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Archive for Blog – Page 10

What’s the Worst?

Posted by Frank McKinley on
 January 13, 2020

If you had let EVERY bit of BAD NEWS over the last 30 years keep you OUT of the market,
what would you have missed?

If you think THIS Iranian/Oil ‘crisis’, or threatening geopolitical situation is much different,
keep your head in the sand!

But should you realize that it too shall pass, that the market is simply stronger than the crisis Du Jour,
then PLEASE call me.

And we’ll get through it, plan for your financial future & retirement and your children’s’ education together!

DON’T MISS OUT ON THE HISTORY OF THE MARKET!
It is just too strong to ignore. Maintain perspective.

30 reasons not to invest over the past 30 years

 

 

Categories : Blog, Financial Services, Investing, Investments, Retirement

Hindsight Is 2020: What Will You Do Differently This Year?

Posted by Frank McKinley on
 January 6, 2020

According to a recent survey, 76% of Americans reported having at least one financial regret. Over half of this group said it had to do with savings: 27% didn’t start saving for retirement soon enough, 19% didn’t contribute enough to an emergency fund, and 10% wish they had saved more for college.1

The saving conundrum

What’s preventing Americans from saving more? It’s a confluence of factors: stagnant wages over many years; the high cost of housing and college; meeting everyday expenses for food, utilities, and child care; and squeezing in unpredictable expenses for things like health care, car maintenance, and home repairs. When expenses are too high, people can’t save, and they often must borrow to buy what they need or want, which can lead to a never-ending cycle of debt.

People make financial decisions all the time, and sometimes these decisions don’t pan out as intended. Hindsight is 20/20, of course. Looking back, would you change anything?

Paying too much for housing

Are housing costs straining your budget? A standard lender guideline is to allocate no more than 28% of your income toward housing expenses, including your monthly mortgage payment, real estate taxes, homeowners insurance, and association dues (the “front-end” ratio), and no more than 36% of your income to cover all your monthly debt obligations, including housing expenses plus credit card bills, student loans, car loans, child support, and any other debt that shows on your credit report and requires monthly payments (the “back-end” ratio).

But just because a lender determines how much you can afford to borrow doesn’t mean you should. Why not set your ratios lower? Many things can throw off your ability to pay your monthly mortgage bill down the road — a job loss, one spouse giving up a job to take care of children, an unexpected medical expense, tuition bills for you or your child.

Potential solutions: To lower your housing costs, consider downsizing to a smaller home (or apartment) in the same area, researching and moving to a less expensive town or state, or renting out a portion of your current home. In addition, watch interest rates and refinance when the numbers make sense.

Paying too much for college

Outstanding student debt levels in the United States are off the charts, and it’s not just students who are borrowing. Approximately 15 million student loan borrowers are age 40 and older, and this demographic accounts for almost 40% of all student loan debt.2

Potential solutions: If you have a child in college now, ask the financial aid office about the availability of college-sponsored scholarships for current students, or consider having your child transfer to a less expensive school. If you have a child who is about to go to college, run the net price calculator that’s available on every college’s website to get an estimate of what your out-of-pocket costs will be at that school. Look at state universities or community colleges, which tend to be the most affordable. For any school, understand exactly how much you and/or your child will need to borrow — and what the monthly loan payment will be after graduation — before signing any loan documents.

Paying too much for your car

Automobile prices have grown rapidly in the last decade, and most drivers borrow to pay for their cars, with seven-year loans becoming more common.3 As a result, a growing number of buyers won’t pay off their auto loans before they trade in their cars for a new one, creating a cycle of debt.

Potential solutions: Consider buying a used car instead of a new one, be proactive with maintenance and tuneups, and try to use public transportation when possible to prolong the life of your car. As with your home, watch interest rates and refinance when the numbers make sense.

Keeping up with the Joneses

It’s easy to want what your friends, colleagues, or neighbors have — nice cars, trips, home amenities, memberships — and spend money (and possibly go into debt) to get them. That’s a mistake. Live within your means, not someone else’s.

Potential solutions: Aim to save at least 10% of your current income for retirement and try to set aside a few thousand dollars for an emergency fund (three to six months’ worth of monthly expenses is a common guideline). If you can’t do that, cut back on discretionary items, look for ways to lower your fixed costs, or explore ways to increase your current income.

1Bankrate’s Financial Security Index, May 2019
2Federal Reserve Bank of New York, Student Loan Data and Demographics, September 2018
3The Wall Street Journal, The Seven-Year Auto Loan: America’s Middle Class Can’t Afford Their Cars, October 1, 2019
Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2020.
Categories : Blog, Financial Services, Investments, Retirement

Socially Responsible Investing: Aligning Your Money with Your Values

Posted by Frank McKinley on
 December 31, 2019

Sustainable, responsible, and impact (SRI) investing (also called socially responsible investing) has been around for a long time, but growing interest has moved it into the mainstream. U.S. SRI assets reached $12 trillion in 2018, 38% more than in 2016. SRI investments now account for about one-fourth of all professionally managed U.S. assets.1

Surveys suggest that many people want their investment dollars to have a positive impact on society.2 Of course, personal values are subjective, and investors may have very different beliefs and priorities.

