Financial Planning Archives - Page 4 of 9

Estate Planning 101

Estate planning is an important cornerstone of your financial plan. While it may not be the most pleasant topic to think about, at some point or another you need to consider what will happen to your assets after you’re gone.

For some, estate planning can seem like a mysterious part of the financial planning puzzle, but when you break estate planning into its individual parts, it’s not all that difficult to navigate. Read on to learn more about estate planning basics and how you can ensure that your legacy is carried out as you intend it.

Take Stock of Your Assets

Before you start planning where to allocate your assets, you need to know what you have. Gather information about your tangible assets — things like property and valuable — and intangible ones — such as bank accounts and investments — that will be passed down.

This may take some time and careful research to ensure that you account for each and every asset that your family will need to work through later on. However, your diligence in tracking down these details now will save your family members big headaches later on.

After you’ve gathered details regarding your inheritable assets, you need to value them. Some assets, like your home, can be professionally valued through an appraisal. Other assets may need to be valued in terms of how valuable they’ll be to those who inherit them. A financial advisor can help you to determine how to value your assets and give you some guidelines for making a realistic valuation of your assets.

Build Your Team

You probably don’t relish the idea of working through your estate plan alone. Even though it’s not the most complex task, there are plenty of places where you’ll have questions or want some guidance in choosing between alternatives.

For this reason, it’s important to build an estate planning team that can give you the professional guidance you need to create a workable estate plan. Ideally, you’ll want to work with a lawyer to handle legal documents, such as your will and trust paperwork.

You will also want to work closely with your financial advisor throughout the estate planning process. Your advisor can help you to determine your best course of action regarding asset allocation, valuation, and beneficiaries. They can also work with your family members to help them understand your plan and carry it out when the time comes.

While your financial advisor and lawyer may never actually meet in the same room, you’ll want to keep lines of communication open with both parties, in case there are questions or concerns about some matter of your estate plan.

You will also want to keep your family members looped into your estate planning activities. After all, they are the ones who will be responsible for enacting your plan later on. When your loved ones feel included in the estate planning process and know the key players in helping you to establish it, they will feel some level of peace when they work with your team in the future.

Get Your Documents in Order

There are a number of legal documents you need in place as you establish your estate plan. You may already have some of these, while others will need to be created during your estate planning process.

You will want to gather information about your assets — things like bank account numbers, titles and deeds, investment information, and so forth — as you work through the asset and valuation process. You will also need documents like your will, life insurance information, and guardianship papers for you children (if applicable).

Finally, you’ll work on items like trust paperwork, medical care directives, and financial power of attorney as you go through the financial planning process. You will want to carefully consider the individual(s) who you’ll use as your agent(s) in financial affairs, since they will have the authority to make important decisions, should you become medically unable to do so.

Keep Track of Beneficiaries

As you work through your estate planning, you will need to designate beneficiaries for all of your assets. Many items, like your life insurance and retirement accounts, will already have space for this information included in your paperwork when you create an account or make updates.

It’s important to carefully consider your beneficiaries and to review them from time to time. There could be family changes that require you to assign new beneficiaries to some or all of your assets and you need to keep this in mind if you go through a major family event, like a remarriage. If you fail to update your beneficiaries, your assets could end up never going to the person(s) you intend.

Additionally, it’s important to always provide beneficiary information for your accounts. You never want to leave this section of paperwork blank. In the event of your untimely passing, an account without a beneficiary is subject to state laws to determine its allocation. This may or may not work in favor of your loved ones’ best interests, so it’s best to make the designation yourself.

Prepare to Make Adjustments

Just as with your retirement planning, you need to go into estate planning with the understanding that your first plan will not be your only one. Times change. Family relationships go through ups and downs. Markets fluctuate. There’s simply no way to draw up a totally future-proofed estate plan.

Your financial advisor can give you the guidance you need to establish your estate plan today and the foresight you need to stay on track for the future. Perhaps you’ll forget about some details, like updating beneficiaries as your family grows and you gain new grandchildren, but your advisor can provide timely reminders.

Estate planning isn’t the most exciting activity, but it’s a necessary step for protecting your loved ones and your assets after you pass away. That’s why it’s a good idea to choose a trusted advisor who knows you personally and has your best interests at heart.

