Tax planning is one of the most misunderstood areas of financial planning. From the complexity of how income taxes, Social Security taxes, and various investment taxes are calculated, to the fact that the tax code changes in some capacity almost every year, it’s no wonder that people are confused when it comes to this subject.
Retirement planning means different things to different people. We all have different ideas of what life should look like after closing the chapter of our careers. However, even with countless unique perspectives, there is one statement that has applied to every person I have ever worked with: “At some point I do not want to HAVE to work or HAVE to save money.”
A few years ago, I watched my then 6-year-old skip gracefully out the front door, across our porch, and finally into our chicken coop. She glided through that door with a twirl—naturally—and emerged a few minutes later with her basket crowded with the freshest eggs imaginable. Her return trip began with the same leap into a skip, but a slight misstep on the porch forced her off-balance for barely a moment…. but it was enough for those precious eggs to spill from the basket onto the porch.
We talk often about how having a grasp of your month-to-month spending plan is paramount to your retirement planning success. What we mean is this: a key component to creating a rock-solid financial legacy is understanding how much wealth is needed month-to-month to provide the lifestyle you want when you are no longer earning income.
Over the coming weeks, we will be reviewing what we consider to be the seven major areas of personal finance. Many of you have seen our Pyramid of Financial Planning below, as we use it often to demonstrate how the various pieces of wealth management are inter-related.
We’re starting to hear the “I-word” mentioned more often as of late. Inflation is on the rise. The Federal government’s money printing machines have been on overdrive, and the US economy has taken note. Prices have begun to tick up across the economy – most notably in residential real estate. The counterpoint (as made by the Fed) is the inflation we are seeing today is merely temporary, a hangover from the COVID shutdowns.
One of our primary goals as financial advisors is to help our clients put good financial behaviors into place in their lives. Some of the most commonly-used phrases about finance and investing are so generic as to be ignored or met with a yawn by most of us. So, how can we make them specific – to apply them to your own personal financial situation?
When investing in US stocks, the longer your time horizon, the better your odds of success. Most of us know that intuitively, but following through on head knowledge with actual life choices is another matter.
U.S. Treasury bonds have not yielded this little interest since the 1940s. Based on the data, it’s fair to expect U.S. bonds to return something on the order of 2% per year over the next 10 years. You might then ask: why do we own bonds at all? The answer is because there is value in stability.
Do you know how to make a pencil?
Why is the US stock market trading near all-time highs? That’s a question some of our clients are asking right now – and many more are thinking about it without vocalizing it. With the ongoing effects of COVID-19 being felt all around us, it’s natural to be skeptical of stocks going up.
Imagine for a moment that we’re past the worst of the COVID scare. Imagine also that you aren’t watching or reading political news. Then live a typical day in America. Just how good do we have it?