Monday, December 8, 2014

If Your Financial Advisor Is Doing This, Tell Him/Her, “You’re Fired!”

If Your Financial Advisor Is Doing This, Tell Him/Her, “You’re Fired!”

Imagine a doctor who, when you consulted with him or her, allowed you, the patient, to tell him/her the medications you wanted, down to the exact dosage – and then pulled out a pad and wrote precisely that prescription. Should you – or would you – visit with such a physician? Of course, not! You’d be wise to stay as far away as you possibly could.

How about this other doctor? He or she speaks with you at length, makes a diagnosis, and decides that you need some antibiotics. However, he/she then gives you a list of say 15 to 20 different types of available medications, asks you, the patient, to choose, and then writes the prescription based on your choice. Would you deal with such a doctor?

Only a person who doesn’t value his or her life would have anything to do with either of these doctors. I’d even bet that if there were such doctors in real life, it wouldn’t be long before they’d lose their licenses to practice. I imagine they might even wind up behind bars.

Now let’s look into the way so many financial advisors, consultants, specialists, or whatever fancy-schmancy title you can come up with, operate. They talk with you; you tell them which product you want, like an IRA or a mutual fund. And what happens next? You get a list of available funds from which to choose. So you do your thing and there you go, your account is all set up. Or maybe you answer some quick questions on a computer program and a nice pie chart pops up with your available options – from which, you the client, make the actual selections for your account.

That may sound fairly familiar and even normal, but here’s the unfortunate thing: It’s a horrible way to plan your future! How different is that from the bad doctor scenarios I mentioned earlier? Just think about it. If your so-called financial advisor is asking you to make all the nitty gritty selections regarding your investment portfolio, you’re basically writing your own prescription. And the most incredible part is that, the advisor, the one with the license and “expertise” to guide you, is ultimately letting you do their work – and he/she still gets paid from your money. Is that how things are supposed to work? Of course not! The sad thing is that this is exactly the way that easily 9 out of 10 advisor-client roles are playing out at this very moment. Is it any surprise, then, that more and more folks have practically nothing tangible to show after all their years of hard work and investing?

Just so we are clear, I’m not suggesting by any measure that you should simply hand over your money and have no input. Of course you should set boundaries regarding what you can live with and expect out of your investments. But if the person with the training and license to actually write the prescription is leaving all the decision-making up to you, simply based on your intuition, why are you paying them? Maybe these so-called advisors prefer this setup because it works in their favor when it comes to being held fully accountable: “Hey, if I let you make your own selections, you can’t blame me later if you’re not satisfied.”

My dear investor, are you working with a REAL advisor? Or are you just paying someone to watch you do eeny-meeny-miny-moe with your future?
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Want an independent assessment to confirm that you are on the right track when it comes to saving for your retirement, including the money you will leave to your heirs? Come in so we can help you to  objectively evaluate your current approach. Visit LaserFG.com or call 877.656.9111 right now to book your complimentary session

Monday, November 24, 2014

What has the BIGGEST impact on your portfolio returns? The answer might surprise you

What has the BIGGEST impact on your portfolio returns? The answer might surprise you

In my last column I made the case for why it’s such a terrible idea – a lost cause, even – for trying
to pinpoint the best times to get in and out of the stock market. I’m hoping I was able to convince you to take that impossible, wealth-eroding enterprise off of your must-do list.

Today, I want to continue that discussion, but from a slightly different angle: By how much would you enhance the returns on your portfolio if you were able to perfectly time the stock market’s movements?

I must point out that we both already know this isn’t possible, but for the sake of this discussion, let’s say you or your financial advisor somehow had the proverbial crystal ball.

I think it’s a fantastic question, because the answer will really help you to decide whether it’s even worth the effort. At the end of the day, what it all comes down to is getting a good return on your savings, period.

According to the widely used Brinson, Hood, and Beebower (BHB) study into what really makes up the returns on a portfolio, here’s how an investment portfolio’s return breaks down:

  • Market timing: 1.8%,
  • Stock selection: 4.6%,
  • Other factors: 2.1%,
  • Asset allocation: 91.5%.
So say that a given portfolio earned 10 percent. Market timing will have contributed 0.2%, stock selection 0.5%, other factors 0.2%, and asset allocation 9%.

Now let’s put things into perspective. All things being equal, if you (or your financial advisor) were able to perfectly time the market by accurately predicting its exact movements with no error whatsoever, choose the right stocks/bonds, as well as arrange every other detail you feel is essential for the perfect portfolio investment, but got your asset allocation wrong, you’d have ended up with only a 1% return.

