Average is not good enough … Our goal at Family Investment Center is excellence. We find excellent investment products and supervise an excellent service package. We maintain a library of excellent research materials and financial planning resources. We also demand top safety and security for our clients.
We won’t settle for average. We continually seek top managers or securities and meld them into superior custom portfolios. Each palette of investments is carefully tailored to personal or family goals. We enlist excellent managers, research, resources, and effort for our clients. Don’t settle for average. You deserve excellence.
Please search our blog posts for answers to common investment questions, and we look forward to sharing our knowledge and experience with you first-hand.
Preparing for Retirement With 401(k) Investing
Once you hit the big 5-0, there are some financial advantages that can be beneficial for everyone who hits this milestone, including some tax breaks and perks where your retirement investments, like 401(k) investing, are concerned.
As of 2017, you can contribute $18,000 a year to your 401(k). However, once you hit the age of 50, you can put an extra $6,000 into your 401(k) each year. These are referred to as “catch-up” contributions, which can offer people with less time until retirement to contribute more to their plan.
If you’re turning 50 or have already hit that milestone, it can be beneficial for you to take advantage of that extra $6,000 investment. There are also advantages for business owners who have yet to establish their retirement investments. For example, say a couple in their mid-50s wants to finally get the ball rolling on their retirement accounts. They can open a self-employed 401(k), which is also referred to as an individual or solo 401(k), and sink the full regular contribution plus the “catch-up” $6,000 into this account.
For those who would rather go with an IRA investment, there are some options here as well. While traditional 401(k) contributions are tax-deductible, any withdrawals from the 401(k) are taxed as income. A traditional IRA works similarly, but the maximum annual contribution is $5,500, with an extra $1,000 “catch-up” contribution. With a Roth IRA, however, no deduction may be taken for contributions, but then withdrawals in retirement are not taxable. IRAs can be extremely advantageous for extra savings, especially when used in conjunction with employer-sponsored plans.
According to a recent Forbes article, 50 percent of investors age 50 to 69 took full advantage of catch-up contributions in 2015. For those putting their investments into a Roth IRA, 45 percent did the same.
The rules are different depending on the type of plan to which you’re contributing, so be sure to ask an advisor for the applicable rules. Aging into 50 and beyond can be an exciting and rewarding time. At Family Investment Center, we know a lot about the various ways that age has advantages when it comes to investing. Come in and talk to us today about your investment goals. If you’ve yet to establish a strategy, we’ll discuss the options available to you and get you started on the right path.
Cutting Fees When Investing for Non-Profits Can Lead to a Boost in Profits
Do you have a favorite charity? If so, you want to see their investments do well so your favorite cause can receive the maximum amount of assistance possible … and in turn, so they can do the most good possible. You may not consider this often, but investing for non-profits is an important part of funding .
Here’s some insight from Dan Danford, founder/CEO of Family Investment Center, on how your favorite nonprofits can see a better return on their investments, which will allow them to do more for those they serve.
First, it’s important that a non-profit gets the best returns possible on their investment. That means whoever is managing the investments should aim to choose stocks, bonds, mutual funds, or other investments that seek to balance risk with reward.
As most of us know, nobody can predict exactly what the market is going to do. If there were such a person, they’d be unbelievably wealthy. But it is important for someone managing a non-profit’s funds to understand the balance between risk and reward. And perhaps more importantly, you want them to have the utmost transparency when it comes to fees.
When times are great and the market is booming, a non-profit may not be worried about fees, especially if it’s half of a percent. But what about when the market sours and funding is desperately needed for all the programs the non-profit administers?
When the economy takes a nose-dive and investments are suddenly reduced to one percent returns (or worse), that fee of half of one percent becomes a massive piece of the equation. This may be the time a non-profit finds out about all the extra fees they’ve been paying for years and never knew about. The new fiduciary rule, which went into effect in June of this year, should help stamp out any fine print that left people unaware of these fees.
If a non-profit wants to boost their portfolio returns, they should look for a safe and insured custodian with a figurative allergy to high fees. Find one that will provide verified statements. Also, it could be a good move to shift portions of a portfolio to a low-cost index or institutional-share manager. Finally, if a non-profit is happy with the performance of a current investment advisor, they can simply ask them if they’ll reduce their fees – some will take that cut.
At Family Investment Center, we’ve always operated as a fiduciary, which means we put our clients’ best interests first. Need advice investing for non-profits? Contact us today.
Taking a Fresh Mental Approach to Investing for Retirement
Mental buckets of money. It sounds like an odd idea at first, but when you consider all the investments contained in savings and retirement portfolios, thinking in terms of “buckets of money” can actually help deconstruct a complex situation into something more manageable when strategically investing for retirement.
During our working years, we look forward to that paycheck that comes every two weeks or once a month. We plan around that check; taking into account our rent or mortgage, food, clothes, entertainment and savings. Even if our investment accounts are plentiful, when it comes to retirement, we need to mentally adjust to the fact that the regular check is no longer coming in. Call it “mental accounting.”
Morningstar recently published an article on the subject of mental accounting, where Michael Kitces, director of wealth management for Pinnacle Advisory Group, touched on the fact that there are different ways to sort and separate the different “buckets” of money. It’s essentially the way people categorize their money and how they think about their assets and income sources. Some researchers have narrowed these categories down into three main buckets: current income (paychecks), current assets (money used for current needs), and the future bucket for everything else, including retirement accounts.
What’s interesting, as the article explains, is that as humans we have feelings that often don’t line up with logic, or what is actually happening. Take, for instance, the fact that British researchers found when they looked at people’s happiness, the happiest were the ones with a comfortable amount of money in the first bucket, regardless of what was in the third bucket.
