Do Interest Rates Have You Worried About Buying a First Home?

Guide to Buying Your First Home

Did the recent interest rate hike news cause any delay to your plans to house hunt? Are you wondering – given the rate increase and current market turmoil – if this is really the right time to purchase a first home, or if renting makes more sense for you right now?

Actually, the exact opposite happened. Rates actually fell from 2.3% to 1.55% on the US 10-year treasuries (a common indicator of how mortgage rates are priced), their lowest point since September 2012. If you already own a home with an ARM or 30-year fixed mortgage, this is also a good time to refinance or reduce debt at these low rates.

Remember a house or condo is both a home and an asset that can appreciate over time. No matter what they’re saying on the news, what’s important is what makes sense for your finances, based on your goals and what’s happening in your local housing market.

Here are a few things to consider:

Evaluate your current circumstances:

  • What would your mortgage payment be in relation to current rent? A good rent-versus-buy calculator can be found at Realtor.com
  • Do you plan to be in the area for 5 years or more? The housing market will fluctuate. If you need to sell quickly, you may have to sell for less than desired, whereas a booming market can provide quick sales for a profit.
  • Can you afford the additional costs? The cost of home ownership is more than just the mortgage payment. There are taxes, insurance and sometimes homeowner’s dues that need to be considered, not to mention upkeep, repairs, upgrades, and furniture!

Assess Your Finances:

  • Have a good understanding of what your assets and liabilities are.
  • Consider what you can afford. Being house poor and unable to save for emergencies, retirement, college or other financial goals can create a stressful situation.
  • Speak with a lender about which programs you may qualify for; what a lender will approve you for and how much you can afford may not be the same thing.
  • Take a look at your credit report. AnnualCreditReport.com offers a free credit report from all three credit bureaus. Get one from each bureau and check it for accuracy.
  • Meet with a financial advisor to strategize your financial planning Is it better to make a higher down payment, pay down debt to get your debt to income ratios lower? Or is it better to leave the money invested so the lender includes this in your financial reserves?

Get Pre-approval:

  • Your chosen lender will review your financial information and credit, then make an assessment about how much home you can buy, what down payment is required, and the best loan program. The lender then provides a preapproval letter.
  • A second option is having an underwriter review your completed file, evaluating your income, credit, and financial assets, then providing a pre-approval letter.   Having an underwriter review your file may require application fees and other costs to be paid up front.

Contact a real estate agent:

Start your search online to help narrow down location and potential neighborhoods. This can save time (and therefore money) by giving you a sense of where you want to live and what is available in your price range.

  • Pay attention above all to location: be sure you are within an acceptable commute to work, schools and other activities that you will be involved in on a regular basis.
  • Consider resale value: do not buy the most expensive home in the neighborhood.
  • Consider how you want to use your financial resources: fixer-uppers are the best bargains but take both cash and time to complete.

Buying a home is an exciting decision and can result in a solid investment that appreciates over time. Whether or not this is the right moment to purchase is something you should evaluate carefully with your financial advisor, based on your current financial plan and your long-term goals, not based on the news or economic “predictions.”

While interest rates may have risen slightly they are still at historic lows, so don’t miss out the opportunities that a low-interest rate environment offers homeowners and prospective homeowners.

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The views expressed in this blog post are as of the date of the posting, and are subject to change based on market and other conditions. This blog contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
Please note that nothing in this blog post should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax or legal advice. If you would like investment, accounting, tax or legal advice, you should consult with your own financial advisors, accountants, or attorneys regarding your individual circumstances and needs. No advice may be rendered by Sherman Wealth unless a client service agreement is in place.
If you have any questions regarding this Blog Post, please Contact Us.

Still haven’t won the Powerball?… Now what?

Powerball

Still haven’t won the Powerball/? You may have to postpone that fantasy of buying a private island in Thailand, but that doesn’t mean you can’t still be on your way to achieving your financial goals and dreams.

