FIC Blog

We believe in – and live by – a philosophy of excellence.

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.

Do You Need Investment Advice for a Tax Refund? (Or Any Windfall?)

Investment Advice for Making the Most of Your Tax Refund

 

You’ve likely already received a nice refund on your tax return. If you’re like most people, your wheels have started turning. Do you add a few days onto your summer vacation or finally splurge on that new furniture you’ve been eyeing? Few want to consider investment advice that starts with not spending your entire refund, but you may find that you’re happier in the long run investing into a solid retirement fund.

 

There’s more than one way to invest, though, and it is important to carefully think about your options before you plan your strategy for handling a small windfall that comes in the form of a tax refund.

 

Why would you want to think about investing some of your refund, rather than spending it all on entertainment, luxury items or home improvement? The average refund enjoyed by Americans is $3,000, an amount that may seem perfect for a good, guilt-free splurge. It’s sizable, but not life-changing, so it may be easy to justify buying yourself a treat.

 

However, with the average rate of return that the stock market delivers, you could potentially turn $3,000 into $50,000 in 30 years because investment growth and compounding interest.

 

You could choose from an index, like the S&P 500 or the Dow, but you can also invest in a mix of blue-chip stocks and enjoy solid returns over the course of your investment time. What matters most, of course, is that you don’t go out and spend all of your refund, but invest a portion instead.

 

At Family Investment Center, Dan Danford, CEO, has a three-part strategy for making the most of your tax refund, or any other small fortune that comes your way. Take a look at these steps for what could be a more satisfying approach to tax refunds:

 

Blow it: Whether it’s a weekend trip or a great pair of shoes, you should get to spend part of your refund on something that improves your quality of life. Making memories and enjoying a treat are great ways to invest in your satisfaction. Danford believes that many financial plans fail simply because they fail to include some joy and some fun into the mix.

 

Mow it: Part of your refund should go to maintenance that protects your investments, such as your home or your car. Maybe you have a leaky roof or a fence that needs repaired, or maybe you need to upgrade to a vehicle that is more reliable. These are also important ways to spend your money and are a good option for a portion of your refund.

 

Grow it: Take part of your refund and invest it in your retirement savings or a college fund. Even a small amount invested will multiply over time and can yield impressive growth. Don’t limit your investments to traditional accounts, though. Danford suggests that taxpayers receiving a refund also consider investments that could further their career, like a college class, or experiences that might widen their horizons.

 

A balanced approach to investing is always best, and we believe that you’ll have the most satisfying results if you get to enjoy spending some of your money and enjoy watching some of it multiply over time. Make an appointment with us today at Family Investment Center. We welcome you to enjoy jargon-free but experience-based conversation around our table.

 

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Retirement Planning: Your Strategy Should be Unique to You

Avoid Retirement Planning Missteps and Plan Your Exclusive Freedom Tour

 

 

If you’re intimidated by retirement planning, you share a similarity with a great many Americans. However, this intimidation leads to the first big mistake – not planning at all.

“I’ll get to my planning for retirement later,” many people say to themselves. You may think you’ve got decades ahead of you before you have to start worrying about it. Don’t fall victim to this thinking.

Another mistake many people make in retirement planning is that they have a faulty vision of what they’ll be able to spend in retirement. A survey conducted by Fidelity Investments reveals that more than 10 percent of Baby Boomers think they can withdraw 10 to 12 percent of their income on an annual basis. Following that line of thinking can drain a retirement account within a decade.


Everyone’s vision of retirement is unique, as are the strategies one must use to plan for their retirement. A common denominator in all scenarios is that an accurate forecast for retirement relies on how old you are today, how much money you’re saving and how you’re investing it.

This means that if two people have the same vision of living on a golf course in Arizona during retirement, they could have vastly different prospects for reaching that goal. If one of them has a few thousand dollars in the bank while the other has hundreds of thousands, the retirement planning is going to be just as disparate.

To get into the right mindset for reasonable retirement expectations, you have to stop thinking about retirement as a single event; it’s actually a long, extensive event. There are 70,000 people in America right now who have reached the age of 100. Not many of them will tell you they thought they’d reach that milestone.

