2 years working directly with CFP professionals. After obtaining the CFP designation, Certified Financial Planners must maintain continuing education.

Why is financial planning a great field for women?

Now is a fantastic time to become a financial advisor. The average age of financial planners is over 50 and ⅓ of advisors are projected to retire within the next 10 years.  Women are uniquely positioned to excel as financial advisors in the years ahead.  Listen to this episode to hear why 72% of women who pursue the CFP® designation report high levels of career satisfaction.

Why aren’t more women in financial planning?

We walk through the CFP Board whitepaper detailing recommendations to increase the number of women CFP® professionals and the reasons women are not pursuing this career path.

  1. You can’t be what you can’t see.  Financial planning is not top of mind as a career path for many women. Grace and Allison discuss their efforts to increase awareness and encourage others to consider financial planning.
  2. There are misperceptions about the work.  Most think that this career path is very math heavy. Make no mistake, the CFP® exam and coursework require math skills and you will use math every day in this field.  However, math is only one tool in the process toward helping clients reach their goals.  Successful financial advisors also require the ability to build relationships and counsel clients as life changes.
  3. Women’s own behaviors may be holding them back. This phenomenon was detailed in Sheryl Sandberg’s book “Lean In,” which we discussed in Episode 73.  Women may not feel as comfortable taking the career risk this industry may require.  This is a multi-faceted issue but learning more about the inner workings of the career can help break down these barriers.
  4. Gender discrimination and bias exist in the field.  Unfortunately, there are still biases and many women don’t feel welcome in the industry.  Both Allison and Grace are sometimes asked if they are someone’s wife or secretary.  The good old boys’ network is still alive and well in financial planning, but this is changing, and it is easier than ever to connect with other women on this journey.
  5. Work/Life Balance is not an issue.  When asked to respond to the statement, “Financial planning offers good work/life balance,” only nine percent of Men and 10 percent of women disagreed.  Contrary to popular belief, work-life balance is no longer a predominantly women’s issue.
  6. There are not enough female role models. Grace and Allison are working to change that.  Listen to this episode to find out where to turn for helpful advice and encouragement.

Resources & People Mentioned

  • WIN CFP - The CFP Board’s women’s initiative

Connect with Grace Kvantas and Allison Berger

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Apr 8, 2019

You've just sold your business. Or maybe you received an inheritance. Making decisions on how to handle the lump sum proceeds can be paralyzing. We all have that fear of making a mistake with the money and when the stakes are high, the fear is heightened. You might be wondering how wise it is to invest a big chunk of money with the markets near all time highs. When dealing with a lump sum, there is more to consider than just investment decisions. Listen to this episode to hear about the things you may not have thought about when considering your lump sum investment options.

You have 3 options when you come into a large sum of money

You may have received an inheritance, sold a business, or received stock options or restricted stock. However you received the money, there are really only three things you can do with it. You can spend it, pay down debt, or invest it. In fact, spending a portion of your newfound wealth to treat yourself is a good first step. Then take a step back and analyze your new financial picture. How have your goals changed? Is retirement now just around the corner? How will you need to invest to accomplish your new objectives? Many people are quick to want to pay off all debt. But first analyze the kind of debt you have before rushing to pay it all off. Paying off credit card debt is generally a good idea, but you might want to rethink paying off your mortgage. Before you make any decisions on what to do with the money you should take some time and consider all of your options carefully.

Analyze the tax implications

When receiving a lump sum of money, it is important to estimate the tax burden that comes with it. You don’t want to spend all of the money and then discover that you owe a large amount in taxes. No one likes to pay penalties so it is important to do some tax planning first. Take a comprehensive view of your tax strategies with a professional to help you consider all the options. There are many strategies you can consider to help ease the tax burden. A donor-advised fund is a great choice for the charitably inclined. Are their retirement accounts (SEP-IRA, 401k, Roth IRA, HSA's)  you haven't been maxing prior to the lump sum? Could front-loading a 529 account be right for you? What's your plan for health insurance and how will the premium tax credit affect you? You also want to consider the timing to ensure that your strategies are used in the same calendar year that you receive the lump sum.

What are some lump sum investment options?

We would all love to have a crystal ball to tell us the perfect time and place to invest our money. Instead, we ask questions like, should you invest it all at once? Should you invest in small increments over time? Or do what too many people do, and don’t do anything. Vanguard had an article which analyzed these lump sum investment options from a historical perspective. It turned out that about two-thirds of the time it was better to invest all at once. But, if you were prone to sell if experiencing a big loss in first few months, then investing over the next year may be best. Bottom line was that if you wait too long, you could end up regretting it. We all have that fear of making a mistake, but that fear of missing out in a rising market compounds the difficulty of long-term decision making. Understand that your decisions won’t be perfect but at the end of the day, it's all about the big picture. Think about your investment strategy. What assets make the most sense for your goals? Implementing a customized strategy for your specific desires will give you the comfort of being able to sleep at night, knowing you have a plan in place.

Outline of This Episode

  • [3:27] What are your options if you come into a large sum of money?
  • [7:53] Analyze the tax implications
  • [10:55] How to invest the lump sum
  • [16:08] Update your estate documents
  • [20:05] What is your cash flow?

Resources & People Mentioned

Connect With Chad and Mike

Subscribe To This Podcast

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Mar 25, 2019

Have you checked out the new federal tax forms? You probably don’t want to wait until the last minute to prepare your taxes this year. With the new tax code here you’ll want to give yourself plenty of time to get familiar with the new federal tax forms. But before you get started you need to arm yourself with as much information as you can about the new tax code. That’s why today we brought our very own tax extraordinaire, Grayson Blazek to share his extensive knowledge of the new federal tax forms. Listen to this episode as Grayson helps us understand what the new tax forms look like, what’s changed, how to save and be more efficient on taxes, and what planning opportunities there are to prepare for next year.

What’s different on the new federal tax forms?

Well, that time of year is here again, everyone’s favorite season: tax season! You may have heard that there are many new changes this year to the 1040. The idea behind the new federal tax form is to simplify the tax filing process. The new 1040 is touted as a postcard, while not exactly postcard sized, it is down from 79 lines to 23. Although there are only 23 lines on the new tax form there are several addendums which utilize a building block approach. There might be a touch of confusion for the first few years, but the new tax forms should be pretty easy to get used to. Listen as Grayson explains the new federal tax forms and takes us on a tour of the new 1040.

Here is the lowdown on the new schedules 1-6

  • Schedule 1 is similar to lines 10-36 of the old 1040. It is used to report extra income items like rental income and real estate and other above the line deductions.
  • Schedule 2 generally covers the old lines 45-47. It is used for the alternative minimum tax. You may not even see this one since most people won’t come across it.
  • Schedule 3 replaces lines 48-55 on the previous tax form. Schedule 3 covers child tax credits and dependent care credits.
  • Schedule 4 is a replacement for lines 57-63 and covers self-employment.
  • Schedule 5 is used for estimated tax payments and amounts paid with extensions
  • Schedule 6 is the 3rd party designee.

Besides the new federal tax forms, what else has changed?

Obviously, the changes in the tax code are not only in the format. There are several other changes made as well. They eliminated personal exemptions which were $4500 per taxpayer on the 2017 return as well as dependents. The child tax credit used to be $1000 per child but has been increased to $2000 per child. The income threshold has been increased. There has also been a substantial change to standard and itemized deductions. And it is estimated that the number of people that will itemize their deductions will lower from 20% to 5%. Although there are fewer deductions your overall tax burden may be similar. Listen to this episode to hear what else has changed with the new tax code.

What are the planning opportunities?

When preparing your taxes each year you have the opportunity to reflect on what you could have done to decrease your overall tax burden and what you can do in the future to ease your tax burden. Consider whether you should be taking advantage of your retirement savings accounts or health savings accounts. You can also think about your deductions and how efficiently you can space your charitable deductions. Decide whether you could donate every other year to get past the new threshold for itemized deductions. A donor-advised fund is a great tool to use when planning for your taxes. There are many other planning opportunities to consider so listen in to discover how you can begin planning next year’s taxes.

Outline of This Episode

  • [1:47] A tour of the new 1040
  • [7:01] Besides the form what else has changed?
  • [9:31] Changes to the schedule A were the main overhaul
  • [14:26] How has the overall tax rate changed?
  • [18:17] What are the planning opportunities?
  • [27:20] What has changed with the qualified business income deduction?

Connect with Grayson Blazek

Connect With Chad and Mike

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Mar 11, 2019

It wasn't that long ago that the most popular television show in America was named "Who wants to be a Millionaire?" Before that, in the 1980s, we were enamored with "Lifestyles of the Rich and Famous." There's something about the idea of becoming a Millionaire that fascinates us. But what is it about the wealthy that sets them apart from the rest of the population? How are their choices different from the average investor? If you've ever read Thomas J. Stanley’s The Millionaire Next Door, you might have a bit of an idea. We recently read The Next Millionaire Next Door by Dr. Stanley's daughter, Dr. Sarah Stanley Fallow, to learn about new insights into the minds of the next generation of millionaires. If you're curious about the strategies, discipline, and characteristics of millionaires and how they may have changed over the past 20 years, you'll want to listen to this episode.