Here at Puckett & Sturgill Financial Group, our team of experienced CERTIFIED FINANCIAL PLANNER™ professionals can handle your estate planning needs with compassion. If you are curious about the estate planning process or need to make updates to an existing plan, contact us today to learn more about our estate planning services!

Ask an Advisor: How do we get paid?

November 27, 2019 Tags: Ask an Advisor P&S

Transcript

Deborah: 00:008
Hi, I’m Deborah Williams. We’re with Puckett & Sturgill Financial Group, and Aaron Puckett is going to talk about our financial advisor series question. How do you get paid?

Aaron: 00:18
That’s a good question. You know, every client when they walk in the door it’s lingering in the back of their mind. They want to know how am I going to pay this person? How does that work?

Deborah: 00:27
Right.

Aaron: 00:28
One of the things that surprised me over the last 17 years of doing this, I know, probably the same with you, is how many people we talk to that maybe have been working with an advisor or have used some sort of financial products, and they had no idea, how that person was paid.

Deborah: 00:47
And sometimes the fees are high, and they had no idea still.

Aaron: 00:48
Yeah, I know. It’s surprising. I mean, I think our industry is trying to do a better job of making compensation more clear.

Deborah: 00:57
I agree.

Aaron: 00:57
But every firm and every advisor, I think maybe has a different way of talking about compensation, and so it is confusing to people. I think it’s a great question to ask.

Deborah: 01:10
Right, it’s hard to compare apples to apples.

Aaron: 01:13
Yeah. So I guess the way I usually talk with people about it in that first meeting is I’ll explain, in our industry generally you’ll find that people are either being paid a commission and that’s where a product has compensation for the advisor already built into it. Or they might be being paid on some sort of fee basis. Maybe it’s an hourly fee or a flat fee, or sometimes they’re being paid a fee that’s based upon the assets under management where there’s some sort of percentage fee that’s built in.

Deborah: 01:47
That’s transparent, that they can see on their statement.

Aaron: 01:49
Yeah, and I mean, that’s a generalization, but I think that that captures the way most firms work. There isn’t really one type though that’s best for every single client situation. You know? As we do with our clients at our firm, we look at their situation first and then we can see which model makes the most sense.

Deborah: 02:15
Right, which is the best fit for their situation.

Aaron: 02:17
Yeah. So usually in a second or third meeting, we’re coming back to them and saying, “Okay, here’s what we think works best for you, here’s why,” and make sure that they understand and that it’s clear. At the end of the day, no matter what the fee arrangement or compensation model is, the most important thing is that the clients know this was built specific to their situation and that they’re clear and they understand the engagement.

Aaron: 02:43
Then also, we don’t charge for initial consultations or going through those first few meetings, which I think is important for clients to know

Deborah: 02:49
That’s right. Yeah, they’re complimentary and then we can define the scope of the engagement.

Aaron: 02:55
That’s right. That’s right.

Deborah: 02:56
Thanks for listening. Let us know if you have any other questions

Aaron: 02:59
Yes. Please don’t hesitate to email, call or post a question on our website.

It’s Your Turn to Ask

Surprising Ways that Practicing Gratitude Can Impact Your Retirement Savings Strategy

November 26, 2019 Tags: Gratitude, Retirement Strategy P&S

As we enter the Thanksgiving season, we also enter into a season of thankfulness. This November, we’ve got thankfulness on the mind — and want to share some surprising ways that gratitude can positively impact your financial mindset.

If appreciation and accounting don’t quite go together for you, consider the following ways in which an attitude of gratitude can serve you well now and as you prepare for retirement.

Get a Feel for Tomorrow’s Lifestyle Needs

Instead of glossing over the “what are you thankful for?” question when you’re asked this year, it may be in your best interest to embrace and thoughtfully answer it. Studies have shown that being grateful decreases depression, decreases blood pressure, increases happiness and self-esteem levels, and increases the likelihood of prosocial behaviors.

On its head, this doesn’t seem like the most helpful financial advice, but practicing gratefulness can have benefits beyond your mental and emotional well-being. Just as one can practice their golf swing to train their muscles, one can practice gratefulness to train their brain to produce feelings of happiness and contentment — and become better at deflecting negative thoughts. This practice may have a positive impact over time.