Think of your retirement as a freedom tour, a series of events that you are free to choose to do during your years of retirement. Here are a few tips for a successful retirement freedom tour:

 

·         Think about your retirement in terms of a theme or idea

·         It takes expertise to plan this theme, which some might consider a “tour”

·         Planning for the tour begins months before the excursion takes off

·         All stops along the way are planned

·         There will be emergency stops, so have money set aside for them (think medical emergencies)

·         Working together with family and investment advisors provides for a smoother tour


The snapshot of your tour is going to differ from others’ snapshots, which means you can’t rely on someone else’s investment strategy to make yours become a reality. Work with an investment advisor to make sure you’re not making mistakes that could keep you from enjoying retirement.

At Family Investment Center, we love assisting our clients in retirement planning. In fact, we form relationships that have followed through to the next generation of our clients’ families. Let us help you plan your tour.

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3 Ways Your Mind Tricks You Out of Building Wealth

Solid Strategies for Building Wealth ... Avoid These Mental Pitfalls

 

Careful and diligent planning over time is a reliable strategy for building wealth, but did you know that your mind may be working against you and your long-term plans? There are a number of mistakes that people make in their financial decisions that can throw off their wealth strategies. Here’s a quick guide to ways that your mind can trick you into making poor financial decisions:

 

Anchoring: Don’t fall into the trap of relying too much on the first piece of information you learn about something. For instance, pretend you are interested in hiring a housecleaning service and you begin to call around to check rates. The first company you call quotes you $75 per hour. The second company gives you a rate of $90 per hour.

 

You may dismiss the second company because they are charging $15 more per hour and go with the first company instead. In fact, though, the going rate in your community is $60 per hour, but you overpaid because of the anchoring fallacy.

 

How do you get past anchoring if you don’t have endless hours to call cleaning companies and compare every rate out there? Some experts recommend that, instead of trying to get a true average rate, you estimate how many hours you’d have to work to cover the cost of a service or product, or what else you will have to give up to purchase it. This might help you get a truer sense of your cost.

 

One particularly strong anchor in investing is a stock’s price. Investors tend to keep their purchase price at the forefront when making trading decisions. For example, if you buy a stock at $10 per share and it’s currently trading at $8 per share, you may hesitate selling the stock because it’s lower than your initial purchase price. But what if the stock was overvalued when you bought it? Anchoring is often responsible for investors selling winners too soon or holding losers for too long.

 

Availability Heuristic: In this financial misstep, you pay more attention to more publicized events over those that are most likely to actually happen. For instance, you may have an outsized anticipation of winning the lottery because instances of lottery winners shown on the news stand out in your mind.

 

This concept carries over to other areas in life, too. You may have sweated a little on a trans-Atlantic flight, but probably not on your drive to the grocery store. Despite the fact that traffic accidents are far more likely than a plane crash, you brain latches on to news stories you’ve seen about flights that ended in crisis.

 

Likewise, an investor tends to overreact to the “talking heads” on the radio or television who warn of doom and gloom in the markets.

 

Hedonic Adaptation: When you purchase something new, you often feel a rush of satisfaction and excitement. In some cases, such as with a new car or a dream home, you may feel unable to contain yourself as you bask in the glow of acquisition. Even a new pair of shoes or a weekend trip can make you feel like you could never ask for anything more.

 

The trouble is, you always do, and it’s keeping you from building wealth. The hedonic adaptation principle says that no acquisition is capable of satisfying you forever. What’s more, you become less willing to go back to your previous lifestyle, even though your new purchase isn’t satisfying you like it did when it was new.

Overconfidence: Overestimating your own ability, at choosing investments, for example, can be detrimental to your financial strategy. If you don’t have the time, expertise and experience to handle an investment portfolio, consider hiring an investment advisor to help.

 

Hindsight: We’ve all heard it: “hindsight is 20/20.”  When analyzing past events, it’s easy to hinge on information that hadn’t been available at the time, believing that the event was predictable (and perhaps preventable) when it really wasn’t. For example, after a stock market crash, you suddenly think of many reasons why youshould have adjusted your portfolio more conservatively, when in reality, there was no way of knowing it was coming. (Interestingly, hindsight can lead to overconfidence, as well.)

 

Building wealth over time takes a lot of discipline, but it also takes an awareness of the tricks your mind might play on you as you make financial decisions. No matter how solid your wealth strategies are, be careful that you aren’t derailing your goals by buying into these fallacies.

 

To learn more practical ways to think about building wealth, make an appointment to talk with the advisors at Family Investment Center. Always commission-free and client-focused, we help you develop strategies that are clear-minded and designed to help you plan for a solid future.

 

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The DIY Investing Mistake: Are You Relying on “Vacuum Investing” or “Soapbox Time?”

Dan Danford Explains 5 Surprising Investing Myths in “Money is Freedom” Podcast Episode

 

Much of our financial knowledge comes from trusted sources – friends, coworkers, colleagues, family members. But a lot of this information requires a serious update. In fact, it may be holding you back from the success you want.

Today, ask yourself this:  Are you believing the five common myths (mistakes) about DIY money management? These mistakes include relying on the “special knowledge trap,” “soapbox time” and “vacuum investing.”

Listen to this brief, jargon-free and value-packed podcast today. It might change your thoughts on DIY investing, and, more importantly, it might change your future.
 

Listen to the “DIY Mistake” here on Sound Cloud:
https://soundcloud.com/money-is-freedom/the-do-it-yourself-mistake

Listen to Dan Danford on “Money is Freedom” on iTunes.

 

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Investing for Women: More Female Millionaires Working With Advisors

Recent Numbers on Investing for Women Show Increasing “Clout”

 

investing for womenThe numbers of male clients to female clients at investment firms began to even out during 2016, says a recent CNBC article. Why? Because the number of women who have reached millionaire status is also climbing. In fact, it’s believed that in the next 13 to 15 years, as much as 66 percent of wealth in the U.S. will be owned by women.  How do these numbers affect investing for women?

According to the article titled “For Women, Retirement Can Be a Serious Challenge,” wealthy women are emerging now in stronger numbers. Approximately 45 percent of millionaires in the U.S. are female, says the article. During the next 14 to 15 years, females will be responsible for at least 66 percent of the country’s wealth. As a reflection of these numbers, it’s no surprise that women are currently the chief money makers in nearly half of U.S. households.

What’s the Challenge?
The numbers are encouraging, yet unique challenges remain for women in investing. As of 2015, women earned roughly 80 percent of what men were paid. This means when retirement comes around, women will draw less in Social Security benefits.

Many women choose to shift focus away from their careers during top-earning years to turn more attention to raising children, meaning less money goes into their retirement accounts. Some work part-time for a season to raise their families, which often makes them ineligible for employer-sponsored  retirement programs.

In addition, with 63 million women earning wages today, only 45 percent are enrolled in retirement savings accounts. Of those that are enrolled, they average 50 percent less in their accounts than their male counterparts.

Another challenge, say experts, is that women who reach the age of 65 will live, on average, another 20.5 years. This means many of them will need more money in their retirement accounts than anticipated to live comfortably. Ultimately, too many women may be underfunded in their retirement accounts.

Addressing the Challenges
Investments can be a challenge, even for those who consider studying financial and investment news an enjoyable hobby. That’s why bringing an advisor into the plan can create a number of advantages.

An advisor can put together a plan considering all your information, including your insurance policies, your tax returns and banking records, information about mortgages and loans and all the investment records on your retirement accounts. Your advisor will help you create a strategy, which includes prioritizing expenses in categories such as wants and needs. This will help you devise a savings plan that matches your goals for retirement.

If debt is a concern, an advisor can assist you here as well. You might be surprised to learn that some debt can actually be used as leverage to increase your success. Contrary to some popular thought, not all debt is a hindrance to reaching your goals.

One of the most important things a good investment advisor will do is help you establish your goals and an investment plan that will help you reach those goals – despite media headlines, emotions and market shifts.

A final note:  When you look for an advisor, find one that operates as a fiduciary. When you partner with a fiduciary, you have an advisor that puts your interests first. Also, a “fee-only” advisor will never take a commission on an investment they recommend. This is how Family Investment Center has operated from the start. Contact us today and find out more about what makes us so unique.

 

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