On the other hand, if you nailed your asset allocation (the broad proportionate mix of equities/bonds/cash) but botched the other three areas – including market timing, because you went about your daily business without constantly trying to predict what’s going to happen in the market on the next day – you’d have earned 9% out of the 10% return in this example.

So, my friend, you’ve got to focus on where the money is really going to come from – your broad asset allocation strategy – instead of wasting your time, energy, and emotions trying to time/predict the market for negligible results. And while on the subject, let me remind you once again that you shouldn’t allow the talking heads on TV, radio, or in print media to take you on a rollercoaster ride that could potentially rob you of what matters most.
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Want an independent assessment to confirm that you are on the right track when it comes to saving for your retirement, including the money you will leave to your heirs? Come in so we can help you to  objectively evaluate your current approach. Visit LaserFG.com or call 877.656.9111 right now to book your complimentary session

Monday, November 10, 2014

Now is a TERRIBLE time to get back in the stock market

Now is a TERRIBLE time to get back in the stock market

No, this is not intended as a joke, and I’m fully aware that it runs completely counter to the conventional “wisdom” of the media these days. Perhaps your own financial advisor is even busy encouraging you to take the plunge you’ve been resisting up until now, but if you’re one of the folks who, for one reason or another, are wondering whether or not now may be the right time to get in the stock market, my unequivocal answer to you is no, no, and no! Please don’t!

Here’s why. Trying to pinpoint a good time to get into and, for that matter, out of the stock market is an impossible task. No one has ever had the ability to predict that, nor will they ever be able to do that. If anyone tells you otherwise – that they know the specific times for you to get in and/or out of the stock market – I’d suggest you don’t walk, but run as fast as you can away from him/her. Whether it’s a website or an app or a TV “expert,” run, because if you don’t, you’ll end up destroying the very thing you’re trying to enhance: your financial future.

If you cannot handle the gyrations of your portfolio that led you to get out of the stock market in the first place, I suggest you simply stay out, because trying to time the market is not possible and you’re more likely to end up derailing your future. According to a recent study released by the independent research firm DALBAR, although the S&P 500 Index has averaged an 11.10 percent annual return over the past 30 years (1983 through 2013), the average person who owned an equity-based mutual fund over the exact same period earned only 3.69 percent!

Of course, many things may account for this dismal outcome. However, the data clearly points to a telling revelation that trying to time the market has failed terribly – as it always has and will continue to do. Over the 30-year period the survey covered, the average individual held any particular fund position for only 3.31 years.

Now here’s what has worked beautifully for our clients. Work with your advisor to design a broadly diversified portfolio with a risk tolerance you can live with and clear benchmarks/expectations to measure your progress along the way, and rebalance when appropriate.  Then let the portfolio actually do what it’s supposed to do. The real hurdle for you as an investor is finding a financial advisor who’s disciplined enough and has the guts to help you stay disciplined so that you can achieve your goals.
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Want an independent assessment to confirm that you are on the right track when it comes to saving for your retirement, including the money you will leave to your heirs? Come in so we can help you to  objectively evaluate your current approach. Visit LaserFG.com or call 877.656.9111 right now to book your complimentary session

Monday, October 27, 2014

What's The Biggest Mistake That Will Affect Your Retirement?

What's the biggest mistake that will affect your retirement?
This past week I found myself in a conversation with someone who, upon learning about my line  of work, asked what I believe to be an extremely crucial question. I’d even venture to say that, in my humble opinion, it is the most important question every single person accumulating a retirement nest egg needs to ponder:

What is the one prevalent mistake
most folks make to hurt their retirement aspirations?

I’ll admit that the question came as a bit of a surprise to me, because the line of questions I usually hear in such settings has more to do with which stocks/funds people should own or what my thoughts are about folks’ current investment allocations.

That said, here is my answer to the current – and crucial – question.

Most folks spend their entire working years believing that all it will take to have the retirements of their dreams – moneywise, of course – is to focus on saving as much money as they possibly can.

Make no mistake: I’m not saying that saving as much money as you can is not a good thing. It is very important, but it’s not all you’ll need to do if you intend to hit a financial home run. The KINDS of investments you’re pouring your contributions into is far more important, in the sense that if you have a bunch of lousy underlying securities/funds, no amount of money is going to change that reality. Instead, you are likely going to end up wasting most or all of the money and the effort you put in.

What if you discovered that your investment vehicle had unusually high fees that were draining your money? Should you (or would you) still contribute as much money as you could to it?

While the virtue of saving the most you can is definitely a great idea without any reservations whatsoever, I’d suggest that WHERE your money is actually is much more crucial. What I’m trying to tell you here is that before you make the next contribution into your retirement nest egg, make sure it doesn’t have any holes you’re unaware of. One of the most devastating things anyone can face is discovering that they’ve been financing someone else’s lavish lifestyle, instead of supporting their own retirement, only after it’s too late to do anything about it.

Happy retirement!

Monday, October 13, 2014

Real-life Question about Social Security Benefits

Real-life question about Social Security benefits


The following question was submitted through the "Ask Your Question" portal of our website, LaserFG.com.

Dear Mr. Asare:

I’ll be turning 66 in three months and my wife will do the same in seven months. We both have good-paying jobs that we love, so we are postponing our retirements until we’re each 70 years old. Social Security tells us that I can collect $1,900 now or $2,500 when I’m 70. My wife’s estimates are $1,500 now or $1,900+ at age 70. I’m not sure if there’s anything else to this, but our good friends [names redacted to protect their anonymity] suggested we seek your advice, so we’ll appreciate your thoughts.

Sincerely,

John & Carol [last name withheld]
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Hello, John and Carol –

First of all I’d like to wish you each a happy 66th birthday. It’s good to know that you both feel healthy, happy, and have careers that you enjoy – hence your decisions to delay retirement until age 70. I think it calls for a great big birthday bash!

Specifically regarding your Social Security, based on the general information you’ve provided, I see an opportunity for you and Carol to begin collecting approximately $950/month (which comes out to $11,400/year) for the next four years as you wait to reach age 70, for a cumulative total of $45,600.

No I’m not kidding! Actually, I don’t think that’s even the best part of the story, because you’ll be delighted to know that collecting this $950/month will not reduce either your or Carol’s future benefit amounts, the ones you’re expecting at age 70. You’ll still get to collect your $2,500 and Carol her $1,900+. Basically, this $950/month is a complete bonus, so to speak. However, if you fail to collect it, it will not increase either your or Carol’s future benefit amounts.

It may sound strange, but it’s true and a perfectly legitimate benefit under Social Security rules. I explain this claiming strategy in great detail on page 11 of my Social Security strategies special report, which you may download for free at SecureYourFutureReport.com.

Here’s the gist: Upon reaching your full retirement age of 66, you will need to file an application with Social Security, but immediately – and simultaneously – turn around and suspend it so that you won’t actually collect checks. That will open the way for Carol to submit a restricted application for “spousal benefits only,” based on your record, so that she can begin collecting one-half of the $1,900 that you would have collected now (which is about $950/month).

Because your application is “suspended” you’ll still continue to accrue your annual 8 percent increases through age 70. And since Carol will be collecting only her “spousal benefits” – and not her own retirement benefits – she, too, will continue to accrue the full 8 percent yearly increases. Long story short, you and Carol will still get to collect $2,500 and $1,900, respectively, at age 70. This strategy will simply bring in another $11,400 a year, beginning right now for the next 4 years. I’m pretty sure that you and Carol don’t mind collecting a $950/month bonus, for lack of a better word, from of all the people on this planet, Uncle Sam!

Now here’s an extremely important caveat: Choosing this option requires that you give very specific and detailed instructions/requests when you visit your local Social Security office, and you want that to go smoothly. I strongly recommend that you schedule a time to come and meet us or talk with us on the phone so that we can break down the process for you. You can schedule this appointment through our website or call us at 877.656.9111.

My warmest regards to you both.

Samuel

Monday, September 29, 2014

You Have a Choice – Have that Tough Talk before Your Family is Left in Ruins

You Have a Choice – Have that Tough Talk before Your Family is Left in Ruins
Today, I’d like to open that proverbial box. The one that sits at the back corner of the room and, for one reason or the other, most of us either don’t get to talk about or don’t want to talk about. What if you were suddenly gone from the face of this planet and your family (or those for whom you are financially responsible) had to manage on their own – beginning tomorrow?

Okay, don’t freak out. This isn’t a fun discussion for me, either. Given that I was born and raised in the West African nation of Ghana where discussions of this nature are a full-blown taboo subject, this isn’t something I’d naturally like to bring up. However, we both know, or at least we should know, that failing to address the possibility of us not being around tomorrow isn’t going to keep anyone around for even one more nanosecond than we’re supposed to be, is it? Of course not!

I don’t expect you to be thinking or talking about death every day. But I strongly believe that if you have a family – wife, husband, and/or children who depend on you financially – and you’re really serious about taking care of them to the best of your abilities, you must address the issue of making sure that they will have the financial resources necessary to continue life as they know it, should the unthinkable happen to you. Pardon me, but there’s just no other way for me to sugarcoat it.