Here’s one way to do it – take that money you’re sinking into lottery tickets and invest it instead.

Why are so many people willing to waste hundreds of dollars on a lottery they won’t win instead of investing it in capital markets that have shown growth over time? Many reasons. For some people, the hardest part of saving and investing could be just getting started. For others, it’s not understanding the benefits of compound interest and that even small amounts add up over time. For others it may be fear of volatility and distrust or the markets from listening to too much CNBC, Fox Business, and Bloomberg!

While it’s true that markets have dipped significantly in January, market dips are a potential opportunity to buy low and earn higher returns over time. The bottom line is that, for most people, even those starting with modest amounts, keeping money in cash is generally not a winning proposition.

Here’s why:

Lets say you are contributing $250 each month ($3k/yr) to your 401k plan with a 100% company match and invest it in a diversified basket of stocks and bonds based on your risk tolerance. At the same time, you save and invest $20 a week (the cost of 10 Powerball tickets a week) in a regular investment account. Assuming historical 4.8% annual returns*, here is how your money will grow over a 20-year period (in today’s dollars) vs. saving the same amount as cash:

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*based on a diversified portfolio that assumes the following weights: 25% in the S&P 500, 10% in the Russell 2000, 15% in the MSCI EAFE, 5% in the MSCI EME, 25% in the Barclays Aggregate, 5% in the Barclays 1-3m Treasury, 5% in the Barclays Global High Yield Index, 5% in the Bloomberg Commodity Index and 5% in the NA REIT Equity REIT Index. Balanced portfolio assumes annual rebalancing. All data represents total return for stated period. Past performance is not indicative of future returns. Data are as of 12/31/15. Annualized (Ann.) return and volatility (Vol.) represents period of 12/31/99 – 12/31/15. Source: Page 59 https://www.jpmorganfunds.com/blobcontent/202/900/1158474868049_jp-littlebook.pdf

So go ahead and keep dreaming about that island! But first speak with a financial advisor about your current situation and future goals and what the best steps are to start working towards financial freedom.

And when the next Powerball comes around? Our guess is that a good financial advisor can help you find better ways to let that $2 grow for you!

 

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The views expressed in this blog post are as of the date of the posting, and are subject to change based on market and other conditions. This blog contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
Please note that nothing in this blog post should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax or legal advice. If you would like investment, accounting, tax or legal advice, you should consult with your own financial advisors, accountants, or attorneys regarding your individual circumstances and needs. No advice may be rendered by Sherman Wealth unless a client service agreement is in place.
If you have any questions regarding this Blog Post, please Contact Us.

Why Go Where Your Money’s Not Wanted?

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In the film The Shining, a ghostly bartender tells Jack “your money’s no good here,” while other ghosts are planning to do away with Jack and his family. In December it was Wells Fargo doing the “ghosting.” By urging its brokers to get rid of clients with a minimum balance of less than 65,000, Wells Fargo Advisors sent a clear message to younger investors that, going forward, their money is “no good” at Wells Fargo.

In a company statement quoted by Janet Levaux in Think Advisor, Wells Fargo, which is the most valuable financial institution in the world according to the WSJ,* said that, in 2016, “bonuses will be awarded to FAs with 75% of their client households at $250,000.”

Wells Fargo isn’t the only large institution effectively ignoring Millennials and other smaller and entry-level clients. Most of the corporate institutions prefer high-net worth clients because it creates “efficiencies of scale” and a higher profit margin on larger trades.

As frustrating as the requirement for a high minimum balance is for first time investors, it has also inspired a new breed of smaller independent RIAs, like Sherman Wealth Management (“SWM”), as well as the the new “robo-advisor” firms.

Younger, breakaway firms like SWM aren’t looking for “efficiencies” or working for sales commissions on the products we recommend. Our focus is different. We strive to help investors build a strong foundation then grow with them, not by profiting off the trades, good or bad, we recommend for them.

