Retirement

Your Retirement Budget is Going to be OK, Probably.

That doesn't sound like a very good answer, but it isn’t as bad of an answer as you might think.

Many couples and individuals preparing for retirement understand and appreciate that they have to build a budget for retirement. But with so many different variables, it can be hard to predict if your money will really last and if you will be able to afford the budget that you built for yourself. So even if the answer is “probably”, that can help establish some peace of mind.

The process of budgeting for retirement and planning how to spend down retirement savings can be daunting. So, here are a few suggestions to help you take control of the process, maintain the lifestyle that you’ll establish for yourself and enjoy financial security.

First, I strongly recommend to my clients that they spend a year “practicing” or “test driving” various budgets and lifestyles to ensure that they really know what they are signing up for. Many retirement planning tools use 70% or even 60% of pre-retirement income as the planned level of spending in retirement. That might be realistic for some, but maybe not. And while using such a low number in the planning process will help ensure your retirement assets last longer, it may not be sufficient to support other goals and ambitions you have for retirement. The longer you can sustain and feel comfortable with lower levels of spending, the more confident you can be using them in retirement planning tools.

Second, speaking of planning, as you sit down with an advisor or endeavor to plan out your retirement finances on your own, be sure that the tool you are using is enabled for Monte Carlo simulations. Rather than giving you a point estimate, Monte Carlo gives you a range of outcomes and will give you the probability that your retirement assets will last. Be sure the tool uses your level of spending and risk in your portfolio as inputs. No one knows exactly what’s going to happen in the investment markets. But what if today starts the worst 15-year stock market stretch in history? Will your assets last? Monte Carlo can help answer that question, and less dire scenarios too.

Third, once you have a comfortable level of spending and have found a great tool to analyze everything, take a big step back and make sure that those budget expectations are reasonable.

Two areas in particular: Many couples find that they have underestimated their medical expenses and medical insurance costs. Fidelity Investments estimates that a couple aged 65, retiring today will need $260,000 to cover health care costs in retirement. Is that what you’ve budgeted?

The other big area that is sometimes overlooked is inflation. The cost of everything you buy is going to go up over time and your income may not keep pace. It’s important to account for and factor in some level of increasing costs so you can maintain your lifestyle.

Fourth and lastly, consider the potential role of annuities in your portfolio. As a fee only, fiduciary advisor, we do not sell or promote any products on commission, including annuities. We always work in the best interests of our clients. Given the low assumed interest rate most annuity providers use and the ability to achieve similar results at a lower cost, we generally don’t recommend annuities. However, what happens if you go through all this planning and budgeting and build a fantastic plan that shows a high likelihood of your assets not running out based on the life expectancy of you and your spouse? Well, that’s a great start, but if you are given the gift of a long life? Don’t you want to make sure you have enough money to last as long as you live? If you plan for a normal life expectancy and live longer than expected, you may be exposed to some risk. A longevity annuity that kicks in after say age 85 is a good way to help protect your lifestyle in those very golden years.

Those four pre-retirement focus areas certainly aren’t comprehensive and every individual has circumstances that are unique to their situation that need to be planned around and accounted for. From Social Security claiming strategies to Long Term Care insurance, to Donor Advised Funds for charitable giving, there is a lot to consider. There are also so many different tools and calculators on-line out there that trying to sort it all out can be overwhelming. So take it slow and tackle on issue at and time.

If you have questions on any aspect of your retirement budget or pre-retirement financial planning or would like suggestions on the tools we use and recommend, just reach out, we’d be happy to help.

PLEASE REMEMBER:

- INVESTING AND INVESTMENT MANAGEMENT INVOLVES RISK, INCLUDING THE LOSS OF YOUR INITIAL INVESTMENT OR ANY INVESTMENT GAINS.

- PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

- THIS GENERIC INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION FOR ANY INDIVIDUAL TO TAKE A SPECIFIC ACTION.

- PLEASE INVEST PRUDENTLY AND SEEK PROFESSIONAL HELP FROM A FINANCIAL ADVISOR, INVESTMENT MANAGER, ACCOUNTANT, LAWYER OR OTHER PROFESSIONAL ON MATTERS THAT YOU ARE UNSURE OF OR THAT ARE UNIQUE TO YOUR PERSONAL CIRCUMSTANCES.

- FINANCIAL PLANNING AND INVESTMENT MANAGEMENT SERVICES PROVIDED BY J. BRADFORD INVESTMENT MANAGEMENT, NASHUA NH.

 

 

This is Probably Why You Shouldn’t Ask Your Friend for 401(k) Advice.

Most of us have great friends and co-workers who we rely on for help, advice and insight.

Elle Mills recently asked her tattoo artist friend Tavian to give her a great first tattoo. He ended up giving her a tattoo of a heart with his Twitter handle?!?

Rather unfortunate. 10 minutes of fame can’t be worth that price.

In any event, just as it was a marginal decision for Elle to turn over the entire process of her first tattoo to her friend, it would be just as bad of an idea to ask Tavian how she should invest her 401(k). And not just because he probably shouldn’t be trusted.