There are a multitude of ways that cultivating these feelings of gratitude can affect your health mindset — and even how you handle your finances. And with the added possible benefit of better health through practicing gratitude, you may be able to realistically plan for your ideal retirement lifestyle later on down the line.

Avoid Emotional Investing

Adding simple gratitude practices to your routine can be as easy as thinking grateful thoughts before bed or discussing aloud the things that you’re grateful for. As you head into retirement age, it’s not so silly to consider your mindset and attitudes on thankfulness when thinking about reducing your healthcare costs.

Aside from reporting better health, individuals in gratefulness studies who reported higher levels of thankfulness were less likely to give in to instant gratification and make impulse purchases, and were more likely to save appropriately. Gratefulness begets contentment, which may lead to smarter financial decisions as you navigate your retirement savings strategy.

Emotionality can subvert your financial plans, so finding balance and contentment in your current lifestyle can give you a clearer mindset as you contemplate the future. And if you tame tricky financial habits now, chances are you’ll carry these good habits into retirement.

Give Back and Gain More

When it comes to financial management, especially the development of a retirement plan, we immediately think of savings or ways to stow away money. But, part of a grateful attitude might mean more generosity.

In fact, individuals who give more or live more generously tend to be happier than people who don’t. Helping loved ones financially can be uplifting, as can giving to a charity that you believe does important and meaningful work.

While giving money away isn’t the most intuitive way to approach financial planning, there are benefits in the short- and long-term. For example, you may be able to plan your IRA distributions to go toward qualified charitable donations so that you can balance your retirement tax strategy.

Additionally, as you cultivate gratitude and generosity, you may find the practices shaping can how you choose the community, location, and lifestyle that you desire for your retirement and how much money you will need in order to meet those goals. All of these are important considerations for your retirement planning.

Here at Puckett & Sturgill Financial Group, we understand that you’re more than your financial plan. Our CFP® professionals want to tailor your retirement planning to your unique desires, attitudes, and needs, and we understand that a grateful attitude has important impacts on planning for your retirement. Contact us today for a consultation!

Considerations for Married Couples Claiming Social Security Benefits

November 20, 2019 Tags: Finance for Couples, Retirement, Social security P&S

If you are a married couple approaching retirement, no matter how long you’ve been married, you’ve weathered both great joys and storms. To best enjoy each other’s company in your retirement years, it’s essential to have a holistic retirement plan. And if you’re like most American couples, one important aspect of your joint retirement plan is the use of Social Security benefits.

Today, we’re going to address some of the top considerations for married couples claiming Social Security benefits.

When Should I Start Collecting Social Security Benefits?

Timing plays a big role for couples when they are planning to start collecting Social Security. Waiting to collect benefits until you reach your Full Retirement Age (FRA) can make a big difference in the amount of spousal benefits that you can claim. Your financial advisor can help you to determine the optimal time to begin claiming Social Security benefits.

How Does Circumstance Impact the Benefits I can Collect?

All couples arrive at retirement with a unique set of circumstances that must be taken into account in order to maximize benefits through their timing. Here are some common situations to consider:

Long Life Expectancy and Even Incomes

If both you and your spouse have a long life expectancy and have maintained similar yearly earnings throughout your careers, a strategy that involves waiting as long as possible before claiming could help you to maximize your Social Security benefits. In general, the longer you wait to claim your benefit, the better the payout.

Long Life Expectancy, Uneven Incomes

In the case that both you and your spouse are planning for long life expectancies, but one of you has earned significantly more than the other, the higher-earning spouse might delay their collection while the lower-earning spouse collects their own earned benefits. Once the higher-earning spouse has begun collecting their benefits, the lower-earning spouse may switch from their own benefit and apply for spousal benefits instead.

Other Circumstances

There are, of course, other combinations of life expectancy and income comparisons to consider. In some cases, it makes sense to begin collecting Social Security benefits immediately at age 62. In others, a delay is advisable. As always, your financial advisor is the best person to ask in regards to how your unique circumstance impacts your when to claim benefits.

What Other Factors Might Impact my Claim and Benefits?

There are other factors that influence when and how you and your spouse should claim Social Security to maximize your benefits.