Where large brokerages currently see a “revenue problem,” we see a growth potential and are building long-term lasting relationships. By the time Wells Fargo and the other firms with traditional models get around to investing their time and attention in younger investors, it may just be too late. Those Millennial clients will be growing their wealth with firms that didn’t “ghost” them and, like Jack – spoiler alert! – may end up being “frozen out” of the largest wealth transfer in the history of the world as capital shifts from Boomers to Millennials.

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The views expressed in this blog post are as of the date of the posting, and are subject to change based on market and other conditions. This blog contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
Please note that nothing in this blog post should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax or legal advice. If you would like investment, accounting, tax or legal advice, you should consult with your own financial advisors, accountants, or attorneys regarding your individual circumstances and needs. No advice may be rendered by Sherman Wealth unless a client service agreement is in place.
If you have any questions regarding this Blog Post, please Contact Us.
*http://www.wsj.com/articles/wells-fargo-co-is-the-earths-most-valuable-bank-1437538216

Why You Should Consider Buying that Powerball Ticket

Powerball

If you won the Powerball today, what would you do with the $90 million dollars?

While I’m not the first to tell you that you are definitely not going to win the Powerball – you have a 20 times greater  chance of having identical triplets – it’s a great idea to think about what you would do with the 90 million dollars if you did win.

Here’s why: your answer is a great way to understand what you truly care about in life.

What’s the first thing you thought of? Was it “retire and live on a boat in Hawaii?” “Quit my job and become a deejay?” “Book a ride to the Space Station?” Or even just “Stop worrying about how to pay for my kids’ college?”

Your answer – however crazy or however normal –  is a window into what’s really important to you and a great way of evaluating your current financial strategy. Is upgrading your home a potential goal? Have you budgeted enough for your passions? Should you start saving more for more travel and adventure? Have you looked into 529 plans?

As a Financial Advisor, I would advise that you not waste that $2 when it would be better spent collecting compound interest. I would ask you whether you’d already contributed to your 401K plan, your emergency fund, and your other long or short term savings goals. Then I would suggest that if you really wanted to play Powerball, that you re-allocate that $2 from another area –  skipping the caramel latte this morning, for instance, or biking to work tomorrow to save on gas – so that the $2 is amortized.

But I would also tell you to keep dreaming, because those things you are dreaming about are a great way to evaluate whether your current savings and investment goals are tailor-made to help you achieve the life you really want, the life you’d lead if there was nothing standing in your way.

So consider it: if you won $90 million dollars, what’s the first thing you’d do? Now call your financial advisor and take the first step to actually making that happen.

p.s. – If you want to see what your chances of winning actually are, click here to try the LA Times’ Powerball Simulator!

 

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The views expressed in this blog post are as of the date of the posting, and are subject to change based on market and other conditions. This blog contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
Please note that nothing in this blog post should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax or legal advice. If you would like investment, accounting, tax or legal advice, you should consult with your own financial advisors, accountants, or attorneys regarding your individual circumstances and needs. No advice may be rendered by Sherman Wealth unless a client service agreement is in place.
If you have any questions regarding this Blog Post, please Contact Us.

7 Tips to Maximize the Value of a Bonus or Raise

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Expecting a bonus or a raise? Read these tips before you start Googling timeshares in Cancun

If you’ve got an end-of-year bonus or a well-deserved raise coming, it’s easy to think of it as “extra money” you can use to splurge on a trip to Mexico, a new phone, or a serious visit to the outlet stores. It’s particularly easy if you’ve been sticking to your budget and feel you deserve a little fun after behaving so responsibly all year!

Before you blow that bonus on a phone upgrade or a cruise, though, consider these smart ways to really reward yourself with the extra infusion of resources.

1. Upgrade Your Budget Instead of Your Phone

Still rocking a flip phone from the 90s? If so, yes, maybe you should invest in something smarter. But for most of us, it’s smarter to spread the extra cash across several budget items. Go ahead and add a little to your entertainment or entertaining budget, but consider allocating the rest of it to these smart ideas!

2. Make a Bigger Dent in your Debt

Are you feeling the weight of college loans, a mortgage, or, even worse, high interest credit card debt? You can lighten that load by using your bonus to make a larger payment than usual. It lowers your balance so it reduces some of those high interest charges moving forward. Increasing this budget category when you get that raise can also add up to a significant reduction of interest in the long run.

3. Invest to Watch it Grow

Setting aside money when you have large expenses to deal with now can be daunting. But the earlier you start investing the more time your money has to grow. If you haven’t already, create an investment account and put that bonus money to work for you, instead of leaving it in a checking account.

4. Kickstart Retiring

If you’ve kicked your tires and they need to be replaced, by all means, safety first! Use some of the rest of the money, though, to max out your company’s 401(k) contribution limits. If you qualify for an employer match, your bonus just got bigger!

5. Recalibrate Your Portfolios

If you’re already an investor, consider adding some of those extra funds to your investment portfolios. While you’re at it, take a look and see what’s working and what’s not. Your financial advisor can help you evaluate whether your allocations should be adjusted based on your risk tolerance and your long and short-term financial goals.

6. Start a College Savings Plan 

It’s never too early to start saving for a child’s college education. By starting early, you can get a good head start and maximize compounded interest. Your financial advisor can help you choose a plan that works with your life, you goals your timeline, and, most importantly, your bonus!

7. Save for a Rainy Day

Those emergency funds may seem like low priority, until you suddenly need them. If you haven’t already, create an account with funds for unexepected expenses like job loss, emergency repairs, medical bills for you, your family, or your pets, and even weather emergencies (remember Hurricane Sandy?) A good rule of thumb is to have three to six months of expenses saved up just in case.

There’s nothing wrong with treating yourself a little. You worked hard and you deserve it! Remember though, that by keeping the splurging and celebrating to a minimum, and letting that bonus or raise work for you, chances are you’ll have much more to celebrate when next year’s bonus comes around!

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The views expressed in this blog post are as of the date of the posting, and are subject to change based on market and other conditions. This blog contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.

Please note that nothing in this blog post should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax or legal advice. If you would like investment, accounting, tax or legal advice, you should consult with your own financial advisors, accountants, or attorneys regarding your individual circumstances and needs. No advice may be rendered by Sherman Wealth unless a client service agreement is in place.

If you have any questions regarding this Blog Post, please Contact Us.

My Response To a Millennial’s Open Letter To CNBC

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After the markets took an incredibly volatile ride on August 24th, zerohedge.com published this letter to CNBC from a millennial named Ryan, who wrote:

“I’ve dipped my toes in the stock market this past year but after today’s action, I have to say I’m done. Forever. Gone. Don’t count on another dime of mine in the market.”

Ryan isn’t alone. A surprising 74% of Millennials surveyed said they do not own stocks. And that’s unfortunate for Ryan and his fellow GenY-ers.

Ryan’s letter is worth a read – and he’s makes a couple of good points – but he’s also misses a very important point: none of this should really matter to a Millennial.

Here’s why.

“I’m sure countless little guys had their stocks absolutely steamrolled this morning only to see the big guys scoop up the shares on a discount.”  

There is obviously a wide range of ways to experience the market: as a small investor, as a large investor, and as a robot.  Are other people going to do better than you sometimes? Sure. They’re also going to do better than you at sudoko, finding parking spaces, and – unfortunately in my case – Fantasy Football as well. But that shouldn’t matter to you, and shouldn’t keep you from investing in your own financial independence.

The stock market is volatile and, sure, some investors may make impressive bets while others experience much too impressive losses (all investing involves risk, including the risk of the loss of principal.) But, historically, the S&P 500 averaged a 7-8% return (after inflation)* each year and that’s value you’re missing out on if you’re not invested.

 “The only “people” who can react to those pricing distortions in real time are computers. This isn’t a place for small time people like me.”

