Wealth Management – Why Pay Off Your Mortgage?

From the desk of Paul Nichols: President of Financial Abundance Inc.

Most homeowners have the misconception that the wisest method to accelerate the payoff of their home is to simply pay extra principle payments on their mortgages. Other homeowners are lured into thinking that bi-weekly mortgage payment plans are the answer. Still other homeowners utilize a 15-year mortgage rather than a 30-year mortgage amortization. In actuality, none of these methods usually prove to be the wisest method to accomplish a “free and clear” home.

Roth 401(k)

From the desk of Paul Nichols: President of Financial Abundance Inc.

The Roth 401(k) entered the retirement community in 2006. This investing innovation was created by a provision of the Economic Growth and Tax Relief Reconciliation Act of 2001. Modeled after the Roth IRA, the Roth 401(k) gives investors the opportunity to fund their accounts with after-tax money. Investors will receive no tax deduction on contributions to a Roth 401(k), but they will owe no taxes on proceeds. Participants in 403(b) plans are also eligible to participate in a Roth plan.

Coaches!?! We Don’t Need No Stinking Coaches!

From the desk of Paul Nichols: President of Financial Abundance Inc.

I recently read an article in the WSJ discussing economic icons not practicing their own investment advice. I understood the article to make the point that we are not all perfect, that even the notable academics mentioned sometimes sway from their disciplines.

Harry Markowitz, who shared the Nobel Prize in economics in 1990 for his mathematical explorations of the relationship between risk and return, was asked how he diversified his portfolio.

IRA: Congress Feels Your Pain

Recognizing the bear market’s severe impact, lawmakers approved an economic relief measure before they adjourned earlier this month that can be a big deal for most older retirement investors.

The legislation suspends for 2009 the rules that force older individual retirement account holders and their beneficiaries to take minimum annual withdrawals, or what’s referred to as RMDs (Required Minimum Distributions).

The legislation, called the Worker, Retiree, and Employer Recovery Act of 2008, applies to RMDs for IRAs, 401(k)s, 403(b)s, and similar plans. It only applies to withdrawals in 2009, so 2008 needs to be taken, and they will be back in force (barring any changes) for 2010.

Withdraw Cash From Your IRA or 401(k) Annually With No Tax Consequence

Most Americans are lured into saving for retirement with traditional qualified retirement plans, such as IRA’s and 401(k)s. They are convinced by financial advisors to contribute pre-tax dollars to 401(k) plans or place tax-deductible contributions into IRAs because of the tax advantages during the contribution and accumulation phases of their retirement planning. They seem to ignore the two most important phases – when withdraw your money for retirement income, and when you pass away and transfer any remaining funds to your heirs.

Investments: Fees, Costs, Commissions?

From the desk of Paul Nichols: President of Financial Abundance Inc.

When it comes to making investment decisions, many consumers know they are ill prepared to do it themselves. That’s why you’re smart to turn to a financial advisor for help. A talented, dedicated advisor can help you develop a portfolio that’s suitable and appropriate for your situation, one that’s designed to meet your goals and can generate higher returns at lower risks– and with less work– than you are likely to obtain on your own.

Parkinson’s Law

From the desk of Paul Nichols: President of Financial Abundance Inc.

C. Northcote Parkinson is probably most recognized for his book entitled Parkinson’s Law. It states that “work expands to meet the time envelope allowed.” Give it a shot- give someone a task with a deadline of 2 days, and it will be done near the end of the 2nd day. Give the same task to another person and give them a week to complete it. You can bet that the task won’t be completed until the waning hours of the 7th day.

Tax Planning: All the Dogs Barking Up the Wrong Tree Doesn’t Make it the Right One

From the desk of Paul Nichols: President of Financial Abundance Inc.

Socking money away into IRAs and 401(k)s and paying extra principal on your mortgage is counter-productive

In the quest for financial independence, there are two places most Americans accumulate the most money: our home and our retirement plan.

Following accepted wisdom, we set aside money in qualified retirement accounts such as IRAs and 401(k)s, enjoying tax deductible funding and/or tax deferred accumulation. At the same time, we assume it’s best to achieve the goal of outright home ownership and save money no mortgage interest expense by sending extra principal payments against our mortgages.

Wealth Advisors: You Don’t Know What You Don’t Know

From the desk of Paul Nichols: President of Financial Abundance Inc.

I originally heard the question why not you, why not now in 1992 at a business function. The billionaire Richard DeVos was speaking, where afterwards I had an opportunity to sit down and spend some time with him.

What’s Buffett Buying?

From the desk of Paul Nichols: President of Financial Abundance Inc.

In a recent article Warren Buffett wrote:

“THE financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary.

So… I’ve been buying American stocks. This is my personal account I’m talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities.

Portfolio Management: Should You Switch to Cash?

From the desk of Paul Nichols: President of Financial Abundance Inc.

I’m sure the thought has crossed your mind, especially with the roller coaster stock market we are currently experiencing. “Why not just put all of my investments in cash, just until the market stabilizes?” Many investors are acting on that thought. Through the first six days of October, $19 billion was pulled out of mutual funds that invest in United States stocks. That’s equal to the ENTIRE MONTH of September 2008 according to TrimTabs Investment Research.

Portfolio Construction Investor Quiz

Must Answer Questions for Confident Investing

Successful people learn from the mistakes of others, yet the investment world is littered with people making the same missteps over and over again. What are they and how can we avoid them? Let’s take a look at some of the more universal strategies that investors use that cause financial heartache.

Financial Planner: Initial Consultation

How we can help you:

If you’ve been concerned about your investments, it may be time to meet with us at Financial Abundance. Unlike other advisors, we are not affiliated with any firms that are paid through commissions or product sales.