Consider This… Radio Show 5/27/2017

Here is this week’s radio show, hosted by Joe Clark, CFP with Sherri Contos.

Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer.

Consider This… Radio Show 5/20/2017

Here is this week’s radio show, hosted by Joe Clark, CFP with Sherri Contos.

Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer.

Handling Money in Your Marriage

Bringing two lives together to form one family unit is an exciting time.  The joining of things, beliefs and money create an atmosphere of opportunity but as well as stress. Couples usually have broad future thinking discussions but what is left off the agenda is how to commingle the money in the most convenient and opportunistic manner and how you will financially operate as a family.

Discussion number one is how much to save. We recommend a fixed percentage of household income and make sure it goes in the most advantageous place. For instance, all 401k plans are not created equal. One plan may have a better match, more investment options, less fees or allow for the Roth option. You need to examine the options and then make the best selection.  Remember you are married!  The money can work together.

Discussion number two pertains to risk and volatility in the market.  Oftentimes one spouse may be more open to investment volatility than the other. Indeed, more often than not, one spouse takes care of long-term planning and the other does the day-to-day budgeting. We recommend that you are both fully aware and involved in both but it is okay to delegate tasks to one another. If you live in two extremes – one wants the money in the mattress and the other micro cap stocks from third world countries – then meet in the middle with a balanced approach.

Discussion number three focuses on building your family’s financial dashboard.  The sooner you can do this the better off you will be. Remember, money and especially debt tend to lead to more marital problems than any other single culprit. Deal with the finances early by setting up parameters.

A financial dashboard is similar to the one on your car.  You look at important data to make sure the car is operating safe and sound. You look at speed and gas and multiple other indicators.  Your financial dashboard has three big dials. What percentage of your income you are saving, what is your current debt to income ratio and how much money do you have left over (discretionary income) at the end of the month. If you can keep these three in check you will be better prepared for the occasional bump in the road. If you set targets on these three issues as a family you will eliminate future discussions that may not express the love you currently share for one another.

For couples a little further along in life it can be especially challenging to combine the resources and many times there are even separate checking accounts. This requires open and honest communication and strategy going forward. It is true that each individual has their own credit score and your debts don’t impact your spouses score but that doesn’t mean household debt doesn’t create other distractions and issues. How much you spend on cars, vacations and leisure are common battle grounds when assets, income and attitudes aren’t fully understood.

 

Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer.

Should You DIY Your Investment Strategy?

We all know someone with a natural gift for repairing what’s broken. Those of us not blessed with this handy talent usually turn to the Internet to get help with repairs. Do it Yourself (DIY) videos make challenging projects look so easy. After watching a few online demonstrations, I was inspired to take on a bathroom renovation—big mistake!

Tasks may look simple, but we all know things aren’t always as they appear. A home improvement contractor might consider installing a new vanity to be quite simple. Similarly, a celebrity chef says, “Bam!” and a sumptuous and effortless-looking meal appears. Both the contractor and chef have perfected their craft over years.  Ease is in the eye of the beholder.

And so it is with investing, which can feel simple. But log onto your 401k and look at all of the data and information. Some of us wish we could easily repair a broken sink or quickly serve a gourmet feast, but the process is rarely straightforward. Similarly, some people want to believe that the investing process can be simple and easy with “simple” relating to the process and “easy” relating to the result.  This is where demonstrations and videos can instill false confidence.

The nice thing about home improvement projects is you can check them off your list, choosing to live with little imperfections like uneven wallpaper or paint that’s a shade too bright. Or, you can re-do the project to your satisfaction. But ask yourself this question: How do you notice a mistake on your 401k? Is it based on returns relative to a specific benchmark? Do your asset allocations “clash” with events occurring in the financial world? Unlike the home improvement project, you can’t put a 401k on auto-pilot.  Investing is not a one and done process.  You can sign off on the initial plan, but you must monitor along the way.

USA Today reported that 63% of workers with 401k’s manage their own investments. But Fidelity Investments found in a data analysis of 13 million participants across the country that 54% of such folks are not taking an active role in managing their 401k. That is much scarier than any home remodeling or cooking project gone askew! Even scarier is that most people don’t get around to implementing a process for what needs to be monitored or how to evaluate their investment management strategy.

Whether it’s cooking or home decorating, most of us are passionate about our hobbies and interests, so we invest time and money in these areas. In contrast, many individuals don’t pay enough attention to their finances because they don’t have a process for managing their accounts. Sure, they care about their investments, but they haven’t “gotten around” to monitoring and managing these assets.

We all have different tastes. If you don’t have an appetite for planning, find a professional seasoned in investing. Unlike cooking or remodeling, you get just one shot at retirement.

Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer.

Consider This… Radio Show 4/29/2017

Here is this week’s radio show, hosted by Joe Clark, CFP with Sherri Contos.

Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer.