The Five Biggest Things That Confuse Americans About Retirement
The Five Biggest Things That Confuse Americans About Retirement
Retirement: What people say about their readiness
Kerry Hannon Sun, August 6, 2023
Americans think they'll need to save $1.8 million for a comfortable retirement, according to a new survey. But for many of them, that’s just a shot-in-the-dark guess. Many have no idea how much they should save or how to invest whatever money they sock away. They’re baffled by many other essential facets of retirement planning, the survey released this week from Charles Schwab showed.
That’s a real problem because what Americans save is supposed to become a major source of income in retirement, and, if they're clueless on the basics, many may under-save and face a shortfall in their old age.
The Five Biggest Things That Confuse Americans About Retirement
Retirement: What people say about their readiness
Kerry Hannon Sun, August 6, 2023
Americans think they'll need to save $1.8 million for a comfortable retirement, according to a new survey. But for many of them, that’s just a shot-in-the-dark guess. Many have no idea how much they should save or how to invest whatever money they sock away. They’re baffled by many other essential facets of retirement planning, the survey released this week from Charles Schwab showed.
That’s a real problem because what Americans save is supposed to become a major source of income in retirement, and, if they're clueless on the basics, many may under-save and face a shortfall in their old age.
"The workers we surveyed may be 5, 10, 20, or even 30 or more years away from retirement, but the gap between now and the future can make it difficult for savers to nail down specifics about what they imagine their lives will look like in retirement," Marci Stewart, director, communication consulting and participant education for Schwab Workplace Financial Services, told Yahoo Finance.
"That raises the bar on providing access to quality education and professional advice."
Here are the five biggest things that confuse Americans about retirement, according to the Schwab poll.
How much should I save?
More than four in 10 workers (41%) polled said they need help calculating how much money they need to save for retirement. In fact, a recent survey from Transamerica Center for Retirement Studies actually found that 45% of workers said they guessed the amount they need to save for retirement.
"Retirement calculators are widely available online and they are great tools to help people get a sense of whether they are on track," Stewart said. Check out AARP, Bogleheads, Fidelity, Schwab, or Vanguard to start.
Plan on some soul-searching and sleuthing.
"Consider what you need to enjoy the life you want to in retirement,” Liz Davidson, CEO and founder of Financial Finesse and author of "Money Strong: Your Guide to a Life Free of Financial Worries," told Yahoo Finance. "That number may be significantly lower than what you need right now. From there, consider what income sources will be there for you in retirement, like Social Security or even a pension."
If you have a personal my Social Security account, you can get an estimate of your future monthly retirement benefits and see the impact of different retirement age scenarios from retiring right now to your full retirement age or at age 70 based on your actual Social Security earnings record. If you don't have an account yet, you can set one up on the site. You might factor in a scenario where Social Security benefits are reduced 25% compared to your estimated statement to take into account the potential for the 2034-35 estimate for depletion of the Social Security Trust Fund.
One way to boost retirement savings is to check to be sure you are saving enough of your income in your employer-provided plan to score matching funds they contribute, Davidson said.
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Nobody Told Me
Nobody Told Me
Jonathan Clements | February 8, 2020
I HAVE DEVOTED my entire adult life to learning about money. That might sound like cruel-and-unusual punishment, but I’ve mostly enjoyed it. For more than three decades, I’ve spent my days perusing the business pages, reading finance books, scanning academic studies and talking to countless folks about their finances. Yet, despite this intense financial education, it took me a decade or more to learn many of life’s most important money lessons and, indeed, some key insights have only come to me in recent years. Here are 10 things I wish I’d been told in my 20s—or told more loudly, so I actually listened:
Nobody Told Me
Jonathan Clements | February 8, 2020
I HAVE DEVOTED my entire adult life to learning about money. That might sound like cruel-and-unusual punishment, but I’ve mostly enjoyed it. For more than three decades, I’ve spent my days perusing the business pages, reading finance books, scanning academic studies and talking to countless folks about their finances. Yet, despite this intense financial education, it took me a decade or more to learn many of life’s most important money lessons and, indeed, some key insights have only come to me in recent years. Here are 10 things I wish I’d been told in my 20s—or told more loudly, so I actually listened:
1. A small home is the key to a big portfolio. My first wife and I bought a modest house, because we worried that we couldn’t really afford anything bigger. I ended up living in that house for two decades.
Financially, it turned out to be one of the smartest things I’ve ever done, because it allowed me to save great gobs of money. That’s clear to me in retrospect. But I wish I’d known it was a smart move at the time, because I wouldn’t have wasted so many hours wondering whether I should have bought a larger place.
2. Debts are negative bonds. From my first month as a homeowner, I sent in extra money with my mortgage payment, so I could pay off the loan more quickly. But it was only later that I came to view my mortgage as a negative bond—one that was costing me dearly. Indeed, paying off debt almost always garners a higher after-tax return than you can earn by investing in high-quality bonds.
3. Watching the market and your portfolio doesn’t improve performance. This has been another huge time waster. It’s a bad habit I’m belatedly trying to break.
4. Thirty years from now, you’ll wish you’d invested more in stocks. Yes, over five or even 10 years, there’s some chance you’ll lose money in the stock market. But over 30 years? It’s highly likely you’ll notch handsome gains, especially if you’re broadly diversified and regularly adding new money to your portfolio in good times and bad.
Over the past decade, I’ve upped the bond position in my portfolio, so today—at age 57—I’m at 60% stocks and 40% interest-generating investments. (The latter includes the private mortgage I wrote for my daughter.) But long before then, I spent an awful lot of time debating whether to invest more in bonds. It simply wasn’t necessary.
To continue reading, please go to the original article here:
15 Most Important Assets That Will Increase Your Net Worth
15 Most Important Assets That Will Increase Your Net Worth
Jennifer Taylor Fri, August 4, 2023
Your net worth is more than just the balance in your bank account. It's a measure of your financial health. To get the answer to "What is my net worth?" subtract your total liabilities from your total assets. If you're trying to figure out which assets are the most valuable or will otherwise give your net worth a boost, here's a rundown of 15 critical assets. Learn how you can start making lucrative investments toward your future.
15 Most Important Assets That Will Increase Your Net Worth
Jennifer Taylor Fri, August 4, 2023
Your net worth is more than just the balance in your bank account. It's a measure of your financial health. To get the answer to "What is my net worth?" subtract your total liabilities from your total assets. If you're trying to figure out which assets are the most valuable or will otherwise give your net worth a boost, here's a rundown of 15 critical assets. Learn how you can start making lucrative investments toward your future.
1. Owning Your Primary Residence
Homeownership ranks among the most common ways people gain a substantial increase in net worth. Instead of choosing the traditional 30-year mortgage, opt for a 15- or 20-year term, so you can pay it off more quickly, which will result in a significant asset and savings on interest. And if you decide to sell after you pay your home off, capital gains are tax-free up to $500,000, as long as your status is married filing jointly.
Renting might make more financial sense than owning in some high-priced urban areas, depending on whether the cost of ownership is reasonable in relation to total living expenses.
2. Second Home
Second homes are a savvy way to earn passive income via short-term rental platforms like HomeAway, VRBO or Airbnb. At first, you can use the extra income to help pay off your mortgage more quickly. Then, once you pay off the mortgage, you'll own a significant asset while still benefitting from the passive income of renting it out if you choose -- both can result in a nice gain in your net worth.
3. Retirement Savings
Retirement might be decades in the future, but saving now can enhance your net worth.
To continue reading, please go to the original article here:
https://finance.yahoo.com/news/15-most-important-assets-increase-133014378.html
Coping With The Guilt Of Losing Money
Coping With The Guilt Of Losing Money
By THE INVESTOR
I accept it’s normal to feel frustrated, angry, or even downright stupid when you lose money on your investments.
But what about guilt? My portfolio’s fall from its peak value in summer 2007 to a low in October 2008 represents a big loss for a 30-something private investor like me: at least a couple of years of after-tax income in cash terms. More importantly, the losses meant I had fewer options in October 2008 than the year before. I’d originally begun investing to build up a house-buying war chest for when the over-valued housing market corrected itself.
After several years waiting, house prices were finally falling, but my investments had fallen further. It was my sister who put it simplest and best, when I explained to her my fate:
Coping With The Guilt Of Losing Money
By THE INVESTOR
I accept it’s normal to feel frustrated, angry, or even downright stupid when you lose money on your investments.
But what about guilt? My portfolio’s fall from its peak value in summer 2007 to a low in October 2008 represents a big loss for a 30-something private investor like me: at least a couple of years of after-tax income in cash terms. More importantly, the losses meant I had fewer options in October 2008 than the year before. I’d originally begun investing to build up a house-buying war chest for when the over-valued housing market corrected itself.
After several years waiting, house prices were finally falling, but my investments had fallen further. It was my sister who put it simplest and best, when I explained to her my fate:
“Ah, I see. If only you’d sold all your investments and put the money into a savings account! Now you’d have even more money, and you could buy a cheaper house.”
My sister was a 100% right.
Being told what I did wrong by my sister, who takes no real interest in money, might have hurt my pride. But then my emotional state has taken several turns during the bear market. I’ve felt:
Frustrated: After half a decade of waiting for property prices to fall and saving as much as 50% of my annual after-tax income, I’d thrown away my ticket to the ball.
Angry: At the world, and at the markets. What were the chances of a once in a hundred year credit crisis coming along just when I was finally getting ready to buy a house?
Foolish: If I’d thought property prices would fall so far, how could I have missed the connection with the stock market? Wishful thinking, perhaps?
Guilty: My family background is not a wealthy one, and the money I’d lost was modestly substantial – more than my parents’ life savings. What was I thinking playing roulette with the market and exposing myself to such losses?
Despite these churning emotions, I didn’t sell up in despair. Instead, I kept buying while shares were cheap. I did what history and the likes of Warren Buffett say you should do – hanging in and even buying when others were fearful.
Time will tell if this faith in the stock market simply compounds my losses or leads to a recovery, but I’m glad I’ve stuck to the rational line.
Here some tips that might help you if you’re also feeling guilty or giving in to bear market despair.
1. Don’t take it personally
The stock market doesn’t know or care that I was saving money for a house, or what I’d given up. The world is a billion times bigger than our own investments, and our good or bad decisions. Market declines of 40% will leave anyone’s portfolio battered. A bear market is not your fault.
2. Accept declines are as inevitable as gains
To continue reading, please go to the original article here:
https://monevator.com/coping-with-the-guilt-of-losing-money/
8 Insights Only the Self-Made Super Wealthy Understand
8 Insights Only the Self-Made Super Wealthy Understand
Billionaire Ken Fisher Shares 8 Insights Only the Self-Made Super Wealthy Understand
Wonder what it's really like to strike it rich? Billionaire Ken Fisher explains the perspectives of the self-made wealthy.
BY KEVIN DAUM Inc. 500 entrepreneur and best-selling author@KevinJDaum
Not all entrepreneurs are in it for the money, but gaining wealth is certainly among the top motivators for company building. Not surprisingly, having great wealth brings it's own unique responsibilities and circumstances that few get to experience first hand.
I recently had the privilege of interviewing billionaire Ken Fisher, founder, chairman, and CEO of Fisher Investments, best-selling author, Forbes magazine columnist, and No. 225 on the Forbes 400.
8 Insights Only the Self-Made Super Wealthy Understand
Billionaire Ken Fisher Shares 8 Insights Only the Self-Made Super Wealthy Understand
Wonder what it's really like to strike it rich? Billionaire Ken Fisher explains the perspectives of the self-made wealthy.
BY KEVIN DAUM Inc. 500 entrepreneur and best-selling author@KevinJDaum
Not all entrepreneurs are in it for the money, but gaining wealth is certainly among the top motivators for company building. Not surprisingly, having great wealth brings it's own unique responsibilities and circumstances that few get to experience first hand.
I recently had the privilege of interviewing billionaire Ken Fisher, founder, chairman, and CEO of Fisher Investments, best-selling author, Forbes magazine columnist, and No. 225 on the Forbes 400.
Fisher provided a candid, no-holds-barred look at the perspective of the self-made super wealthy.
Here are his insights.
1. It Isn't Pursuit Of Wealth, But Pursuit Of Passion That Creates Wealth
Focusing on money won't likely get you to the Forbes list like Fisher. He aptly states: "Most people don't get super wealthy by accumulating money. They get super wealthy by following some dream they are passionate about, whether its starting and running a business, or being a rock star musician or a visual entertainer."
He points out that most of the super wealthy overshoot their personal goals, and yet they are still driven by their passion. The super wealthy know that if you pursue your passion, the money will come.
2. After A Certain Monetary Threshold, The Desire Isn't For More Wealth, But More Time
There is very little that the super wealthy cannot buy. As the wealth keeps accumulating, spending becomes less of a joy or ambition. "After a certain point," Fisher explains, "there isn't much more you can think of that you want."
What becomes more desirable is time to enjoy life. "The vacation homes, cars, boats, and wardrobes are just more stuff to deal with." Fisher observes. "All that stuff clutters your time usage, so at a certain point, the wealthier you get the more you covet time."
3. Everyone You've Known Forever (Except Your Spouse) Will Think You've Changed
To continue reading, please go to the original article here:
What You Should — And Shouldn't — Do If You Win The Mega Millions Jackpot
What You Should — And Shouldn't — Do If You Win The Mega Millions Jackpot, According To An Expert
Kate Murphy·Producer Updated Fri, August 4, 2023
There’s still a chance — 1 in nearly 303 million – for a lucky winner to score the Mega Millions jackpot, which climbed to an estimated $1.25 billion this week. If won, this jackpot would be the fourth largest grand prize won in the game's history, according to the Mega Millions website.
While securing the golden ticket is all a matter of luck, holding onto one’s newfound fortune after such a windfall requires some strategy. In fact, compared to the average American, lottery winners are more likely to declare bankruptcy within three to five years, due to a lack of financial planning.
What You Should — And Shouldn't — Do If You Win The Mega Millions Jackpot, According To An Expert
Kate Murphy·Producer Updated Fri, August 4, 2023
There’s still a chance — 1 in nearly 303 million – for a lucky winner to score the Mega Millions jackpot, which climbed to an estimated $1.25 billion this week. If won, this jackpot would be the fourth largest grand prize won in the game's history, according to the Mega Millions website.
While securing the golden ticket is all a matter of luck, holding onto one’s newfound fortune after such a windfall requires some strategy. In fact, compared to the average American, lottery winners are more likely to declare bankruptcy within three to five years, due to a lack of financial planning.
Yahoo News spoke to Andrew Lokenauth, a personal finance expert and founder of thefinancenewsletter.com, for some tips on what to do, and not to do, if you are the jackpot winner. Some answers have been lightly edited for length and clarity.
Someone Just Won The Lottery Jackpot, What Should They Refrain From Doing?
Andrew Lokenauth: One: Don't sign the ticket, because once people know who claimed it, everyone is going to be rushing after you. I would say put it in a safe place, and depending on the state you're in, you can claim it anonymously (Delaware, Kansas, North Dakota, Ohio, South Carolina or Maryland).
Two: Don't tell anybody. This leads back into the first point because you could become the victim of robbery, or people can try to extort you.
Go private until things get under control. You'd want to delete your social media or make it private until you figure things out. Legally change your address to a P.O. box. And get a new phone number and email address, because it can be easy to find both online.
What Actions Should Lottery Winners Take?
To continue reading, please go to the original article here:
Why an Accountant Is Worth the Money
Why an Accountant Is Worth the Money
By Max Wong WiseBread
Anyone who is at all familiar with me knows that my yearly earnings put me squarely in the economic category commonly referred to as the Working Poor. So when I mention that I pay $550 a year for an accountant to help me with my finances, people typically give me that sad look that they reserve for mediocre subway violinists and ugly babies.
And then there's the thick pause in the conversation when the other person decides against asking this question out loud: Um, don't you write about personal finance?
In answer to the silent, questioning looks, and in defense of my financial decisions, there are so many reasons why my accountant is worth the money.
Why an Accountant Is Worth the Money
By Max Wong WiseBread
Anyone who is at all familiar with me knows that my yearly earnings put me squarely in the economic category commonly referred to as the Working Poor. So when I mention that I pay $550 a year for an accountant to help me with my finances, people typically give me that sad look that they reserve for mediocre subway violinists and ugly babies.
And then there's the thick pause in the conversation when the other person decides against asking this question out loud: Um, don't you write about personal finance?
In answer to the silent, questioning looks, and in defense of my financial decisions, there are so many reasons why my accountant is worth the money.
1. An Accountant Is Cheaper Than Therapy
Oh my God. What if I forget something?
I would rather get oral surgery than do my own taxes. My financial life is complicated. I own a rental property. I run two separate businesses out of my home. I got 1099 forms from five different companies last year. I have a grant. I go to school part time. There are so many moving pieces in my life that just organizing my paperwork in preparation for my tax meeting with my accountant stresses me out.
As a reasonably organized person who spends a lot of time thinking about personal finance, I'm in that dicey position of knowing enough to get myself into trouble, but not enough to get myself out. I would rather pay and be sure that my finances are in order than spend hours filing my own taxes and still feel dread.
Additionally, my accountant is available to answer my financial questions all year long. While some accountants bill by the hour, my accountant rolls my calls about health care costs and asset depreciation into that yearly $550 flat fee.
2. They Can Save You Time (and Time Is Money)
I do my taxes once a year. My accountant does taxes all year long and all the livelong day. Guess who's better at doing taxes?
My accountant is a virtuoso with a calculator. She can hit the keys with the speed and precision of a concert pianist. Doing your own taxes isn't rocket science. That said, my father-in-law is actually a rocket scientist and even he uses an accountant! Why? Because it's cheaper for him to outsource his tax chores to a professional, so he can use the time he saves to make money doing something he enjoys.
My accountant also enjoys reading up on the latest changes in the tax code. Reading changes to the tax code is something I am sure that I don't want to do even once, never mind making it a yearly tradition.
Because she stays on top of her game, she is able to help me make the best choices about how and when to spend and save money.
3. They Can Recommend Legal Loopholes to Save You Money
To continue reading, please go to the original article here:
https://www.wisebread.com/14-reasons-why-an-accountant-is-worth-the-money?ref=seealso
Magnitude Matters
Magnitude Matters
Rand Spero | HumbleDollar
WHY DON’T WE spend our time and energy on financial issues that have the greatest impact? We’ll drive to a more distant gas station to save 10 cents a gallon, but fail to do all the maintenance needed to extend the life of our car. What lies behind this sort of behavior? The savings from getting the best price per gallon is concrete and immediate, while maintaining our car is long term and abstract. It’s simply easier to focus on the 10 cents. I have a relative who stayed at a $500-a-night luxury hotel in downtown Boston. He emailed me to bring him water when I visited, because the hotel charges $5 per bottle.
Yes, the hotel is pushing the envelope with its water bottle charge, but my relative claiming he won’t pay “on principle” seems like a stretch. Such “injustices” occur when we have concrete price expectations, while we happily tolerate other, much higher costs.
Magnitude Matters
Rand Spero | HumbleDollar
WHY DON’T WE spend our time and energy on financial issues that have the greatest impact? We’ll drive to a more distant gas station to save 10 cents a gallon, but fail to do all the maintenance needed to extend the life of our car. What lies behind this sort of behavior? The savings from getting the best price per gallon is concrete and immediate, while maintaining our car is long term and abstract. It’s simply easier to focus on the 10 cents. I have a relative who stayed at a $500-a-night luxury hotel in downtown Boston. He emailed me to bring him water when I visited, because the hotel charges $5 per bottle.
Yes, the hotel is pushing the envelope with its water bottle charge, but my relative claiming he won’t pay “on principle” seems like a stretch. Such “injustices” occur when we have concrete price expectations, while we happily tolerate other, much higher costs.
Deciding on a college is a huge investment of time and money. Yet as my family dashed from one campus visit to the next, I wondered if we were being good consumers. Were we prioritizing colleges based on which tour guide captured the interest of our daughter?
Perhaps we needed to slow down and do more extensive research. When my daughter decided to apply early decision to a nearby university, we suggested she visit the school a second time. She spent a full day talking to students and sitting in on classes, and came back enthused. It proved to be a good fit.
The importance of considering the financial magnitude of a decision became apparent when I went house shopping with a friend. He was moving into town for work and wanted to get settled quickly.
As we raced between showings, one desirable property stood out. There was a crowd at the open house and the broker indicated it would move fast.
All bids would be accepted by Sunday evening and the winner would be announced the next day. My friend got caught up in the frenzy and wanted to know what bid might be needed “to win it.”
It struck me as amusing that we had spent just 45 minutes looking at the desired house for sale. I asked my friend how much time he would spend looking at a high-priced sweater. He proudly indicated that he was a bargain shopper.
My friend added that, if he were going to pay a lot for an item of clothing, it had better be worth it. Yet soon he could be obligated to spend hundreds of thousands of dollars for a house, initiating this decision after spending less than an hour.
Want to make better purchasing decisions? Try asking these five questions:
What dollar amount are you actually spending or saving?
Are you sidetracked by focusing on low-cost items that are more easily understood?
Do you cite “principle” to defend fretting over small expenditures?
On big ticket items, have you established clear criteria before purchasing?
Have you allocated time and energy that’s appropriate, given the financial magnitude of a decision?
To continue reading, please go to the original article here:
Stop Budgeting Like the Middle Class and Do What the Rich Do Instead
Stop Budgeting Like the Middle Class and Do What the Rich Do Instead
Angela Mae Wed, August 2, 2023
A lot of people believe all they need to do to become wealthy is to earn more money or to save what they do have. This isn’t all that surprising, considering how many people subscribe to the idea that their income directly corresponds to their wealth.
But what many people who are considered “middle class” don’t realize is that earnings are just one part of the bigger picture. The people who achieve true wealth are those who know how to spend and invest the money they earn in ways that will benefit them in the long run.
Stop Budgeting Like the Middle Class and Do What the Rich Do Instead
Angela Mae Wed, August 2, 2023
A lot of people believe all they need to do to become wealthy is to earn more money or to save what they do have. This isn’t all that surprising, considering how many people subscribe to the idea that their income directly corresponds to their wealth.
But what many people who are considered “middle class” don’t realize is that earnings are just one part of the bigger picture. The people who achieve true wealth are those who know how to spend and invest the money they earn in ways that will benefit them in the long run.
If you’ve been living with a middle class mindset and want to make a change, you might need to take a moment to consider the behaviors or actions that keep you from becoming rich. Here are some of the most common things people in the middle class tend to do that the rich do not — and things the rich consistently do to maintain their wealth.
The Rich Invest While the Middle Class Do Not
The middle class tend to save their money, while the wealthy invest theirs.
Robert R. Johnson, Ph.D., CFA and professor of finance at Heider College of Business at Creighton University, gave a historical look at the stock market.
“From 1926 through 2022,” he said, “the stock market provided returns that far exceeded treasury bills or treasury bonds. According to data compiled by Ibbotson Associates, large capitalization stocks — think S&P 500 — returned 10.1% compounded annually. Over that same time period, long-term government bonds returned 5.2% annually and T-bills returned 3.2% annually.
“To put it in perspective,” he added, “a dollar invested in the S&P 500 at the start of 1926 would have grown to $11,535 (with all dividends reinvested) by the end of 2022. That same dollar invested in T-bills would only have grown to $22.05. That same dollar invested in long-term government bonds would have only grown to $130.89. It pays to invest and not simply save. And it’s not a close call.”
Justin Albertynas, CEO of RatePunk, added, “Wealthy individuals also prioritize long-term investing strategies. They are more likely to hold onto their investments, benefiting from compound growth over time. According to a study by Spectrem Group, 75% of millionaires in the US attribute their wealth to long-term investing.”
Middle Class Individuals Rarely Have Multiple Income Streams
To continue reading, please go to the original article here:
https://finance.yahoo.com/news/stop-budgeting-middle-class-rich-150019991.html
Rich People Do These 4 Things to Stay Wealthy (& So Can You)
Rich People Do These 4 Things to Stay Wealthy (& So Can You)
Wola Odeniran, CEPF® Thu, August 3, 2023
Advisors often work with high-net-worth clients and are able to understand the expectations wealthy clients have about managing their finances. The good news is that some of those takeaways can be applied to clients who are not high-net-worth individuals.
Read on to understand four lessons advisors can take from high-net-worth clients – and how they can be applied to any client.
Rich People Do These 4 Things to Stay Wealthy (& So Can You)
Wola Odeniran, CEPF® Thu, August 3, 2023
Advisors often work with high-net-worth clients and are able to understand the expectations wealthy clients have about managing their finances. The good news is that some of those takeaways can be applied to clients who are not high-net-worth individuals.
Read on to understand four lessons advisors can take from high-net-worth clients – and how they can be applied to any client.
Almost Everyone Needs an Estate Plan
Estate-planning practices apply to every client, no matter their tax bracket, says Renee Fry, co-founder and CEO of Gentreo, a company that provides estate-planning document services.