Nothing beats human guidance and judgment to prevent panic selling or override a previous decision when a drop in a price is anomalous and not due to a fundamental loss in value. Having a plan and sticking to it is usually the best approach and there are great Financial Advisors ready to help you or sharing their insight on the web.

“The only reasonable thing that any little guy can do is sit back and say, “Wow there is a lot of distortion going on and I can’t even guess at these prices.”

Investing shouldn’t be guesswork and doesn’t have to be. A good financial advisor – or your own research – can help you select a diversified group of financial instruments tailored to your own financial goals and risk tolerance. With that in place, along with a well-thought-out plan for steady saving and investing, market price fluctuations should not disrupt your plan. If you’ve got a solid financial plan, investing in the stock market does not affect your ability to pay your rent, take care of yourself or your family, or add to that rainy day emergency fund.

I hope you reconsider, Ryan.

As Millennials, we’re in it for the long haul, we have years of disciplined savings ahead of us with interest that will continue to compound if we avoid reacting emotionally to the markets.

Once the uneasiness of August 24th has worn off (and much of that day’s paper losses have already been recovered,) I hope you and the millions of Millennials who are not yet investing, take advantage of the opportunity to invest while you are young, to maximize your options for reaching your own financial goals, whatever they may be.

 

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*http://www.investopedia.com/ask/answers/042415/what-average-annual-return-sp-500.asp

3 Winning Strategies Investing and Fantasy Football Share

Fantasy Football Goal

As the NFL season begins, millions of fantasy football fans are busy researching and drafting their teams. And this season, as in previous ones, fans will be wondering why some fantasy team managers just seem to have a knack for finding those sleepers and high upside players, while other managers routinely fail to understand and predict player value.

Investors often wonder the same thing: why do some investors consistently get it right and prosper, while others are lucky if they even break even?

Coincidence? Maybe, but there are several important things successful fantasy football managers have in common with successful real-life investors.

Here are three important mindsets that can help you go the whole 9 yards, whether it’s on the virtual gridiron or with your own financial plan.

Research the Players

A good fantasy football manager knows that you need to study all the different variables – including roster positions, draft picks, and expected performance – to build a winning team. Understanding the available options is critical to determining things like how many players you need at each position and which players you think will be the best.

This same principal applies to investing. A smart investor or financial advisor starts by understanding all the different variables, such as capital, types of investments, and asset classes. Understanding the pros and cons of various investment strategies is critical in determining how to choose a strategy that is the appropriate option for your own goals and needs.

Never count on a couple of stars to carry the team

When drafting your fantasy team, you always want to diversify your risk. You might not want to draft multiple offense players from the Green Bay Packers, for instance, even if that team is loaded with talent, because, if Aaron Rodgers and company have a bad week, your fantasy team will be struggling too. Smart fantasy managers build a stable foundation and don’t just count on rising stars.

When building your investment portfolio, risk diversification is critical as well. Wall Street is littered with stories of investors who put all their eggs in one “sure” basket, only to learn the lesson of diversification the hard way. Even if you’re extremely confident that a certain sector is a good bet, it’s usually better to diversify and limit your amount of exposure to individual sectors. That way, even if the sector doesn’t do as well as you had anticipated, your investments are distributed across other asset classes, and your risk should be better managed.

When the going gets tough, the tough stay disciplined

Anyone who has played fantasy football knows the danger of making a snap waiver wire decision you’ll regret later. On one hand, you don’t want to panic and drop your star player after a rough few weeks, only to see him rebound to a MVP-caliber season (and on someone else’s team!) On the other hand, just because an unproven player has a great week doesn’t mean he’s more valuable than the player you’d have to drop in order to acquire him.

When the market hits a volatile patch, it takes a disciplined investor to trust their plan and avoid making snap decisions about buying and selling. A look at the history of the stock market makes it abundantly clear that investors who take a long term view do better than those who shift their investment strategies with every changing wind. This doesn’t mean that any plan should be viewed as foolproof; a good investor or financial advisor knows the value of reassessing and recalibrating appropriately and strategically. What it does mean is that, when the going gets tough, a prudent investor takes the long view, stays disciplined, and sticks to a strategy.

It’s a long season

The only NFL team in history to have an undefeated season is the Miami Dolphins who finished 17-0 in the shorter 1972 season. No NFL team has gone 19-0 to date so it’s highly unlikely that any fantasy team will achieve perfection either. But that doesn’t mean you can’t have a great season and get smarter and smarter about putting together a winning team.

With investing too, there will always be ups and downs, touchdowns and penalties, fumbles and conversions, and a few Hail Mary’s. But with a solid game plan and clearly defined goal, you’ll be on your way to a putting together a strategy designed to stand the test of time and put you squarely where you want to be: heading toward your own end zone with your eye on the ball and your own goals in sight.

 

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Has the Internet Replaced Personal Financial Advisors?

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With the wealth of information readily available online, it’s easy to feel that we’re all experts about everything. From scouring the finance blogs and Twitter for the latest “surefire” ways to beat the market, to diagnosing our aches on WebMD, to grilling along with Bobby Flay on YouTube, it can seem like we have almost instant access to the same information as the pros.

So when it comes to personal finances, why is it necessary to have a financial advisor when financial news is so readily available, Twitter is flooded with “hot tips,” robo advisors are ready to automate the whole process for you, and comparison shopping is so easy? Why can’t you just use this treasure trove of information to make your own financial decisions? Or subscribe to an algorithm-based service that will make the best lightning-quick decisions for you?

A couple of reasons…

If you’re good and you dedicate a lot of time online, you can definitely pick up some great information and strategies that the experts are sharing (follow me on Twitter by clicking here!) The tricky part is making sure that the information and the strategies are actually appropriate for you and appropriate right now. We all know that, if we’re not careful, the instantaneous nature of the internet, social media, and impersonal algorithms can lead to impulsive decisions that may not support our own long-term goals and personal risk profile. Quick reactions to new stock market “darlings” or to sudden market volatility can lead to choices that are not the best for your long – or even near – term financial health and growth. In fact, there is a whole science called Behavioral Finance that addresses how personal biases can lead investors to make decisions that actually work against the goals they set for themselves.

A good financial professional is able to sift through the vast amount of information available to you and determine what is significant to your strategy and what may just be a distraction. A financial advisor who understands Behavioral Finance can help you see where your assumptions, habits, and biases about money and investing may be leading you to get in your own way.

The new algorithm-based platforms are increasingly interesting and have a lot of merit, but the level of personalization is not yet very deep. That means that portfolios are based on broad criteria that may have nothing to do with your current situation, lifestyle, and goals. Again, this is where a trained professional will be able to view your unique individual needs and create a tailored strategy that is geared to you and not just everyone who matches your age and salary level. As more and more fiduciary financial advisors are starting to use smart algorithms as part of their offerings where appropriate, the key is “where appropriate” and “in the clients’ best interest,” the very definition of a fiduciary.

Think about it: would you rather grill along with Bobby Flay on your iPad or would you rather have regular meetings with Bobby, where he looks at the size and model of your Weber, the size of your shrimp, and the recipes you’re trying to learn, and works with you to make sure you become the master of your own grill? (and shrimp!)

The same goes for your financial future. While do-it-yourself is getting easier and easier, that doesn’t necessarily mean it’s getting better and better. Look for a fiduciary financial advisor who also has access to the latest information online and is familiar with the latest algorithmic innovations, but who uses that information to get to know clients individually, and tailors a long-term growth strategy for them that will put them on the road to achieving the goals they have set for themselves.

 

With over a decade’s worth of experience in financial services, Brad Sherman is committed to helping his clients pursue their financial goals. Learn more about our Financial Advisor services.

