Tuesday, May 26, 2015

How to Keep Your Emotions from Interfering with Your Investment Decisions

How to keep your emotions from interfering with your investment decisions 

A lot has been said about the need to keep emotions out of your investment portfolio simply because, as we all know, emotion-based decisions almost always breaks all the rules of sound judgement. This, in turn, leads to poor choices/actions and ultimately disastrous results.

 I believe there is a lot of truth to that hypothesis and have, in fact, witnessed this first hand over the course of my almost two-decade career working with hundreds of folks: whenever emotions lead the way, bad choices usually follow.

What makes things even worse for us in todays technologically advanced age is that we have access to all sorts of information and can always find some article, TV show, blog post, or radio guru that supports our emotional leanings.

So how do we bridge the gap as investors? How can we avoid making investment decisions based solely on emotions?

Here’s the thing. I don't think it is humanly possible to keep one’s emotions entirely out of our investment decisions. We are always going to be human. I mean you turn on the TV or hear on the radio that a certain stock is raising the roof, and that is just the beginning. Your next move is likely to get your advisor on the phone to demand that you get in on that “hot action.”

But there’s a rather simple approach to getting around this issue. You must work with an experienced advisor who knows what he or she is doing to devise an investment strategy you can live with based on your specific individual objectives. This is crucial, because it is where you set the rules of engagement, so to speak. Prior to investing even a single penny, you should sit with your advisor for an objective, neutral assessment of your investment strategy. Ask as many questions as you need to so that you understand all the likely possibilities, as well as defining the variables that may cause things to change.

Going forward, it will be your advisor’s job to hold you to that operating strategy when your emotions come calling. Absent of such clearly defined “rules of engagement,” a news segment about today’s hottest stocks may mean it’s open season on your investments, making them subject to your emotions and vulnerable to some less-than-optimal decision-making.
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If you'd like to avoid falling into the trap of investing by emotion, visit LaserFG.com or call 877.656.9111 right now to book your complimentary session with a seasoned financial professional with a proven track record who can help you create the Rules of Engagement to see you through to the financial future you desire.

Monday, May 11, 2015

Is It Time to Swap Your Financial Advisor for a Financial Coach?

Is it time to swap your financial advisor for a financial coach?

Obviously when it comes to financial planning – and retirement investing, in particular – no one sets out to fail. We all want the same outcome: to be successful by making as much money as is humanly possible so that we can live the golden years of our dreams. So how is it, then, that only a tiny minority make it to this promised land in reality? The vast majority fail miserably, missing the mark by terribly wide margins.

Of course, one could cite a myriad of explanations and causes for this unfortunate situation. Personally, I believe the reasons most often cited are just symptoms of one main underlying cause. So let’s dig deeper and get to the actual root cause.

Most so-called financial advisors allow their clients to dictate how their portfolios should be allocated, down to the minutest details. On top of that, clients may call any time to mandate changes to their underlying asset mix, and most advisors willingly comply. I understand how, as an investor, this may appear as giving you control over your hard-earned money, but that’s not what this is about at all. If your advisor is letting you dictate all the details, you are on a very slippery slope.

Here’s why. As an investor, in 9.9 out of 10 instances, you’re bound to react based on something you hear or see in the media or read in a magazine or on a website – and this tendency is more rampant in today’s information age than ever before. You get excited and want to make changes to your portfolio that you perceive to be advantageous. While this is an understandable natural tendency, when it comes your investment portfolio, it is precisely the wrong move and the surest way to destroy your wealth.

This past week, one of our clients reminded me of an interesting encounter we had some years back. He wanted to change his portfolio allocations to include something that was being discussed everywhere in the media at the time as THE thing to do to hit the investment jackpot. In my professional opinion, it was a bad move so I refused to do it. Of course, he was free to move his portfolio elsewhere, and I’m pretty sure it would have been easy enough for him to find an advisor who’d do whatever he wanted. Long story short, seven years later, he thanked me for taking a strong stand to protect his investments. In hindsight, the move he wanted me to make would have been a very expensive mistake with devastating consequences to his retirement income.  

Situations like these are the reason you need what I term a financial coach instead of an advisor who will just go along and let you do whatever you perceive to be the right thing, even if it breaks the rules of prudent investing. What, exactly, is the role your financial advisor is playing? Helping you to make prudent decisions and preventing potentially destructive behavior? Or just making you happy by doing whatever you perceive to be the right move?
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If you're ready to swap your financial advisor for a seasoned coach with a proven track record who will give you guidance to help  you achieve a secure financial future, visit LaserFG.com or call 877.656.9111 right now to book your complimentary session.

Monday, April 27, 2015

A noteworthy tax lesson: Less Earnings, More Taxes – what NOW??

A noteworthy tax lesson: Less Earnings, More Taxes – what NOW??

