Monday, May 16, 2016

Exaggeration or Cold Hard Truth that Most Financial Advisors are Full of Hot Air?

Exaggeration or cold, hard truth that most financial advisors are full of hot air?

I might be over-exaggerating things here, or perhaps the situation is just as dire as I perceive it – that so many hard-working people out there are getting what amounts to shoddy treatment from the so-called financial advisors, consultants, or what-have-yous they’ve turned to for guidance to secure their financial futures.

Here’s why I am saying this. Quite often, I meet and/or talk with folks who by any reasonable standard were given bad financial advice which led them to invest their hard-earned money in the wrong products – things that ended up giving them less than optimal benefit. On the other hand, however, the advisors always end up receiving their paychecks.

For these unsuspecting folks I have personally met, this usually is a wake-up call, but how many more out there aren’t even aware that they are not getting the best bang for their efforts and money? Unfortunately, I think many of these shady advisors are getting away with this unacceptable behavior.

When you go to talk to a financial professional about your retirement, you would expect to get only the best suggestions. However, based on what I see in my practice on an almost-daily basis, it seems to me that the vast majority of people tend to end up with some cookie-cutter, off-the-shelf advice and products without any real emphasis on their unique set of circumstances.

So, again, I ask: Am I over-exaggerating what’s happening out there? Of course this doesn’t apply to every financial advisor. There are certainly some great advisors out there who are actually going above and beyond to help their clients get the best possible outcomes. In fact, isn’t this exactly and precisely what people should expect from any financial professional they might talk to? Why should that be the exception instead of the norm?

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Visit LaserFG.com or call 877.656.9111 right now to book your complimentary, confidential consultation with a financial professional who has your best interest at heart and who is willing to ask the right questions to help you make a plan that will get you where you want to go. Youll be paired with an experienced financial professional who can help you plan for a secure future, regardless of your current financial situation. Retirement planning means planning for ALL aspects of your life after retirement. If youre ready, were here to help.

Monday, April 18, 2016

Unfortunately, Your Old 401k Isn’t Just Sitting There

Unfortunately, Your Old 401k Isn’t Just Sitting There

Your old 401(k)s isn’t just sitting there. And that is not unique to you — no one’s 401(k) ever just stays put, whether you are actively contributing to it, no longer contributing to it, or no longer employed by the employer offering it. This is the gist of a conversation that I had with someone a few weeks back.

This individual was under the impression that her 401(k) from her previous employer was simply going to stay put, now that she was no longer a part of that organization. In her estimation, nothing would happen to her money except that over the years she could expect to see some growth.

Based on my interactions throughout the years, many unsuspecting folks unfortunately seem to operate under this same erroneous assumption that could potentially lead to costly unintended consequences — as you are about to see in just a moment.

401(k)s, like any other similar investment vehicles, have certain fees associated with them.
In my opinion, one of the most dreadful things surrounding these plans is that these fees are not disclosed anywhere on the statements you receive as being deducted from your account balance, because they are deducted directly from your returns.

For example, say that the fees associated with your 401(k) were 1.5 percent a year. If your investments earned, say, a 6 percent return for the year, you’d only end up seeing an increase of 4.5 percent (6% minus the 1.5% fee). Yes, you can say that the fees get paid on the back end.

In the case of the individual with whom I had the above mentioned discussion, I was able to dig out the associated fees on her old 401(k) from her former employer’s Summary Plan Description document.
And it wasn’t great news. As an employee, her fee was approximately 1.5 percent annually. However, once she was no longer actively employed by the organization, it increased to 2.5 percent. I must note here that this practice isn’t unusual in the 401(k) world. It’s pretty standard for your fees to increase when you are no longer part of the sponsoring employer’s workforce. A good question is: How many folks out there are aware of this? Do you know how much you are paying in fees? The fact is that these fees matter a lot, because they directly affect the outcome you’ll end up having when the rubber finally meets the road.

Let’s assume this individual had about $100, 000 in this old 401(k), and it will earn a return (before fees) of 8 percent a year for the next 10 years. If she were still employed at the company offering the plan, her net return after deducting the 1.5 percent in fees would be 6.5 percent. In 10 years, her money would have grown to about $191, 218. Unfortunately, however, since she is no longer an active employee, her fee goes up to 2.5 percent, meaning her net return comes down to 5.5 percent, which equates to a balance of $173, 107 at the end of those 10 years. That comes to about $1, 811 extra fees a year ($18, 111 over those 10 years).