See the full show notes here:

What does today’s millionaire look like?

It may be surprising to find out that wealthy people are just like you and me. Most millionaires that were surveyed drive practical cars like Toyotas, Hondas, and Fords that are about 3 years old. Remember millionaire is a term that describes wealth, not income. Your income is what you have today, and wealth is what you have tomorrow. In the U.S. in 2018 there were 11 million households with a net wealth greater than a million dollars. The book separated the wealthy into 3 groups, under accumulators of wealth (UAW’s), average accumulators of wealth (AAW’s), and prodigious accumulators of wealth (PAW’s).

What Are the Most Common Characteristics of the Wealthy?

There are 5 important characteristics of the wealthy.

  1. Wealthy people are well-disciplined.
  2. Millionaires are resilient and can persevere.
  3. Rich people are honest with others.
  4. Millionaires understand how to get along with others and work well with others.
  5. 90% surveyed were married and had a supportive spouse. (Divorce decreases wealth by 70%!)

Do you have these characteristics of rich people?

What are some success factors that lead to wealth?

There were many interesting findings of the characteristics of millionaires in the book. Not surprisingly, education was critical to the success of most millionaires. 93% of those surveyed had a college degree and 60% had a graduate degree. What may be surprising to some, is that attending a private school or even a top-rated school was not important. The ability to focus is a key factor in the success of the wealthy. Another important characteristic mentioned, is the ability to track spending. The vast majority understand where their money goes.

These are the least important success factors of the wealthy.

  1. Attending private school
  2. Attending a top-rated college
  3. Graduating at the top of the class
  4. Undertaking an internship in college

How do millionaires spend their time?

It sounds like wealthy people spend their time just as carefully as they spend their money. Wealthy people work more than the average American. They work about 38 hours a week on average, whereas the rest of Americans average 32 hours a week. Millionaires read more too. Books build a framework of knowledge for you to look back upon and analyze. Wealthy spend much less time on social media than the average Joe. They average only 2 hours a week and other Americans average 14 hours a week. Rich people also exercise more and spend more time caring for their family. How do you compare to the millionaires around you?

Outline of This Episode

  • [6:07] What are the different groups of millionaires?
  • [6:29]What are some characteristics of the wealthy?
  • [14:08] What are some success factors that lead to wealth?
  • [18:52] How do millionaires spend their time?
  • [22:06] Where is rich people's money invested?
  • [26:08] What is Chad’s takeaway from the book?

Resources & People Mentioned

Connect With Chad and Mike

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Feb 25, 2019

Money and relationships don’t always go hand in hand. Making you wonder if you and your partner are speaking the same financial language. If money is causing stress in your relationship, you are not alone. 31% of couples say that the biggest cause of stress in their relationship is money. We want to help you communicate better with your partner about money. On this episode, Allison Berger joins us to discuss four common financial disagreements in couples. Listen in to learn how to better your relationship with your partner and with money.

You spent how much on that?

Does one person in your relationship spend more than the other? Oftentimes one partner feels that the other spends too much. This is so common since opposites attract in relationships. Our partners help to balance us out. So what can you do if you feel that your partner spends too much? Communication is key. It is important to be on the same team and make sure that you have the same financial goals. You can create a financial plan to keep you in check and keep you both on the same page. This way you can see if you are meeting your financial goals. Having a financial advisor can also be a great way to get a 3rd party’s view on the situation. The advisor can help take an objective opinion when there are arguments about spending that arise.

Saving and investing takes coordination

One spouse generally enjoys security more than the other and the other prefers to spend more money. When you have a financial plan in place, you can coordinate how best to save and invest for your specific objectives. Paying yourself first is a great first step. Automating your savings makes life so much easier. One way to easily increase your savings is by doing so when your income goes up. You can simply increase your 401K contribution whenever you get a raise. Another way to save more is to look for opportunities to increase your savings. If you pay off a car you can use the money you used to pay each month for savings instead.

Deciding on how much risk to take with Investments

The most common question we hear centers around people wondering if they will have enough? To best answer this question, the amount of risk in your strategy will play a tremendous role. Everyone has a different risk tolerance when it comes to investing. Sometimes one partner prefers to take risky investments and the other prefers to play it safe. Once again communication is key to understanding how your partner feels about investing. First, you should think about what your financial goals are as a couple. Open communication and education can help you understand each other’s feelings about risk tolerance. Learning about investments can also help you feel more comfortable about investing.

Differing philosophies on debt

Debt can be an unnerving issue for some causing some to lose sleep at night. Understanding your feelings on debt as well as your partner’s feelings can help defuse arguments before they even pop up. People have different feelings about money based on past experiences. Often our concerns about money manifest in childhood. Learning both why you and your partner feel the way you do about money can help you better communicate your needs and come up with a financial plan that you can both agree upon.

Outline of This Episode

  • [1:27] The biggest cause of arguments in relationships is money
  • [3:22] What are the biggest disagreements with couples related to money?
  • [6:12] Does one person in the relationship think the other is too spendy?
  • [12:14] How much to save and invest and how much to spend?
  • [17:33] What is the best practice on the difference in risk in investment strategy?
  • [21:18] There can be a lot of emotions around debt

Resources & People Mentioned

Connect With Chad and Mike

Subscribe To This Podcast

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Feb 11, 2019

Our listeners and clients often ask: Is now a good time to invest? Or what should I invest in? We give feedback on both these questions in our 2019 Investment Outlook episode. Be sure to check out the show notes for this episode in particular as we provide detailed charts to help demonstrate our discussion. If you are curious as to whether now is the time to jump into the stock market, what role bonds play in your portfolio, or what the experts say about the future of the markets then you'll want to listen to this episode.

2008 Review

After logging strong returns in 2017, global equity markets delivered negative returns in US dollar terms in 2018.  Common news stories in 2018 included reports on global economic growth, corporate earnings, record low unemployment in the US, the implementation of Brexit, US trade wars, and a flattening US Treasury yield curve. 

Many are still wondering why should we invest overseas given returns in the US have been so strong?  Investors should remember that non-US stocks help provide valuable diversification benefits, and that recent performance is not a reliable indicator of future returns.  It is worth noting that if we look at the past 20 years going back to 1999, US equity markets have only outperformed in 10 of those years—the same expected by chance. We can examine the potential opportunity cost associated with failing to diversify globally by reflecting on the period in global markets from 2000­-2009, commonly known as the “lost decade” among US investors. While the S&P 500 recorded its worst ever 10-year cumulative total return of –9.1%, the MSCI World ex USA Index returned 17.5%, and the MSCI Emerging Markets Index returned 154.3%. In periods such as this, investors were rewarded for holding a globally diversified portfolio.


Are there risks today to invest in the stock market?  Yes.  Have their been risks in the past?  Yes.  Through all these risks the global stock market has gone from $1 to $59 from 1970 to 2017

History has found certain periods have resulted in higher returns than others.  Part of this can be explained by starting valuation.  Valuation is one of the best indicators of long-term returns (i.e. 10 years), but it is a horrible short-term timing strategy.  One popular valuation metric we’ve discussed in the past is the cyclically-adjusted price-to-earnings (CAPE) ratio.  Instead of dividing price by the past 12 months of earnings, the CAPE ratio divides price by the average inflation-adjusted earnings of the past ten years.  The idea is to smooth out the good and bad years created by the business cycle.

Is the CAPE Ratio a good predictor of future returns?  According to a study by Research Affiliates titled CAPE Fear:  Why CAPE Naysayers are Wrong, starting CAPE Ratio has between a 48% to 91% correlation to future 10-year returns across 12 countries.  So yes, starting valuations do matter over the subsequent 10-year period.

In addition, below Exhibit 4 is the average future 10-year real return based on starting US CAPE Ratio. As of December 31, 2018, below are the current CAPE ratios of the major equity markets:

  • US Stock Market = 29
  • MSCI EAFE (int’l developed) = 15.5
  • MSCI Emerging = 12.5


As noted in our recent blog, Crystal Balls and CAPE, when one market (US or foreign) was trading at a material premium (such as today), the other market stock market outperformed over the subsequent 10-year period.

What is the purpose of bonds in your portfolio?

Our belief is that high quality bonds in your portfolio provide the following benefits:

  • Balance – diversification from equities
  • Safety – capital preservation
  • Income – interest payments

Bond returns are largely driven by the term and credit quality of a bond.  Long-term bonds experience bigger price movements for a given change in interest rates.  Investor are expected to be compensated for taking that extra risk as a result.  The same can be said for lower credit quality bonds such as high yield bonds.  As the current time the spreads – the gap between the yield on credit and Treasuries – have remained narrow by historical standards.  For bond investors, that means the compensation for taking on credit risk is relatively low, and the upside from here could be quite limited.

Future returns of bonds are highly correlated to the starting yield. Therefore, as of 12/31/2018 the yield on the Barclays U.S. Aggregate Index was approximately 3.28% which is depicted in the exhibit below.  Therefore, over the next 7-10 years investors can expect returns similar to starting yield levels. Overall, bond yields have increased over the last couple years, but remain low compared to historical levels.

How about Cash?

The Federal Reserve raised rates four times in 2018 and nine total adjustments over the past four years.  The benchmark interest rate is in a range of 2.25% to 2.5%.  The benefit of this is many investors have seen higher returns from their bank accounts but borrowing costs have also increased.  What will the Federal Reserve do next?  I have no idea, but below are the current market/Fed expectations as of December 31, 2018.  You’ll notice the Federal Reserve and market is not expecting material rate increases from this point forward.


To summarize, with low returns expected for US stocks and bonds many investors allocated primarily to US stocks will be disappointed with returns over the next ten years.  As a result, individuals may need to either work longer or spend less than expected to reach their financial goals.

For current savers a market decline should be viewed positively as it allows them to buy stocks at cheaper prices.  For existing or soon-to-be-retirees it is important to understand your risk capacity and risk tolerance and adjust your asset allocation accordingly.  You’ll need equity for long-term growth, but it is important to have high-quality bonds for current spending.

What can you do about potential lower returns?  First, focus on what you can control (spending, taxes, estate planning, etc.) and your long-term financial plan.  If you don’t have a financial plan in place, it’s the perfect time to contact a fee-only financial planner such as Financial Symmetry.  Second, implement a long-term, disciplined investment strategy.  And no, buying the mutual fund/ETF/stock that has done the best over the last three years is not a strategy.  If you don’t have a disciplined strategy or want to learn more about our process click here to download our white paper.

Outline of This Episode

  • [1:37] Is now a good time to invest in the stock market?
  • [4:41] How do you evaluate when the best time to invest is?
  • [12:22] What is the purpose of bonds in your portfolio?
  • [16:53] What is the role of cash in a portfolio?
  • [18:20] What do the experts say?
  • [20:35] How do you prepare for lower returns?

Resources & People Mentioned

Connect With Chad and Mike

Subscribe To This Podcast

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Feb 1, 2019

What are the habits of successful investors? You may think that there are big differences between successful and unsuccessful investors. In the book Atomic Habits, by James Clear, he identifies the small habits that lead to success in life, these habits apply to investors just like anyone else. We all have intentions of doing the right thing, but there is a big gap between intention and action. Only about half of our intentions turn into actions. Join us on this episode to find out what sets successful investors apart from the rest of us.

See the Full Show Notes Here:

Small Habits Make a Lifetime of Difference

  1. Successful investors bridge the knowledge and action gap. They understand delayed gratification. Successful investors realize that small changes compound over time. The difference between success and failure is that the cost of good habits is in the present and the cost of bad ones is in the future. If you can delay your gratification to the future it will benefit you greatly down the road. This is true for exercise, eating well, saving, and investing.Successful investors don’t let emotions derail their strategy. In fact, successful investors find a way to deal with the boredom when most people don’t because the greatest threat to success is not failure, but boredom.
  2. Successful investors minimize the valleys of disappointment. These are the times when you don’t feel like you’re going anywhere. It’s a hallmark of any compounding process: the most powerful outcomes are delayed. Most people know that delaying gratification is the wise approach and all of us want the benefits of good habits, but those benefits are seldom top-of-mind at the decisive moment. For successful investors, that’s not the case.
  3. Successful investors possess the ability to implement their intentions. When one says they are going to do something, it’s not a general idea. The successful investor creates a specific plan with an actionable timeframe.
  4. Successful investors know how to track their habits. We all know that life is a balancing act. It is hard enough to balance work and family life. If you throw in exercise and fun then investing can quickly take a backseat. Tracking your habits can allow you to recover quicker after a time of difficulty. A good investor can compare their investing with planting a tree. You don’t go out and check on your tree daily to look for growth. Simply set up a system for care and watch it grow over time.
  5. Successful investors practice self-control. Self-control can be challenging in times of uncertainty. Luckily there are plenty of ways to automate investing. Hiring a professional is another way to help you practice self-control. You don’t have to try and be an expert at everything, put your investments on autopilot or ask for help.
  6. Successful investors refine and reflect on their strategy. Small changes can greatly improve your success at investing. When you make small changes it makes you more aware of your mistakes and opens paths to improvement. Small improvements now can lead to major improvements in the future.

Are you ready to implement these habits for success?

Making small changes can really make the difference in your life. When you bridge the gap between your intentions and actions you begin to change your habits and start on a path to success. Implementing these strategies can help to make you a better investor and they can be applied to many other areas of your life as well. Listen to this episode of Financial Symmetry to hear how you can create successful habits as an investor and these can bleed over to other areas of your life.

Outline of This Episode

  • [1:27] Half of all intentions actually turn into action
  • [5:45] Understand delayed gratification
  • [7:18] Minimize the valleys of disappointment
  • [11:00] Implement intentions
  • [13:14] Habit tracking
  • [15:20] Controlling your self-control
  • [19:11] Refine and reflect
  • [21:57] A recap of the 6 habits

Resources & People Mentioned

Connect With Chad and Mike

Subscribe To This Podcast

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Jan 14, 2019

If asked, most people are hopeful they will have a happy retirement. They're just not sure they are taking all the necessary steps to get there. We all have those moments in our busy lives where we stop and ponder, am I doing what I need to enjoy retirement? But then our busyness continues and takes over any productive changes we considered. As financial advisors, we work with people in all phases of life and often chat with retirees that have walked this path. The happiest of them agree, there are 4 main areas that contribute to their happiness. If you want to prepare for a happy retirement then listen to this episode to hear 4 secrets to a happy retirement.

Happy retirees take their health seriously

The happiest retirees are able to move their bodies so that they can remain active. Physical exercise has the benefit of getting the endorphins going and creating joy. Staying active is an important part of maintaining a healthy lifestyle as you age. You can’t wait until you retire to become active or it will be too late. Part of creating a healthy body is by moving more now. Even though it can be a challenge to find the time to create a healthy exercise habit, this is an important part of ensuring that your body will work the way you want as you age. Are you doing what you can now to make sure your body will still function the way you want in your golden years?

Happy retirees have enough money because they had a financial plan

Happy retirees have enough money to retire with and are financially independent. Are you doing everything you can to ensure that you will have a comfortable retirement? What savings rates do you need to have to have a comfortable retirement? How do you know that your money won’t run out when you retire? There are so many questions about money and retirement. A financial advisor can help ease your concerns about finances in retirement.

Having enough money means you will have less stress. A financial plan will help you make sure that you are saving enough. This may be obvious to some, but the fact is, only 35% of pre-retirees have a written financial plan. If you are unsure if you are saving enough now is the time to meet with a professional that can give you peace of mind. We recommend finding a fee-only financial planner to help you make sure you are doing all that you can to have the savings you need so that you won’t have to worry your way through retirement.

A strong sense of purpose can ensure a happy retirement

You need not only have a financial plan but a personal plan as well. If you have a strong sense of purpose that drives you this will help you to spend your retirement in a fulfilling way. Volunteering your time is a great way to further your knowledge and pass on your wisdom. Creating a life of purpose doesn’t just ensure that you aren’t sitting at home watching tv all day, it can result in leaving a legacy behind. What are your retirement plans? Are you planning to retire to something rather than away from something?

Relationships are important to a happy retirement

Happy retirees have friends. The happiest retirees interviewed have stated that they have a sufficient amount of friendships. Those with fewer friends are 3 times less likely to be happy. Are you developing friendships right now that will transcend the test of time? Creating friendships through common interests is a great way to ensure that you will have a number of friendships when you finally leave the work world behind. So how are you doing in these 4 areas? Do you feel like you are setting yourself up for a happy retirement?

Outline of This Episode

  • [2:17] Happy retirees take their health and wealth seriously
  • [4:52] Happy retirees have enough money to retire on and are financially independent
  • [9:22] Happy retirees have a strong sense of purpose
  • [13:03] The importance of friendships

Resources & People Mentioned

Connect With Chad and Mike

Subscribe To This Podcast

Apple Podcasts <> Stitcher <> Google Play

Jan 1, 2019

2018 gave us a December to remember, with the S&P 500 index losing 9% for the month, locking in the worst December performance since 1931.

From peak to the most recent bottom, the S&P 500 has fallen more than 20%, marking the first bear market since 2008-09. Now the bear market is here, are you prepared to deal with it?

This most recent drop has given us all a scare. Does the drop have you worried? 

Did you prepare for the bear market beforehand?

Preparing for stock market drops prior to experiencing one, helps you digest results when it occurs. It doesn't change the fact that disciplined investing is difficult. And while you'll never be excited about stock market declines, you can be prepared. 

On this episode, we clue you in on the tricks for surviving a bear market. You’ll learn what a bear market is, the questions people typically ask when the markets drop, how to prepare for a bear market, and how to recognize a bargain when you see one. The markets are always changing, are you ready for what’s ahead? Listen to this episode to help you weather the storms that bear markets bring.