April 15, the dreaded day of reckoning for millions of American taxpayers, has come and gone. For Ms. J.R., this year being the third year into her retirement, it was particularly brutal, as her tax bill skyrocketed far beyond anything she could have imagined. What was particularly mind boggling to her was the fact that she’s not making nearly as much income in retirement compared to her working years, and yet her tax bill “keeps going up.” 

To paraphrase her two-minute-plus passionate voice message, “I need to come in and see you right away to look over my stuff because something is not right somewhere.” Her cousin, D.W., who has been our firm’s client for more than six years, suggested she contact me and followed up with a call of her own to stress the urgency of J.R.’s situation.

And, in many ways, I do understand where they are coming from. After all, how many of us wouldn’t think something was terribly wrong when someone who makes more than $32,000 more in income per year than you do, with pretty much the same tax profile in terms of exemptions/deductions, has a lower tax bill than you do? No, that wouldn’t be cool, would it?

I personally returned Ms. J.R.’s call the same afternoon, and we set an appointment for the following morning. Lo and behold, her income is significantly lower than her beloved cousin (by more than $32,000), yet to her surprise and greatest disappointment, I couldn't find anything wrong on her tax return. Of course, she didn’t like that news one bit.

Here’s the simple explanation and the point I hope to drive home for millions of American taxpayers: Although Ms. J.R.’s cousin made significantly more than her, and they both have pretty much the same situation in terms of tax deductions/exemptions, Ms. J.R.’s “taxable” income was much higher than her cousin’s. In other words, although D.W. brought in way more money, most of her income is considered “nontaxable.”

As I explain in great detail in 5 Mistakes Your Financial Advisor Is Making and also in Is Your 401(k) a Trap?, under our tax code, we pay tax only on taxable income. So instead of simply thinking and assuming that because your income might be lower when you retire you’ll automatically have to pay much less in the form of taxes, you’d be wise to work with a financial advisor who knows what he/she is doing to make sure that you are effectively shifting your income from the “taxable” column into the “nontaxable” column of your tax return. This is exactly what we helped D.W. accomplish successfully over the past six or so years.

Of course, Ms. J.R. now wants a plan of her own that will help her turn things around for the better. Who wouldn’t like to keep more of their hard-earned money? The great news is that we can help Ms. J.R. make that essential shift.
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If your tax burden is much higher than you think it should be, based on your new income in retirement, contact us so that we can help you to evaluate your current situation and see if you may be able to turn things around. Visit LaserFG.com or call 877.656.9111 right now to book your complimentary session.

Monday, April 13, 2015

Saving Money Is NOT the Most Crucial Thing to a Financially Successful Retirement

Saving Money Is NOT the Most Crucial Thing to a Financially Successful Retirement

Dont get me wrong at all. Working hard and saving as much money as you can toward your
retirement is not an inconsequential step in ensuring that youll have a financially comfortable life during your golden years - so by all means, go ahead and sock away as much as you possibly can. And then some more!

However, the fact that a lot of well-meaning retirement investors seem to be missing, in my opinion, is that you must first make sure that your particular investment vehicle of choice isnt going to bleed your money away.

Of course, who would set out to do that? Invest your hard-earned retirement money in an account that wouldnt bring you the best possible outcome? That is precisely the reason you must separate the act of saving money from the efficacy of the particular savings vehicle you choose to use for the purpose of growing your contributions.

View your investment account as a container into which youre storing your nest egg. Before you even begin making contributions into itas well as on an ongoing basis once you do start contributingensure that it doesnt have any big holes which may come in many forms, including things like unreasonably expensive/unwarranted commissions and fees or inefficient underlying investments.

So heres the point Im trying to drive home: You should by all means save money, and do so diligently. But before you write those investment checks, make sure that the containerinto which they are to be stored is intact in mint condition.
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Want real, fact-based information that will give you the financial serenity you're seeking? Contact us so that we can help you to evaluate your current situation and make a plan that you can live with. Visit LaserFG.com or call 877.656.9111 right now to book your complimentary session.

Monday, March 30, 2015

Is Your Actively Managed Mutual Fund Performing Up to Par?

Is Your Actively Managed Mutual Fund Performing Up to Par?
When it comes to the stock market, the past six years or so have been pretty great. But according to a study commissioned by S&P Dow Jones Indices, if you own an actively managed U.S. equity-based mutual fund, more likely than not your portfolio hasn’t seen any measurable growth - or at least nowhere near what the stock market has actually returned.

I believe the study’s findings give investors who own actively managed mutual funds something serious to consider because, generally speaking, the whole idea – and for that matter, the purpose and selling proposition – for owning an actively managed fund (as opposed to their passive/index counterparts) is to get returns that are superior to what the market generates. Not to mention that you generally end up paying a bit more in management fees to own an active fund.

One cannot and should not lump all actively managed mutual funds together in such a generic manner. So I’m not suggesting that you shouldn’t get yourself one, or as many of them as you’d like if that is, in fact, what you believe will lead to your financial promised land. However, it is worth noting that to date there hasn’t been any definitive proof to the contrary that actively managed mutual funds generate superior returns, compared to index funds.