Updates to “File and Suspend”

You may have heard of the “file and suspend” strategy where the higher earning spouse waits to collect their benefit while the lower earning spouse cashes in on the spousal benefit. If you’ve considered this strategy for your own filings, you’ll likely need to think again.

In November 2015, Congress passed the Bipartisan Budget Act, which got rid of the potential for the higher earning spouse to “file and suspend.” Unless you and your spouse were born before 1954 or turned 62 before 2015, this option is off the table.

Taxes

Depending on your income during retirement, you will have to pay taxes on your benefits. A formula that determines your Provisional Income (PI) determines the level of taxable Social Security benefits you are receiving.

Healthcare

Your healthcare, which may include Medicare premiums, may be taken out of your Social Security benefits. Depending on the Medicare plan and other healthcare expenses you have, this can affect how you plan your Social Security benefits collection.

Government Employment

Lastly, if you or your spouse are/were employed by a governmental organization, your Social Security benefits (both from benefits you earned or spousal benefits) can be reduced to reflect the pension you receive or for not paying Social Security taxes as a government employee.

Bottom Line: Your Situation is Unique

There are so many factors that contribute to you and your spouse’s optimal time for claiming Social Security benefits. Thankfully, you do not need to navigate these waters on your own! Our CFP® professionals know the questions that need to be asked in order to get you on the right track to get the most out of your Social Security benefits.

To learn more about retirement planning and Social Security, contact us today for a complimentary consultation!

Leaving Your Employer? Here are Some Options for Transitioning Your 401(k)

November 18, 2019 Tags: 401(k), Retirement Jacob Sturgill

If the end of the year brings some big changes, like a promotion or new job, you might have some financial homework to do before you make the change. When you leave one employer for another (or to go into business for yourself), you have options for transitioning your 401(k). After all, the investment is the result of your savings over the time you spent with your employer.

Here are some options available to you when transitioning your 401(k):

Option 1: Keep Your 401(k) Where it Is

In some situations, you may be able to simply leave your 401(k) where it is. Depending on your employer’s policy or specific plan, you may be able to leave your 401(k) indefinitely.

However, this may not be ideal. If you find yourself moving to a new company every few years or so, it could become confusing to leave 401(k)s behind you at every former employer. Additionally, you may find it better to utilize the money for other investment purposes, rather than leaving it sit where you have it.

Option 2: Rollover Your 401(k) to an IRA

A popular choice for handling an old 401(k) is to roll it over into an IRA. This option allows you new opportunities for investment and provides tax incentives that protect your funds.

If you have multiple 401(k)s that you need to consolidate, rolling them into an IRA could be ideal for your situation. You can open one account and dump all of your old 401(k)s into it, bringing some welcome simplification to your retirement savings.

Option 3: Move Your 401(k) to a New 401(k)

You may have the option to move your old 401(k) into a 401(k) offered by your next employer. In this case, you gain the benefit of keeping your funds in a single account, rather than juggling two (or more).

If your new employer has awesome 401(k) benefits, you may find it advantageous to move your old 401(k) into your new one. Additionally, you can make this switch without taking a tax hit, making it a potentially appealing option for consolidation.

Option 4: Cash in Your 401(k)

There is, of course, the option to cash in on your old 401(k). This isn’t typically a popular route, since there are significant fees associated with cashing in early on a 401(k) — even one from a previous employer.

In some cases, though, the benefits of cashing in outweigh the negatives. Only you and your financial advisor can know for certain whether this option is best for your 401(k).

Deciding how to Handle an Old 401(k)

When you’re handling your retirement accounts, it’s important to view each investment as part of the bigger financial picture. The actions you take today can have impacts that last well into your retirement years.

If you want to learn more about using 401(k)s as part of your retirement plan, contact Jake Sturgill today to schedule a consultation!

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

Finding Reliable Voices in the Online Financial Advice Chatter

November 11, 2019 Tags: Financial advice, initial consultation Jacob Sturgill

Sifting through the Internet for financial advice is an activity that you undertake at your own risk. In fact, many professional financial advisors recommend that you ignore most — if not all — of the financial chatter you find online.

But the fact of the matter is that you’re already online and sometimes, you’re going to come across blogs or headlines that you can’t resist. Today we’re going to look at some ways that you can protect your mindset when browsing financial insights and advice online, as well as provide practical options for seeking professional financial advice outside of the blogosphere.