This lady thought all along that her money was just sitting there; she learned the hard way that this isn’t the case because that is not how investment accounts of any kind work. This realization gives her the opportunity to seek an alternate investment account that will get her the same or a potentially better return, but with a lower fee structure so she’ll come out ahead and end up keeping more of her money. And from where I am sitting, isn’t that the goal of every hard working investor?

When it comes to your old — or current — 401(k), are you asking the right questions, or simply making assumptions?

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Visit LaserFG.com or call 877.656.9111 right now to book your complimentary, confidential consultation with a financial professional who has your best interest at heart and who is willing to ask the right questions to help you make a plan that will get you where you want to go. Youll be paired with an experienced financial professional who can help you plan for a secure future, regardless of your current financial situation. Retirement planning means planning for ALL aspects of your life after retirement. If youre ready, were here to help.

Monday, March 21, 2016

Think Twice Before Contributing to a Traditional IRA


Think Twice Before Contributing to a Traditional IRA


It’s tax time once again, which makes it the perfect time to discuss what, in my humble opinion, seems to be one of the deadliest financial mistakes that millions of unsuspecting folks are led to make by some tax preparers.

Right about now, so many folks are being given what amounts to very short-sighted advice to make tax-deductible contributions into traditional IRAs so that they can reduce their taxes (a.k.a. save money and, in turn, outsmart our favorite Uncle Sam). On the surface, that sounds like a pretty awesome situation, doesn’t it? But that is not the end of the story. In fact, from my standpoint, it is not even half of the story. 

First of all, it is true that once you meet certain criteria, you are allowed to make tax deductible contributions to an IRA. Presently, it’s up to $5,500 for those under age 50 and $6,500 for people 50 and older. So, yes, by doing so, you would be reducing your taxes, all things being equal, but only for today.

However, here’s the rest of the story – the alarming part that people often discover so many years later to their utter dismay, at least based on what I keep seeing in my practice year after year.

Your contributions to a traditional IRA and the interest you earn on them accrue on a tax-deferred basis. In everyday English, all you are doing is essentially electing to postpone paying the taxes you owe until sometime in the future, probably when you reach retirement age. So you really aren't avoiding any taxes – they all must be paid sooner or later.

So when you reach retirement age and begin taking withdrawals from your traditional IRA, every single penny will be subject to taxes – get this – at whatever tax rate you find yourself in at that point in time. An amazing number of people tend to think that when they retire, they will somehow find themselves in a very low tax bracket because they expect a drop in their total income. But it is not as simple as that, because that is not how income taxes work. We are taxed on our “taxable income” – not simply income, two entirely different concepts.

And I can tell you this also. Generally speaking, you tend to have very few deductions in retirement, compared to earlier on in life, so your taxable income – like that of most retirees in America today – will likely be higher than you anticipate, even though you have a much lower total income. I am not sure if you’ve noticed it yet, but most folks in retirement tend to not enjoy tax time at all. Not that most of us look forward to it, but per my observations, retirees really, really dread April 15.

Another caveat. All the withdrawals you take from your traditional IRA in retirement also factor into how much tax you’ll end up paying on your Social Security benefit checks. I am not sure any of these traditional IRA gurus tell folks about this piece of crucial tax planning information. 

To be clear. I am not telling you that you should not own a traditional IRA, because I simply don’t know your particular situation. I am suggesting, however, that you be mindful of the often one-sided view offered by typical financial advisors and consider the total picture. At the end of the day, when the rubber finally meets the road, as it always does, you are not saving because you want to defer taxes, but because you want to have income available for a better tomorrow.

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Visit LaserFG.com or call 877.656.9111 right now to book your complimentary, confidential consultation with a financial professional who has your best interest at heart and who is willing to ask the right questions to help you make a plan that will get you where you want to go. Youll be paired with an experienced financial professional who can help you plan for a secure future, regardless of your current financial situation. Retirement planning means planning for ALL aspects of your life after retirement. If youre ready, were here to help.

