web analytics
July 30, 2014 / 3 Av, 5774
Israel at War: Operation Protective Edge
 
 

Posts Tagged ‘financial planning’

Three Things to Do Before Meeting Your Financial Planner

Friday, November 9th, 2012

Did you know that the most important part of a financial planning meeting occurs even before you set foot inside your financial adviser’s office?

Before you meet for the first time, you need to do your homework. Even the most professional adviser can’t help you if you haven’t done these three things:

1. Make a list of your current income and expenses, as well as future anticipated income and expenses. Then, create a careful inventory of your net assets. Include any property you own, including stocks, bonds, mutual funds, savings and pension plans. To make this easier, use these trackers to organize your information.

2. Outline your goals.  Take a realistic look at what you want to accomplish beyond paying your monthly bills.  Do you have large college tuition expenses or wedding bills looming in the future?

When do you wish to retire? All of the various factors that may affect your future goals and desires should be written down before you meet with your financial planner so they can be included in the plan.

3. Buy a box of tissues either for the disappointing news that your aspirations are beyond your means or for the tears of joy when you find that your dreams are within your reach. While meeting with a financial planner can help create order an increased chances of reaching your goals, it shouldn’t bring any surprises.

The more complete your list of net assets, the more thoughtful your goals, and the more realistic your expectations are, the greater the chances of your reaching them… and the better you’ll sleep.

If you’re like me, even the most comfortable eye shades won’t help you fall asleep unless your finances are in order. A financial planner can’t make miracles or predict the future. However, if the clients supply accurate information and realistic goals, together they can create a financial plan to maximize chances of reaching your life goals.

The Safety Net You Need

Sunday, October 28th, 2012

The last time you were at the circus did you gasp as the trapeze artist swung through the air?

Even though his antics might be scary, there’s a strong safety net catch him in the event of a fall. Hopefully, the trapeze artist won’t ever need to use it. But it is always there – just in case.

Even the world’s best acrobats have safety nets to catch them if the unfortunate occurs. So what does that say for the rest of us, who aren’t the world’s best?

Even if you’re not a trapeze artist, you need a safety net. As long as you have dependents, you need a safety net to save you from fiscal free fall.

Sometimes, the “fall” can be the result of poor financial planning and decision-making, but often it’s due to circumstances that are beyond your control.

For this reason, it’s important to make sure you have a safety net in place. In terms of personal finance, this is a two-pronged approach: making sure that you have adequate insurance and having an emergency savings account.

If you have young dependents, insurance is absolutely vital. What would happen if your family’s breadwinner(s) died or was seriously injured? While insurance won’t solve every problem, it definitely helps alleviate some fiscal concerns.

And in a situation that is far less drastic, but still costly, emergency savings can make all the difference between being unable to put food on the table or repairing the car.

Review your insurance portfolio to make sure that your family is covered in the event of a possible disaster, and evaluate your bank accounts to ensure that you have an emergency savings plan in order to catch you in case you fall. And like the trapeze artist, let’s hope that you never actually need to use it.

Are Your Investment Decisions Rational?

Friday, September 28th, 2012

As a financial planner, I often ask new clients why a particular investment is included in their portfolio. One answer that I find somewhat worrying is: “I don’t really know how to explain it, but I just had a gut feeling that this stock was going to be a winner!”

Often the stock in question is anything but a winner, but that isn’t the point. If you were to fit a new kitchen, would you simply walk into a builder’s showroom and say that you wanted the kitchen cabinets that are in the storefront window because you had a “gut feeling” about them as soon as you saw them, or would you first visit several showrooms, research the types of materials used and other factors that are important to your decision? Of course you wouldn’t order home renovations based on gut feelings, because thousands of dollars are at stake, as well as the fact that you will have to live with the results of your decision for a very long time.  Just like investing.

Yet very often, investors base their financial decisions on irrational reasoning.

The way that emotions affect investing has become a science and much research is conducted into various phenomena such as loss aversion, mental accounting, and herding. Emotions influence investors’ decisions in many more ways than you would expect. Sometimes fear drives an investor to sell a stock because a sudden dip in the market makes him afraid he’ll lose everything. And, at the other end of the spectrum, is the person who did well with a certain small investment, and figures that because he did well once, he’s bound to do even better if he does it again. He continues to invest in something that might not be appropriate at increased levels, just because he wants to duplicate his previous “win.”