What do people ask when the markets drop?

In long and strong bull markets, overconfidence is plentiful as positive returns inflate our perception of our investing skill-sets. But when the markets drop, we are quick to question our investment strategy. People ask themselves:

  • Should I be doing something different?
  • Should I be buying?
  • Should I be selling?
  • Should I buy cryptocurrency or gold?

We feel the need to act when we see our nest egg evaporating. The biggest question people ask is: what do I need to do to preserve my money? If you feel like you need to sell and go to cash then you could be taking to much risk. Risk tolerance can be thrown out the window when things are going well. It’s when things go south, you learn your true risk tolerance levels. A poor decision in a bear market can often take years or even decades to recover from. Listen to this episode to help you learn how to make the right decisions in a bear market.

What is a bear market?

A bear market occurs when there’s a drop of 20% in a particular stock market. This differs from a recession which is declared after there are 2 consecutive quarters of negative GDP. Many people think there must be a recession to have a bear market, but not every bear market results in a recession. However, they do tend to work together. There’s about a 50/50 chance of having a bear market coincide with a recession. As painful, as bear markets can feel, they do happen much quicker than bull markets. The average length of your typical bear market is 1.4 years, contrasted with an average bull market at 4.5 years.

How can you prepare for a bear market?

Bear markets can be scary to watch and unfortunately, the news channels cover them constantly. People pay more attention to bear markets since they are sensationalized by the news media. The most important thing to remember is to follow your strategy. If you feel like you need to get out immediately and go to cash then you are likely taking too much risk. Unfortunately, we can’t follow our intellect and instinct when it comes to investing. Our instincts influence us to stop the bleeding and sell stocks to hold more cash. The problem with that strategy is big up days occur very close to big down days. So when volatility spikes, your time in the market matters than trying to time the market.

How do you recognize a bargain?

The silver lining of a bear market, is the buying opportunity they create. For many investors that are steadily saving in their investment accounts, bear markets present bargains for higher long-term returns. But how do you know the best time to invest more in stock? How do you ensure that you are not buying too early?  Studies show the best strategy is to invest a lump sum upon receiving, as your average long-term returns are higher with stocks vs. other alternatives. Our emotions tell a different story. Catching a falling knife is a risky game.  This is where personal circumstances matter most. What does your future income, spending and savings rates look like? When will you need your savings? Answering questions like these gives you a head start on the best choices for your life. Because “knowing” what will happen in the short-term is a fool’s game. Understanding the historical context can help, if it gives you the confidence to begin and stay invested through potential worsening conditions.

Warren Buffet once said, “widespread fear is your friend as an investor because it serves up bargain purchases. Personal fear is your enemy and it will also be unwarranted.”

Outline of This Episode

  • [2:27] What do people ask when the markets drop?
  • [5:48] What is a bear market in stocks?
  • [10:22] How can you prepare for a bear market?
  • [16:10] How do you recognize a bargain?
  • [20:36] 5 Points to remember in a bear market

Resources & People Mentioned

Connect With Chad and Mike

Subscribe To This Podcast

Apple Podcasts <> Stitcher <> Google Play

Dec 17, 2018

Welcome to Financial Symmetry, the podcast to help you discover financial opportunities that you may be missing as well as to warn you about many financial mistakes that you can make. We are here to help you improve your life through finances. Finances are so complicated which is why we are here to help you answer questions about your daily financial life. We are here to give helpful hints and education rather than financial advice. On this episode, we discuss our top 4 most popular podcasts of 2018. Listen to this episode to hear what our top 4 most popular podcasts were, as well as many of our favorite podcasts.

Our most popular podcasts are quite diverse

Our 4th most popular podcast aired relatively recently and we discussed why you should bother diversifying your portfolio with international stocks. On that episode, we highlighted why the U.S. has done so well and why you would want to have a mediocre portfolio by mixing it up with international stocks. We discussed the risks of investing internationally as well as our tendency toward home country bias. Episode 67 discussed the long-term benefits and how they can shine through our short-sighted viewpoints. Have you listened to the Why Bother Diversifying episode?

What investment decision process should you implement?

Episode 52 was the 3rd most popular podcast of 2018. The markets had just dropped when this one aired which makes everyone nervous. It’s important to remember that the markets frequently fluctuate. We often forget the rough times in the financial world which is why it is so important to have an investment plan. An investment plan isn’t there for the easy times when all is well, it’s there to help you through the hard times. That episode mentioned how to get through the emotional part of investing. We love to give you a glimpse behind the curtain so to speak so that you can see our own details and strategy that we use here at Financial Symmetry. Do you have a financial plan in place?

5 Easy ways to improve your financial decisions

I’m glad this was the 2nd most popular episode in 2018. It discussed how we often act against our own best judgment. We tend to place more value in small rewards now rather than larger rewards in the future. This episode included easy steps that anyone can implement to improve their financial situation. We talked about small wins, automation, accountability, and how to have a bigger awareness of spending. Check out episode 60 to find out how to improve your financial decisions.

The top episode took us by surprise

We were surprised by the number one episode of 2018. Episode 61 was our most downloaded episode. This one aired in June and discussed how to plan a more enjoyable vacation. We love encouraging experiences over things. Experiences create lasting memories and things are easily forgotten. Check out episode 61 if you are planning your next vacation. Find out which episode didn’t make it into the final 4 as well as which podcasts we really enjoy listening to on this episode of Financial Symmetry.

Outline of This Episode

  • [3:27] What are our top 4 podcasts of 2018?
  • [4:42] Why bother diversifying with international stocks
  • [7:04] What investment decision process should you implement
  • [10:25] 5 Easy ways to improve your financial decisions
  • [15:20] Planning a more enjoyable summer vacation
  • [17:58] What is the one that didn’t make it
  • [19:28] Some other podcasts you might enjoy

Resources & People Mentioned

Connect With Chad and Mike

Dec 3, 2018

Working moms face a difficult balance. People often feel that most women have a choice whether to work outside the home, but the reality is, 65% of families need both parents to work. Women in the workforce is a family issue, not simply a women’s issue, so this episode is useful for more than just women. Allison and Grace join us again to dive into the topics of gender bias, women in the workforce, and they provide helpful strategies and resources to help anyone that is struggling with how to balance it all.

Women face both internal and external gender bias

Studies have found that as women achieve more success in the workplace they lose their likeability. This can make it a challenge for women who want to chase success. Even directly out of college women seem to start out behind men as they begin their careers. Only 7% of women negotiate their first salary whereas 57% of men do. Men are often rewarded for their drive and ambition while those same traits in women are considered self-serving and greedy. In Sheryl Sandberg’s book Lean In, she gives useful advice on how to make the most of your career and motherhood. Discover how to overcome your own gender bias on this episode of Financial Symmetry.

What is truly essential to you?

Working moms aren’t the only ones that seek the perfect work-life balance. But is work-life balance a myth? One way to bring more balance into your life is to consider what is truly essential to you. Once you give yourself permission to stop trying to do it all then you can make your highest contribution to the things that really matter. The book Essentialism by Greg McKeown inspires readers to prioritize what they really need. This book can help you reconsider what is essential in your life. How can you reconsider what is important to you? Listen to this episode to hear more about this book and other resources for working moms.

How do successful women spend their time?

Some people seem to be so great at managing their time. What Laura Vanderkam discovered is that when you focus on what matters to you then you will make time for what you want. She emphasizes that time is elastic and you can stretch it to get what you need out of life if you prioritize what is important to you. We are all given the same amount of time in a week, it’s how we use our time that counts. Successful women get paid for the quality of work that they do, not the hours that they put in. How do you prioritize your schedule and make time for what you really want?

Discover resources for working moms

As you come back to work after having a child your life changes immensely while that of your husband doesn’t change much at all. Even though men often take time off of work, they are not faced with the same kinds of difficult decisions that women face. When returning to work you have to consider how much you will miss your kids when you go back. You have to decide whether you should you stop your career and stay at home or continue to work. Those that normally cheer you on now question all of your decisions. Listen to this episode of Financial Symmetry to find some fantastic resources for working moms.

Outline of This Episode

  • [3:49] There are gender biases both internally and externally
  • [12:45] What is essential to you?
  • [17:12] How do you strike a balance with your spouse?
  • [23:50] Can you achieve more by doing less?
  • [30:10] How do successful women make the most of their time?

Resources & People Mentioned

Connect with Grace and Allison

Connect With Chad and Mike

Subscribe To This Podcast

Apple Podcasts <> Stitcher <> Google Play

Nov 19, 2018

As the holidays near, visions of new tax savings dance in our heads.  But knowing how to spot them is what really matters. With all the new tax law changes, Will Holt joins us again to guide you through seven tax opportunities you can take advantage of before year-end. Some of these tips can save you thousands of dollars, so listen in to see how you they may benefit your personal situation.