If you are picking your 401(k) or 403(b) investment choices by asking your friends and co-workers, you’re not alone. It is a very common strategy and clients report to me all the time that they simply “asked an older person in the office”.

Here are three reasons why that isn’t a great approach:

1)    Even though it may seem like many aspects of your situation are the same – you both work in the same department and for the same employer, you are both saving for retirement and you both don’t pay a ton of attention to the stock market, your situations are probably more different than you think. Understanding your unique circumstances and risk tolerance is a critical step in understanding how you should invest your 401(k) or any assets.

2)    It’s hard to measure, validate and substantiate any claims that “my portfolio has done pretty awesome”. It very well may have had a great one or two year run, but that could actually have been due to luck. We also have to consider “great” compared to what. A great bond fund will look very different than a great international equity fund. And just because a fund has done great in the past, doesn’t mean it will be great in the future.

Making choices where you don’t end up with a diversified portfolio aligned to your level of risk will generally mean poorer long-term outcomes.

3)    Many of us are influenced by the forces of behavioral economics:

> We like to have the comfort of knowing that we are doing what others are doing – a group mentality.

> We have the illusion of spreading risk by deciding to invest 10% in each of the 10 fund choices available.

> Being overconfident in our company stock.

> Just procrastinating and leaving all our investments in cash.

> Knowing you shouldn’t ask your friends, but picking your funds the way you pick your NCAA basketball bracket.

All of these forces, and many others, conspire against us and our attempts at making good financial decisions. You really have to have a thoughtful and disciplined plan to achieve the best long-term outcomes.

We have some step-by-step tips in our 5 Ways to pick your 401(k) or 403(b) differently than your basketball bracket, or, if you would like professional management of your 401(k) or 403(b), please schedule a free consultation or give us a call.

PLEASE REMEMBER:

- INVESTING AND INVESTMENT MANAGEMENT INVOLVES RISK, INCLUDING THE LOSS OF YOUR INITIAL INVESTMENT OR ANY INVESTMENT GAINS.

- PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

- THIS GENERIC INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION FOR ANY INDIVIDUAL TO TAKE A SPECIFIC ACTION.

- PLEASE INVEST PRUDENTLY AND SEEK PROFESSIONAL HELP FROM A FINANCIAL ADVISOR, INVESTMENT MANAGER, ACCOUNTANT, LAWYER OR OTHER PROFESSIONAL ON MATTERS THAT YOU ARE UNSURE OF OR THAT ARE UNIQUE TO YOUR PERSONAL CIRCUMSTANCES.

- FINANCIAL PLANNING AND INVESTMENT MANAGEMENT SERVICES PROVIDED BY J. BRADFORD INVESTMENT MANAGEMENT, NASHUA NH.

Really?!? TurboTax Says I can’t take my IRA deduction because...

Here we are folks! It’s tax season and tax preparers, financial professionals and individual tax warriors across the country are furiously gathering and entering data into their computers and answering questions in TurboTax to get everything wrapped up by the tax deadline.

Thanks to the usual tax day falling on a weekend and Emancipation Day in Washington DC, this year’s deadline is Tuesday April 18th 2017. If you enter your data correctly, TurboTax is generally pretty good about making the correct tax calculations and explaining the various options and implications of your tax situation.

One area where TurboTax can come back with answers that taxpayers aren’t expecting is in regard to IRAs, and it is often to tell you that your IRA deduction isn’t allowed or isn’t deductible. That's typically bad news! There are many rules to keep track of for IRAs but two of the most basic rules can trip you up at tax time.

First, to take a deduction, you must have earned income (at least the amount of the deduction). That means that if your income comes from savings, dividends and investments, your income doesn’t qualify. This can happen to individuals who may have retired on the early side and no longer have wage income, but aren’t 70 1/2 yet and would still like to make contributions to take advantage of the favorable tax treatment.

If you find yourself in this “ineligible to contribute” situation, your tax software should trigger a warning and you’ll have to take action. You’ll have to take the money that you contributed out of the IRA by the tax deadline and you’ll owe a small penalty on the earnings. And if you don’t get it out by the deadline the penalty rises pretty quickly, so best to just try and avoid the situation altogether. So if you don’t have earned income, or a very unique situation where there is an exception, you’ll have to forgo the contribution.

A second surprise that some taxpayers encounter is that there is an income limit to be eligible to make a contribution to a ROTH IRA and an income limit to be eligible to take a tax deduction for a Traditional IRA. The charts here show the income thresholds and phase outs for the different account types and filing status for 2017.

With income limits, it can be difficult to predict if your income will be over or under the cap until the year is over. Which is why it’s a nice benefit to be able make a contribution for the prior year (e.g. 2016) up and until the tax deadline of the current year (e.g. 2017). That way you can evaluate the options, see where your income ends up, and make the choice that best suits your situation and goals.

That still leaves you with the age-old question, which is better, a ROTH IRA or a Traditional IRA and should you consider a strategy such as making a non-deductible traditional IRA contribution?

The general rule of thumb is that if you have a longer time horizon for the investment and you expect to be in a lower tax bracket when you retire, ROTH is better. But time horizons and tax brackets over long periods of time can be very hard to predict, so going with a hybrid strategy – some invested in each type of account – is also a viable strategy.

If you have investment or tax investment related questions or would like to discuss your specific situation and get some help determining what is the best option for you, we’d be happy to help. Give us a call or use the big blue button at the top of the page to schedule an appointment.

PLEASE REMEMBER:

- INVESTING AND INVESTMENT MANAGEMENT INVOLVES RISK, INCLUDING THE LOSS OF YOUR INITIAL INVESTMENT OR ANY INVESTMENT GAINS.

- PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

- THIS GENERIC INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION FOR ANY INDIVIDUAL TO TAKE A SPECIFIC ACTION.

- PLEASE INVEST PRUDENTLY AND SEEK PROFESSIONAL HELP FROM A FINANCIAL ADVISOR, INVESTMENT MANAGER, ACCOUNTANT, LAWYER OR OTHER PROFESSIONAL ON MATTERS THAT YOU ARE UNSURE OF OR THAT ARE UNIQUE TO YOUR PERSONAL CIRCUMSTANCES.

- FINANCIAL PLANNING AND INVESTMENT MANAGEMENT SERVICES PROVIDED BY J. BRADFORD INVESTMENT MANAGEMENT, NASHUA NH.

Jiminy Crickets! Is Anything NOT Stressful Anymore?

And of course, we’ve got the biggie, financial stress. Ugggh, don’t remind me, right?

The good news is that most of the time, with a modest amount of planning, financial stress can be greatly reduced. Why is that?

It’s because good financial planning can help reduce and potentially even eliminate the fears and misunderstandings we may have about our finances. You probably have a general sense of whether you are ahead or behind with your retirement planning or college planning, but:

  • Do you know how far ahead or behind you are?
  • Do you how you are doing compared to your peers?
  • Do you know what will happen to your portfolio if there is a correction in the market?
  • How exposed or protected are you?
  • Is your money really going to last or is there a risk you will run out?

All of those questions can be answered and addressed through financial planning.

Most people are stressed because they don’t really know the answers to their financial worries and many people don’t want to ask because they don’t really want to hear the answer. OK. But in many cases, the answers and results may be better than you thought and you may be doing better than you think.

Now, to be fair, the answers could also be worse that you expected, which probably isn’t going to decrease your stress, BUT formulating and executing an action plan to get back on track, might help reduce your stress. Many people are relieved just knowing that very few people have lived their financial lives perfectly.

For most people, the certainty of knowing the situation they are in and having an action plan to address it is enough to reduce and minimize their stress.

Balancing living now, with saving for college, saving for retirement and saving for other life priorities and wanting to be responsible with your spending isn’t easy. There are many different strategies and approaches individuals can use for their specific situation and a little financial planning can help uncover them.

So hit those holiday parties, enjoy the season and post those pictures on Facebook, but at some point spend some time with your advisor doing some deeper financial planning or get started yourself with some on-line tools. Some financial stress relief may be closer than you think.

PLEASE REMEMBER:

- INVESTING AND INVESTMENT MANAGEMENT INVOLVES RISK, INCLUDING THE LOSS OF YOUR INITIAL INVESTMENT OR ANY INVESTMENT GAINS.

- PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

- THIS GENERIC INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION FOR ANY INDIVIDUAL TO TAKE A SPECIFIC ACTION.

- PLEASE INVEST PRUDENTLY AND SEEK PROFESSIONAL HELP FROM A FINANCIAL ADVISOR, INVESTMENT MANAGER, ACCOUNTANT, LAWYER OR OTHER PROFESSIONAL ON MATTERS THAT YOU ARE UNSURE OF OR THAT ARE UNIQUE TO YOUR PERSONAL CIRCUMSTANCES.

- FINANCIAL PLANNING AND INVESTMENT MANAGEMENT SERVICES PROVIDED BY J. BRADFORD INVESTMENT MANAGEMENT, NASHUA NH.

 

 

 

On This, We Can Actually Agree

There wasn't much agreement between or even within the political parties leading up to the election and I suspect that the deep disagreements will continue well past the election. I'll let the political pundits blog and pontificate on that.

Likewise, there is much disagreement in Financial Services and Investment Management, but there are also some broadly accepted principles and strategies.

One in particular.

J. Bradford Investment Management thinks it's a good idea

Forbes thinks it's a good idea

Morningstar thinks it's a good idea

NASDAQ thinks it's a good idea

CNBC thinks it's a good idea

In fact, just about every major financial institution and publication will espouse the virtues of this fundamental investment activity – rebalancing.

There aren't many universal truths in the investment management industry, and even rebalancing has some detractors, but the importance of periodically rebalancing your portfolio is probably one of the few things that the investment community is largely in agreement with. Sometimes you'll hear it referred to as a “free lunch”.

There has been a significant amount of institutional and academic research on the topic and generally speaking, over time, investment outcomes improve through periodic rebalancing. You'll find different opinions on how often to rebalance, the tax considerations of rebalancing and how wide to cast your asset allocation net, but there is broad and general consensus on the need to diversify and rebalance.

If you are working with an investment manger or financial planner, it is likely that rebalancing is one of the specific tasks that they are working on for you. They'll determine what is the right mix of asset classes and how often should they be rebalanced.

If you own a target date mutual fund or are part of a robo-advisor platform, there too, one of the key tasks of the portfolio manager undertakes is to ensure that the portfolio assets are closely aligned with the fund's objective and periodically rebalanced. That task is covered by the management fee you pay.

But what if you are in “do-it-yourself” financial planning mode? What are the steps to rebalancing?

Very generically the steps would be:

1) Determine an appropriate level of risk and your individual risk tolerance – your willingness and ability to take risk. This on-line tool from Vanguard can help you get started.

2) Build an asset allocation model that aligns with your level of risk – this on-line tool from investor junkie can help you work through some of the individual considerations

3) You can also inform your asset allocation by understanding how institutional managers allocate their portfolios and why.

4) Determine what your existing asset allocation is. Sometimes you can find this information on-
line or on a recent statement, but sometimes you'll have to ask the company you are doing
business with for this info.

5) Then you can compare your existing asset allocation with your desired asset allocation, given your level of risk, and determine the magnitude of the gaps. The bigger the gaps, the more important it is to consider rebalancing. One strategy is to establish "bands" and when one asset class moves outside an established band, it triggers a rebalance.

This whole process can be confusing and overwhelming, so    J. Bradford Investment Management does offer very targeted services for investors who want an assessment of their portfolio positions and detailed insights that may help them bring their portfolios back into their desired alignment.

You can use the link below to schedule a free consultation.

 

PLEASE REMEMBER:

- Investing and investment management involves risk, including the loss of your initial investment or any investment gains.

- Past performance is no guarantee of future results.

- This generic information is provided for educational purposes only and should not be construed as a recommendation for any individual to take a specific action.

- Please invest prudently and seek professional help from a financial advisor, investment manager, accountant, lawyer or other professional on matters that you are unsure of or that are unique to your personal circumstances.

- Financial Planning and Investment Management Services provided by J. Bradford Investment Management, Nashua NH.

 

Investing 101 Class -- now with emojis!!

I'm excited to be partnering with the Coalition for a Better Acre to deliver my revamped Investing 101 workshop on Tuesday, October 18th in Lowell, MA.

Now with emojis!!

I’ll be presenting in the 1st floor community room at 517 Moody Street from 6:30pm – 8:00pm.

 

The workshop is free, dinner will be served and you’ll have a chance to win a $25 Target gift card! Plus you’ll get 90 minutes of Jason unplugged.

 

I’ll answer questions and try to give practical, actionable advice in a pressure and judgment free zone. I hope you can join us.

 

You can check out the presentation slides, catch up on my blog posts or explore other educational videos that might help you formulate questions for the session.

 

Hope to see you there!

Understanding Roller Coaster Payroll Costs

Halfway through 2016 - hard to believe!!

Amusement parks will soon be full of thrill seekers, twisting, twirling and being propelled up and down which is awesome for roller coaster enthusiasts, but a little perplexing for payroll costs and small business owners.

 

Have you ever wondered why your payroll costs are so much higher at the start of the year and drop around this time of year?  The drop in payroll costs is because employees reach wages limits for the fiscal year.  The following shows the wage limit for taxes and FICA contributions for 2016;

•       FICA the limit is $118,500

•       MA Unemployment wage limit is $15,000

•       NH Unemployment wage limit is $14,000

•       Federal Unemployment - Wage limit $7,000

 

Most employees will have met the first two limits so you are no longer paying State or Federal Unemployment on their wages.  When hiring a new employee that starts at any point in the year, they will be subject to the same limits.

Other limits to consider at this time of year are IRAs and 401(k)s:

Simple IRA Max -  $12,500

401K Max - $18,000

Will you be 50 years old by 12/31/2016?  You are eligible to participate in catch up that allows, this you an additional $6,000 for your 401K contributions and $3,000 for your IRA contributions. 

For more information on catch-up contribution provisions or other investment related questions, please contact J. Bradford Investment Management.

And for more information on Payroll and HR Services, please contact the author of this blog, Zoe Hornsby of Advantage Payroll Services: zoe@massadvantagepayroll.com

PLEASE REMEMBER:

- Investing and investment management involves risk, including the loss of your initial investment or any investment gains.

- Past performance is no guarantee of future results.

- This generic information is provided for educational purposes only and should not be construed as a recommendation for any individual to take a specific action.

- Please invest prudently and seek professional help from a financial advisor, investment manager, accountant, lawyer or other professional on matters that you are unsure of or that are unique to your personal circumstances.

- Financial Advisor and Investment Management Services provided by J. Bradford Investment Management, Nashua NH.

5 Quick Tips for Summer Financial Fitness

Memorial Day is in the books and summer is officially on!

School will be wrapping up in the next few weeks and we will shortly be consumed with excitement over summer vacations, beach trips and camp reunions. Before the summer gets away, here are five simple tips for summer financial fitness.

1)   Double-check your 2016 tax withholding.

Getting a Federal tax refund may feel good, but it’s really more like giving the government an interest free loan. It’s equally bad to owe the government at the end of the year as you may have to pay a penalty on top of the tax that you owe.

Just like Goldilocks and the three bears, you want to get your tax bill just right. You can use this free tool from the IRS to see where you stand and then with the six months remaining in the year, you have time to adjust your W-4 or make estimated tax payments to ensure you end the year on target.

 

2)   Double check your employer match and 401(k) maximization.

Just like getting your taxes planned out perfectly, you’ll also want to make sure that you’re not on a path to miss out on employer match dollars in your 401(k). This can happen if you contribute the individual maximum of $18,000 before the end of the year. An easy check is to simply divide $18,000 by the number of pay periods you’ll receive during the year and make sure you aren’t contributing over that amount. Your individual situation can get complicated with employer specific match rules and bonus payments, so charting it out in Excel may be required, but like your taxes, if you plan it out now you’ll have several months to course correct if needed.

 

3)   Do one outsourced household task yourself this summer.

Summer is all about relaxing and spending quality time with family and friends. But “time is precious” and “time is money”, so many of us will work with vendors and service providers so that we can more thoroughly enjoy our time and money. Fair enough, but if you pick just one task, like mowing your own lawn, and do it yourself for the 12 weeks of summer, you’ll be able to goose your retirement or college savings more than you might realize.

 

4)   Save on flights with Hipmunk and try a VRBO

Here are a couple of websites to help with your summer or winter travel planning that you may not have tried yet. For flight planning, I like Hipmunk. The feature that I like best is that Hipmunk assigns every flight an “agony” rating and then you can sort the flights from least awful to most awful. I also really like their graphical view of layovers.

Instead of hotel rooms, I like VRBO/Homeaway. With this site, you book directly with property owners across the country. They typically provide many more photos than hotel properties and you can get the exact amenities and situation you are looking for, often at a much lower price.

 

5)   If you are staying local. Use Parking Panda and Gas Buddy to save on parking and gas.

Finally, if your summer plans are more modest, try Parking Panda and Gas Buddy. Parking is always a pain for those big city trips, but Parking Panda lets you make a discounted parking reservation in advance in most major cities across the U.S. and Gas Buddy will help you keep tabs on the lowest gas prices in the area.

 

If you have any questions about these products, services or strategies or would like a second opinion on the products, services or investment strategies you are using, please use the link to schedule a free consultation.

 

 

PLEASE REMEMBER:

- Investing and investment management involves risk, including the loss of your initial investment or any investment gains.

- Past performance is no guarantee of future results.

- This generic information is provided for educational purposes only and should not be construed as a recommendation for any individual to take a specific action.

- Please invest prudently and seek professional help from a financial advisor, investment manager, accountant, lawyer or other professional on matters that you are unsure of or that are unique to your personal circumstances.

- Financial Advisor and Investment Management Services provided by J. Bradford Investment Management, Nashua NH.

 

 

 

National Be a Millionaire Day - Will You Be One?

It's May 20th and it's National Be a Millionaire Day! You may be surprised to learn that most Americans will in fact earn over a million dollars in their lifetime.

According to inContext -"By retirement, graduates with bachelor's and advanced degrees can expect to have earned an average total of $1.8 million while associate's degree graduates only reach $1.1 million—a 61 percent advantage."

But that's probably not what most of us have in mind when we think millionaire. Most of us consider a millionaire as someone who has a million dollars plus saved or on hand. Fair enough. But 99%+ of us are not going to become millionaires by winning the lottery, answering questions on a game show or by finding that high flying stock.

We're going to become millionaire in these 5 easy steps:

1) We're going to save a bunch ourselves.

2) We are going to let the market do some of the work by investing in a risk appropriate portfolio.

3) We are going to take advantage of all opportunities to boost savings, like 401(k) employer match.

4) We are going to diversify our portfolio and periodically rebalance.

5) We are going to use optimal tax strategies.

Real simple example with very simplistic assumptions, but check it out. 30 year time horizon. 6.5% annual interest rate compounded monthly. You invest $280 every two weeks and your employer matches 50% or $140. With those and other simplifying assumptions, viola, the portfolio grows to just over $1,000,000 in 30 years.

$218,400 came from our savings and $109,200 from our employer. If we didn't have an employer match, we would have been on the hook for $327,600. But tax efficiency and a diversified portfolio invested in the market did roughly 2/3 of the work!! And that's the point. There is tremendous power in simply being invested in a diversified and risk appropriate portfolio that you rebalance periodically.

So go ahead and occasionally buy that lottery ticket so that you can dream about your life as a millionaire -- that you earned by hard work and smart investing.

PLEASE REMEMBER:

- Investing and investment management involves risk, including the loss of your initial investment or any investment gains.

- Past performance is no guarantee of future results.

- This generic information is provided for educational purposes only and should not be construed as a recommendation for any individual to take a specific action.

- Please invest prudently and seek professional help from a financial advisor, investment manager, accountant, lawyer or other professional on matters that you are unsure of or that are unique to your personal circumstances.

- Financial Advisor and Investment Management Services provided by J. Bradford Investment Management, Nashua NH.

 

 

5 Fidelity Products My Clients Rave About

First, full disclosure. I did work for Fidelity Investments for 21 years, but I am not being paid any commission or fee or receiving consideration of any kind to discuss or write about their products.

I am writing about five of their products because my clients often come to me with established relationships with various financial institutions, including Fidelity, and they like to share what's working for them and to get my opinion. So here are the five Fidelity products I hear most about and some of my insight on them.

1) The Fidelity Rewards 2% Cash Back Rewards Card. Clients love that there is no annual fee with this card and that they can get 2% of their purchases directed into either their IRA or 529 College Saving Plan to boost savings. As long as you are paying off the balance every month this is a great way accumulate a little extra every month. The new Visa is also now linked with Apple Pay, Samsung Pay and Android Pay. I like this product a great deal. The Citi Double Cash Card is a similar alternative.

2) The Fidelity IRA match. I think clients love this one because of the very clever marketing and because of the parallels to the 401(k) match. Few will be able to max out the $1,950 over three years, but like the credit card, getting a boost, even a small one, can be worth it. There are other one-time bonuses that are currently available at Fidelity through a different promotion that may also be appealing to individuals. You have to be careful not to give those savings right back in high fee mutual fund products, but all things being equal, the boost is worth it and it helps reinforce good saving behavior.

3) The Fidelity ATM rebate feature. Clients love no stress ATM transactions and I do too. For Fidelity customers with a Cash Management account and a Cash Management Debit card, one of the most compelling features is the ability to have ATM fees reimbursed. All of a sudden your network of ATMs is every single ATM and you don't have to worry about getting dinged for those fees, as they are generally reimbursed. Not only are ATM fees annoying, but they really do add up over time. There are other benefits to the card as well, but the ATM reimbursements is the big one. E-trade, Schwab and USAA have similar products.

4) The Fidelity Charitable Gift Fund. With this product you can make a single tax deductible "donation/contribution" into your giving account, taking a tax deduction in the current year and then disburse the money over time to charities of your choice, potentially even growing the account through investment appreciation. This is a great option for the charitably inclined who may have received a lump sum or significant payout that is going to create a tax burden. Vanguard has a similar giving product.

5) Commission free ETFs. Clients love free. As of early 2016, Fidelity offers 85 commission free ETFs. That's a very good value considering ETF trades at most brokerage firms range from $8 - $12. There is also a fairly diversified mix of choices in that bunch that would aid in constructing a diversified portfolio. But even free isn't a no-brianer, you also have to take into account other factors such as the management fee, the early redemption fee, the tracking error and the index weighting strategy of the ETF. Still, having a base of 85 commission free ETFs to choose from is a great starting point for many. Schwab has a similar offering with over 200 ETF choices.

If you have any questions about these products or would like a second opinion on the products and services you are using, please use the link to schedule a free consultation.

PLEASE REMEMBER:

- Investing and investment management involves risk, including the loss of your initial investment or any investment gains.

- Past performance is no guarantee of future results.

- This generic information is provided for educational purposes only and should not be construed as a recommendation for any individual to take a specific action.

- Please invest prudently and seek professional help from a financial advisor, investment manager, accountant, lawyer or other professional on matters that you are unsure of or that are unique to your personal circumstances.

- Financial Advisor and Investment Management Services provided by J. Bradford Investment Management, Nashua NH.

 

 

Answer me this Batman - Am I on track for Retirement?

It's National Superhero Day! So which of our heroic friends could best help us answer the question: Am I on track for Retirement? I'm going with Batman. He almost always has the answer.

Determining if you are on track for retirement and then determining if you can actually retire perplexes many Americans. UFC star Conor McGregor had a very rocky retirement, retiring last week at age 27 and then two days later, UN-retiring.

 
 

It's also true that some people want a really short answer just to check in and some people want a really in-depth answer for hard core planning.

Realistically, you do in fact need to do some in-depth planning -- particularly around future income needs and your ability and willingness to take risk -- to really understand your situation.

However, that’s not to say that quicker and more “rule of thumb” approaches can’t provide you some insight. Simple can be elegant, as we've seen in prior posts -- "UFC Star Conor McGregor retires at 27. Can you?" and "Why her co-workers couldn't stop staring at her 401(k) statement!"

But let’s say you’re super impatient and you want me to answer, “Am I on track for retirement?”

If can only ask you one question, what would it be?

I would ask you:

  1.  “What does your gut tell you?”

Beyond the science around our ability to generally sense and estimate complicated matters, you’ve probably thought about retirement more than you think and who knows your holistic financial situation better than you? If you sense that you could be doing better or feel like there are other steps you should be taking, both are likely the case.

OK. Fine. That was clever. So let’s say that you’re only mildly impatient and you want me to answer: “Am I on track for retirement” and I can only ask you two questions, what would they be?

If I could only ask you two questions, I would ask you:

  1. How old are you?
  2. How much have you saved so far?

Then I'd suggest you to compare where you stand to this chart:

This approach is a little crude and doesn’t take some variables into account, but it does rather simply encompass many important aspects of retirement planning including the fact that it’s going to be crazy difficult to retire if you don’t start early.

Not bad. Please tell me that the next level of insight isn't 326 questions. Because the last time I went into an on-line retirement planning tool, it was a diabolical black hole. Good news! No, no diabolical black hole here.

So let’s say you’re willing to answer five questions to get an answer to:  “Am I on track for retirement?” What would they be?

  1. How old are you?
  2. How much have you saved?
  3. How much do you save for retirement every month?
  4. Are you a net saver (two questions technically - your annual income and your annual expenses)

And voilà, no Batman tool belt needed here – and guess what? We've already built the tool! You can answer those 5 questions in this quick wizard and see where you stand.

TELL ME HOW I'M DOING IN 5 QUESTIONS

Feel free to reach out with any questions or if you’d like help interpreting the results.

PLEASE REMEMBER:

- Investing and investment management involves risk, including the loss of your initial investment or any investment gains.

- Past performance is no guarantee of future results.

- This generic information is provided for educational purposes only and should not be construed as a recommendation for any individual to take a specific action.

- Please invest prudently and seek professional help from a financial advisor, investment manager, accountant, lawyer or other professional on matters that you are unsure of or that are unique to your personal circumstances.

- Financial Advisor and Investment Management Services provided by J. Bradford Investment Management, Nashua NH.

 

Investment Inspiration from 7 sage Emoji

Investing and finances can be complicated. So here’s a little reprieve.

Everything you need to know about investing summed up by seven sage Emoji!!

PLEASE REMEMBER:

- Investing and investment management involves risk, including the loss of your initial investment or any investment gains.

- Past performance is no guarantee of future results.

- This generic information is provided for educational purposes only and should not be construed as a recommendation for any individual to take a specific action.

- Please invest prudently and seek professional help from a financial advisor, investment manager, accountant, lawyer or other professional on matters that you are unsure of or that are unique to your personal circumstances.

- Financial Advisor and Investment Management Services provided by J. Bradford Investment Management, Nashua NH.

 

UFC Star Conor McGregor retires at 27. Can you?

Today, UFC star Conor McGregor announced he was retiring from the sport. I wonder what it feels like to retire at age 27?

Maybe a new career? Maybe the life of luxury? Maybe charitable endeavors? Whatever it is, I wish Conor the best.

But I also wonder if he’s financially secure and if he’s about to throw caution to the wind like may other athletes or if he’s got a plan? I help clients of all ages plan for retirement and other goals and the process is complicated because everyone has different spending expectations and unique circumstances.

But whether you’re a UFC fighter, a tech start-up success story or a long tenured business executive you’ve probably wondered if you can retire “early”. Many advisors will tell you, and quite frankly I will tell you as well, that to answer that question properly we need to do some fairly sophisticated planning.

But this is a 500-word blog post not a deep dive financial planning session and simple can be elegant. So for educational and illustrative purposes, here is a quick chart. When do you want to retire? What kind of lifestyle do you want? Then you can see a very general and approximate nest egg you’ll need.

If the numbers seem big, don’t freak out. Well, maybe freak out a little…

The chart makes some rather basic assumptions about real rates of return (4%) and life expectancy (age 90) and takes some rounding shortcuts, but you get the general idea. And the chart communicates a really basic and important point, the earlier you retire, the more you’ll need. Simple as that.

The good news is that if you’re 27 and you can’t retire just yet, that’s OK. You can do the next most important thing, which is to start investing early so that you’re not trying to play catch-up as you close in on retirement.

We saw the power of starting early with Michelle in a prior post: Why Her Co-workers Couldn’t Stop Staring at her 401(k) statement.

There are many strategies available to help people of all ages plan and make progress towards their retirement goals. If you’d like to explore retirement savings strategies, your 401(k), 403(b), IRA or any other financial matter with a consultant, please use the button below to book time now.

 

PLEASE REMEMBER:

- Investing and investment management involves risk, including the loss of your initial investment or any investment gains.

- Past performance is no guarantee of future results.

- This generic information is provided for educational purposes only and should not be construed as a recommendation for any individual to take a specific action.

- Please invest prudently and seek professional help from a financial advisor, investment manager, accountant, lawyer or other professional on matters that you are unsure of or that are unique to your personal circumstances.

- Financial Advisor and Investment Management Services provided by J. Bradford Investment Management, Nashua NH.

 

Why her co-workers couldn't stop staring at her 401(k) statement!

Everyone knew Michelle drove a per-owned Nissan Altima, shopped at discount stores and packed her lunch every day. But what they didn't know is that from age 22 to age 38, Michelle grew her 401(k) to over $400,000!!