“Financial advisors should take the example of their high-net-worth clients and apply estate-planning principles to all their customers, regardless of income bracket,” Fry says. “Every person has an estate, regardless of their income level, and thus, everyone should have a plan in place to ensure that their assets are distributed according to their wishes.”
Proper planning can help advisors build a bigger client base. “By doing so, advisors can help ensure their client’s financial security, build long-term trust and differentiate themselves from their competitors,” Fry says.
Outside Advice Is Valuable, Even When Clients Are Knowledgeable
Some clients may be titans of business or professional heavyweights, which has helped them benefit financially. “But that doesn’t mean that they know how to budget, how much insurance to have, how to invest or what to do with their wealth in terms of estate and charitable giving,” says Amy Jo Lauber, a certified financial planner and founder of Lauber Financial Planning.
Lauber also says that non-high-net-worth clients, especially those looking to improve their financial situation, often have more financial awareness than those who are wealthy.
To continue reading, please go to the original article here:
https://www.yahoo.com/finance/news/4-lessons-advisors-learn-high-170850089.html
Ten Rules for Asset Protection Planning
Ten Rules for Asset Protection Planning
By Jay Adkisson
Start early, keep it simple, and don’t try to hide stuff from your creditors.
There’s a gambling saying that goes something like, “If you want to be a winner, you have to walk away from the table a winner.” One time-honored method of reaching this result is to systematically take your chips off the table as you win them, so that your potential for losses stays small.
Asset protection planning is all about taking chips off the table in good times, so that you still can walk away from the table a winner no matter what happens in bad times. Those who worry the most about asset protection are those who are the most likely to get sued; think obstetricians and, more recently, real estate investors here. But average folks often get caught up in difficult situations, and thus if you have something to protect then the topic of asset protection should at least cross your mind. ...
Ten Rules for Asset Protection Planning
By Jay Adkisson
Start early, keep it simple, and don’t try to hide stuff from your creditors.
There’s a gambling saying that goes something like, “If you want to be a winner, you have to walk away from the table a winner.” One time-honored method of reaching this result is to systematically take your chips off the table as you win them, so that your potential for losses stays small.
Asset protection planning is all about taking chips off the table in good times, so that you still can walk away from the table a winner no matter what happens in bad times. Those who worry the most about asset protection are those who are the most likely to get sued; think obstetricians and, more recently, real estate investors here. But average folks often get caught up in difficult situations, and thus if you have something to protect then the topic of asset protection should at least cross your mind. ...
Technically, asset protection planning is the debtor’s side of creditor-debtor law. While creditors are concerned about the strategies and techniques of collection, debtors are interested in the strategies and techniques for protecting their most valuable assets from potential creditors.
But in this calculation, it is not just about protecting assets but also about making sure that one does not end up in jail for contempt or bankruptcy fraud for engaging in the process.
Keeping in mind the law school adage that “General rules are generally inapplicable”, the following 10 rules should always be kept in mind when you try to take your chips off the table.
1. Start Planning Before A Claim Arises
Many things you can do will effectively provide asset protection before a claim or liability arises, but few things will afterwards. That’s because what you do after a claim rises could be undone by “fraudulent transfer” law.
Moreover, the point at which a claim arises is earlier than a layman might think—it is, for example, usually much earlier than when a demand letter or a process server shows up at the door.
2. Late Planning Usually Backfires
Asset protection planning after a claim arises is apt to make matters worse; think of it as getting a flu shot while you have the flu, and the shot itself making you even more woozy.
It is a common misconception that the only thing a judge can do is to unwind a fraudulent transfer, leaving a debtor who unsuccessfully tried late planning no worse off than if he had done nothing.
To the contrary, both the debtor and whoever assisted in the fraudulent transfer can become liable for the creditor’s attorney fees, and the debtor can lose the hope of getting a discharge in bankruptcy.
3. Asset Protection Planning Is Not A Substitute For Insurance
Asset protection planning should not be a substitute for liability and professional insurance, but rather should supplement insurance.
It is a myth that asset protection plans invariably scare away plaintiffs, and an asset protection plan doesn’t pay legal fees to defend against a lawsuit.
Insurance also supplements asset protection planning, since it can help a debtor survive a claim a fraudulent transfer claim. If you get sued, let the insurance company pay to defend it and pay to settle it — that’s what you’re paying the premiums for.
4. Personal Assets Are For Trusts; Business Assets Are For Business Entities
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