Follow us on Twitter to stay up-to-date with investment news and wealth management information.

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Do You Share These 4 Habits of the Wealthy?

Wealthy Habits

In his book “Rich Habits: The Daily Success Habits Of Wealthy Individuals,” author Thomas Corley outlines what he learned when he surveyed both wealthy and struggling Americans about their habits and attitudes.

Here are a few “rich habits” he identified that are worth integrating into your professional, financial, and even personal life, to help you on the road to achieving your own goals.

The Wealthy are Goal-Oriented

Corley found that 67% of the wealthy people he surveyed put their goals in writing, 62% of them focus on their goals every day, and a whopping 81% keep a to-do list.

It’s hard to reach your goals if you’re not focused on them and they’re not your top priority, and it can be daunting to have too many goals (one reason so few people are able to keep their New Year’s Resolutions.)

A more productive approach is to prioritize one important goal, create a plan of actionable steps that help you accomplish that goal, then add those steps, tasks and habits to your daily to-do list. These three simple steps will give your increased focus and will help you move closer to that goal.

Once you’ve incorporated them in your daily routine, identify a second goal and follow the same plan. The key to success is taking it one step at a time!

The Wealthy Use Downtime Wisely

At the end of your workday, do you like to relax with Netflix, video games, or YouTube? According to Corley’s data, 66% of the wealthy said that they watch less than an hour of television a day, 63% spend less than an hour a day on the Internet unless it is job-related, an impressive 79% say they read career and educational material each day, and an equally impressive 63% said “I listen to audio books during the commute to work.”

While we all like to relax and recharge with entertaining media, that time can never be recovered for things that help you become a stronger, more successful individual like reading, networking, exercising, or volunteering for a cause you believe in.

Time is the great equalizer: we all have 24 hours a day. What you choose to do with that time can either help you to reach your financial and life goals, or distract you from it, so choose wisely!

The Wealthy Invest in Their Future

Corley’s research also showed that the wealthy live within their means, pay themselves first, and don’t overspend.

Building wealth is not accomplished by upgrading to each new electronic gadget, leasing the newest model car, and living in an extravagant home. The wealthy, according to Corley, spend less than they earn, own and maintain their cars for many years, and save a significant portion of their income. While saving money and living modestly is not as sexy as a flashy smartphone, it will go a lot further toward providing a comfortable future.

Living within your means also includes not carrying credit card balances or heavy debt. When you are carrying debt, what you earn today is paying for yesterday’s expenses. Living within your means while saving and investing a portion of your income lets you invest in tomorrow, rather than yesterday, while learning to be satisfied with what you have today.

The Wealthy are Willing to Take Risks

Another fascinating finding of Corley’s research is that 63% of the wealthy people he interviewed said they that they had taken risks in search of wealth, while only 6% of the struggling Americans he interviewed said that they had taken risks.

For many, fear of failure is a great de-motivator and can be paralyzing. When you do not fully understand something, whether it’s a challenge, a potential project, an investment, or even a social problem, it can be easier to do nothing than to act. But without risk, there is often no reward.

What Corley discovered is that, instead, rather than fearing failure, the wealthy consider failure to be part of the process and – most importantly – an opportunity to learn.

How can you face risk without fear so that you can seize potential opportunities? Educating yourself is the key step. Researching the investment, the project, or the choice, and learning about the options and risks, help keep fear and anxiety about the unknown from clouding your decision-making process.

Even with the best preparation though, choices don’t turn out as envisioned. When that happens, take a page from the wealthy: learning from those failures and experiences will lead to more opportunities and better choices down the road!

Are Your Own Habits Setting You Up for Success?

While following each of these habits may not make you rich, they will certainly help you get into a success mind-set. 68% of the Americans on Forbes billionaire list consider themselves to be “self-made billionaires,” which means that they worked hard to reach their own professional and financial goals. The true route to financial success is through discipline and steady habits that grow your net worth over time.