7 Tax Opportunities to Take Advantage Of

1. Tax Harvesting (Loss or Gain) – This hasn’t changed with the new tax law, but depending on your tax bracket, that percentage of tax you pay may have. If you’re facing a significant amount of capital gains or expect large capital gain distributions, with the rough October performance, you may want to consider tax loss harvesting. This allows you to offset some of those gains and even go a step further, by using $3,000 of net losses against your income. It may seem counterintuitive to sell at a loss, but it could be an opportunity to offset high taxes. If you are in the new 12% federal tax bracket and lower, realizing more gains could be an opportunity instead, as these could be realized at 0%. But knowing your tax rate and all expected income is required. Discuss with a professional to know for sure.

2. Max Retirement Contributions – Understanding how close you are to the max of your retirement accounts, could present extra tax-advantaged savings at the end of the year. Maxing your 401K contribution is the first place to check. If you get a big year-end bonus, this could be a good trigger. Don’t forget your HSA, as this account provides a triple threat of tax savings (tax deduction, tax deferral, tax-free withdrawals).

3. Convert a Roth IRA? – Doing a Roth conversion can help you stay in your tax bracket by moving an IRA into a Roth. With the new lower tax rates, this could be an opportunity to lower the inevitable tax you were going to pay on this savings. Additionally, you will be taking money out of a tax-deferred account and moving it into a tax-free account. This is a good option for early retirees with large taxable accounts. But you’ll need to be more precise going forward, as the opportunity to recharacterize if you overshoot is gone.

4. Bunching Charitable Contributions – The new tax law has increased the standard deduction for individuals to $12,000 and for married couples from $12,000 to $24,000. This means around 90% of people will now be taking the standard deduction according to the Tax Policy Center. If you forecast your itemized deductions could be higher than the standard amount, consider bunching your charitable contributions into 2-year bundles. One way to do that is by using a bunching tool called a donor-advised fund.  The donor-advised fund allows for more flexibility in taking the deduction now, but still allowing for spreading contributions throughout the year. For more information about donor-advised funds, refer to episode 59 for more details.

5. Look at a Qualified Charitable Distribution Early in the Year – One of the opportunities, that hasn’t changed but is getting more attention, is the QCD or qualified charitable distribution. To enjoy this opportunity you are required to be age 70.5 and older as you can designate a portion of your required annual distribution directly to a charity. This takes some precision and should be targeted for earlier in the year when the RMD still needs to be taken as it must come directly out of an IRA and go directly to the charity of your choice.

6. 20% Deduction for Qualified Business Income – If you are a small business owner or entrepreneur the qualified business income deduction will be of interest. What’s come to be called the QBI deduction, or 199A deduction, is used for any business that is not a C corporation. If you have self-employed income or are an S Corporation, you can receive a deduction of 20% on your profit. However, there are income limitations. After you listen to this tip you’ll want to sit down with your tax professional and plan your taxes. We wrote a more detailed article on potential savings with QBI here.

7. Watch the Tax Torpedos – To truly understand your own tax planning, you have to watch specific income thresholds. We refer to these as tax torpedos. For example, if receiving a premium tax credit for health insurance, you could lose your entire subsidy if you surpass the income limitations by even $1. These are set according to the amount of family members (up to 4). A great example of why tax planning matters throughout the year as well. We discuss other important income thresholds dealing with the medicare premium surcharges, child tax credit cutoffs, and roth IRA limits.

As you prepare for the holiday season, make sure you take a second look at your tax planning. By watching out for these financial opportunities, you could end up saving yourself thousands of dollars in taxes. It’s important to have a multi-year tax strategy and always consider the big picture, not just what is happening now.  Being financially smart means considering all aspects of your financial life.  This time of  year, that begins with looking for ways take advantage of new tax laws for your personal situation.

Outline of This Episode

  • [2:47] Tax loss harvesting
  • [6:51] Retirement accounts tax savings
  • [9:00] The Roth conversion
  • [12:09] The new tax law increased the standard deduction
  • [15:36] Qualified charitable distribution
  • [19:43] The qualified business income deduction
  • [22:37] Specific thresholds to look out for

Resources & People Mentioned

Connect with Will Holt

Connect With Chad and Mike

Subscribe To This Podcast

Apple Podcasts <> Stitcher <> Google Play

Podcasts <> Stitcher <> Google Play

Nov 5, 2018

If you've paid any attention to financial news recently, then you didn't have to look far, as stock market noise was at a peak. Media headlines were filled with phrases like: epic turmoil, getting crushed and no place to hide.

Emotionally charged words that make you feel like you need to do something to prevent losing more of your nest egg. But following our instincts when investing, can lead to dangerous outcomes.

In times like this, we need a strategy to give us proper perspective. On this episode of the Financial Symmetry podcast, we’ll discuss why market fluctuations are incredibly normal and provide techniques to help you cope with short-term volatility and keep your focus on long-term goals instead. If you’re getting nervous about the direction the market is taking, you’ll want to listen for steps to confront the inevitable next occurrence.

How to Deal with the Emotional Roller Coaster of Investing

When listening to financial news it's important to remember that the media’s ultimate job is to sell advertisements. It's not their job to help you see the long-term picture or help you reach your financial goals. Easier said than done when markets around the world experience a 10-15% drops.

But if we back up, history provides a different perspective. Market volatility is reliably normal, but it can still make you feel nervous. To truly understand the ups and downs, take a look at the chart below from the Capital Group. There have been 12 full-blown bear markets since 1945. A 5% or more decline in the market typically occurs 3 times a year. And a 20% drop usually occurs about every 4 years. The past 10 years have actually been the anomaly. It is important to remember that a bear market isn’t a bad thing.

It’s actually a great time to reassess your investment plan and evaluate your risk tolerance.

Fight Stock Market Noise with Facts

With breaking news coming at us as quick as we want it with social media, it's even harder to block out the noise. Whether tweets or 24 hour cable news, today's financial news is near immediate compared to 30 years ago when you may not hear it until the next day.

In Jason Zweig's book, Your Money and Your Brain, he provides some powerful questions to prevent your feelings from overwhelming the facts. Instead of listening and reacting to the financial news du jour, stop to pause and think about if anything else has changed in your financial picture, other than price of your investment. 

  • Consider if your reasons for investing in that investment is still valid? 
  • If I liked this investment enough to buy it at a much higher price, shouldn't I like it even more now that the price is lower? 
  • What other evidence do I need to evaluate in order to tell whether this is really bad news?
  • Has this investment ever gone down this much before?
  • If so, would I have done better if I had sold out-or if I had bought more?

What Should you Do Next?

To successfully navigate a bear market, you have a long-term strategy in place. Cliche? Sure, but considering where you are in life now is instructive in developing your treatment plan for market short-term sickness.

If you're in your 20’s and 30’s don’t worry, there is still plenty of time. Investment choices still matter at these ages, but not nearly as much as your actual savings amounts. Choose and stick with an investment plan so you can steadily take advantage of the drop in stock prices, a fantastic long-term sale.

If in your 50's and 60's, it's much more important to focus on your overall investment strategy. How does your asset allocation match your retirement timeline? For many in this walk of life, investment returns will be larger than your annual savings amounts. You'll also be facing the sequence of return risk which can eat a big portion of your retirement without a strategy.

Professional help at this point, can help you respond accordingly to market events and more importantly, act as an accountability partner. Having a buffer between your emotions and the markets may be the most important financial decision you can make. 

Outline of This Episode

  • [1:17] Examples of fearful headlines in the news this month
  • [4:01] Why you should not be worried about market fluctuations
  • [7:32] Stick to your strategy and investment plan
  • [12:26] What are your emotions telling you to do?
  • [18:26] What should you do next?
  • [23:45] Fight fear with facts
  • [29:04] Next time on Financial Symmetry. . .

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Oct 22, 2018

October is here so time to gather around the campfire. With Halloween around the corner, we are highlighting a few spooky financial stories that have scary circumstances. These feelings typically bleed in to stock markets as well. October is often wrongly characterized as the worst month for people to invest. Primarily because people remember the big historical market drops that happen during October.  But scary moves for your portfolio aren't the only thing to fear in your financial planning. For all our listeners who love movies, you're in for a treat. We've picked 5 spooky financial stories that pair up with some classic Halloween movies. Listen in for some truly terrifying financial stories.

Not Seeing the Forest for the Trees

Remember Jack Nicholson’s classic movie, The Shining?  "All work and no play makes Jack a dull boy.” Finding a work-life balance is difficult for so many of us. We had a client that saved diligently over a hard-working career. While building an impressive savings for retirement, he put off vacations, opting for promotions up the corporate ladder. But once he was finally ready to retire and enjoy his savings, he was diagnosed with a nebulous nerve condition that required daily care and limited physical motor functions preventing him from enjoying his hard earned savings. While we can't prevent crippling medical conditions, we can build in balance to our financial plans. Understanding how your savings and spending will transform throughout your life helps you make more confident decisions while enjoying time with those most important to you.

