Can You Be Too Safe?

If you have been reading along with us so far (and if you haven't, we highly recommend you go back and catch up), you probably think we would answer "no" to that question.

While it is true that many Americans do not have a sufficient amount of safety, you ABSOLUTELY can be too safe. If you have kept your money out of the market the last 18 months because of the risk of another crash, you missed a lot of growth in 2009. This is just one example of having too much safety.

Because of ignoring safety when your portfolio was created, many people panicked, got out, and stayed out of the market because of fear. Brokers and planners usually ignore the safety discussion because the products and programs they sell have risks.

When building (or rebuilding) your portfolio, safety needs to be balanced to suit YOUR needs and REALISTIC goals.

To hear the Smart Money Radio Show segment focused on this topic, Please Click Here! (about 7 minutes long)


To hear the full Smart Money Radio Show where Bruce discusses this topic and more, Please Click Here! (about 25 minutes long)

90% of Your Lifetime Return Comes from One Big Decision

Most of you have taken a risk tolerance quiz. You know how they go, 'If your account drops 10%, what would your reaction be?' These have been long used by stockbrokers and financial advisors and have lately been added to most self-help investment websites.

Usually, you are asked 15-20 questions like the one above to help determine your risk tolerance. From there, they create an asset allocation plan or an "investment pie" to determine where your money should be invested and how risky it can be. You probably aren't aware how important those questions can be.

According to an independent Morningstar report, this one quiz determines where 90% of your investment return in your lifetime will come from. This is a pretty serious decision that most people see as a pop quiz making up part of your initial interview.

While this is important in the basis of modern portfolio theory and has created a lot of marketing material for the financial industry, the models often fail to display the true level of risk from these allocations and provide a false sense of security.

The idea that your risk tolerance can be measure by a questionnaire is at least debatable and it cannot and should not be used as the primary factor to expose you to risk in the biggest decision you have to make for your portfolio. Unfortunately the industry uses everyday and we have retirees that have lost 30% of their money justified by a 15 question pop quiz.

To hear the Smart Money Radio Show segment focused on this topic, Please Click Here! (about 7 minutes long)


To hear the full Smart Money Radio Show where Bruce discusses this topic and more, Please Click Here! (about 25 minutes long)

Why the Show and Blog?

One listener to our show asked why we are doing this. He wanted to know if, even though he enjoys the content and our discussions, this was really just an advertisement for our firm. We thought this was a fair question that deserved a full explanation. Bruce has written financial columns for several area newspapers over the years. Looking at the radio show and the blog, we had six basic goals.

First, the show and blog had to be purely educational. We weren't going to use our advertising dollars to push a product. We aren't salespeople, we are private wealth managers.

Second, we wanted to create a forum that shows our audience that we can have discussions about money that is not complicated. Finances can be easy to understand.

Third, we saw too many people leave their investing to chance and will not meet their needs into retirement. We wanted to empower you to get involved.

Fourth, the number one problem facing current and future retirees is that they will run out of money. No one is doing anything about it and we want to help you better understand it and deal with this issue.

Fifth, the show and blog will present a balanced answer to tough financial questions. Sales people will rarely bring up the downside to a plan and we want you to realize there is no such thing as a free lunch. You need to understand the positives and negatives to a plan so you can make a smart education choice about your finances.

And finally, this show corrects an issue we have had for years. In our practice, we have talked to hundreds of people just like you and over 95% of the people become clients because, just like the show and blog, our practice is unique, direct, and to the point. One of the most common comments we hear is that they never knew someone like us existed. Now, you know that there is a source of quality, sound financial advice without the pressure of a sales pitch.

To hear the Smart Money Radio Show segment focused on this topic, Please Click Here! (about 7 minutes long)


To hear the full Smart Money Radio Show where Bruce discusses this topic and more, Please Click Here! (about 25 minutes long)

New Year’s Resolutions; Have You Forgotten Already?

Almost everyone I know makes New Year's resolutions. Some people vow to get healthier. Some vow to change their personality. Some even choose to change their finances. Sadly, most people never carry their resolution through the whole year (or even January!) let alone their whole lives.

Your finances and the decision to improve your situation do not have to be tied to a tradition like New Year's. Whether you are saving for retirement, just retired and scared how long your money will last, or have been retired for a while and are looking for the best way to pass your assets onto the next generation, you need to start asking questions, getting complete answers you understand, and taking ACTION on those answers.