Double Check the Author’s Credentials

The ease at which hobbyists and untrained financial enthusiasts can share their insights is astonishing. A slick blog or loyal social media following can give individuals with no formal training in finance leverage to share uninformed opinions as fact.

You want to vet any online financial advice you find by checking the credentials of the authors or bloggers whose sites you visit. Credible financial voices should share their credentials in their author bios below or beside their posts. At the very least, you should be able to find this information if you check out the site’s “About” section.

If you can’t find information about an author’s credentials, assume that they don’t have them and disregard the information you find on their site. Even if you do find credentials, take your research a little farther and visit the official sites of the organization(s) that the author claims to be affiliated with.

For example, if a financial blogger has the CFP® mark after their name, visit the official CFP Board website to search for their name and verify that they have actually received this designation. Sometimes, individuals intentionally misuse credentials to lead readers to believe that they are trustworthy financial voices. But an extra step to double check an author’s credentials can help you to determine whether an online financial voice is one worth taking seriously.

Avoid Emotional Click Bait

Let’s face it, sometimes writing and reading about financial information can be a little dry. Financial voices — particularly ones associated with major news outlets or well-ranked financial websites — know this and try to tap your interest by sensationalizing financial information or current events.

You’ve probably seen headlines like “Do This One Thing with Your Retirement Account and Retire in Luxury” and similar ones that promise the article you’ll read will give you some amazing advice you wouldn’t get elsewhere. It’s tempting to allow emotionality, even the curious “what if…” take you down a rabbit hole of terrible financial advice.

It’s important to ignore financial sites and articles that are written to appeal to your emotions. After all, your emotions should already be in the backseat when it comes to your financial wellbeing and investment activities. If the articles you’re reading cause you to have new fear or optimism, you should probably take a step back and question whether this “advice” is worth your time.

Close Your Laptop

At the end of the day, the best place to get financial advice and information is offline. Go ahead, close your laptop and contact a financial professional who knows (or will get to know) you personally and can provide personalized financial advice. If you’re looking for answers to your financial questions, reach out to learn how customized financial planning services can help you get a fresh perspective on your financial situation and future!

Coordinating Your Investment Strategy with Your Financial Future in Mind

November 5, 2019 Tags: Financial Planning Basics, Investment Strategy P&S

“Where should I invest my money?”

This is probably the most common question that financial advisors receive when they sit in meetings with clients — and even from family members around the holiday dinner table!

It’s a good question. After all, we all know that smart investing is the way to grow money for future use or to pull out in case of a financial rainy day.

But, it’s a loaded question. The “best” investments are relative. Markets change daily and multitude factors contribute to make Investment X a superb pick for Joe (the client your advisor met with an hour before your meeting), but would not make an ideal addition to your portfolio.

Today, we’re going to discuss some of the steps you can take to determine your investment strategy.

First Things First: Map Your Ideal Financial Future

There are a lot of things you could do with your money. You probably have some ideas about where your money — present and future — could best be utilized.

When it comes to narrowing your investment strategy, you need to create a clear picture of your ideal financial future. You can’t know how to save if you don’t know what you’re saving for!

Ask yourself what you want to do with your money. Do you want to send your kids (or grandkids) to college on a full-ride to the schools of their choosing? Do you want to have the freedom to invest in friends’ and family members’ business opportunities? What does your ideal retirement look like? How about the assets you’ll leave to your family after you pass away?

These factors, and many more, go into painting a clearer picture of your ideal financial future. And this picture is unique to you — even your spouse might have a different picture than yours.

Once you get an idea of where you’re going, you need to build a team that’ll help you get there. That’s where a financial advisor comes in. Your financial advisor can help you translate your ideal financial future into figures and timelines that give you a better idea of what you need your investment strategy to do for you.

Take a Realistic View of Your Financial Future

It’s important to see your financial future in realistic terms. For some investors, future events, like retirement or sending the kids to college, seem like far-off, almost impossible events. But they’re coming, whether you’re ready for them or not.

Ideally, your investment strategy exists to help you proactively prepare today for the reality of tomorrow. You need to put real dates and numbers on future events to help you and your financial advisor get an idea of what investments to explore and which to ignore.

Take retirement, for example. When discussing finances, we can easily fall into the trap of considering retirement as some vague time off in the distance. But you’re a real person with a real career that will end at some point. Eventually, you’ll put in your notice, they’ll throw a party, and you’ll retire.

What does that next day look like? Is it ten years from today? Two? Thirty? The length of time between now and your ideal retirement date is critical for your financial planning. Similarly, you need to consider factors like how long you anticipate your retirement to be, the quality of lifestyle you’d ideally like to enjoy, and how other family members factor into this picture.

Be Open to a Variety of Investments

If you’ve spent any time researching investment strategies, you already know that diversification is important. You can’t put all of your eggs in one basket and hope for the best.

Perhaps you already have an idea of which investments might fit your situation well. It’s important to tell your financial advisor your thoughts regarding your investment strategy so that your advisor can get a feel for your risk acceptance.

However, you will want to approach your investment strategy with an open mind. While you might think that building your strategy one way or another is the best way to go, your financial advisor will bring a professional viewpoint that might not be the same as yours.

This is a good thing. This is why you’re working with a financial professional in the first place. Your advisor might suggest investment strategies that you’ve never even thought about before. Or they might have insight to a mix that could potentially work with your investment timeline.

You want to stay flexible and open to possibilities beyond those which you’ve previously considered. Your advisor should never push you into one investment strategy or another, but they may give you just the nudge you need to settle on a strategy that you would have never considered on your own.

Review and Re-Adjust

Of course, establishing an initial investment strategy is only the first step. A single meeting with a financial advisor and a path forward can’t possibly account for all of the things that’ll happen as you wait for your future to pan out.

There are any number of factors that can turn even the “best” investment strategy into something that may not look like it is working. This doesn’t mean that you (or your financial advisor) were wrong. It’s just the nature of investing.

This also doesn’t mean that you should panic or become disengaged. It simply means you need to review your strategy and see where it may need to be adjusted.

Because markets and other factors change frequently, it’s important that you have regular meetings with your financial advisor. This way, you can identify potential problems and make changes as needed.

Your financial advisor can help you to see where your strategy might be weak in helping you achieve your goals and provide guidance in identifying an alternate strategy that’s a better fit. Additionally, your advisor should keep a close eye on your portfolio performance and provide periodic updates for your review.

Align Yourself with a Knowledgeable Guide

There are a lot of moving pieces involved in developing an investment strategy with your financial future in mind. But the good news is that you don’t have to navigate the path to your financial future alone.

When you work with a financial advisor to answer the question: “Where should I invest my money?”, you’ll start to understand that this is far from the only question to ask when contemplating your financial future. In fact, you’ll probably come up with a whole lot of other questions that require answers.

Thankfully, you don’t have to find the answers on your own! Your financial advisor can offer their experience, expertise and professional guidance.

Have some investment questions of your own? Contact Puckett & Sturgill Financial Group for a consultation!

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

How to Check on your 401(k) — And Why You Might Want To

October 16, 2019 Tags: 401(k), Retirement P&S

Investing would be pretty easy if you could invest once and trust that your investment would perform exactly how you wanted it to. Of course, that’s not how investing actually works!

Over time, it’s important to check in on your investments and monitor their performance. This is all part of preparing for your financial future. If you neglect an investment for any length of time, you might find that it hasn’t performed the way you’d planned and it could set you behind.

Here’s how to check on your 401(k) — and why you might want to do so sooner rather than later.

Locating Old 401(k)s

Throughout your career, you may have participated in multiple 401(k)s through your various employers. If it’s been a while since you’ve checked in on one or more old 401(k)s, you need to contact your former employer(s) to get information regarding your investment. After all, it’s your money!

Once you locate a 401(k) from a past employer, you will likely have four options and may engage in a combination of these options

Leave the money in your former employer’s plan, if permitted
Roll over the assets to your new employer’s plan, if one is available and rollovers are permitted
Roll over to an IRA
Cash out the account value

Your financial advisor can help you to understand the advantages and disadvantages of each option.