Seeing Something Others Can’t

“I see dead people.” A now infamous quote from The Sixth Sense. This is because Haley Jo Osmond's character can see things others can’t.  Similar scenarios occur when life is full of busyness that blinds us to opportunities that could make a noticeable long-term differences. Instead, by surrounding yourself with people who can spot things you can't see, you set yourself up for new opportunities to bolster your financial progress. The back-door Roth provides a great example. You may think you make too much money to enjoy the benefits of a Roth IRA, but maybe you didn't have enough time to fully understand and follow through with it.

How to Avoid the Blair Witch Scenario

The Blair Witch Project is a frightening scenario about a group of friends that wander into the woods without a plan. They lose their map and this leads them into trouble. Don’t let this be you. If you don’t have a plan you can swerve off course and lose your way to retirement. Many pre-retirees lose sleep over not having enough money because they didn’t set spending limits. You need to have a plan in place and know how much you can afford to spend and how much to save. Do you have a specific and customized plan for your life and your retirement?

Nightmares that Bring Confusion

Some employees are confused about how best to handle employee income incentives. This is much like the people in Tim Burton’s The Nightmare Before Christmas who are confused when Christmas comes to Halloween TownMany employees don’t have the time or expertise of how best to deal with RSUs, ESPPs, and Stock Options. Partly due to the tough decisions of when to exercise, sell or hold. So many tend to hold, where positions build and concentration risk grows. This is breeding ground for nightmare scenarios of holding too long and not diversifying. Listen to this episode to learn how to deal with the familiarity bias and ensure that all your financial eggs are not in one basket.

Don’t Neglect to Invest in your Human Capital

Ghostbusters 2 is a classic tale of reinvention. The Ghostbusters are forced to reinvent themselves after their business goes bust at the end of the first movie. But their is beauty in their resilience and how they trust in their expertise. This is a good metaphor for our own lives. It is important to invest in your own human capital and have the resilience to face negative events that can happen in your own life. If you continually improve your knowledge you will be able to bounce back from challenges and change the trajectory of your life. Investing in yourself will always bring a high return on your investment.

Outline of This Episode

  • [2:57] Not being able to see the forest for the trees
  • [7:16] Seeing something others can’t
  • [12:21] How to avoid the Blair Witch scenario
  • [17:50] The nightmares that bring confusion
  • [22:11] The neglect to invest in human capital

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Oct 8, 2018

If you're a mid-career professional, life is full of demands. You've worked incredibly hard to get here. You're sandwiched between young kids and aging parents. Your job is challenging and life is busy. Be it a technology company, medical practice or your own small business, stress comes with the territory during this season of life. This is fertile ground for growing a financial mid-life crisis. With all that's going on, it’s hard to know if you are making the right financial choices, because you don't have time to stop and focus on the financial considerations of the moment. Understanding this, we've compiled a list of the 8 most important wealth builders for all of you hard-working mid-career professionals.

Saving vs. Enjoying Life?

As income increases to it's highest point in life so far, higher spending follows suit during these years. Deciding how much to save brings new challenges as bigger questions come in to focus. Things like when you really want to retire, changing careers, buying a bigger home for kids, or just remodeling your current home. When entertaining life-changing transitions, taking inventory is the first step. Where have you saved to this point? How will a major life change impact the long-term picture. Weighing alternative lifestyles are ripe with complexity that only becomes clear when comparing planning customized scenarios.

What Are Your Tax Options?

Everyone loves finding more tax savings. The best way to ensure you don’t have unwelcome surprises come tax day is to dissect your tax planning at the end of each year. Many tax saving opportunities are left on the table when other priorities dominate your time. Longer work hours, traveling, and shuttling kids to events take all our attention in our 40s. Without proper attention, you never know when potential tax savings are missed.

How Are You Invested?

When starting out, how much you are saving matters much more than the returns you can earn on those savings. But upon reaching mid-career higher earnings, your investment returns could become larger than the actual annual savings. At this point, your asset allocation moves front and center. Choosing how to divide your investments could pay off if busy lives don’t get in the way. Even an increase of 1.5%/year has a huge impact over time. As with many other things in personal finance, building wealth should be boring with little things adding up in a surprising way over time.

What kind of plans do you have in place for your estate?

When the mid-career attention is divided, important items get ignored. Several of these include life, disability and health insurance for your family. We all know insurance can be expensive, but not having the right kind of insurance when you need it can be detrimental. Many people set up their beneficiaries when they first set up their accounts and then forget to ever update it. Part of your estate planning is choosing a guardian for your children and ensuring that the right people are the beneficiaries of your estate. Working with a professional can assure your estate is in order regardless of any eventuality.

Outline of This Episode

  • [4:27] How much should you be saving vs. enjoying life?
  • [8:55] Should you buy a new home?
  • [11:01] Are you saving enough?
  • [13:09] What are your tax options?
  • [14:35] What is your investing process?
  • [19:15] Life insurance
  • [21:02] Health insurance
  • [22:03] Estate planning

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Sep 24, 2018

When making your retirement decision, you likely get one chance to get it right. These type of situations are where checklists can shine. Understanding all your financial opportunities pre-retirement can make life-changing differences in your retirement journey. Which is why on today’s episode, we are giving you our beautifully detailed Pre-Retirement Checklist to help you make the best of your transition. Because the decisions you make now will have a lasting impact on when and how you can retire. This checklist provides you with a detailed step by step approach to giving you the tools to prepare for your best retirement.

“Good checklists...are precise. They are efficient, to the point, and easy to use even in the most difficult situations. They do not try to spell out everything--a checklist cannot fly a plane. Instead, they provide reminders of only the most critical and important steps--the ones that even the highly skilled professional using them could miss. Good checklists are, above all, practical.”
― Atul Gawande, The Checklist Manifesto

What Will Retirement Look Like?

Answering this question brings a smile to most people, as they secretly picture the time they'll have to do all the things they've put off. But the biggest secret is some of the biggest financial opportunities occur just before and a few years after retirement. Lowering taxes in your highest earning years, and maxing low tax brackets in the first few years of retirement helps you hold on to more of your hard-earned savings. With so many things to focus on during the retirement transition, maximizing all opportunities is difficult without reminders. Enter the pre-retirement checklist. With 60 items highlighted, you're sure to find something to look in to for your own situation. With a plan this detailed, you can be assured you will feel confidence in your retirement transition.

We are not built for discipline. We are built for novelty and excitement, not for careful attention to detail. Discipline is something we have to work at.” 
― Atul Gawande, The Checklist Manifesto

How Much Can You Spend?

Surveys show when planning for retirement, a major concern is knowing how much you'll have to spend in retirement. Figuring out where income will come from is a significant part of retirement planning. Retirement income can come from social security, pensions, retirement savings, part-time work, and passive income. Knowing how you spend your money informs how much income you will need. Tracking 12 months of spending prior to retirement gives you a great start, but when forecasting you'll want to understand how your priorities will change throughout retirement. Taking time to work through the pre-retirement checklist helps spur thinking how spending may change. Taking a tour through the full pre-retirement checklist will help your achieve the most successful retirement for you and your family.

The Tax Diversification of Your Net Worth

Before you retire, taking inventory of assets and debts gives you meaningful feedback. You're now planning to start taking money out of all the accounts that you have nurtured and grown for so long. This actually may be challenging to watch as your savings begin to diminish. One of the more popular (and longest) sections of the pre-retirement checklist helps you understand how you can save more in taxes. Tax diversification helps structure your assets to be as tax efficient as possible.

Insurance Decisions

Insurance may be the biggest question in retirement these days, especially health insurance. Planning to retire before you are eligible for Medicare is creating a conundrum of choices for pre-retirees.  For many COBRA will be your choice for up to 18 months after you leave your job.  However, if you've diversified your savings effectively, you could find cheaper health insurance on the federal exchange via a subsidy.  This takes specific tax planning annually. Outside of health insurance, you may not have thought about long-term care insurance, but it's something you should consider with the rising costs of long-term care. Working with a financial advisor, allows you to model potential scenarios of extended skilled nursing situations providing feedback if you can self-insure or not.

Outline of This Episode

  • [1:27] Our pre-retirement checklist
  • [4:29] What are the big decisions that you have to make in retirement?
  • [9:30] Where is your income going to come from?
  • [15:00] What is your net worth?
  • [21:41] How can you save more in taxes?
  • [23:49] Where will you get insurance?

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Sep 10, 2018

It's easy to stick with investments that are leaving all other assets in the dust. In fact, logic tells us because they're performing so well, we should buy more of it. While you're at it, shouldn't you go ahead and dump the lousy performers in your portfolio? These emotions are what makes investing so difficult. Additionally, when you diversify your investments, mediocrity is inevitable. Given the tear U.S. Stocks have been on, it's a good time to talk through the risks and benefits of diversifying away from areas that have been the top performers. Despite how cliche it's become at this point, the phrase "past performance is no guarantee of future results" is still a truth. Memories of previous bubbles seem like the distant past. Some of us don't want to believe and others don't want to miss out on gains any longer. Whatever the reason, it's inherently difficult to diversify away from seemingly never-ending profits.  So in this episode, we discuss the answer to why you even want to bother diversifying with international and emerging market stocks and what the results could be going forward.

