How Money Works

We hear a lot half truths in the financial world, not necessarily because people try to make misleading statements, but because sometimes a simple statement just doesn’t quite tell the whole story. Let’s discuss a few examples…
1) “Don’t worry about those losses because the market always goes up in the long run.”
2) “The fees in your portfolio are less than 1%.”
3) “With interest rates so low, you’re better off to invest that money instead of paying off your house early.”
4) “Diversification is the key.”
5) “These bonds significantly reduce the risk in your portfolio.”

401K Frequently Asked Questions
We get a lot of questions about 401Ks, so we thought it would be a good idea to address as many of them as we can in one conversation…
1) My company plan is offering a program where I can get advice on my 401k for a very low fee. Is it a good idea to use this?
2) Should I contribute as much as I can to my 401k or only as much as the company will match?
3) Should I use target date funds in my 401k?
4) Is taking a 401k loan always a bad idea?
5) When should I take money out of my 401k and roll it over to an IRA?

Delayed gratification is a difficult skill to master and that’s just as true with financial matters as it is the other areas of your life. Let’s talk about some instances where you might be faced with a choice of being satisfied now or satisfied later…

1) Getting some relief on the household budget vs. getting the 401k match

2) Getting a tax deduction now vs. better tax planning for the future

3) Starting Social Security at 62 vs. starting later and getting a bigger benefit

The obvious thing for us to do on this show would be to tell you all of the reasons that you should work with a financial advisor. But instead, we’re going to tell you all of the reasons that you shouldn’t…
1) You’ve mastered internet research.
2) You’re self-motivated.
3) You have nothing but time on your hands.
4) You want to work until you die.
5) You want to rely on the government for support.
6) You hope your kids get nothing.
7) Paying taxes makes you gleeful.

Today we look at some quotes from great investors and financial authors and do a retirement reality check.
SEGMENT:  QUOTES FROM GREAT INVESTORS

1. “If you’re not willing to have composure during a 50% market decline two or three times a century, you’re not fit to be a stock-holder and you deserve the mediocre result you’re going to get.”   Charlie Munger, Berkshire Hathaway
2. “Fear incites human action far more urgently than does the impressive weight of historical evidence.”   Jeremy Siegel, financial author
3. “The four most dangerous words in investing are: “This time it’s different.”   Sir John Templeton, founder of Templeton Growth Fund
4. “Wall Street sells stocks and bonds, but what it really peddles is hope.”   Jason Zweig, author
5. “The investor’s chief problem—and even his worst enemy—is likely to be himself.”  Benjamin Graham, author
6. “There is no such thing as no risk. There’s only this choice of what to risk and when to risk it.”   Nick Murray, author
7. “The most dangerous people in the world are very smart traders who have never gotten their teeth kicked in.”   Helmut Weymar, author
8. “More people lost money waiting for market corrections and anticipating market corrections than the actual market corrections.”   Peter Lynch, mutual fund manager

SEGMENT:  RETIREMENT REALITY CHECK
Some people just need a reality check when it comes to understanding their retirement. Here’s a start…

1) Manage your expectations.
Just because every TV commercial about retirement shows people on a beach or a boat, that doesn’t mean that this is your retirement reality. Understand what reality looks like for you so that you can retire with the proper expectations instead of disappointment.

2) Account for your changing expenses.
How much have you thought about all the things that will be changing with your monthly expenses once you retire? Some of these changes will add to your monthly expenses, others will decrease your expenses.

3) Be ready to adjust.
It’s crucial to have a plan in place for all of the different financial aspects of your retirement. But it’s just as important to have the ability to adjust and make changes as you go, because life happens.

4) You can be brilliant in your field but still need financial planning help.
Too many people feel that they should be capable of planning their retirement by themselves so they don’t seek out the help that they should. This can be especially true with people who hold jobs that require significant amounts of education—they feel that they’re smart enough to handle their money without help.  But it’s not how smart you are. It’s more about the fact that you don’t know what you don’t know.

Having a good financial plan can help you resist some of the financial temptations that the average person will face.  Today we talk about some common temptations we often see people fall victim to.

We also discuss some income planning essentials to help you become better informed before heading off into retirement.

When it comes to retirement planning, it only takes one area where you planned poorly to ruin your entire plan. Today we talk about how a good retirement plan addresses some of these potential pitfalls…
1) The possibility of outliving your money
2) The threat of a couple of major home repairs in the same year
3) The expense of a nursing home stay
4) The volatility of the stock market
5) The threat of rising taxes

We've  worked with people who have lost their spouse and are concerned about their financial situation.  Some things to consider include:

• Income gap (loss of Social Security or pension that dies with spouse)
• Now a single filer instead of joint filer on taxes
• Spousal continuation option on pensions
• Leaving the kids a tax time bomb
• Not communicating your plans in advance
• Inaccurate beneficiary designations
• Kids that aren’t prepared to responsibly handle wealth that they inherit