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Financial Symmetry: Balancing Today with Retirement

When considering retirement, do you wonder what financial opportunities you may be missing? Busy lives take over and years pass without taking advantage. In this retirement podcast, Chad Smith and Mike Eklund unveil financial opportunities, to help you balance enjoying today so you are ready to retire later. By day, they are fiduciary fee-only financial advisors who answer questions about tax savings, investment decisions, and how to save more. If you’ve been putting off your financial to-do list or are just not sure what you’ve been missing, subscribe to the show and learn more at www.financialsymmetry.com. Financial Symmetry is a Raleigh Financial Advisor. Proudly serving clients in the Triangle of North Carolina for over 20 years.
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Now displaying: February, 2021
Feb 22, 2021

Have you wondered if there are any financial mistakes that you may have been making?

Video recap here: https://youtu.be/9fsWlp56R2U

Sometimes our financial mistakes aren’t obvious, so in this episode of Financial Symmetry, we discuss 3 hidden financial mistakes that you may be making and how you can spot them. 

Uncertain outcomes cannot be predicted

Are you guilty of believing an uncertain outcome is certain? Sometimes we feel confident that things are going to happen. This can be true even with geopolitical events like the Coronavirus. You may have known the virus would happen, but could you have predicted this current situation? 

People are naturally overconfident, but the market is smarter than you. Trying to anticipate corrections will cost you money. In fact, trying to anticipate market corrections will end up costing you more money than the market corrections themselves.

One way to prevent overconfidence is by talking through potential outcomes with a financial advisor or a financial accountability partner. 

Don’t underestimate the market’s ability for positive surprises

Many people have a negative money script or way that we view finances. This scarcity mindset could penalize their financial potential. There will always be reasons to wait it out or not invest, but instead of focusing on those reasons focus on not missing out on opportunities. You don’t want to take a pay cut in retirement because of missed opportunities. 

We often delay financial decisions to give ourselves time to think about it more or evaluate the alternatives and to consider all outcomes. But often the best investments are the most difficult ones that you have to make. This is why having an investment plan makes sense. 

“Investing is a lifelong journey. Making money slowly is much better than making then losing money quickly.” -- David Booth

Are you missing hidden tax opportunities?

There are different tax opportunities that can be taken depending on your phase of life and how the laws change. One opportunity that many retirees were able to take advantage of this year was the lack of required minimum distributions (RMDs). This allowed people to do Roth conversions. Retirement brings on a wealth of tax planning opportunities since you have more control over your income in retirement. Advanced tax planning early in retirement can help you save on your lifetime tax bill. Listen in to hear how long-term tax planning can save you money over your lifetime. 

Estate planning pitfalls

Estate planning is often the last part of a financial plan that people want to address since it is the least enjoyable part of financial planning. But if you want a say in what happens to your money after you are gone then you’ll need to create an estate plan and review it periodically. Check out episodes 102 and 122 to learn more about estate planning. 

Do you have enough? Are you saving enough? When is the best time to invest? Are you missing out? These are all questions that can be answered with the right financial plan. Think about what a financial plan can do for you. If you are looking for a financial advisor to help you create a financial plan click through to our website.

.Outline of This Episode

  • [2:40] Believing an uncertain outcome is certain 
  • [10:16] Missing hidden tax opportunities 
  • [14:50] Are you taking advantage of an HSA?
  • [17:15] Estate planning pitfalls
  • [21:18] Today’s progress principle

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Feb 8, 2021

Stock market manias have an uncanny way of capturing our attention.

Short video recap: https://youtu.be/wr04xy1pDnU

Not only do they dominate weekly headlines, but create visions of what could be. The most recent example is the rapid rise of meme stocks, including Gamestop, AMC and Blackberry among others.

In this episode, we’ll explore what happened with this most recent mania, and describe the why behind how we can become enamored with this type of approach. We'll then offer three questions to provide a framework for the next time you're facing similar feelings.

What happened with Game Stop?

You may have seen a Game Stop store at your local mall or shopping center. Game Stop is a video game retailer whose future did not look promising. Many people compared it to Blockbuster Video.

This uncertain future attracted the interest of short-sellers and the retailer ended up becoming one of the most heavily shorted stocks. When an online Reddit group discovered what was happening to the stock, many people decided to jump in and stop the short. This sudden influx of investors drove the share price up to unprecedented levels.

There’s a difference between gambling and investing

Manias are nothing new. We've seen them in many forms including the Nifty Fifty in the 1950s, the tech bubble in the 1990s and BRIC Countries during the 2000s. The speed and size of these rallies can foster a fear of missing out feeling that's is more analogous to gambling.

There's a fine line between gambling and investing. In stock market manias, it's easy for people to throw risk considerations out the window because the possibility of life-changing gains takes over. Subsequently, this mentality could lead to detrimental results when investors are using money they can't afford to lose.

With Game Stop, investing quickly becomes interesting when the stock is increasing like a rocket ship within a week. For many, this strategy looks miles more exciting when compared to a disciplined long-term strategy. This is when the gambling temptation can circumvent the longer-term evidence based approach you may have used up to that point. Enter diversification.

That's because diversification decreases your investment risk. When you diversify, you invest in many different types and sizes of companies all over the world. The goal of diversification is to ensure the performance of one specific stock won’t impact your entire portfolio.

3 Questions to Ponder when Tempted

If you find yourself considering a specific stock purchase, there are a few questions that can help your decision.

  1. What does this strategy claiming to provide that's not already in your portfolio?
  2. What will this investment reasonably add to your portfolio by including it?
    • Could you increase your expected returns?
    • Will it reduce volatility in your portfolio?
    • Does this help you achieve a goal?
  3. Are you going to be comfortable with the range of possibilities this purchase creates?

Your investment strategy will be most appropriate for you when it's created in service to your financial plan. A plan that is specifically created for your goals and circumstances. Understanding the interaction between your income and future expenses for the next few years.

  • What will you need your savings rate to be?
  • How much longer will you plan to work?
  • Do you have other resources where this risk won't derail your long-term financial picture?

Carefully considering your investment decisions and ensuring that they align with a cohesive and diversified investment strategy will help you stay on target to reach your long-term goals.

Outline of This Episode

  • [1:32] What happened with Game Stop?
  • [6:03] There is a difference between gambling and investing
  • [9:29] The benefits of diversification are far-reaching
  • [14:39] Time is the ultimate thief 
  • [17:33] Today’s progress principle

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