Your resolution does not get to stop there! You will need continue forward and get updated information as the world changes. As your goals evolve, so will the financial climate.

Most failed financial programs are the result of lack of maintenance and/or failures to update the account holder and manager.

Your financial resolution should become a tradition all of its own!

To hear the Smart Money Radio Show segment focused on this topic, Please Click Here! (about 7 minutes long)



To hear the full Smart Money Radio Show where Bruce discusses this topic and more, Please Click Here! (about 25 minutes long)



 

Time to Make a Move?

With the New Year right around the corner, we always get calls on whether or not you should make a change in their retirement accounts or wait until after the 1^st of the year. Our listeners and readers should be aware of this timing for their regular accounts too.

Regardless of the market conditions, there is no bad to upgrade or make improvements in your portfolios. If it is an improvement, never hesitate based on the old sales sayings of "You are selling out of an investment when it is worth less than you started with", "never sell an investment when the market is down", or our personal favorite, "you shouldn't sell this because it is a long term investment". Ask people who owned stock in Ford, General Motors, or any of the other huge blue chip companies that went bankrupt this year if they were better off holding onto that particular stock as the market went south.

Furthermore, there are moves in your regular taxable accounts that can help reduce or eliminate taxes. Mutual funds must distribute capital gains to anyone that owns the fund on a particular date. Therefore, you can find yourself paying stiff tax bills because of a mutual fund that actual LOST you money. Now is a time to look at your investments to see if it makes sense to harvest some losses for tax purposes.

Remember though, taxes should not be a major factor in making a decision to sell a good investment.

To hear the Smart Money Radio Show segment focused on this topic, Please Click Here! (about 7 minutes long)


To hear the full Smart Money Radio Show where Bruce discusses this topic and more, Please Click Here! (about 25 minutes long)

Active Investing

For over 25 years, we have asked new clients what has got them to be where they are at financially, whether it is up or down, good or bad. As they are telling us why it happened, when it happened, or who is to blame, it is always someone else's fault.

In investing, you have to remember it is YOUR money. You need to be or become active in it. This is not saying you have to do it all yourself, but you need to be part of the process. Here are three questions to help you get started.

First, how did you get where you are and what caused you to get the results you have seen? Were the investments solid or could you have done better? Is your money safe enough for another crash? Have you been saving enough??? You need to understand where you are and how you got here.

Second, the success or failure of your investments lies solely on you. Exactly what part were you responsible for? Have you chosen the investments yourself? Did you make an informed decision that you couldn't do it yourself? Did you hire the right advisor? Were you sold a product? Hindsight is always 20/20, but if you had to make the same choices today, would you choose the same answer? Remember, this is your money so you need to accept some responsibility for how much you have today.

Finally, are you focused on the actions needed to improve your situation in the future? Do you need to change investments? How has the economy changed your situation? Is your advisor still right for you? Do you know what you are looking for? Do you have a clear picture of what your goal looks like?

Investing is a constantly changing process. You need to be active in it if you want success in your financial future.

To hear the Smart Money Radio Show segment focused on this topic, Please Click Here! (about 7 minutes long)


To hear the full Smart Money Radio Show where Bruce discusses this topic and more, Please Click Here! (about 25 minutes long)

Time, Time, Time

One of the reasons you hire an advisor to "deal" with your investing is because you don't have time to do it yourself. You don't have time to learn, to do the research, to follow up. While we understand our client's time is invaluable, we also understand that your account could be saved thousands for each hour you invest in it.

Being active in your investments does not mean you have to learn everything there is to learn. In fact, many people are learning as much as they can since the crash of 2008. You do not see any real value from learning though until you put into action what you have learned.

You at least need to learn enough that you can actively oversee your investments. Most of the work is still done by others. Think of yourself as the foreman at a construction site. You need to be able to look around and know enough that you can see the proper work is being done.

By being accountable and active, you can be rewarded well for your time and actions.

To hear the Smart Money Radio Show segment focused on this topic, Please Click Here! (about 7 minutes long)


To hear the full Smart Money Radio Show where Bruce discusses this topic and more, Please Click Here! (about 25 minutes long)