 
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She accidentally left her account statement on her desk one day and her co-workers couldn't stop staring as they were astonished that she had saved so much. It's not typical for a 38 year old to have a 401(k) account balance over $400,00, but Michelle isn't typical. Here's how she did it:

She didn't "shoot for the moon"!

 
 

First, she contributed 12% of her salary every year and her employer matched her 1:1 up to 6%. 12% was a lot for Michelle, but she made some small changes in her budget and didn't really notice the difference in her life.

Next, her employer also made a 4% profit sharing contribution every year. Michelle is lucky to work for such a generous employer. We focus on salary, but total compensation and benefits matter too.

Although she started at an entry-level salary of $40,000, she also worked hard to get promoted and take on additional responsibility and increased her salary an average of 6% per year over the course of 16 years.

Michelle weathered the ups and downs of the financial markets and stayed invested in her portfolio in both good times and in bad, and averaged a 7.5% annual return for her moderately aggressive portfolio over those 16 years.

16 years later, her account balance now stands at $403,905.09!!

She is well on her way to a comfortable and secure retirement.

You can follow the same principles as Michelle.

- Contribute as high a % as you can afford to your 401(k). But not so much that you max out early and miss out on company match or if you have high interest rate debt.

- Ensure you contribute enough to earn a full employer match

- Manage your human capital (work life) as thoughtfully as you do your investments (financial life)

- Do an honest assessment of your risk tolerance and invest accordingly for the long term

If you'd like help becoming the next Michelle, schedule a free consultation.

PLEASE REMEMBER:

- Investing and investment management involves risk, including the loss of your initial investment or any investment gains.

- Past performance is no guarantee of future results.

- This generic information is provided for educational purposes only and should not be construed as a recommendation for any individual to take a specific action.

- Please invest prudently and seek professional help from a financial advisor, investment manager, accountant, lawyer or other professional on matters that you are unsure of or that are unique to your personal circumstances.

- Financial Advisor and Investment Management Services provided by J. Bradford Investment Management, Nashua NH.

 

 

 

5 Ways to pick your 401(k) or 403(b) differently than your basketball bracket

TOURNAMENT TIME

No doubt your office sports guru or the take-charge sports fan in your life has distributed brackets or the URL for you to make your picks in the upcoming NCAA basketball tournament.

 
 

But if you’re like most of us, you don’t know a whole lot about college basketball, you haven’t watched that many games throughout the season, and you probably won’t get around to doing the picks until just before the deadline.

When it’s time to pick, you’ll implement some combination of well-known strategies to choose your teams – pick the higher seed, pick teams playing close to home, pick teams that are hot and the ever-popular, pick the team with the cutest mascot. Maybe this year you’ll get lucky…

That kind of cavalier approach is probably fine for your basketball bracket, but if you pick your 401(k) or 403(b) investments in a similar fashion, you could be significantly and negatively impacting your investing objectives.

FIVE STEPS

So how do you pick investments from that daunting list of investment choices? Truthfully, it’s not easy and it can be quite complicated based on your situation and your individual risk factors, but in general there are five basic steps everyone should follow:

1)     You should first determine your ability and willingness to take risk. This can generally be accomplished by taking a risk questionnaire or other assessment tool either on-line or with a professional.

2)     You should align your risk tolerance with an appropriate asset allocation. There too, there are many sophisticated models available on-line, usually used in conjunction with a questionnaire or you can discuss your situation with a professional. No one single chart can be used by everyone, but a simple model may look something like this one, which is provided for illustrative purposes only.

 

3)     Determine the asset allocation mix of the funds available to you and find the possible combinations of funds that align to your allocation. There may be funds that you don’t want in your allocation and there may be many choices to meet a particular category, such as U.S. stocks. You’ll also want to be sure that your selections provide enough diversification, particularly if you have company stock.

4)     Make your final selections. Once you have a diversified mix of possible choices across multiple asset classes and are still trying to choose which ones - funds with lower fees and funds that have higher risk adjusted returns are two areas to consider focusing on. Sometimes that information is summarized in a nice chart and sometimes that information is provided in summary form through a third party, but often you have to go from fund to fund to make that assessment. Assessing funds against their benchmark and against their peers is another prudent step.

5)     Finally, you need to periodically rebalance your portfolio. As investments increase and decrease in value, your portfolio may become riskier than you intend or not be risky enough. You may have to buy or sell some positions to bring your asset allocation back into balance.

Again, each of those steps can have many complicating factors depending on your individual situation. If you would like help with any of the steps above or would like professional management of your 401(k) or 403(b), please schedule a free consultation or give us a call.

PLEASE REMEMBER:

- Investing and investment management involves risk, including the loss of your initial investment or any investment gains.

- Past performance is no guarantee of future results.

- This generic information is provided for educational purposes only and should not be construed as a recommendation for any individual to take a specific action.

- Please invest prudently and seek professional help from a financial advisor, investment manager, accountant, lawyer or other professional on matters that you are unsure of or that are unique to your personal circumstances.

- Financial Advisor and Investment Management Services provided by J. Bradford Investment Management, Nashua NH.