The goal for those people is to have cash on hand rather than savings for the future. Investing for retirement requires a different mindset when it comes to that third bucket. Interestingly, people with plenty of money in their retirement accounts will often stress in retirement because they don’t have that regular paycheck coming in to fill the first bucket. This is why it’s important to do the mental accounting.
Financial advisors will often focus heavily on investing in the retirement bucket, taking much of the importance off the money their clients have in a checking account. However, to appease that need to have a constant influx of cash to the checking account, advisors might recommend an annuity. Interestingly, the source quoted in Morningstar said less than one percent of people actually follow through with this advice.
One of the reasons people don’t adopt the annuity method is because if they do, they don’t really have the opportunity to improve their lifestyle from where it is right now, as it removes a lot of the flexibility of other investment accounts.
At Family Investment Center, we’re experts at helping people understand what they need to reach their goals. Investing for retirement, in all its complexities, is an important topic that deserves the attention of people who make it their life’s work. Contact us today and let’s start some mental accounting that will make you comfortable with your position today and in the future.
An Investment Advisor Can Help You Make Important Financial Decisions for Your Future
What’s your opinion of investment advertising? Do you immediately turn away when you come across it? You may not even realize you’ve tuned it out, which is unfortunate because so many Americans need the assistance that an investment advisor can offer.
Dan Danford, founder/CEO of Family Investment Center, recently penned a column in The Kansas City Star that touches on this topic.
Danford says that while some Americans will only take the DIY approach to investing their money, the majority of us would benefit from enlisting the help of a trusted professional.
Some investors are loyal to one brand and will invest heavily in its stock. Perhaps it’s their workplace where they enjoyed a long career and from where they have retired. They sink everything they’ve got into the performance of that one company. But what if the company begins to fail? All those years of saving and investing are now in jeopardy. This is not an uncommon scenario and it’s one that could possibly be avoided with the help of a professional.
It’s likely that the people who get in these predicaments don’t know that they should implement a long-term plan where portions of the stock are liquidated, often in a tax-advantaged manner. That’s the advice Danford offered in his column.
The process of making investments for the future intimidates many Americans. If this is true for you, consider talking to an investment advisor about what you should do. There are a number of investment vehicles that suit the goals that are unique to every investor.
The thing is, people can maintain their loyalty as long as they diversify. It’s really all about risk abatement – making smart decisions by spreading the nest egg out over a number of different investments that carry various levels of risk, tailored to the individual investor’s risk tolerance, time horizon and goals.
Unfortunately, there are many consumer advocates out there that offer poor investment advice, including advice saying no one needs a professional to assist them in their DIY investment efforts. However, it’s unwise for the average person to attempt to tackle the many complexities involved in investing.
“While many people are capable of basic investment and finance decisions,” Danford said in his column, “suggesting that the average person tackle complex financial issues without professional help is like advising consumers to service their own cars. Given the proper training and experience, I suppose it’s an option, but how many people have the knowledge, inclination and time to perform such a complicated and potentially hazardous task?”
At Family Investment Center, clients quickly leave their intimidation behind them as they receive reassurance from our team of professionals. The process is complex, but it’s what we do day in and day out, and we know how to inform you in a way that will educate you and prepare you for the big decisions that need to be made about your financial future. So make an appointment with us and let’s talk about your goals.
How Taxes Can Affect Your Investment Portfolio
There is so much going on in Washington D.C. these days that it’s tough to keep up. However, given the recent movement regarding regulatory reform, it might be a good time to stop following the news surrounding the current administration and look at your investment portfolio to how it might be affected.
The Trump administration is eyeing a three percent or better GDP, which Treasury Secretary Steve Mnuchin said in May is achievable, but only if they make historic reforms to taxes and regulations. He also said he’s got a large group of people working on tax system reform while also making strides to undo the Dodd-Frank Act, which was put in place in 2010 in a response to the financial crisis that led to the Great Recession. It’s controversial and people are taking sides.
Mnuchin also said the administration is working to simplify personal taxes and make business taxes more competitive. The reforms Mnuchin talked about last month at a Senate Banking, Housing and Urban Affairs Committee hearing have some believing that if they are able to make these changes, corporate heavyweights could forge ahead with longer-term planning. Could this ease the uncertainty that causes a volatile stock market? The answer may be a resounding “yes” in the corporate world.
It’s also important to note that in 2015, Congress took the research and development tax credit, which had traditionally included sunsets that were frequently extended, and made it permanent. This means large companies, including those that are publicly traded, can more lay out their planning strategies and product development, which again, could lead to more stable performance on the stock market.
However, there might be a snag in the form of funding gaps for a few reasons. First, there is a move to rebuild infrastructure in the U.S. and keep the military the strongest in the world, which is expensive. At the same time, the aging population requires their entitlement programs, which means there will be a funding gap that must be dealt with. One possible solution is a border adjustment tax, which is being opposed by retailers who get a majority of their goods overseas or across borders.
All of this means that as an investor, you need to consider which companies will benefit from these changes, which will be hurt, and make sure your investment portfolio is set up to weather any storm. An investment advisor will tell you that fear and investing are two things that don’t mix well.
To really stay on top of these reforms, talk to your investment advisor about where your money is and if it should be adjusted to better reflect the positive changes that could result from taxation and reforms.
At Family Investment Center, we make it our duty to follow any change in public policy that impacts our clients’ investment portfolios. We welcome the chance to talk about these changes with our clients and offer strategies that will align with your goals and the current or impending reforms. Schedule an appointment with us today and let’s start planning your financial future.