As an investor, you’ll want to make sure that if you’re going to pay a fund manager “extra money” to help you “beat” the market and get you far superior returns, that you do, indeed, end up getting your extra money’s worth. The findings of this study seem to be adding to the considerable body of evidence in favor of owning low-cost index mutual funds.
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Want real, fact-based information that will give you the financial serenity you're seeking? Contact us so that we can help you to evaluate your current situation and make a plan that you can live with. Visit LaserFG.com or call 877.656.9111 right now to book your complimentary session.

Monday, March 16, 2015

Treat Your Retirement Savings Like Your Health - Get an Annual Checkup!

Treat your retirement savings like your health - get an annual checkup!

Setting aside money toward your retirement in some sort of account is a step in the right direction. But much more than that is necessary to ensure you’ll be set for the long run. You must also make sure that the specific investment vehicle you are using is, indeed, delivering the results required to turn your contributions into the income you’ll need during retirement.

That makes sense, right?

Just because you are making contributions into to a 401(K) or some other account doesn’t, in and of itself, necessarily mean that your retirement is all set. For all you know, your portfolio may be headed in the wrong direction. In fact, even if your account’s balance seem to be increasing from one statement to the next, you could still be moving in the wrong direction. You wouldn’t want to get all the way to retirement, years later, only to discover that you got the short end of the stick, would you? Not to mention that by then it might be too late for you to fully recover.

So, on a scale of 1 to 10 — ten being the most — how much attention would you say you are really paying to whats happening with your retirement savings?


Obviously money and health are not the same, but let me attempt to draw an analogy. It is wise to ensure that you keep up with your annual health evaluations, even if you feel great and healthy, simply because feeling great — or even believing that you are healthy — doesn't necessarily mean everything is going great in your body, health wise. You should view your retirement in the exact same light, and get an independent confirmation from a trained, qualified, and honest advisor annually.
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Want real, fact-based information that will give you the financial checkup you need to be sure your retirement account is doing what it needs to do for your healthiest financial future? Contact us so that we can help you to objectively evaluate your current situation and make a plan that will yield the results you want. Visit LaserFG.com or call 877.656.9111 right now to book your complimentary session.

Monday, March 2, 2015

Buyer Beware: A Traditional IRA Could Be Your Worst Tax Nightmare

Buyer Beware: A Traditional IRA Could Be Your Worst Tax Nightmare

Tax season is once again upon us and, among other things, it's that time of the year that experts give us so-called tax saving strategies. Of course there are some great ideas that may end up benefiting you, but in my humble opinion which is based on real-life experience with real people facing real situations some of these tax saving strategies may, in fact, end up doing the exact opposite and instead cost you big time in the long run.

One of the notoriously popular yet equally dangerous strategies is encouraging everyone to fund a traditional IRA in order to savemoney on your tax bill. Sounds good, but will it really save you money?

While it is true that contributions to traditional IRAs are deductible, and the gains you make during accumulation years are not currently taxable, that's not the end of the story by any measure.

The more compelling story is what happens down the road when you begin accessing money from your traditional IRA during retirement. Every single cent of that money will be subject to income tax at whatever tax rate is in effect at that moment in time and who knows where tax rates are headed?

As I explain in greater detail in my books 5 Mistakes Your Financial Advisor Is Making  and Is Your 401(k)  a Trap?, the indisputable fact is that with a traditional IRA, you are simply making a decision to pay taxes in the future, which would be a good decision only if you knew for a fact that your tax rate would be much lower than it is today, something I think we can both agree that even the President of the United States doesn't know not to mention that he cannot honestly promise anything in this regard. So, in effect, its a complete gamble.

Heres the piece that seems to allude the so-called experts. Even if today's tax rates do not change, there's still the real possibility that you'll end up paying more taxes when you retire, simply because you'll most likely have fewer deductions and exceptions than you enjoyed during your working years. For example, your dependent children will likely be adults by then, your mortgage would likely be paid off or almost paid off, and youll no longer be making deductible contributions into a 401(k) or your traditional IRA. All of which will imply one thing a potential increase in your taxable income, even though your gross income may have dwindled. Talk about the perfect storm for getting clobbered by taxes.

This is something I see happen to real people in real life every single day. I'd like to suggest a very simple way for you to test the potency and also the shortsightedness of this strategy. Find someone whos retired and followed this kind of advice and ask them how their tax situation is panning out in retirement. Are they actually saving money on their taxes? Also ask him or her if, given the chance of a do-over, he or she would go the same route.

If you are really looking to reduce your tax bill in the long run, you may need to look beyond a traditional IRA. Hopefully you are hearing me loud and clear.

Happy retirement.
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Want real, fact-based information that will give you the whole picture, rather than assuming the IRA is your best option? Contact us so that we can help you to objectively evaluate your current situation and make a plan that will yield the results you want. Visit LaserFG.com or call 877.656.9111 right now to book your complimentary session.