On my radio show, Goldstein on Gelt, I interviewed several researchers who study behavioral investing, including Professor Terrance Odean of Berkeley University, Nobel Prize Winner Professor Daniel Kahneman, and best-selling author Professor Dan Ariely (click on their names to watch videos of these interviews). Watch the videos and let me know if the research on behavioral finance jives with your investment decisions.

The Four Most Common Financial Mistakes

Monday, September 24th, 2012

As a financial adviser I notice that certain money mistakes are very commonplace. Are you making these kinds of errors that can destroy a fortune?

Instead of learning from your own mistakes, try learning from other people’s mistakes. Below is a list of some of the most common mistakes in financial planning:

1. Putting off buying life or health insurance. Even if you are still young and you belong to the mindset of “it will never happen to me,” the truth is that you never know. Accidents, terror attacks, and sudden illnesses are all in the hands of the One Above, and although no one should ever go through life in a constant state of fear and worry, it’s important to be prepared for any eventuality. Think of your insurance policy as “risk management.”

2. Passing up tax breaks. When considering whether to buy or sell an investment, don’t only look at the figures. Find out what this means in terms of tax. How will the dividends/interest be taxed? Does the investment have any kind of tax deferral or tax-free status? While tax status shouldn’t be your sole concern in purchasing investments, make sure to keep tax liabilities in mind.

3. Buying or holding stocks for the wrong reasons. Are you holding onto a stock out of sentimental reasons, because you inherited it from a loved one? Are you thinking of buying a stock simply because you enjoy the company’s products? Don’t base your decisions on emotions. Do your homework, and only buy the stocks that make the most financial sense for you. If you are not sure how to work this out, consult with a financial planner.

4. Not taking enough risk. Some people are very cautious by nature, and they would prefer to invest their money with the least risk of loss. Although this might sound prudent because it minimizes the chance of loss, the other side of the equation means that your gains will be limited. Of course, the appropriate level of risk for you depends very much on your personal situation, so speak to your financial adviser about what is appropriate for you.

Keeping these four points in mind should help you avoid some of the most common money mistakes. Don’t make these mistakes, and if you do, visit a qualified Certified Financial Planner (CFP®) for help in fixing them.

Transferring Wealth with Stocks, Bonds, and Bicycles

Friday, September 7th, 2012

Wealth transfer is a hot topic in financial planning. Thinking about how to pass funds from one generation to the next can be emotionally difficult. Perhaps the older generation doesn’t approve of the way the younger spends the money, or the younger generation isn’t involved in the family business. Furthermore, tax and legal issues can complicate matters.

While estate and inheritance planning can be complex, other wealth can be transferred more easily: the wealth of knowledge. My grandmother successfully passed a financial education to my mother, who transferred it to me, as I am a proud third-generation licensed broker. My maternal grandmother Miriam Rosofsky struggled against social norms to enter the work world. But eventually she had the distinction of being one of the first women to hold a U.S. Securities license. She started as a secretary in a brokerage firm, but then began picking up her own book of clients. My mother Rhoda Goldstein was an associate vice-president in Dean Witter. Dinner-time conversation around my childhood table alternated between medical issues (my father was a surgeon) and economic discussions. I saw how both my parents helped people gain and maintain their physical and financial health. It was therefore only natural for me to begin my financial career partnering with my mother on Wall Street.

After I made aliya, I founded Profile Investment Services, Ltd. with the aim of helping people living in Israel create financial plans and maintain U.S. brokerage accounts. I try to follow in my mother and grandmother’s footsteps in transferring the wealth of financial knowledge to my own children. Even though none have announced their desire to be financial planners (but my wife recently became a licensed U.S. broker), they do check stock prices regularly.

We frequently discuss fiscal responsibility, budgeting, and other economic topics at our dinner table.  Some of the kids are reading books on behavioral finance, and others are reading books about loyalty, fidelity, and trust. My mother, keen to pick up on children’s natural curiosity about money and the way the “grown up” world works, recently came out with a book geared for young adults about how the stock and bond markets work, and how an entrepreneur can raise the funds necessary to fulfill his dream. If you’re interested in sharing this information with your children and transferring the wealth of financial knowledge to them, visit my website to get her new book Stocks, Bonds, and Bicycles. Let me know if you recognize any of the characters in the story.

Printed from: http://www.jewishpress.com/blogs/goldstein-on-gelt/transferring-wealth-with-stocks-bonds-and-bicycles/2012/09/07/

Scan this QR code to visit this page online: