4-Minute Money Ideas

Why You Need to Talk to Your Adult Children about Your Finances
By Douglas Goldstein CFP® - helping olim handle their U.S. investments from Israel

Do you find it difficult to discuss with your adult children what should happen with your finances towards the end of your life?

If so, you’re not alone.

People don’t like thinking about their own mortality or losing control. Moreover, as family relationships aren’t always easy, discussing issues such as power of attorney, healthcare proxies, and estate planning can get very complicated. For these reasons, many families push off this conversation for as long as possible.

If you don’t speak with your adult children about your finances, they may have difficulty picking up the pieces and taking care of you and your affairs if you become too infirm to take care of yourself. The emotional and monetary effects of taking care of an elderly parent without any direction can be very hard, especially if your adult children are raising families of their own at the same time.

How to have “the talk”

The best way to let your adult children into your finances is to talk with them. If you can’t physically do that for any reason, compose a list of all your assets, where they are, what you want to happen when you’re no longer able to look after yourself, who would take care of you, and other important issues. Make sure to sign the appropriate documents so your children have the legal means to make financial decisions on your behalf (Power of Attorney, Trading Authorization, etc.)

If you have a financial advisor, invite your adult children to the attend meetings. Let them know who helps you with your finances and who to ask for reliable, objective advice when necessary. While you can’t ever know exactly how long you will live or stay healthy, taking a disciplined approach and sharing your financial situation, goals, and strategies can save a lot of heartache for everyone down the road.

For more about why sharing your finances with your adult children is so important, listen to Tim Prosch, author of The Other Talk, on The Goldstein on Gelt Show at here.

Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Neither PRG nor its affiliates give tax or legal advice.

Steps You Need to Take 5 Years before Retirement

By Douglas Goldstein CFP®- helping olim handle their U.S. investments from Israel

Will you have “enough” money to live comfortably? The months and years before retirement may be filled with trepidation and financial worries. In order to minimize financial concerns before retirement, here are some steps you should take in the five years leading up to it:

Organize your assets for tax efficiency
Most retirees underestimate the impact taxes will have on their retirement income. If you have an idea of what your retirement tax bracket will be, work with your advisor to arrange your assets in a way to create the greatest tax efficiency when you start withdrawing. Selling assets might trigger large capital gains taxes, and there may be additional taxes on pension payments.

Know your pension options
For some people, delaying taking Social Security or other pensions until as late as possible might make sense. Learn more about timing claiming benefits at: Profileperspectives.com/social-security. Be sure to check with your Israeli pension advisor in Israel about taking Bituach Leumi and withdrawing your work pension as a lump sum or in monthly payments.

Don’t be too conservative
While it may be tempting to reduce your exposure to risk-based investments pre-retirement, if you get too conservative, you could inadvertently diminish your portfolio’s capacity to generate enough income to meet your needs. A balanced and diversified portfolio of both stocks and bonds may be your best strategy for maintaining capital growth while reducing portfolio volatility. But beware of taking risks without consulting with a licensed advisor first.

Find your retirement ambition
Studies show that retirees who stay engaged and productive are happier in all aspects of their lives. Explore new interests that can be enjoyed now and more fully developed as you cross the retirement threshold. These might include volunteering, mentoring, or starting a new hobby or business.

The five years before retirement is a critical period for ensuring a smooth transition into your next stage of life. Get in touch if you’re concerned about how to handle your investments for retirement: [email protected].

Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Neither PRG nor its affiliates give tax or legal advice.

How to Choose the Right Financial Advisor for You

By Douglas Goldstein CFP®- helping olim handle their U.S. investments from Israel

Choosing the right financial advisor can be like seeking the right life partner. Your financial advisor needs to be the perfect match for you and your situation. Your advisor must be knowledgeable, honest, reliable, and, most importantly, have your best interests in mind.

There are many financial professionals, who all offer a range of services and expertise. How should you choose? When considering whether to work with a prospective advisor, ask yourself these questions:

Is this financial advisor qualified?

Before you set foot inside a financial advisor’s office, make sure that he is licensed and has expertise with the types of investments that interest you. You can check out his qualifications, background, and experience through the online checking facilities provided by FINRA (Financial Industry Regulatory Authority) in the United States and ISA (Israel Securities Authority) in Israel.

Who is the topic of your first meeting?

