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Wednesday, November 29, 2017

The Most Wonderful Time of the Year

Parties, shopping, cookies, visits with relatives, travel, decorating, more cookies, giving gifts, receiving gifts, and more cookies makes the holidays a truly wonderful time.  Then there’s paying the bills, too much “togetherness”, too little “togetherness”, poor sleep, year-end deadlines, shopping, and travel.  All that can make the holidays not so wonderful, stressful even.
Holiday stress is definitely a thing.  From a financial perspective, not only does our holiday spending cause stress but, according to a recent survey by credit karma, stress causes many of us to spend more.  This is a dangerous cycle.
A quick Google search will find pages and pages of articles with tips on minimizing your holiday financial stress.  Most of them hit on the obvious:  Make a budget, start saving early in the year, don’t use credit cards, start shopping earlier, etc.  While helpful, these articles often neglect the big picture.
Here are my suggestions:
·         Determine why you celebrate the holidays.  Is it about the gifts and spending? Or are there other important priorities?  Discuss this with your family to get everyone on the same page.  De-emphasize the all-day gift opening sessions.
·         Make it about experiences rather than things.  Volunteer as a group or family to serve at food banks or for projects that help others.  Create lifelong meaning and memories.
·         “Adopt” a family in need.  Instead of buying things for each other that you don’t need, share your blessings with others.
A little reflection and communication can go a long way to making the holidays more enjoyable, and you may even find that others in the family have the same ideas. 

Merry Christmas, Happy Holidays, and Happy New Year!

A. Christopher Engle, LUTCF®, CFP®, ChFC®
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Friday, October 27, 2017

Sometimes You Just Need to Refresh

We’ve all needed to do it at one point or another. Whether it’s been physical exhaustion in need of a nice spa treatment, a wardrobe that no longer fits our lifestyle, or a pesky webpage that’s trying our patience, it’s easy to understand the significance of taking a moment to refresh. One area though, that we may neglect to consider needing a revival, is our financial plan; but just like our wardrobe, our financial plan can become stale, outdated, and irrelevant. For this reason, it’s important to periodically evaluate our financial plan to determine if it still makes sense with our evolving goals and circumstances or if it’s time to hit the refresh button.

Because it’s no secret that money dictates most everything we do, it’s important to consider what it is we want or need in order to create an applicable plan. Fortunately, there are professionals that can help navigate this process who are knowledgeable in not only the scenarios we ought to consider, but also the behavior of financial investments.

A couple of steps that can be taken to assess the efficacy of your financial plan are 1) establish a rapport with a financial advisor who measures their success by yours and 2) engage in a rhythmic personal assessment of your goals and circumstances.

You know yourself best, so when it comes to something as personal as lifelong goals, you are the greatest judge in the matter. Pair your assessment with the help of a professional, and even the goals that are really more like dreams, become realistic. So even if your hairdo matches your parents’ yearbook picture, don’t let your goals go unaccomplished because you failed to plan for their accomplishment.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.


Wednesday, September 27, 2017

Financial Resilience: Part 3 of 3

Resilience (noun): the capacity to recover quickly from difficulties; toughness.

In the previous two parts of this Series, I outlined various facets of Individual and Family financial resilience. This third and final installment will close the loop by illustrating how these households organize and interact to build Community Resilience.

At this point, the effects of globalization and financialization are apparent in many of the smaller and more rural communities. Over the course of the past century, capital has become evermore consolidated in cities through large financial institutions, major national corporations, and the effects of compounding interest.

As a result, local economies have become increasingly reflective of national economy. As evidenced during the financial crisis of 2008, a major market event can have a dramatic impact on even the smallest businesses.