But there is also a wider recognition that some harmful business practices can affect a corporation’s bottom line and its longer-term prospects. In some instances, good corporate citizenship may boost a company’s public image and help create value, whereas shortsighted actions taken to cut costs could cause more expensive damage in the future.

Data-driven decisions

Services that provide research and ratings for investment analysis may also verify and publish environmental, social, and governance (ESG) data associated with publicly traded companies. Money managers who use SRI strategies often integrate ESG factors with traditional financial analysis. Some examples of ESG issues include environmental practices, employee relations, human rights, product safety and utility, and respect for human rights.

For example, an SRI approach might include companies with positive ESG ratings while screening out companies that raise red flags by creating a high level of carbon emissions, engaging in questionable employment practices, investing in countries with poor human rights records, or profiting from certain products or services (e.g., tobacco, alcohol, gambling, weapons).

Some investors may not want to avoid entire industries. As an alternative, they could use ESG data to compare how businesses in the same industry have adapted to meet social and environmental challenges, and to gain some insight into which companies may be exposed to risks or have a competitive advantage.

Investment vehicles

Many SRI mutual funds and exchange-traded funds (ETFs) are broad based and diversified, some are actively managed, and others track a particular index with its own universe of SRI stocks.

Specialty funds, however, may focus on a narrower theme such as clean energy; they can be more volatile and carry additional risks that may not be suitable for all investors. It’s important to keep in mind that different SRI funds may focus on very different ESG criteria, and there is no guarantee that an SRI fund will achieve its objectives.

The number of mutual funds and ETFs incorporating ESG factors has grown rapidly from 323 in 2012 to 705 in 2018.3 As the universe of SRI investments continues to expand, so does the opportunity to build a portfolio that aligns with your personal values as well as your asset allocation, risk tolerance, and time horizon.

As with all stock investments, the return and principal value of SRI stocks and investment funds fluctuate with changes in market conditions. Shares, when sold, may be worth more or less than their original cost. Asset allocation and diversification do not guarantee a profit or protect against investment loss.

Investment funds are sold by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the investment company, can be obtained from your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.

1-3US SIF Foundation, 2018

 

Categories : Blog, Investing, Investments, socially responsible investing

Should I sign up for an identity theft protection service?

Posted by Frank McKinley on
 December 23, 2019

Unfortunately, data breaches are now normal, everyday occurrences in our society. As a result, many companies are offering services to help you protect your personal information. If you want an extra layer of protection, an identity theft protection service is a good option. However, the term “identity theft protection service” can be misleading. The reality is that no one service can safeguard all of your personal information from identity theft. What most of these companies actually provide are identity theft monitoring and recovery services.

A monitoring service will watch for signs that an identity thief may be using your personal information. This typically includes tracking your credit reports for suspicious activity and alerting you whenever your personal information (e.g., Social Security number) is being used. The recovery portion of the service usually helps you deal with the consequences of identity theft. This often involves working with a case manager to help resolve identity theft issues (e.g., dealing with creditors or placing a freeze on your credit report). And depending on the level of protection you choose, the service may also provide reimbursement for out-of-pocket expenses directly associated with identity theft (e.g., postage, notary fees) and any funds stolen as a result of the identity theft (up to plan limits). Identity theft protection services usually charge a monthly fee. Entry-level plans that provide basic protection (e.g., Social Security number and credit alerts) can cost as little as $10 a month, while plans that offer more advanced features (e.g., investment account monitoring) will cost more.

Keep in mind there are steps you can take on your own to help protect yourself against identity theft, such as:

  • Check your credit report at least once a year for errors
  • Periodically review your bank and debit/credit card accounts for suspicious charges/activity
  • Obtain a fraud alert or credit freeze if necessary
  • Have strong passwords, use two-step authentication, minimize information sharing, and be careful when shopping online

Protect yourself against identity theft

 

 

Categories : Blog, Financial Services

How to Give Like a Billionaire When You Don’t Have Billions to Give

Posted by Frank McKinley on
 December 16, 2019

Since Bill and Melinda Gates and Warren Buffett created the Giving Pledge in 2010, more than 200 of the world’s wealthiest individuals and couples have committed to giving the majority of their wealth to philanthropic or charitable causes.

Although the Giving Pledge only invites billionaires to join, “it is inspired by the example set by millions of people at all income levels who give generously — and often at great personal sacrifice — to make the world a better place.”*

You don’t have to be a billionaire to embrace the spirit of the Giving Pledge: When people come together to give, regardless of wealth, they can improve the lives of others.

Decide which causes matter most to you

Giving Pledge billionaires are a diverse group, coming from 23 countries and ranging in age from their 30s to their 90s. While they’re all dedicated to philanthropy, they support many different causes.

For example, Giving Pledge member Sara Blakely pledged to help empower women to prosper when she signed the pledge in 2013. She has since donated money to build homes for impoverished families and funded entrepreneurial programs for girls.