Monday, March 7, 2016

From Saving to Distribution - Is Your Retirement Plan COMPLETE?

From saving to distribution - is your retirement plan COMPLETE?


There’s a rather unfortunate problem on the American retirement scene that seems to be getting worse by the day - an ever increasing number of folks are arriving at retirement only to discover that they are at risk of running out of money. And it’s not because they didn’t save enough during their working years. Many did. So why are they facing this predicament?

From what I have seen in my practice, most folks fail to transition from the accumulation or savings phase of retirement planning into the distribution or income phase. In fact, many retirees today have not done any form of serious income planning. So in effect, they are going along in retirement trying to manage issues relating to longevity of their income but with accumulation-focused nest eggs.

This amounts to trying to fit a square peg in a round hole because the two are entirely different. Income planning is a whole specialty on its own, and not all financial advisors focus on it. But it is too important to ignore because the consequence is the difference between running out of money mid-stream or making sure that you’ll never run the risk of outliving your income, irrespective of how long you end up living. 


Some questions to consider


Will I have enough income to last as long as I do? Will my income keep up with rising prices? What effect will a stock market crash have on my income? What portion of my income is guaranteed and based on what? What will happen to my spouse’s lifestyle if I die? What effect will taxation have on my various sources of income throughout the years?


It may not seem that big of a deal. But without proper income planning by an experienced professional, you could end up in a really tough spot at a time that you don't want to be. Report after report tell us that is exactly what’s happening to so many unsuspecting folks out there. My hope is that if you haven't done so already or feel uneasy about your situation you’ll take some time to talk with an advisor who specializes in income planning today because your peace of mind in those retirement years is too important. 

Food for thought.
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Visit LaserFG.com or call 877.656.9111 right now to book your complimentary, confidential consultation with a financial professional who has your best interest at heart and who is willing to ask the right questions to help you make a plan that will get you where you want to go. Youll be paired with an experienced financial professional who can help you plan for a secure future, regardless of your current financial situation. Retirement planning means planning for ALL aspects of your life after retirement. If youre ready, were here to help.

Monday, February 22, 2016

The New Big Changes in Social Security Rules for Married Couples

The New Big Changes in Social Security Rules for Married Couples


It is fair to say that on November 2, 2015, when President Obama signed The Bipartisan Budget Act of 2015 into law, some pretty major changes happened to the way married folks get to claim Social Security benefits going forward, because the new rules effectively ended two of the popular spousal claiming strategies widely used for the past 15 years.

The somewhat good news is that for some folks there still is a window of opportunity to act and get in under the old rules. We’ll get to that later, but to make things easier to understand, let’s begin by reviewing the now old rules.  


The Old Rules


Until now, Social Security rules have allowed a worker who has reached their Full Retirement Age (FRA) – which for most folks retiring is now age 66 – to file and then immediately turn around and suspend their benefits so that they would not actually collect the checks. Why was this necessary? Your spouse could begin to receive spousal benefits from your work after you “filed” – you didn’t have to actually claim the money at the time – hence the “suspend” part. Meanwhile, by “suspending” your benefits, you would get to earn delayed retirement credits of 8 percent a year between the ages of 66 and 70, for a total of a 132 percent larger monthly check when you finally did begin collecting the money. This was advantageous for workers who desired to delay their benefits past FRA, but the law was flexible and also allowed spouses to start collecting benefits as early as age 62.


Pretty powerful, wasn’t it? It got even better if this worker’s spouse had also reached his/her FRA, because they would be able to file a “restricted” application which enabled him/her to collect their spousal benefit check while also growing their own retirement checks – assuming they worked outside the home – by earning another and completely separate 8 percent yearly delayed retirement credit. Then, whenever that retirement check had peaked or exceeded the smaller spousal check, they’d simply switch over and begin collecting the larger amount.

The New Rules

According to the new law, when you suspend your benefits, no one – including your spouse – will be eligible to collect a check based on your record. Additionally, no one will be allowed to file a “restricted” application. Now when you file to claim your spousal checks, you will receive the higher of either your spousal check or your own retirement benefits. So Congress and the President pretty much ended suspended benefits.