What then can we do as individuals and families to help protect the communities in which we live?
In his book Local Dollars, Local Sense, Michael Shuman outlines three important rules to support the prosperity of a local economy:
  1. Maximize the percentage of jobs in your local community that exist in businesses that are locally owned. 
  2. Maximize the diversity of the businesses in your community, so that your economy is as self-reliant and as resilient as possible.
  3. Prioritize spreading and replicating local business models with outstanding labor and environmental practices.
The bottom line is that if we want a thriving community, we must help build one with our finances. Buying local products and produce, supporting local existing businesses, and encouraging community entrepreneurs can be marginally more expensive, but the benefits to the community cannot be ignored.

Being able to provide local sources of food, education, transportation, and manufacturing helps protect communities from national financial challenges.

Here are some resources on building a local, sustainable economy in Grand Rapids:
  1. Local Dollars, Local Sense by Michael Shuman
  2. Locavesting by Amy Cortes
  3. Slow Money by Woody Tashe
  4. Small is Beautiful by E.F. Schumacher
Geoffrey Sadek, CFP®

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Wednesday, September 13, 2017

MI 529 Plan

The smell of fall is in the air, college football is on TV, and families are back into their school year schedules.  It’s also the time of year when some of us are reminded about the importance of saving for our children’s college education.  The month of September is a big month for Michigan residents who own a Michigan based 529 Plan account currently held with Allianz Global Investors.  Starting in the middle of the month, Nuveen Securities, LLC will take over the program distribution.  Account numbers will not change, but there will be a few program enhancements.  Make sure you contact your financial advisor to see if any changes need to be made to your individual plan.  Or you can visit the website for more details.

Ryan P. Smith, ChFC®, CASL, CFP®

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Prior to investing in a 529 Plan, investors should consider whether the investor's or designated beneficiary's home state offers any state tax or other benefits that are only available for investments in such state's qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing

Wednesday, August 2, 2017

Are You a Speculative Investor or a Long Term Investor?

It is easy to get excited when you read about someone who made millions on a particular “investment”.  The latest in the craze are the cryptocurrencies such as Bitcoin.  These stories are gaining clicks on social media and financial websites.  I often get asked my opinion about these “investments” and my answer is always the same:  I have no idea.

This sounds like a funny answer for a financial advisor but there is a very good reason.  My expertise is investing and helping clients pursue their financial goals using sound financial strategies.  Speculation is not one of them!

Understanding the difference between investing and speculation is important.  Speculators look to profit from short term changes in price.  Often, they look to anticipate an event or change in the “investments” usage.  For example, purchasing natural gas futures in anticipation of a colder than normal winter. 

Long term investors, on the other hand, look to participate in the growth of an investment over the longer term.  Long term investors use sound investment principles such as diversification and asset allocation to manage risk.  By using these principles as part of a comprehensive plan, an investor can be less concerned about short term volatility.  Also, a long term investor is not tempted to speculate.

A. Christopher Engle, LUTCF®, CFP®, ChFC®

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
No strategy assures success or protects against loss.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

Asset allocation does not ensure a profit or protect against a loss.

Thursday, June 29, 2017

How much is ‘Enough’? [Hint: ‘More’ is not the answer]

One of my favorite client’s came into my life wondering if they had enough to retire. Upon reviewing their statements, I found they had enough to retire years ago! Which made me think – how many people go through their daily routine, without realizing they had already crossed the finish line? How much different would work feel if you knew that you no longer had to work, that it was a choice? Too often, we are told how much we should be saving but never have an idea of what the finish line is. Below are three steps for setting and using financial finish lines to improve the quality of your life. 

Step One: Enough for Me
How much money do I need to take care of myself in retirement? If I become disabled?
How much will I need to start my business? Buy the house? Get a new car?

The first step in the process is having a goal-setting conversation with your advisor. Any financial planning firm should be able to give you “Your Number,” whether it’s for education, retirement, or that shiny new toy.
What are you looking for? You want one number for each goal that you set. Whether it is a purchase, retirement, or something else.
Unfortunately, too often the conversation stops here.
Step Two: Enough for My Family
How much will it take to provide for my spouse? To leave something for my children?
The next layer of “Enough” comes in the form of what you leave to those you care about. Making sure their dependents are protected in the event of death or disability is a priority for many. But unless you define the ways in which you want to leave a legacy to your heirs, planning is nearly impossible.
What are you looking for?  Again, you want one number for legacy that you want to leave to your family. Work with your advisor to have a full conversation on what your hopes are for your loved ones.

Step Three: Setting a Finish Line

Add up your numbers. This is your finish line.
These should be single, lump sums. Not how much you should be saving, but an end goal.
One of the most depressing beliefs I encounter is that we MUST work eight hours a day until we hit “retirement age,” where we then get the privilege to start hoping that we won’t outlive our money.
But let me ask you this: what would you do if you already had crossed your “retirement savings” finish line? If you knew you already had “enough”? Would you work less? Would you give more?

The Purpose of Finish Lines

The purpose of financial finish lines is to give us the confidence to do the things we’ve wished for. Knowing that we have “enough” lets us do the things we’ve wished for ourselves, and especially the things we’ve wished for others.

Geoffrey Sadek, CFP®
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Wednesday, May 31, 2017

Financial Resilience: Part 2 of 3

Resilience (noun): the capacity to recover quickly from difficulties; toughness.

In Part 1, we outlined individual resilience and the opportunities to protect our finances from the known and unknown risks of the future. For Part 2 of our series, we will be focusing on family resilience. Where before we had discussed the different threats to our individual financial well-being, we’ll expand our view to consider the implications on our household, as well as our capacity to impact the prosperity of other generations in our family.

Dual Incomes: The second half of the 20th century witnessed an incredible expansion of productivity in the US with the entrance of millions of women into the workforce. Since, the 1950’s nominal household income has skyrocketed. Now becoming the norm, two income households also are subject to their own risks. If a family depends on two incomes, the risk of job loss doubles with two working parents. The margin between income and outgo, as well as an adequate emergency fund, becomes imperative.

Financial Education: One of the most impactful gifts we can leave to our children is a solid understanding of how finances work. Setting and sticking to a budget, critically evaluating advertisements, entrepreneurship, and an understanding of how to succeed in the workplace are all essential skills often neglected during our formal education. To help ensure the continued prosperity of younger generations, parents can facilitate mentorships or use their own advisors to educate their children.

Sandwich Generation: As the concept of “retirement” continues to evolve, there has been an increasing experience of couples in their prime earning years being responsible for launching their adult children while beginning to care for their aging parents. This results in three growing commitments between children, parents, and career. By equipping and educating children early, and clarifying needs and wishes of parents, couples can see improved prosperity, resilience, and relationships during these years.

Multi-generational wealth: With a focus on values and education, a commitment to communication, and a long-term vision, families can create prosperity and resilience not only for themselves, but for generations that follow. By investing in family members over time, one of the greatest joys of financial planning is leaving an inheritance that extends beyond what is outlined in an estate plan.
In families, resilience is not just about meeting the financial obligations of a household. The objectives ought to be arranged around empowering each generation and passing down the means to succeed as markets and economies as professions continue to evolve.

Geoffrey Sadek, CFP®

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Friday, May 5, 2017

Saving For Retirement in Your Twenties

"It seems like an impossible task."  "I don’t have a pension like my grandpa did." "$2,000,000 needed to retire, no way!"  "Besides, who wants to think about being done working when you’re just starting?" These are some of the comments spoken daily by 20-somethings when it comes to retirement planning. So how does a recent college graduate with a couple hundred dollars in the bank start to make a dent in the almost insurmountable task of saving enough for retirement? 

The Grand Rapids Press had a great article giving some simple, yet effective tips for getting started.  The simple solution: Start small, spend wisely, and make it easy to save. The simpler and more automatic saving is, the easier it will be to increase those amounts down the road. Set up good habits early, stay diligent in your savings, and before you know it you’ll be on your way to a happy and lucrative retirement!
Ryan P. Smith, ChFC®, CASL, CFP®
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This is a hypothetical example and is not representative of any specific situation. Your results will vary. The hypothetical rates of return used do not reflect the deduction of fees and charges inherent to investing.

Thursday, April 13, 2017

Love and Marriage (and Money): Part One

Spring is here and love is in the air!  Wedding planning is in full bloom for those summer weddings.  With a daughter getting married in July, I’ve been made keenly aware of the financial considerations of marriage and weddings.  Recently, I read in the Grand Rapids Press that the average wedding in West Michigan costs over $30,000.  This cost has the potential to have a big impact on the financial planning for both the new couple and the parents. 

Since a wedding is such a joyful and emotional time, it can be easy to overlook financial burdens and get carried away in the planning process; plus, it is a lot more fun sampling caterers than it is talking about your budget.  So, what should we spend more time doing?

Here are some thoughts for the happy couple and their parents:

·         Decide who is going to pick up the tab for each part of the wedding.  There are a lot of resources out there that give a “traditional” breakdown, if you choose that route.  Google is your friend in this matter, and can educate you on what’s practical for a nice wedding.

·         Establish a budget.  $30,000 is a huge (ridiculous?) amount to spend for most people.  There are a lot of ways to have a fantastic and memorable wedding without the big price tag.  In my opinion, you should never take on debt to pay for a wedding.  Make it about the marriage, not the party. At the end of the day, if the two in love were married, it was a success! Don’t let the burden of new debt dilute the celebration.

·         For the bride and groom:  Don’t start your married life with financial stress due to wedding and honeymoon costs.  If you can’t pay for it without borrowing, don’t do it.  Remember, financial stress is a leading cause of conflict within a marriage.

·         For the parents:  Financial goals, such as your retirement, are more important than a costly wedding.  Don’t borrow or withdraw from your retirement accounts to pay for wedding expenses unless you have more than enough to pursue your long-term goals.  Also, beware of tax and penalty consequences for early withdrawal of retirement funds.

It’s about love. It’s a once-in-a-lifetime experience. You’re making memories. These are all rationalizations that can allow our emotions to drive decisions. These are also reasons to use caution and strategic planning when this exciting time arises. After all, you want the wedding to be memorable for the right reasons, not because you are still paying the bills years later.

A. Christopher Engle, LUTCF®, CFP®, ChFC®

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Tuesday, March 14, 2017

Quick Tips for Your Next Negotiation

As someone who’s on the hunt for a new house in what most would call a “seller’s market”, I’m not so sure I’ll be utilizing the best negotiation tactics at this moment in time, but there’s no denying a time will come when anyone can benefit from such strategies. Whether you think you’d be more productive in a better work environment, more efficient with a larger staff, or less likely to seal a deal without a few revisions, negotiation can be a discussion worth having. When the opportunity arises, the following approaches can prove effective to the conversation.

Do your research.
There’s a ton of research readily available to help you determine the most appropriate scenario for your situation. If you’re seeking a new job title, find comparable job descriptions that hold the title you’d like. That way, your employer can clearly see why you might feel your current title is lacking. As with most negotiations, be prepared to explain why something is important to you and how it will benefit the other party. Know that proposing a new job title may even insight more responsibility and decide if that’s something you’d be willing to take on.

When it comes to a pay raise or business deal, you can also find information that will assist you in determining what something is worth, yourself included. It would be in your best interest to know what comparable employers or buyers in the area are paying for similar services. This way, your proposal won’t come across as merely something you want just because you think you deserve it, but something that is logical and reasonable to suggest.

Know what you want.
In light of my recent endeavors in the home-shopping process, I’ve learned more each time I’ve viewed a new property. What I initially wanted to what I’m looking for now has adjusted slightly, and the same can happen in multiple scenarios. Keeping to the topic of the workforce, author Victoria Pynchon makes a good point in her article, “5 Things Most People Don’t Know About Negotiating.” She suggests we “…take a look at the way in which [we] ‘value’ money,” and goes on to say what we’re truly after might not be quite so obvious.

For example, if you ask for a salary bump but what you want is to feel more valued and you think a higher salary is going to evoke that feeling, you may be disappointed even if you get what you ask for. Take the time to examine your request. What brought it to mind? Is there something in particular that happened? If you get what you ask for, will the existing problem go away? If you ask yourself questions, and in this case, find that there’s actually a task in your job that feels demeaning for one reason or another a bump in pay isn’t going to solve your problem; which brings us to the last point…honesty.

Be honest.
If you’re honest with yourself, then it will be easier to be honest with the other party. Providing a big picture explanation will help someone understand things from your perspective better than if you throw out your request and wait for an answer. What most of us know about good communication is that people feed off of your energy, so if you’re more open and honest, your listener is likely to be more trusting and empathetic in their response. In turn, a productive conversation will allow both parties to end on a positive note, and might even yield better results than you originally intended.

Overall, the big takeaway is to be mindful of your approach to any negotiation, and take the time to understand the matter at hand. If something is important enough to motivate this type of discussion, then it’s worth the preparation.

Crystal Schneider, Client Relations Manager 

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Thursday, February 16, 2017

Financial Resilience: Part 1 of 3

Noun: the capacity to recover quickly from difficulties; toughness.

Too often what we see as advisors is a focus on accumulation and growth in a portfolio. While there is no denying that long-term growth is an important part of financial success, a too-often-neglected component of financial planning is building financial resilience, not only within a portfolio, but also outside of the portfolio. Three opportunities for building financial resilience include individual resilience, family resilience, and community resilience.

Individual resilience is founded on the knowledge, experience, and systems in place that insulate your lifestyle from the ups and downs of your portfolio. The caricature of individual resilience is the image of the “doomsday pepper.” Completely self-sufficient, providing their own food, water, and energy, their lifestyles would remain largely unaffected regardless of the performance of the stock market. A more realistic component of individual resilience for individuals are the following:

1.      Emergency Fund: how many months worth of expenses do you have liquid and available in the event of an emergency or job loss? Cash savings are the first line of defense against the many threats to your financial security. Without these reserves, urgent and unexpected expenses are financed onto a credit card or other debt, to the detriment of our future well-being.

2.      Cash Flow Margin: How much of your income is eaten up by lifestyle expenses? How much is left over at the end of the month? The narrower the margin between your income and your outgo reduces the flexibility in the event that your cash flow is disrupted due to disability, emergency, or lay off.

3.      Income protection: Speaking of disability, is your income adequately protected against the threat of a long-term illness or accident? Even though many employers offer Long-Term Disability Insurance (LTDI) as a benefit, often those benefits (perhaps only 60% of your salary) are taxable, leaving you with close to half of your normal base pay.

4.      Occupational Risk: On the topic of income, how much does your job depend on the economy staying business-as-usual? If there was a downturn or upset in the market, would you be at a greater risk of layoff or being forced to take a pay cut?

5.      Credit Risk: You may think that having a line of credit on a credit card or against your home equity gives you the same protection as an emergency fund. However, the limits and terms on these products can often change with the economy. Without a liquid emergency fund, you can see credit evaporate or rates increase, just when you need it the most.

6.      Personal liability: A feature of most all auto and homeowners policies is liability coverage, but many individuals have no idea whether theirs is adequate. Especially as your net worth increases, so does the likelihood that you might be the defendant of a lawsuit if you are in an accident. I will leave the specifics on how to insure property to an insurance agent, but protecting yourself against the litigious nature of our society is a necessary step in increasing your resilience.

These are six critical areas for building resilient wealth that are often glossed over in financial planning for individuals. Please stay tuned for Part 2 of the series; Family Resilience.

Geoffrey Sadek, CFP®

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.