One of the newest signers of the Giving Pledge, Robert F. Smith, focuses on causes that support equality for African Americans. In May 2019, he told graduates of Morehouse College that he was paying off their student loans via a grant that is worth an estimated $40 million.

What causes are you passionate about? What are your values? Do you want to make an impact locally or globally? Aligning the causes you support with what’s meaningful to you can help deepen your long-term commitment to giving back.

Write down why you are giving

Director and producer George Lucas and his wife Mellody Hobson joined the Giving Pledge in 2010. Like other members, they wrote a statement explaining why they wanted to join and what they intended to accomplish.

“My pledge is to the process,” Lucas wrote; “as long as I have the resources at my disposal, I will seek to raise the bar for future generations of students of all ages. I am dedicating the majority of my wealth to improving education.”*

Lucas fulfilled part of this pledge by creating the George Lucas Educational Foundation to transform education through innovation.

Writing down your own intentions can help clarify your philanthropic goals and serve as a reminder of the impact your gift could have.

Inspire and learn by going public

The Giving Pledge hopes to “inspire conversations, discussions, and action, not only about how much, but also for what purposes/to what end.”*

Even if you normally prefer to keep your charitable work private, being open about the causes you support might help inspire others to give back.

Other perks of going public include being able to exchange ideas and lessons learned with others, and the opportunity to meet people in your community or around the world who share your commitment.

Connect generations through giving

A major goal of the Giving Pledge is to encourage long-term family giving that will help make the world a better place for generations to come.

Sharing your passion for helping others with your children or grandchildren can be especially rewarding. Setting family goals, choosing worthy causes, and volunteering together are ways that you can help unite generations and make philanthropy part of your family’s legacy.

*To learn more about the Giving Pledge and those who have signed it, visit givingpledge.org.
Categories : Blog, Contributions, Financial Services

Take This Quiz: The Social Security Retirement Earnings Test

Posted by Frank McKinley on
 December 9, 2019

Can you work and receive Social Security retirement benefits at the same time? Yes, but the Social Security Administration (SSA) will apply an earnings test. Part or all of your monthly benefit may be withheld if you earn too much.

To help avoid surprises, take this quiz to find out what you know — and don’t know — about Social Security earnings test rules.

Questions

  1. The retirement earnings test applies only if you are receiving Social Security benefits and are…
    a. Under age 62
    b. Under full retirement age
    c. Full retirement age or older
    d. Age 70 or older
  2. Which of the following types of income count toward the earnings test?
    a. Wages earned as an employee and net self-employment income
    b. Pension and retirement plan income
    c. Interest and dividends
    d. Both a and b
    e. All of the above
  3. Benefits that are withheld are lost forever.
    a. True
    b. False
  4. The earnings test may affect family members who are receiving which types of benefits?
    a. Disability benefits
    b. Spousal benefits
    c. Dependent benefits
    d. Both b and c
  5. What special rule applies to earnings for one year, usually the first year you claim Social Security retirement benefits?
    a. A monthly earnings limit applies to any earnings after you claim retirement benefits.
    b. Earnings during the first year after you claim retirement benefits can’t be counted if you retired after 40 years of continuous employment.
    c. Earnings during the first year after you claim retirement benefits will not reduce your Social Security benefit if you retired from a government job.

Answers

1. b. If you have not yet reached full retirement age (66 to 67, depending on your year of birth), your Social Security retirement benefit may be reduced if you earn more than a certain annual amount.

In 2020, $1 in benefits will be deducted for every $2 you earn above $18,240. In the calendar year in which you reach your full retirement age, a higher limit applies. In 2020, $1 in benefits will be deducted for every $3 you earn above $48,600. Once you reach full retirement age, your earnings will not affect your Social Security benefit.

The SSA may withhold benefits as soon as it determines that your earnings are on track to surpass the annual limit. The estimated amount will typically be deducted from your monthly benefit in full, so you might not receive benefits for one or more months before they resume.

2. a. Only earned income, such as wages from an employer and net self-employment income, count toward the earnings limit. Unearned income — such as other government benefits, investment earnings, interest, pension and retirement plan distributions, annuities, and capital gains — doesn’t count.

3. b. Benefits that are withheld are not really lost. Your benefit will be recalculated at full retirement age to account for the months benefits were withheld. You’ll receive the higher benefit for the rest of your life, so assuming you live long enough, you’ll eventually recoup the total amount you previously “lost.”

4. d. Benefits paid to family members (such as your spouse or dependent children) based on your earnings record may also be reduced if you’re subject to the earnings test. The earnings test does not apply to disability insurance benefits.

5. a. Many people retire mid-year and have already earned more than the earnings limit. So in the first year you claim retirement benefits, a monthly earnings test may apply, regardless of your annual earnings.

For example, let’s say that you claim benefits at age 62 on September 30, 2020 and have already earned more than the 2020 earnings limit of $18,240. Then, you take a part-time job that pays you $1,000 per month for the rest of the year. You’ll still receive a Social Security benefit for October, November, and December because your earnings are less than $1,520, the monthly limit that applies in 2020.

Categories : Blog, Financial Services, Retirement, Social Security
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