Clarity Coaching Tips

Here you will find many tidbits of coaching and financial information that often needs to be clarified for most American investors. Some of the information is very basic and in the form of a current market update. Some of the information is timely topics, based on current social political and economic climate. Some of these are strategies, ideas, and concepts that we have picked up through the years and implemented in our practice. Basically a soup to nuts area of information on all things financial.

 

Check out our Clarity Coaching Video Clips and the “It’s Your Money” podcasts for more tidbits that might pique your interest.

Retirement Income

For this post I’m using an article that I wrote for the Town & Gown’s Guide to Financial Services, regarding our income for life strategy. Enjoy!

Recent studies have shown that the traditional retirement strategies of pulling a percentage off a brokerage account may be flawed. According to one study, stock and bond only strategies preserved the original value in just 45% of the cases, while “Income for Life” strategies preserved the original value in 93% of the cases. Paul Nichols, the president of Financial Abundance a registered investment advisor and estate planning firm in State College, compares traditional retirement strategies to the “Income for Life” strategy.

Mortgage Acceleration Plans

Most homeowners have the misconception that the wisest method to accelerate the pay-off of their home is to simply pay extra principal 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. In actuality, none of these methods usually prove to be the wisest method to accomplish a “free and clear” home.

You can accumulate sufficient cash in a conservative tax-deferred mortgage acceleration plan to pay off a home just as soon or sooner than utilizing the methods described above. In addition, you will have the following advantages:

Retirement: Retirement Planning Today

Coming up in October I will once again be teaching one of my Retirement Planning Today® courses sponsored by South Hills School of Business & Technology. These courses are taught at over 200 colleges and universities throughout the country. I am teaching two sessions, one on Thursdays October 1 and 8 and the other on Tuesdays October 6 and 13. Each session runs from 6:30 pm to 9:30 pm and included in the $49 tuition is a 230 page work book.

Why Financial Education is Important

As an investor coach, I feel education and proper planning are vital components to a happy retirement. Due to recent tax law changes, an uncertain future for Social Security and the shift toward employee-directed retirement plans, the need for sound financial strategies has never been greater. In straightforward

Top 5 Reasons for Long Term Care Insurance

Planning for long term care is an easy thing to put off. Maybe you think you’re too young, can’t afford it or simply won’t need it. But if you want to help preserve your choices about future care and have retirement assets and personal savings to protect then, long term care insurance could be the right vehicle for you. Here are 5 logical and emotional reasons why it may make sense for you:

1. To enable you to stay in your home for a longer period of time—comprehensive long term care insurance offers you the option of staying in your own home for as long as possible which helps to preserve.

The Ethical Will: Voice for Estate Planning

In medieval times, Jewish men wrote letters to their sons, passing on guidelines for living a worthy life. These legacy documents were called “Ethical Wills,” and provided for meaningful, enduring communication between generations. Modern people of all ages and faiths are now rediscovering this beautiful and sensible tool.

An Ethical Will or “personal legacy letter,” is appealing because it provides thoughtful adults the opportunity to reflect on their own lives for the benefit of those who will follow them, and helps make sure that nothing really important gets ‘lost in the cracks’ between generations.

Tax Cuts and the Rich

A common misconception is that tax cuts are for the rich. This is nothing more than political “get-me-re-elected” talk. It is obvious that the rich make up such a small portion of the tax paying population, the politicians view this as a small group of voters. There are more poor, middle class, and upper middle class voters than there are rich voters. So don’t be surprised when a politician favors the area where there are more voters. The tactic is as old as dirt. Divide and conquer, blame someone else for your problems, so you will vote for them. These are not poor or middle class people running for office. Remember, these people will spend millions to get elected to a position that pays a couple of hundred thousand dollars a year. Makes sense, right?

Tax Planning: Misguided Wisdom

Don’t Limit 401K Deductions to the Amount Matched…I found the following sage advice in a local newspaper: Even though the company matches only part of the 401k contribution, it is to your benefit to put the most away in your 401k plan as you can, since 401k plans are an excellent way to save for retirement. The author of the article went on to profess that often many investors contribute only up to the company match within their 401k plan, and do not take advantage of their 401k plan if the company does not match, and he states that this is a mistake. He finalizes this train of thought by stating that with a 401k plan, an investor receives a double tax benefit.

Major Transfers lack Wealth Management

In your everyday existence, you are confronted with transfers of your wealth. You continuously, unknowingly, give or transfer money away. Not only do you give this money away but you also lose the ability to earn money on that money once it is transferred. This compounds your loss. To eliminate or reduce these transfers, you must first learn to recognize them and then understand how directly or indirectly they cost you money. You may have to confront conventional financial wisdom. Remember, the ones giving you these financial programs tend to profit from them. Always ask, who would profit from these transfers? Here is a list of transfers that are worth investigating further:

-Taxes
-Qualified Retirement Plans
-Financial Planning
-Disability
-Credit Cards
-Tax Refunds

Caring for Your Spouse…Even After You’re Gone

Your spouse has been there with you through thick and thin. They have been your rock, the foundation upon which you’ve built your life. Your spouse has probably been your friend, confidant, and true partner.

If your spouse is ailing now, there are ways that you can protect them, even after you are gone. Let’s say your spouse has a slowly degenerative disease, like Alzheimer’s disease. Hopefully, their illness may be kept at bay. As long as you are there, you may intend to care for your spouse at home. But, what if you die first? At least one study has shown that caregivers themselves often get sick or die early because of the stresses on them.

Portfolio Construction: Investment Strategy

The third part that we need for developing your Investment Philosophy is your Investment Strategy. There are two clearly defined strategies for investing; one associated with each of the specific market beliefs.

The first strategy we will discuss is Asset Class Investing which employs an investment methodology that is consistent with the belief that markets work.
The second strategy is Speculative Investing, otherwise known as Active Management. This approach is aligned with the belief that markets fail.

Portfolio Construction: Choosing your Investment Philosophy

The second step in Choosing your Investment Philosophy involves examining your beliefs about the market. Our beliefs, whether conscious or subconscious, are the root of action. Beliefs about the market and how it works are largely responsible for dictating decisions made regarding investments. Formed for many reasons and based on numerous factors, beliefs may be changed instantaneously based on new information or a new understanding. For this reason, it is important to consciously examine your beliefs about the market.
Markets Work
First, let’s examine the efficient market belief.

Breaking the Cycle Investors’ Dilemma’s

For most investors, the Investors’ Dilemma remains undefined and continues over a lifetime. The first step toward operating outside of this cycle is becoming aware of it and you have already done that (if you haven’t done that read the previous blog “Understanding the Investors’ Dilemma”). The next step is to choose an investment philosophy in which you believe. An investment philosophy is made up of three fundamental principles: your True Purpose for Money, your Market Belief, and your Investment Strategy.

The Investors’ Dilemma: Understand the Psych

Have you ever worried about getting high enough returns on investments? Maintaining your standard of living at retirement? Affording high quality education for your children? Have you ever worried about the next market crash, missing out on the latest, greatest stock tip? Making sense of the all the information available or someone else having a better portfolio than you? Have you ever worried about not having enough money to care for loved one, getting bad advice and, worse yet, paying for it? Have you ever bought an investment when it was doing really well, when it was high, and later sold it because of bad performance at a low price? If you can answer yes to any of these questions, then you are in the right place.

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.