Do you already share these four habits of the wealthy? If so, congratulations on your focus and your commitment to success. If not, try adopting one – or all four – of these important habits and see if it doesn’t get you closer to achieving your own goals!

 

With over a decade’s worth of experience in financial services, Brad Sherman is committed to helping his clients pursue their financial goals. Contact Brad today to learn more about how you can better pursue yours.

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5 Important Planning Tips for New Parents

7parentingtips

Expecting a visit from the stork soon or has it already dropped off a new bundle of joy? If so, you know the full range of emotions that come with a growing family. Along with the love and excitement you feel with a new baby boy or girl, comes the pressure of new responsibilities and additional financial obligations.

Babies change your life in many ways, including requiring large amounts of time and money. While you may already be thinking about childcare costs and options, or about paying the medical bills that accompanied your new child, there are several other – important – financial considerations you should be thinking about even before the new baby arrives.

Evaluate Financial Priorities. It’s important to consider both short-term and long-term expenses that come with the addition of a new family member. It is a natural impulse, for instance, to want to put your child first and redirect retirement savings into college savings. But remember, you can borrow for college but you cannot borrow your way through retirement. It’s also important to balance long-term goals, like retirement and college expenses, with current financial needs, to help you allocate resources in an appropriate way.

Update Insurance Needs and Your Will. With the expansion of your family, insurance needs can change significantly. Having enough insurance is important in feeling confident about your family’s financial future. Adding your child to your health insurance policy can usually be done with a phone call. Making sure you have enough life insurance for both parents can help ensure you have the funds to raise your child if the unthinkable happens. Short-term disability insurance provides benefits if you have an accident that takes you out of work temporarily. Long-term disability insurance is critical in case a major accident has a permanent impact on your ability to work and earn. While some companies offer disability insurance, it can also be purchased independently.

Updating your will or creating a trust can provide care instructions for your child and allocate resources for their upbringing. Without a will or trust, if you and your spouse die, the state will decide who will raise your children. A will establishes your wishes for who will care for your child. A trust can direct funds specifically earmarked for raising your children and can be an effective way to cover financial expenses and provide for college expenses.

Start Planning For College Early. The sooner you start the better. While it is impossible to know exactly how much you’ll need to save – given that you don’t know what kind of college your child will choose – consider that in 2013-2014 the cost of a moderate in-state public university was $22,826 per academic year and the cost of a “moderate” private university averaged $44,750, according to a College Board survey. ¹

For new parents this means that college could cost over $100,000 for a public college and more than double that number for private school. Instead of trying to fund the entire cost of their education, determine how much you want to contribute. Having children be responsible for a part of their education is often a good lesson in work ethic, even if you can afford to pay for everything, and a critical life lesson if you can’t.

Keep Spending and Debt under Control. When you have an adorable child it’s very easy to overspend. You want them to have the best of everything. Setting a budget and sticking with that can help you keep your spending in line with your established budget. This can also help you maintain the discipline needed to continue contributions to long-term financial goals like retirement and their college education. And remember, the best gift you can give your children – your time and attention – is free.

Another important consideration is debt. When you carry debt, you are paying today for yesterday’s bills. Investing potentially allows you to pay today for tomorrow’s bills. By keeping yesterday’s bills settled and debt to a minimum, you lay the foundations for having enough to enjoy today with your children and plan for tomorrow.

Teach Children About Finances At An Early Age. Finances are a part of our daily lives. When you involve children early on they gain an appreciation for what things cost and how to choose what we want and what we can live without. As soon as your child old enough, start helping save their pennies for something they really want, and teach them that work is part of the process of earning money. These skills, if taught early, can lead to a lifetime of responsible money management.

Parenting is an amazing adventure that changes the way you see yourself and the world. Keeping an eye on finances can provide you with the confidence you need to not only enjoy your growing family but help lay the foundations for a stronger future.

 

¹ http://www.collegedata.com/cs/content/content_payarticle_tmpl.jhtml?articleId=10064

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