Of course, you are being responsible by working and making sure that your family has a comfortable life today. And just like me, you intend to be around till a very ripe old age to see your great-great grandchildren. Hey, there’s nothing wrong with that, and I pray you get exactly that. However, that still doesn’t change anything about the real possibility that we could be gone tomorrow. Then what happens to our family’s way of life? Will your children be able to afford the college you dreamed of and are currently saving money for them to attend? How about the roof over their heads? Losing a loved one is terrible enough, but having to endure a financial lack on top of that is one thing I wouldn’t wish on my worst enemy. Unfortunately, however, it happens every day to unsuspecting families.

Yes, it’s important. I’ll take care of it soon. After all, nothing is going to happen to me or my spouse.

I don’t know exactly how to label that thought: denial, carelessness, or plain old arrogance? I recently met a widow who’s now living on public assistance because she had to give up the family home she lived in with her late medical doctor husband. She told me the subject of death never came up in the 18 years they were together, because in their culture, such a discussion is frowned upon. I certainly do respect my culture – and yours, too. But we shouldn’t lose sight of the fact that cultures consist of some great things, some so-so things and, let’s face it, some pretty ridiculous things, too! I’m sure that if the late doctor had known precisely how long he had to live, he’d have put things in place to prevent the financial ordeal his wife is facing today, wouldn’t he?

OK, I Get It. I have some insurance coverage through my employer.

That’s great. But how much exactly will your loved ones need, and how close is it to what they will receive? Will that check be enough to take care of your family’s day-to-day expenses in the case of yours/your spouse’s demise? Here's another story: Wife dies suddenly. Husband knew she had coverage at work, but wasn’t exactly sure of the details because in the part of the world they come from, talking about this stuff is a bad omen. In fact, he said, just raising the subject might be perceived as wanting to profit from your spouse’s death, so people just don’t bring it up. Come to find out his late wife’s coverage was an “accidental death policy,” but since her death wasn’t accidental, the family receives nothing. I’m pretty sure this lady loved her husband and their three children and wouldn’t want them to suffer financially. But isn’t that’s exactly what’s happening now?

Obviously, I don’t know your particular situation. Here’s what I know: I cannot make you do anything that you don’t want to do. You’re the boss of your life! But at least I’ve made my point. Now, I hope you’ll do what you know in your gut must be done. I wish you all the best!
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Want an independent assessment to confirm that you are on the right track when it comes to saving for your retirement, including the money you will leave to your heirs? Come in so we can help you to  objectively evaluate your current approach. Visit LaserFG.com or call 877.656.9111 right now to book your complimentary session

Monday, September 15, 2014

Are Your Retirement Decisions REALLY the Best Ones for You?

Are your retirement decisions REALLY the best ones for you?

One of my favorite all time statements happens to be this one by Will Rogers.  
And I must say, from all of my years as a front-row eye witness into the retirements – and by extension, lifelong decisions – of so many families, Will is right on target. As it pertains to retirement planning, the actions you take to invest your nest egg generally reflect what you believe to be the best possible decisions. I can’t think of any sane person who’d even settle for the second best choice in this situation. But what if what you believe to be the best decision turned out not to be so? Then what?

Almost on a daily basis, I meet folks who thought they were doing the “right thing” with their retirement money, but as it turned out, they weren’t – and they have horrible results to show for it. These are well-meaning folks just like you and me who worked hard all their lives, controlled their spending, and saved/invested their money along the way.

Here’s the point I want you to take away from this discussion. Hard work and socking money away all your life are great virtues that are well worth pursuing. But – and that’s a but I’d like to really emphasize – you could still end up exactly where you didn’t want to be if you ignore another crucial piece of the puzzle that seems to elude so many of us: the right investments! You can work hard and save all the money in this world, but the wrong investments will eventually rob you of the lion’s share of that money.

So do you know exactly where your nest egg is invested? Do you know the fees associated with your account? Keep in mind that most of those fees may not show up on any of your statements. Whose advice or direction are you following regarding your investment decisions? How accountable is that person for the advice they give you? Does he or she have real-life success stories, when it comes to delivering the kind of results you are hoping to achieve?

Hard work is great. But you don’t want to end up wasting your years of effort, do you? If you’d like to explore how well your current retirement plan is really working for you, I offer you a complimentary independent evaluation of your current investments. Simply call my office at 877.656.9111 or schedule your complimentary session here