Why have U.S. stocks been so tempting?

The U.S. stock market has enjoyed outstanding results over the past ten years, earning around 10.7% per year (S&P 500 with dividends through August 2018). With numbers that consistent, it's hard to find a reason to diversify with international equities when U.S. stocks are on such a hot streak. But we live in an interconnected world, our coffee, cars, electronics, are all created across the globe. While US stocks represent just 50% of global market values, 70-75% of Americans invest solely in U.S. stocks, influenced by home country bias which is common throughout the world. Furthermore, out of the last 20 calendar years through 2016, no country had the best-performing equity market for more than two years. As Howard Marks once said, "There’s little I’m certain of, but these things are true: cycles always prevail eventually."  

Why would you want a mediocre portfolio?

Having diversified investments means there's always something you'll despise in your portfolio. This amplifies the fear of missing out on a high flying tech performer. Especially the past 10 years, where U.S. stocks outpaced foreign and emerging stocks by over 6% per year during that period, which is why it's a challenge to remember the Lost Decade from the 10 years prior (2000-2009). Investing often makes us shortsighted. Creating pressure that tempts us to pick winners when markets aren't going our way. Even if diversification feels mediocre, it increases the reliability of longer-term outcomes. Allowing you to have winners in all types of market cycles.

What are the risks of investing internationally?

We highlight 4 major risks when dealing with international investments in this episode. Tariffs and trade wars have dominated the news cycles of late, but so far it's more talk than action. Equity markets often react to short-term noise based on overblown fears and exuberant hopes. Currency fluctuations will affect the value of your foreign returns as well. A rising dollar against other currencies will hurt foreign stocks. We also discuss economic and geopolitical risks in many areas of the world. Yes, there's always a reason to avoid investing in poorly performing areas, but valuations should be considered. We mention and link an article below discussing the historically high correlation of valuation metrics with 10 year future returns. So despite the risks, this research raises some interesting questions about the prospects for international and emerging stocks going forward. But this requires discipline and diversification. The type of discipline that you could question for years. Likely the same way most investors were questioning U.S. stocks prospects in 2009. We've all seen how that's turned out. 

Outline of This Episode

  • [1:27] How and why you should diversify your portfolio
  • [6:30] When you diversify you will have a more mediocre portfolio
  • [11:32] Why aren’t people investing in international stocks?
  • [17:55] What are the benefits to investing internationally?
  • [22:05] We have no idea what will happen in the future
  • [25:22] Have a disciplined approach to investing

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Aug 27, 2018

On this episode of Financial Symmetry, Chad and Mike revisit a few previous episodes to cover some important financial questions that frequently come up. Taken from episode 6 is the question: Do I need a financial plan? With this question comes further questions. You’ll want to listen in to hear what the answers are. Episode 11 asks the question: What little things can you do to improve your financial life? There are so many little things you can do to improve your finances, listen to this episode to hear what they are. The last question is taken from episode 13. How will you pay for your child’s college? You won’t want to miss this episode to discover the answers to these financial questions.

Do you really need a financial plan?

Many people, including our clients, wonder if they really need a financial plan. Is it worth your time and money to create a financial plan? People that have a financial plan discover more opportunities to save money which is a great way to make the plan pay for itself and then some! Compare a financial plan to a doctor’s checkup. Revisiting your planner and your financial plan each year is a great way to stay on track and focused on your financial goals. A financial plan is not just for retirement, it is something you should begin when you start your career. Listen to this episode to hear why you wouldn’t want to live your life without a financial plan.

What are some little things you can do to improve your financial life?

Improving your finances doesn’t necessarily mean that you need to let go of all little luxuries you have become accustomed to. There are actually quite a few things that you can implement now that are relatively painless. The most challenging part of implementing these action steps are simply setting them up. One simple way you can improve your financial future is to set up an automatic monthly deposit into your investment account. This used to be something difficult, but with the advent of mobile banking, it can literally be done with the push of a few buttons on your phone. Listen to this episode to hear simple steps you can take to improve your finances.

How to improve your financial future with your 401K

Another way people to improve your financial situation is to make the most of your 401K. Some people don’t even have this set up to take advantage of their employer match. They are leaving a 100% return on the table! Make sure that your 401k is set up to deposit the most that you can each month. When setting up your 401K it is important to diversify. Many people are afraid to do anything with their 401K account and simply leave it all in cash or employer stocks. They are missing out on a great way to grow their money. Listen to this episode to hear how important it is to set up your 401K properly so that you can get the most out of your retirement savings.

How to pay for college?

Paying for college can seem like such a daunting task. A state university education can cost $100K and a private university can be more than double that. There are a few things you can do right now to help you figure out how to pay for your children’s education. There are many different ways to pay for college, but the important thing is to have a strategy. It is important to choose the right school for your child, one that has the right fit. By knowing what you can afford this can be a great way to limit your child’s choices and help you choose the best fit. It is important to remember not to focus on the sticker price of the school because there are many ways to reduce the costs of tuition. Listen to this episode to hear some great ways to create a strategy for paying for college.

Outline of This Episode

  • [1:27] Do you really need a financial plan?
  • [11:32] Little things you can do to improve your financial life
  • [19:39] How to pay for college?

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Aug 13, 2018

All of us have a subconscious financial bucket list of things we want to accomplish. After having meetings with thousands of clients collectively over the years, we have a pretty good sample size of the biggest checklist items people would include on their financial to-do list. Now it’s Chad’s turn to share reflections on his 40th birthday. While Mike looked back highlighting lessons he’d learned, Chad looks forward describing the biggest bucket list items people hope to accomplish within their personal finances. Everyone has different things that they worry about or financial goals they are trying to achieve. On this episode, we explore what really gets people excited about financial planning.

When should you retire?

Most people have entertained thoughts about retiring early. It is a dream for most when starting out. The retire early movement is about having the financial freedom to spend your time as you choose. To retire early you need to understand what you spend, what you save, and how your investment portfolio should be allocated as a result. But many people don’t realize what they’re spending. Important points when considering an early retirement is finding the best way to withdraw your money from a tax perspective, having a disciplined investment strategy, and planning how to best pay for health insurance. Having a plan for these will help you decide if you can retire early.

Elevating Milestones Along The Way

How do you balance delaying gratification and celebrating achievements? Many people pencil in becoming a millionaire near the top of their bucket list. Despite being an arbitrary number, it’s one that is concrete and still a significant symbol of consistent savings over a working career. If you’ve ever read The Millionaire Next Door, you know the simplest way to reach this goal is to live below your means. By delaying gratification you can invest more in your future. Sometimes you may miss opportunities but your rewards will come later. Try to sustain your momentum by celebrating milestones along the way. According to the book, The Power of Moments, elevating smaller milestones on the journey can speed up your progress.

Taking a Life-Changing Vacation

Not sure the Bucket List would exist if it weren’t for vacations. Thinking, planning, and sharing the trips we hope to take gives color to financial planning in unforgettable ways. Are you able to spend whatever you want on a vacation without guilt or worry? Steward Butterfield, the creator of Flickr and Slack, shared a great definition of levels of wealth related to vacations in a recent episode of the podcast How I Built This. Many  clients rely on a financial advisor to give an objective third-party view of how much they should spend on a vacations. When talking through this with clients, we set up a customized yearly cash-flow plan that helps you see the longer-term effects of your vacation dreams. As we discussed in previous episodes, lasting experiences hold great value of their own, especially when planned for appropriately.

Eliminating the Mortgage

Searching for security creates a wave of emotions when dealing with money. For many, this manifests in the desire to pay off their mortgage. Many feel that true financial independence can only come from living completely debt free. But before you write that check to pay off the mortgage you may want to think twice. Is there value in having a mortgage? Could it be a good financial move to keep a mortgage even if you can pay it off? You have liquidity and equity even if you do carry a mortgage. Paying off a mortgage is an important level of security for many. If you are going to pay it off, you need to think first where the money will come from.

Outline of This Episode

  • [3:27] 5 financial goals people have
  • [4:20] Retiring early
  • [7:40] Understand how much tax diversity you have in your accounts
  • [8:19] Have a disciplined investment strategy
  • [9:35] Health insurance
  • [12:02] Becoming a millionaire
  • [18:18] What about vacations?
  • [22:45] Becoming debt-free
  • [25:17] Creating a legacy for your children

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Jul 30, 2018

One of the difficulties in decisions around retirement, is most people only get one chance. One of the more essential decisions centers around when and how you choose to take Social Security. Maximizing your benefit has huge impacts to you retiring well. So this is not a subject that should be independent of your complete retirement financial plan. Carefully analyzing the best options could mean hundreds of thousands dollar differences for you throughout retirement.  So in this episode, we answered 8 of the top questions we hear about social security in less than 30 minutes. Our hope is that you'll have a desire to dig deeper in your on analysis, to assure you are making the best decisions for you and your family.

Who is eligible for social security?

The social security program was created in 1935 to promote the economic security of the American people. It takes about 10 years of work history for someone to become eligible for the benefits. The system works on credits and you need 40 credits over your lifetime (earn up to 4 a year). If you're married, you're eligible for spousal benefits especially if you don’t have as much of a robust work history. There are also disability and widower benefits. If you land in the latter category you should work with a CFP to help you understand your best filing options. Social security benefits are calculated by taking your highest 35 years of earnings and your benefits are calculated by these.

When should I claim social security?

The big question that everyone wants to know is, when should I claim social security benefits? The trick is, the answer is different for everyone. You can start claiming social security at age 62, which 34% of people do, or you could wait until age 70, which only 4% of claimers do. Full retirement age ranges from ages 65-67. Claiming your benefit before your full retirement age reduces your benefits by 5-6% annually. So claiming at age 62 could be a reduction of 25%. On the flip side, every year you wait to claim social security after full retirement age, your benefit grows by 8%. When deciding when to claim your benefit, health and life expectancy also should play a role in your decision. The decision about when to claim is an important one that can have significant financial ramifications.

Married couples have more benefit strategies to consider

A married couple has a lot to consider when it comes to thinking about filing for social security benefits. A spouse that hasn’t worked as much as the other is entitled to 50% of the higher earner’s social security benefit. For those born before January 1, 1954, the restricted benefit is still an option. Where one spouse, can take a "restricted" benefit equal to half their spouses monthly benefit. If one spouse passes early then the other spouse is entitled to the higher earner’s benefit amount. There are 3 main options for couples to consider: both spouses delaying, the higher earner delaying, or both taking early benefits. With singles, it is much easier to decide when to get your benefits, but still should be weighed with other income sources and current market environments.

When will Social Security run out?

A big influence on why people take Social Security early is the fear that it won't be there in the years to come. We've heard for years that the social security fund will eventually run dry. While it's true that the worker to retiree ratio is getting smaller, we shouldn’t have to worry about the program completely running dry in our lifetimes. Current projections show that social security will not be able to fully fund retirees beginning between 2033-2035. But, the system won’t run out completely and it could fund 70% if nothing is done to solve the problem. A few of the potential solutions include:

  • Pushing the claiming age out (last extension in 1983 only affected those 45 and younger at the time)
  • Increasing Social Security taxes through payroll deductions
  • Benefit Cuts to certain income levels

Listen in to hear the rest of the questions chocked full of useful information to help you uncover the mysteries behind the social security system.

Outline of This Episode

  • [2:07] What is social security?
  • [3:07] Who is eligible?
  • [7:00] When should I claim social security?
  • [13:05] Married couples have more social security strategies to consider than singles
  • [17:37] What about widows and divorcees
  • [19:07] Social security taxes
  • [21:49] When will social security run out?

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Jul 16, 2018

Do you ever feel financial advisors speaks a different language? Many clients feel their advisors throw around financial terminology that creates more confusion than clarity. Financial planners use mnemonics and acronyms since they are a great way to remember things. But the shorthand can be confusing to those that are unfamiliar with them. According to Investopedia, there are around 1900 financial acronyms, and more being created daily. Join us on this episode as we decode 10 of the most common to give you a head start in the next meeting with your advisor.

Do you let FOMO direct your investment decisions?

FAANG and FOMO go hand in hand. FAANG refers to the hot tech stocks like Apple, Netflix, and Google. This acronym is reminiscent of the late 90's tech stock boom when there were only 5 or 6 tech stocks that were sustaining the entire market. FOMO (the fear of missing out) leaves you feeling like you are getting left behind if a decent portion of your portfolio is not invested in these stocks. This is where it's important to recognize how your emotions are influencing your investing decisions. History shows us the slippery slope letting your emotions drive your investing can be.

How BPS is just as important as GPS

BPS is how a mutual fund expense ratio or financial advisor's fee is often quoted. BPS simply stands for Basis Points, the number of decimals after a whole number. For example, 50 BPS is 0.50%. Understanding the total annual cost of your investing strategies can help you more accurately compare the value you are getting from your investment strategy or financial planning relationship.

In the third slot is the CAPE ratio. This is an acronym for the Cyclically Adjusted Price Earnings ratio, a popular measure to help judge whether the stock market is cheap or expensive according to historical averages. A highly correlated long-term indicator of future returns, the CAPE ratio continues to be a good measure for understanding the stage of the market cycle.

Are you part of the FIRE generation?

FIRE is a newer movement, developing more over the last 10-15 years. It stands for Financially Independent, Retire Early. Many people are looking for the flexibility to work less or retire earlier in life. Folks that attempt to drastically limit spending or save considerably may be trying to achieve FIRE. Given the gravity of these decisions and the length of low to little expected income, it's most important to understand the risks. This is where evaluating your full financial picture with annual cash flow comparisons and tax planning opportunities can add extra benefits at the margins.

Should you do a QCD from your RMD or use your DAF?

Does your financial advisor speak like this? Do you just nod your head and play along? Understanding these terms could shave your tax burden considerably if used correctly. QCD, DAF, and RMD are important acronyms for the charitably inclined which can also lower your annual tax burdens. RMD is the Required Minimum Distribution that you are required to take at age 70 ½ each year. QCD is the Qualified Charitable Distribution if you are over the age of 70 ½ which sends a percentage of the RMD directly to charity, therefore, reducing your taxable income.

Listen to this episode to hear all 10 financial acronyms decoded (plus a few bonus ones) to be fully engaged at the next meeting with your financial advisor.

Outline of This Episode

  • [1:27] Acronyms are a great way to remember things
  • [5:17] FAANG
  • [6:21] FOMO
  • [7:40] CAPE
  • [8:51] BPS
  • [9:56] FIRE
  • [12:10] RMD
  • [13:58] QCD
  • [14:38] DAF
  • [15:52] NAPFA
  • [17:48] ACH
  • [19:39] REIT
  • [20:44] ETF

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Jul 2, 2018

You have been hearing about Bitcoin and other cryptocurrencies for the past few years now. Nothing attracts the attention of the public like the possibility of missing out on the latest craze. The fear of missing out or “FOMO” can be extremely powerful. So you may be wondering whether Bitcoin or another cryptocurrency might be worthwhile to invest in. Like anything money related, it is important to understand what you are getting yourself and your money invested in. Listen to this episode to learn more about what Bitcoin is, the risks involved, and how cryptocurrencies work.

What is Bitcoin and how do cryptocurrencies work?

Bitcoin is a worldwide cryptocurrency and digital payment system. It was invented in 2009 by a person or group of people named Satoshi Nakamoto, and it is still unknown who exactly the founder was. There are now more than 1500 cryptocurrencies in the virtual world today. Cryptocurrencies are different than regular currency because there is no bank or government backing them. Cryptocurrencies are created by mining. Like gold, cryptocurrencies have a limited supply which is where their value comes from. Listen to this episode to learn more about Bitcoin and how cryptocurrencies work.

What are the risks of Bitcoin?

There are many risks to buying Bitcoin and other cryptocurrencies including, regulatory, security, insurance, fraud, security, and market risks. The government can essentially outlaw cryptocurrencies if it so chooses. There is a security risk in protecting your purse or online wallet. Someone can hack into your wallet and steal your coins. Your money at the bank is insured by the FDIC, but cryptocurrencies are not. So if someone does steal your coins you will not be insured. How do you know that you are buying real Bitcoin? The risk of fraud when buying cryptocurrencies is real. The price has see-sawed up and down dramatically over the past 8 years so along with all the other risks, there are substantial market risks. Listen to this episode to become informed on all the risks associated with Bitcoin and other cryptocurrencies

Is Bitcoin an investment or a speculation?

Investments are something you can estimate the expected returns of by reading up on the background of the stock or bond. By researching the growth rate and fundamental value of an investment you can get an idea of what you may think the future return will be. The value of Bitcoin is dependent upon what someone else is willing to pay you and the history of it is all over the map. For this reason, we feel that cryptocurrencies are a speculation rather than an investment. Listen to this episode to hear why we feel that cryptocurrencies are not something you should invest a significant amount of money in and why you should not try to use Bitcoin to fund your retirement.

What is blockchain and why is it important?

Although cryptocurrencies are tumultuous and it can be difficult to see what their future may bring, blockchain technology may have a big role to play in the future. Bitcoin is distributed by a blockchain which is a publicly distributed ledger. The technology of blockchain may completely change over time. The future of blockchain may include payment processing, money transfers, digital voting, and real estate or title transactions. Cryptocurrencies may not be the best investment but they have opened a new frontier in digital money and accounting. Listen to this episode to hear why blockchain technology could be so important to the future of money.

Outline of This Episode

  • [0:27] Why you need to know about Bitcoin and cryptocurrency
  • [4:17] What is cryptocurrency?
  • [8:07] What are the risks of Bitcoin?
  • [13:40] What are the tax implications?
  • [14:20] Is Bitcoin an investment or a speculation?
  • [16:11] What is blockchain?

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