Now to the grandfathering opportunity I mentioned earlier. First, if you are age 66, you can still use the old file-and-suspend rule, but you must file your application with the Social Security Administration by Friday, April 29, 2016. Second, if you were 62 or older by December 31, 2015, you will still be allowed to file a restricted application. I must mention, though, that if you are already collecting benefits, you are not impacted by the changes.

Obviously, this will potentially impact millions of families in the coming months and years. Retirement income plans may need to be revisited and reanalyzed to respond to these changes. But that’s assuming that your advisor knows as much as he/she should know about Social Security in the first place. If you need assistance to revise your retirement income plans, please contact Laser Financial Group at LaserFG.com or call 877.656.9111 for a complimentary review.

Monday, February 8, 2016

It Sounds Counterintuitive, Yet Rebalancing Could Be Your Single Greatest Investing Move

It Sounds Counterintuitive, Yet Rebalancing Could Be Your Single Greatest Investing Move


Looking to hit that home run with your investments? Of course, who wouldn’t be? Then you must be prepared to be counterintuitive and take actions that go against the grain of conventional wisdom. I’d even go so far as to say that you must be willing to take the occasional odd action.

Here’s why. One of the fundamental things that every long-term investor must do religiously – based on the occurrence of certain predetermined triggers – is what is referred to in financial planning as rebalancing. In basic terms, rebalancing is the process of realigning your investment portfolio back to its original and/or predefined target setup.

For example, let’s say that prior to investing, Mary determined that the appropriate level of risk for her timeframe and risk tolerance is 40 percent equities/stocks and 60 percent fixed income/bonds.

However, because real-world markets often tend to change, and rather unexpectedly, this 40/60 mix is bound to get out of sync. Let’s assume that Mary’s equities did really well, but her bonds went south. As a result, stocks now make up 60 percent of Mary’s portfolio and fixed income represent 40 percent. So her portfolio has changed from her original 40/60 to 60/40.

Although things may look great for Mary because her account balance may have increased, here’s the catch. The current portfolio mix contains much more risk than she set out to take. Stocks now represent 60 percent and bonds only 40 percent - a whopping 20 percent higher than her actual stock tolerance.

Mary needs to rebalance her portfolio back to her target 40/60. To do that, she must sell 20 percent of her stocks and buy 20 percent more bonds. Yes, I know. That sound like the wrong move. Stocks are up bonds are down, so why sink her money into what is presently down?

Remember what I said earlier? Rebalancing is completely counterintuitive to conventional investing wisdom. You’re basically selling the winners and buying losers. Wow, that's hard to accept. But it is precisely the right thing for Mary to do. You never want to plan based on what you perceive might happen in the future - because no one knows. Neither is it done based on what you feel. Rebalancing must be entirely based on what has already happened.

Now back to Mary’s portfolio. Think about it this way. She’s selling stocks at the time that they are higher in value and, in turn, buying bonds that have dropped in value. Bonds are practically on sale, which if you really think about it is precisely the right time to buy, isn’t it? What about the stocks she’s selling at a higher value? That’s great, too, isn't it?

When it comes to money and investing, conventional wisdom most of the time has nothing to do with wisdom. Please find yourself an experienced, honest financial professional who can help you build a suitable plan and, most importantly, help you do the difficult but prudent things that are good for your future.

All the best.
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Visit LaserFG.com or call 877.656.9111 right now to book your complimentary, confidential consultation with a financial professional who has your best interest at heart and who is willing to ask the right questions to help you make a plan that will get you where you want to go. Youll be paired with an experienced financial professional who can help you plan for a secure future, regardless of your current financial situation. Retirement planning means planning for ALL aspects of your life after retirement. If youre ready, were here to help.

Monday, January 25, 2016

Can Someone Actually Predict the Stock Market's Movements?



Are there some folks amongst us who can actually predict precisely what the stock market is going to do? The most honest answer is no, not on this planet. Up until this point in time in the history of mankind no one has been able to accurately predict any such thing. Although so many have tried, according to the evidence on the books they've all been colossal failures.

If you want to become a successful investor, please, do yourself a huge favor: focus on the fundamentals, invest prudently - not based on anyone's predictions or even your own feelings.