If your prospective financial advisor spends a lot of time talking about himself and his credentials, but doesn’t ask you about your investment goals and current financial situation, then choose someone else. The main subject of your first meeting should be you. A financial advisor needs to learn about you, your specific needs, goals, and the ultimate purpose of your investments.

Talking with you or at you?

When a financial advisor speaks with you about investments, make sure you understand how these investments work and why he suggested them. Not everyone understands financial jargon, so make sure everything is explained clearly. If you don’t feel comfortable asking questions, interview another advisor. During your conversation (and yes, it should be a conversation and not a monologue!), make sure that you feel comfortable. You should leave the meeting with a sense that your finances are in good hands.

What else do you need to know about finding the perfect (financial) match? For more ideas, read this: Profile-Financial.com/pick-advisor

Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Neither PRG nor its affiliates give tax or legal advice.

What You Need to Know About Rolling Your 401(k) to an IRA

By Douglas Goldstein CFP®- helping olim handle their U.S. investments from Israel

When you change jobs, everything you need to take with you can be neatly packed into a box – except your retirement plan. When you leave your job, you need to think about rolling your 401(k) into an IRA (Individual Retirement Account). If you left your job to make aliya, this question becomes even more crucial, as cross-border financial regulations come into play with keeping the tax-beneficial status of American retirement accounts.

What are your options?
If you leave your American job to move to Israel, you have four options for your 401(k):

• Keep the money with your former employer’s 401(k) plan,
• Roll your funds into an IRA,
• Roll your money into your new employer’s plan if it’s allowed,
• Cash out your 401(k) plan by withdrawing all your money (not recommended).
The best course of action depends on your financial situation, your attitude about managing your own retirement funds, where you will live, and the specific plan options available to you. What are the pros and cons of rolling your 401(k) plan into an IRA?

Advantages of an IRA Rollover
There are several reasons why rolling your 401(k) into an IRA may be advantageous. An IRA gives you more control over your specific investments, as they tend to offer more investment options than a typical 401(k) plan. Furthermore, you can easily manage an IRA from overseas.

Disadvantages of an IRA Rollover
If you want access to your retirement funds before age 59½, you may prefer to keep your funds in your 401(k) or roll them into your new employer’s 401(k) plan (if available). If you are younger, you might want to take advantage of the fact that 401(k) withdrawals are allowed at age 55. Or, if you are happy with your current investments, it may be better to leave them where they are rather than rolling them over to somewhere else.

Before changing any retirement plan, make sure to consult with a financial advisor and tax professional to understand the tax consequences of any move you make. To learn more about IRAs, read: ProfilePerspectives.com/401-and-ira

Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Neither PRG nor its affiliates give tax or legal advice.

How to Make a Good Investment Decision

By Douglas Goldstein CFP®- helping olim handle their U.S. investments from Israel

Since one person’s good investment choice may be a huge mistake for someone else, what factors should you consider when deciding upon a potential investment?

In investing, the only hard and fast rule is that past performance never guarantees future returns. Though you should try to understand why a security acted in a specific way in the past, the most important thing you can do is make sound decisions based upon your personal situation. To help you make an even clearer decision, use an investment evaluation tool like the one available at Profile-Financial.com/investment-evaluation

All too often, folks lose money as a result of not asking the right questions. So, when deciding what to invest in, ask yourself:

What is your net worth?

Why is knowing your net worth important? Before you invest your money, you need to know how much you really have. This doesn’t only refer to savings, but also to other assets such as real estate and collectibles (if you would ever consider selling them). Knowing your total net worth helps you create an asset allocation model and understand how the new idea would fit in your big picture.

What is your tolerance for risk?

Risk tolerance is very individual. If you are close to retirement, your risk tolerance level may be lower than that of a younger person because you have less time to recoup any potential loss. Sometimes even younger folks don’t have the stomach for market volatility and they need to choose more conservative investments, too.

What is the purpose of the investment?

Are you investing for growth, to maintain your principal, or to generate income? Growth investments increase your wealth through long- or short-term appreciation. These investments include mutual funds and various types of stocks. Income investments, on the other hand, generate steady income through interest or dividend payments. Examples include dividend stocks or bonds. An income investment may not be suitable for growth investing, and vice versa.

To find out what other questions you should ask before making a financial decision, check out the free investment evaluation tool at: Profile-Financial.com/investment-evaluation

Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Neither PRG nor its affiliates give tax or legal advice.

Was Miguel Cervantes’ Don Quixote fighting imaginary windmills or market volatility when he said, “Don’t put all of your eggs in one basket?” Putting all of your assets in one basket doesn’t keep them as safe as you might think because there is always a risk that you might lose them all at once.

The way to counter this is the investment strategy of asset allocation. Asset allocation, or diversification, may be even more important than picking the “right” stocks.

The idea is to diversify your money among different types of assets, such as equities, fixed income, and cash and its equivalents, rather than putting all your money into one single asset class.

Minimize potential losses

The main reason for practicing asset allocation and having a diversified portfolio is to minimize potential losses. If you invest in a single asset class, and it does badly, you could sustain a heavy loss. However, if you spread your investments among different asset classes, if one class performs poorly, your losses could be mitigated by holdings in different, hopefully better-performing asset classes. For example, historically, when bonds tend to have low interest rates, stocks rise in value, and in periods of high interest rates, bonds outperform stocks. Of course, past performance is no guarantee of future returns.

How to determine your asset allocation

How do you choose which asset classes to invest in, and in which proportions? This depends on your personal situation and goals. If you want to save for a specific, short-term goal, you would put more of your money into liquid assets that minimize jeopardizing the principal, such as certificates of deposit (CDs), money markets, or cash. However, if you are investing for the long term, you might include a larger proportion of stocks and other growth investments in your portfolio. As the goal is more long term, you have more time to ride out market fluctuations.

To find out more about asset allocation and the importance of having a diversified portfolio, read my blog: Profile-Financial.com/asset-allocation

Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Neither PRG nor its affiliates give tax or legal advice.

Why You Need to Build an Emergency Fund
By Douglas Goldstein CFP®- helping olim handle their U.S. investments from Israel

What would happen if you had an emergency – like a huge dental bill or unexpected car repair? And even worse, what if you had lost your job a month before and couldn’t even get an interview for a new one? To top it off, you get a call that a close relative in the States is sick and you desperately want to fly in to help. Do you have cash available to pay, or would you need to withdraw from your long-term retirement account or sell investments (possibly incurring a large tax bill)?

How to build an effective emergency fund

Generally, folks should have three to six months’ worth of essential living expenses as the benchmark, and sometimes as much as twelve months or more, depending on their other assets and job prospects.

Your emergency fund money should be in a liquid investment so it can be accessed instantly, when needed, without penalties. It’s true that you won’t earn a lot on it, but that’s the cost of liquidity. Investing in something that yields a higher return usually involves greater risk… risk you shouldn’t take with your emergency fund. Since you may need all of this money, you can’t afford a drop in its value. Additionally, if you put this money into an illiquid investment, you may not be able to sell it quickly enough when faced with a bill. Remember, emergencies don’t wait for a bull market.

Review your personal life and work situation. Someone who works in a field with frequent turnover – like technology, or on a commission-based salary, may need a larger emergency fund. Likewise, a single person may face fewer emergencies than a family with many children, and his fund may not need to be as large.

If you continually need to call on your emergency fund, you should also reevaluate your budgeting practices.

For other advice on saving and investing, download a free copy of The Retirement Planning Book at: Profile-Financial.com/rpb

Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Neither PRG nor its affiliates give tax or legal advice.

The Things Not to Do With an Inheritance

By Douglas Goldstein, CFP® - helping olim handle their U.S. investments from Israel

When you get an inheritance, your first question may be, “What should I do now?” But perhaps a better question is “What shouldn’t I do now?”

An emotional rollercoaster

Getting an inheritance arouses many emotions. Sometimes, people get too excited and they spend all the money without thinking about the best uses for it. Others feel uncertain that they know how to manage the wealth they just received. Their fear paralyzes them, preventing them from making good investment decisions.

What are the mistakes to avoid?

When you get an inheritance, try not to let the tangle of emotions interfere with making the right choices. Avoid the following:

Impulse spending. While you may have always wanted a luxury car, designer jewelry, or the latest technological gadget, step back and ask yourself if these are really the best uses for your new wealth. Sometimes there is an additional cost to an item beyond its price tag – can you afford the ongoing costs of maintaining a new acquisition?

Get-rich-quick schemes. While it may be prudent to invest some or all of your inheritance, don’t get blinded by your desire to make as much money as possible. Many offers of “high returns” that sound too good to be true often are. Sometimes preservation of wealth is more important than growth. Consult your financial advisor before making any investment decision, since their objectivity and knowledge can alert you to scams and unrealistic expectations.

Fear and anxiety. Don’t be too frightened to take some risks. The problem with conservative investments is that low interest rates may not beat inflation, so in the long run, your money may lose its real value. A financial advisor can help you assess your situation and suggest suitable investments.

Greedy/Needy friends or relatives. If you are approached by gift/loan requests, don’t feel pressured into agreeing. First make sure that your own future is financially secure, and only then weigh the merits of the request.

What should you do now?

There are positive ways to use your inheritance. For some more information on what to do after you receive an inheritance, join my free webinar. Register at Profile-Financial.com/webinar

Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Neither PRG nor its affiliates give tax or legal advice.

How Can You Increase Your Retirement Income?
By Douglas Goldstein, CFP® - helping olim handle their U.S. investments from Israel
How can you increase your retirement income and avoid risk? That’s tricky, and a lot of folks simply opt to put their money in the bank. But the good news is that there are other options, aside from the bank, for reducing risk and generating more retirement income.
While banks present a lower risk than the markets, bank deposits historically have low yields. This is very significant in retirement because you need sufficient income from your investments to replace your paycheck. Your bank savings may not grow if interest rates are low, and may even lose value over time due to inflation.
Income-producing investments
These two income-producing investments, while more risky than bank deposits, may be appropriate for some investors, and it’s worth asking a professional, licensed investment advisor if they’re right for you:
Bonds – A bond is a loan to a government or company over a set time period. When the bond matures, you get back your original sum (the principal), while during the time that you own the bond, you receive regular interest payments. Even though bonds are lower risk than stocks, they are not risk free. During a bond’s lifetime, market volatility can cause its value to go up or down, and there is the risk of default.
You don’t have to invest in individual bonds – a bond fund gives you the opportunity to diversify. These funds are managed for you, and you can also receive a monthly payment instead of the semi-annual payments received from individual bonds. Be sure to read the prospectus before investing in a mutual fund so that you understand the risks and expenses.
Dividend-paying stocks – Individual stocks may pay dividends, as well as REITs (real estate investment trusts), ETFs (Exchange Traded Funds), and mutual funds. While the dividend rate isn’t guaranteed (that is up to the board of directors to decide), dividend-producing investments generate income on a regular basis. (Don’t forget that the initial investment does carry risk of principal.)
Consult with a financial advisor
Before deciding on an income-producing investment, consult a financial advisor to find out which investment strategy is best for you. For more information about increasing your retirement income, watch the 9-minute video at Profile-Financial.com/videos/increase-retirement-income

Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates.

What Happens to Your U.S. Brokerage Account When You Leave America?
By Douglas Goldstein, CFP® - helping olim handle their U.S. investments from Israel
The good news is that if you are an American expat, or you are not a U.S. citizen at all, you can still benefit from having a U.S. brokerage account. (For more information about managing your American brokerage account from abroad, download the Profile Toolkit.)
Why have an American brokerage account?
There are many reasons to keep your investments inside a U.S. brokerage account. These include: transparency and efficiency, lower transaction fees, and an opportunity to profit from worldwide markets in both dollars and foreign currencies. You can diversify your holdings inside a U.S. brokerage account, with CDs (certificates of deposit in a bank), mutual bunds, stocks, bonds, and much more. Additionally, if you are an American expat, keeping your investments inside a U.S. brokerage account will make it easier for you to file your U.S. taxes and fill out the FBAR form.
By keeping some of your investments in a U.S. brokerage account, your portfolio becomes more diverse as you are not relying on the movements of one single economy.
How can you invest in U.S. markets from outside America?
While it is still possible to invest in U.S. markets from overseas, the most cost-efficient way to do so may be through a U.S. brokerage account. To do this, you need to enlist the services of an investment company that specializes in cross-border and international clientele.
The brokerage company you choose should not only be cross-border friendly, but should also specialize in customer service. It should provide you with clear advice and services for custody and clearing, meaning that it can hold securities for you on your behalf and execute your trade orders. Make sure that whatever firm you choose is properly licensed and experienced.
For more about how to open a U.S. brokerage account and invest in U.S. markets from outside America, download the Profile Toolkit.
Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates.