Retirement Savings Plan Risk Tolerance Portfolio Planning Investing

Investing: comfort vs. need

How should I invest? Of course, the answer is unique to each person based on a variety of factors. Instead of getting technical I want to boil it down to two key drivers, comfort and need. Comfort means being comfortable with how your investments are performing, in both good and often more importantly bad times (since behavioral economics studies have shown that loses hurt twice as much as gains feel good). If you are comfortable and confident in your investment strategy, you are much more likely to have peace of mind and avoid poor decisions. Need is the purpose of your investments. What is the money for? The most common answer I see is retirement. When the paycheck stops, savings will provide much of the income needed to live. It is necessary to take inventory of your resources and your future needs to evaluate if you are on track to meet your objectives. Comfort + Need When the two align it is beautiful (yeah, I’m a finance geek). Unfortunately, this isn’t always the case. The most common mismatch I see is a desire to be too conservative. An emphasis on comfort can lead to lost opportunity and a shortfall in your plans (i.e. running out of money). Though not as common but still relevant (especially for entrepreneurial types) is being more aggressive than you need to be. This can increase the odds of loss and derail your plans. Take away: A properly designed investment strategy will address both comfort and need, providing you the best chance of meeting your objectives with a sense of confidence.  Tools (email me and I'll send you links): Risk Tolerance - This helps evaluate the comfort side of the equation. My caution is that it is only one side of the equation. Too often people (even advisors) use this tool alone, which is very dangerous because it doesn’t tell you if you’re on track to meet your needs. Financial Plan – This evaluates the need side of the equation and sets targets to let you know if you’re on track. Pair this with the tool above and you’re off to a good start. Email me for a personalized link to a free basic version of the planning software I use, and I’ll set you up. Once logged in it takes about 10 minutes to go through the setup process.  Advisory services offered through Arbor Point Advisors. Securities offered through Securities America Inc., Member FINRA/SIPC. Arbor Point and Securities America are separate companies. CA Insurance #0E88557

Q1 2018 market Review

While 2017 was a year of smooth sailing, 2018 has started with some rougher seas. The VIX is a measure of market volatility, the higher the number the more volatility. In 2017 the VIX often floated around 10 and peaked around 16. So far this year the VIX has hovered around 20 and at one point spiked to 36. Regarding market returns, after initially climbing, both the US and international stocks ended the quarter with slight declines, while emerging markets had moderate gains. Interest rates in the US rose during the quarter, bringing bond prices down, while the global bond market had small gains. For a detailed market overview, click here. Planning note: The tax filing deadline is Tuesday, April 17th this year. If you are eligible to fund retirement accounts and have the means to do so but haven’t, you can still make 2017 contributions. Talk to your tax preparer or feel free to contact me if you have questions about plans you may be eligible for and contribution limits based on your circumstances.      Advisory services offered through Arbor Point Advisors. Securities offered through Securities America Inc., Member FINRA/SIPC. Arbor Point and Securities America are separate companies. CA Insurance #0E88557

Financial Advisor, Safe Investments, Christian, San Diego, Professional Athletes, Celebrities, Financial Planner

investment fraud

Far too often I see or hear about people, especially celebrities and athletes (as they get all the media attention) falling victim to investment fraud. Recently an article about a former San Diego Padres pitcher, Jake Peavy, discussed some challenges he’s faced which included a fraudulent investment from someone he trusted. This article inspired me to provide a few tips to help reduce the chances of this happening to you or someone you know. Do your research – When working with a financial professional do a quick online search. Websites such as Broker Check and Adviser Info are a good starting point. Personal references can be helpful, but I don’t suggest relying on them alone. Understand where your money is going – Many financial advisors use third-party custodians such as TD Ameritrade (my preference), Charles Schwab and others. By using a third party the money is held at that company and the advisor manages the account on your behalf. A good rule of thumb is to never write a check payable to an individual for money you wish to be invested. (By the way, Bernie Madoff’s company served as its own custodian rather than using a third party) Limit private investments – It seems that most cases of fraud that I see involve private investments. These are considered “non-registered” investments and therefore information is more limited. Examples often include start-up companies and real estate investments. I don’t mean to imply that private investments are bad, just know that they are generally less regulated and less transparent, therefore harder to research. They may tout high return potential but often involve substantial risk. I suggest limiting your exposure to these types of investments.  Diversify – The idea of not putting all your eggs in one basket doesn’t prevent you from investing in something that could be fraudulent, however, it does provide some protection to your overall finances.    Advisory services offered through Arbor Point Advisors. Securities offered through Securities America Inc., Member FINRA/SIPC. Arbor Point and Securities America are separate companies. CA Insurance #0E88557

Rancho Bernardo Financial Planner