Markets have cycles, and at some point, the major indices will descend. We have seen a tremendous rally on Wall Street, nearly nine months long, with the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average repeatedly settling at all-time peaks. Investors are delighted by what they have witnessed. Have they become irrationally exuberant?        The major indices do not always rise. That obvious fact risks becoming “back of mind” these days. On June 15, the Nasdaq Composite was up 27.16% year-over-year and 12.67% in the past six months. The S&P 500 was up 17.23% in a year and 7.31%

Today’s impulsive moves could breed tomorrow’s regrets. When emotions and money intersect, the effects can be financially injurious. Emotions can cause us to overreact – or not act at all when we should.     Think of the investors who always respond to sudden Wall Street volatility. That emotional response may not be warranted, and they may come to regret it. In a typical market year, Wall Street can see big waves of volatility. This year, it has been easy to forget that truth. During the first third of 2017, the S&P 500 saw only 3 trading days with a 1% or

Careers & businesses end, but the need to borrow remains. We spend much of our adult lives working, borrowing, and buying. A good credit score is our ally along the way. It retains its importance when we retire.     Retirees should do everything they can to maintain their credit rating. A FICO score of 700 or higher is useful whether an individual works or not.   For example, some retirees will decide to refinance their home loans. A recently published study from the Center for Retirement Research at Boston College noted that in 2013, 50% of homeowners older than 55 carried some

Do you really want to risk facing these potential outcomes? Saving for retirement may seem a thankless task. But you may be thanking yourself later. Putting away a percentage of one’s income, money that could be used for any number of bills or luxuries, is a sacrifice made in the present in order to avoid a larger trouble down the road. More than a quarter of seniors have no retirement savings. To be more specific, the Government Accountability Office says 29% of households headed by people 55 or older have no savings in a retirement account and no possibility of

Too few Americans understand personal finance fundamentals. If only money came with instructions. If it did, the route toward wealth would be clear and direct. Unfortunately, many people have inadequate financial knowledge, and for them, the path is more obscure.   Are most people clueless about financial matters? That depends on what gauge you want to use to measure financial knowledge. The U.S. ranked fourteenth in Standard & Poor’s 2015 Global Financial Literacy Study, with just 57% of the country’s population estimated as financially literate.1  Obviously, the other 43% of Americans have some degree of financial understanding – but it is

This may be one of the best things you can do for your financial health. If you had a chance to save hundreds of thousands of dollars over time at no great cost to your lifestyle or your monthly budget, would you take it? An easy-to-use retirement savings option that might go a long way to giving your retirement savings a boost? Look at what the standard 401(k) can offer you. Tax-deferred growth. The money you save and invest in a traditional 401(k) grows without being taxed. You only pay taxes on it when it is withdrawn.1 Compounding. As the

A good financial strategy is not just about “making money;” it is also about protection. Some people mistake investing for financial planning. Their “financial strategy” is an investing strategy, in which they chase the return and focus on the yield of their portfolio. As they do so, they miss the big picture. Investing represents but one facet of long-term financial planning. Trying to build wealth is one thing; trying to protect it is another. An effort must be made to manage risk.    Insurance can play a central role in wealth protection. That role is underappreciated – partly  because some of

This employee benefit & hiring incentive may help your office compete. Great employees are hard to find. This truth applies for all businesses, including healthcare offices. The challenge just begins at the point of hiring. Finding top-notch workers is one thing; retaining them is another. If your business offers no 401(k) plan, this amounts to a recruiting disadvantage. Fewer potential employees may want to work for a company that offers no retirement savings plan.  That may also encourage turnover, which could add to your office’s financial headaches.   Just how much do employees value benefits like 401(k)s? In its 2016 annual

When should you apply for benefits? Consider a few factors first. Now or later? When it comes to the question of Social Security income, the choice looms large. Should you apply now to get earlier payments? Or wait for a few years to get larger checks? Consider what you know (and don’t know). You know how much retirement money you have; you may have a clear projection of retirement income from other potential sources. Other factors aren’t as foreseeable. You don’t know exactly how long you will live, so you can’t predict your lifetime Social Security payout. You may even

Keep an eye on where it goes, as some destinations may be better than others. You can probably envision how most of your retirement money will be spent. Much of it will be used on living expenses, health care expenses, and, perhaps, debt reduction. Beyond the basics, you will unquestionably reserve some of those dollars for grand adventures and great experiences. If your financial situation permits, you may also contribute to charity.     You just have to remember that your retirement fund is not a bottomless well. If outflows begin to exceed inflows (that is, you repeatedly withdraw more than

Diversification still matters. One day, this bull market will end. In the first quarter of 2017, the bull market seemed unstoppable. The Dow Jones Industrial Average soared past 20,000 and closed at all-time highs on 12 consecutive trading days. The Nasdaq Composite gained almost 10% in three months.1 An eight-year-old bull market is rare. This current bull is the second longest since the end of World War II; only the 1990-2000 bull run surpasses it. Since 1945, the average bull market has lasted 57 months.2 Everyone knows this bull market will someday end – but who wants to acknowledge that

How separate (or intertwined) should your financial lives be? Some spouses share everything with each other – including the smallest details of their personal finances. Other spouses decide to keep some individual financial decisions and details to themselves, and their relationship is just fine.    Just as a marriage requires understanding, respect, and compromise, so does the financial life of a married couple. If you are marrying soon or have just married, you may be surprised (and encouraged) by the way your individual finances may and may not need to change. If you are like most single people, you have

What they can (and cannot) accomplish. Living trusts are created with a clearly defined objective: to avoid probate. Unfortunately, misconceptions about living trusts have spread to the point where people think they can accomplish much more than they can. If you fear probate, consider a revocable living trust. If you worry about your will being contested or your heirs fighting over your assets, it may be an excellent idea.  You fund a revocable living trust during your lifetime with all or most of your assets. The trust owns the assets; yet, you are the trustee, meaning that you can still

What designations let you know that a financial professional will abide by this rule? This year, the Department of Labor intends to introduce a new rule regarding retirement plan accounts, with full implementation envisioned by 2018. Under this new rule, financial professionals who consult retirement savers will be held to a fiduciary standard of care. In other words, they will have an ethical and legal obligation to always act in a client’s best interest.1,2     Many financial professionals already abide by a fiduciary standard. If the new fiduciary rule is implemented, even more will. In fact, the fiduciary standard may soon

Rental Property

The basics on capital gains & deductions. Buying or selling income property has definite tax consequences. A taxpayer should clearly understand them, whether he or she intends to acquire a property or put one on the market.  A sale of income property incurs either a capital gain or loss. If you profit from the sale of income property, that profit is considered fully taxable by the Internal Revenue Service. Fortunately, if you have owned that property for at least a year, you will pay only capital gains tax on those profits rather than income tax.1 Your capital gain is determined

Insurance

Certain kinds of coverage may help to sustain you financially in an emergency. You plan for retirement with expectations in mind. You hope to enjoy a certain quality of life, with sufficient income resulting from smart financial choices. Ideally, your future unfolds as planned. But what if the unexpected happens? Will you have the right insurance in place to deal with it?  Insurance matters more in retirement planning than you may think. It is seldom “top of mind” in retirement planning conversations, but the right coverage could help you maintain some financial equilibrium in the face of sudden money pressures.

Health illness

What it is, why people opt for it. Ever hear of critical illness insurance? This isn’t standard-issue disability insurance, but a cousin of sorts. With people living longer, it is a risk management option entering more people’s lives. The notable wrinkle about this type of insurance is that the insurer issues you a lump sum while you are alive. Insurance for a prolonged health crisis. You buy critical illness insurance to help you out in case you are diagnosed with, suffer from, or experience a serious, potentially life-threatening health concern. Now, what does an insurer define as “serious” or “life-threatening?”

Insurance

What kind of coverage do you need, and why? Do you own a small business? Are you starting one? What kind of insurance should you have? Truthfully, you should consider (and preferably have) three kinds of insurance for your business and its assets.  Liability insurance. Absolutely essential. If you run a small business, especially one that provides services of some kind, you will inevitably be sued someday or at least threatened with a suit. Liability insurance will help you if your services or products cause harm to someone or their property. In such cases, liability insurance pays for some or

Some solopreneurs think they will “work forever,” but that perception may be flawed. About 20% of Americans aged 65-74 are still working. A 2016 Pew Research Center study put the precise figure at 18.8%, and Pew estimates that it will reach 31.9% in 2022. That estimate seems reasonable: people are living longer, and the labor force participation rate for Americans aged 65-74 has been rising since the early 1990s.1,2  It may be unreasonable, though, for a pre-retiree to blindly assume he or she will be working at that age. Census Bureau data indicates that the average retirement age in this

RothIRA

Why do so many people choose it rather than a traditional IRA? The Roth IRA changed the whole retirement savings perspective. Since its introduction, it has become a fixture in many retirement planning strategies.   The key argument for “going Roth” can be summed up in a sentence: Paying taxes on retirement contributions today is better than paying taxes on retirement savings tomorrow. Here is a closer look at the trade-off you make when you open and contribute to a Roth IRA – a trade-off many savers are happy to make. You contribute after-tax dollars. You have already paid federal income