Four Steps for Starting Your Kids on Their Investment Journey
Monday, 08 February 2021
In many families, kids are granted an allowance or earn money for doing chores, plus they’re likely to amass a bit of savings from birthdays and lost teeth, too. While most start out with a piggy bank and eventually move to a savings account with mom and dad’s help, consider the option of investing for kids. Opening an investment account in their name can be exciting, and it’s a great way to begin teaching them more about personal finance from a young age.
Now, the rules for minors surrounding investing are a bit different than they are for adults, but it’s relatively simple to get your kids started. They may only make a little bit of money, but it’s the education and experience that comes with early investing that is truly beneficial. After all, it’s young adults who begin investing for retirement with their very first paycheck who end up with a tidy nest egg that keeps them set for life.
Plan Ahead to Overcome the Emotional Reactions that can skew prudent Investment Strategy
Wednesday, 13 January 2021
As humans, we are emotional creatures, and our feelings can have a tremendous impact on our behavior. When it comes to investing, this can inhibit our ability to make sound financial judgments. In fact, many poor investment decisions have been made by investors who became too emotional and let their behavioral biases overrun their rational thoughts.
For this reason, it’s crucial to understand how emotion can interfere with your investment success. We all go through life with various ups and downs and hiccups along the way. This can cause fear and uncertainty – both fertile fields for emotional financial decision-making.
Below we will discuss three emotional biases in particular that can wreak havoc on your investment strategy – if you let them.
Savings Considerations for Your Early Earning Years
Monday, 21 December 2020
When it comes to investing, an earlier start means your retirement savings will have more time to grow and you can take full advantage of the magic of compounding. However, many young investors find it challenging to truly focus on saving for retirement, let alone get choosy about the different savings vehicles like Roth IRAs or Traditional IRAs. After all, life is often full of hectic changes and transitions, both at work and personally. If you’re a young investor, you’re in your early earning years when potential job mobility is high, and you’re probably focused on things like buying a home, getting married, and having children. Even if you do find the time and resources to put a bit away for retirement in the midst of all this, you may not believe it’s enough to require a meaningful tax strategy.
Of course, the opposite is true. It is during those early earning years when the true impact of your savings is strongest. The sooner you begin saving – any amount at all – the better off you’ll be in the future when you become much more focused on building your nest egg for retirement.
How Planning Ahead Can Help to Minimize Your Tax Burden in Retirement
Friday, 30 October 2020
Are you saving for retirement with a traditional 401(k) or IRA? If so, you’re probably enjoying the fact that these investment vehicles are tax-deferred, meaning you haven’t had to pay any taxes on your contributions yet. That won’t happen until you take withdrawals from your accounts once you retire.
Most people assume this is advantageous because their income tax rate will be lower in retirement than it is while they’re working, and that’s certainly true for some people. So, for these folks, it’s savvy to save tax-deferred and then pay taxes on their savings later when the tax rate will be reduced. This is the ideal scenario.
So, what happens if your retirement tax scenario is… less than ideal? What if you tap into your accumulated wealth when you retire and, combined with Social Security and Required Minimum Distributions from your 401(k) or IRA, you end up in the same or higher tax bracket? Fortunately, there are a few strategies you can use to minimize the impact of your RMDs in order to reduce taxes, and we’ll discuss each of them below. First, though, let’s review RMD basics.
How to Choose the Tax-Advantaged Account That's Right for You
Monday, 28 September 2020
There’s been a lot of buzz in recent years about Health Savings Accounts and Flexible Spending Accounts – HSAs and FSAs respectively. Both are tax-advantaged accounts that let you save for medical costs, and many companies offer them as options in employee benefits packages. There are good reasons to take advantage of both HSAs and FSAs, but there are key details that differentiate them. Since you typically cannot have both, it’s important to determine which is the better option for you.
When to Use Leverage as a Means for Growth
Wednesday, 02 September 2020
For many people, doctors included, the word “debt” has only negative connotations. After all, most of us took out considerable student loans to finance our educations. However, debt can also be used to your advantage when you leverage it for growth.
Investing for Growth Versus Paying Down Debt
Some doctors are quite comfortable with excessive debt, choosing to invest more of their income in tax-advantaged accounts, while others eschew investing at all in order to throw every available dollar toward erasing their debt. Most doctors, though, fall somewhere in the middle and are constantly asking themselves how to best balance investing in tax-advantaged accounts versus paying down debt.
If you find yourself in this middle ground, here are a few basic recommendations, in order of financial importance:
When volatility prevails it is important to weigh your options and choose wisely.
Tuesday, 30 October 2018
It goes without saying that October was quite a challenging month for global markets. Selling pressure and volatility paved the way for widespread market declines. As investors ourselves and trusted advisors for our clients, we feel those emotions too. But as veterans of the markets, we also understand the necessity to anticipate and expect volatility but not overreact to it. We believe that times of volatility emphasize the importance of having a long-term investment plan. That plan should recognize potential volatility and have the mechanisms in place for addressing it.
While many advisors will recommend to “do nothing”, we understand this is not as easy it sounds. Fear is a human element we cannot avoid, and goals, opinions and risk tolerances evolve over time. Depending on your unique situation, the concept of doing nothing can make you feel like a sitting duck. While stepping back and letting the markets correct themselves is often what we recommend, sometimes, we recognize that a different course of action is necessary to be prudent with our risk. We believe this is one of those times…
"The stock market is a device for transferring money from the impatient to the patient." - Warren Buffet
Friday, 12 October 2018
It’s hard to watch the news and not worry about your investments. We understand this. Every day comes with some new political upset, international debacle, scathing book or some other distraction. And with it, comes financial news which tethers itself to these headlines as if they have something to do with one another. It’s hard as an investor with skin in the game to not feel a pang of worry, or be tempted to act impulsively. But, believe it or not, the market corrects itself nearly every year and, if past history could predict future results (which it cannot) it might suggest that the Market is highly resilient and we as investors are too.
"EVERYONE HAS A PLAN UNTIL THEY GET PUNCHED IN THE FACE" - MIKE TYSON
Wednesday, 11 April 2018
This is my favorite quote when I think about investing. I love it because it was not intended for investing, yet, so relevant. Most people investing in the markets will claim they are invested for the long-term and will be patient. Most investors adhere to a Buy-and-Hold Strategy.
Monday, 12 February 2018
In case you were not aware, global equity markets experienced a massive dose of volatility over the past two trading days. From recent highs last week, the S&P 500 is down around 8%. Although this is not large from an historical perspective, it has garnered attention given the recent rapid pace of selling. The losses over the past 2 days has been ~6%.