It may not take more than a few quick calls to HR and various investment companies to locate your old accounts. But there’s the possibility that the investment company that your employer used has since been purchased or had another change of identity and requires a bit of a deeper dive to find your important info. In this case, you may be able to contact former colleagues to learn where to look or you can consult a national registry to locate your specific 401(k). Your financial advisor may have some advice in navigating this search. Additionally, your financial advisor can help you consolidate old plans so to facilitate managing them in the future.

Balancing Your 401(k)

Your 401(k) is likely comprised of mutual funds. Your 401(k) statement should have a breakdown of your investments and the returns from each.

Over the life of your 401(k), you may determine that one or more investment types aren’t the best option for reaching your financial goals. If this happens, you’ll want to rebalance your 401(k) investments to reflect a blend that more accurately captures your risk acceptance and investment objective. Making rebalancing decisions can have a substantial impact on long-term performance both positively and negatively. It is very important to seek professional advice before making these types of financial decisions.

In addition to balancing the investment portion of your 401(k), it is also wise to examine the tax choices offered in your employer sponsored plan. Many 401(k) plans today will offer employees the option of choosing between Traditional or Roth contributions. Your selection between these two options will determine the current taxation of your contributions and the taxation of the income you draw from the plan in retirement. The difference to your retirement income stream can be huge, so don’t take this decision lightly and get professional help.

Why Check on Your 401(k)?

It is easy to get caught up in life and lose track of what’s happening with your 401(k). For many of us, our 401(k) will likely be the largest asset available to create retirement income, yet despite the importance, it can be out of sight and out of mind. If you aren’t managing and maintaining this asset with care, then you might be missing opportunities or falling behind your goals.

Sitting back and letting your 401(k) — or any investment for that matter — take on a life of its own isn’t a solid investment strategy. Staying engaged with a financial advisor is one way to avoid falling into the trap of complacency.

If you’d like to learn more about understanding your 401(k)s or balancing your retirement portfolio, contact Puckett & Sturgill Financial Group for a consultation!

Ask Jake: What are some common mistakes that investors make?

October 11, 2019 Tags: Ask, Ask an Advisor, Investments Jacob Sturgill

Whether you’re new to investing or have been investing for years, it seems like there’s always something new to learn. As regulations change, markets move, and time goes by, investors frequently face new challenges.

While there’s no way to ensure that you’re never going to make an investing mistake, there are some ways to become a better investor. Today, we’re talking to Jake Sturgill to learn more about some common mistakes that investors make – and savvy investors can avoid these pitfalls.

Here are some common investor mistakes, according to Jake:

Over diversification

Many financial experts claim that diversification is one of the most important things to consider when investing. But sometimes, too much of a good thing is simply too much.

Over-diversification is, in some ways, owning nothing by owning everything. This mistake manifests itself when you have a core portfolio, then purchase something else… and something else… All of a sudden you own a bunch of stuff that more resembles a nicely curated collection of financial trinkets as opposed to a healthy investment portfolio.

Under-diversification

The flip side to over-diversification is, of course, under-diversification. This is the impulse to keep narrowing your portfolio down to “what’s working”. In theory, choosing what works is a good idea, but as the markets approach significant tops, the basket of “what’s working” typically shrinks to just one or two ideas. So, under diversification is essentially narrowing a portfolio to one idea — this is a big mistake.

Here are some examples of under-diversification:

You have just one stock — maybe you inherited it or worked for a company with a stock option for 30 years. You can get wealthy by under-diversifying in this way, but you cannot stay wealthy over the long-term.
You chase hot managers or sectors — hot investments can be thrilling, but they can present significant volatility and risk. While some investors can stand to dedicate a portion of their investing “pie” to these investments, they aren’t for everyone.
Euphoria or Overconfidence

In summary, euphoria or overconfidence is really just greed. When you get caught up in euphoria, you lose sense of the principal risk. When you forget about risk to principal, then you instead worry about being outperformed.

It’s not uncommon for euphoria or overconfidence to pair with Mistake 2: under-diversification, especially if you’re chasing hot markets. If you’re prone to investor overconfidence, it’s imperative to align yourself with an advisor who knows when to anchor you to a more sound investing strategy.

Panic

And of course, the opposite of overconfidence is panic. Both stem from an emotional investing attitude and can be detrimental to your portfolio’s performance.

Panic is the failure of faith in the face of the apocalypse du jour. Just as it’s wise to avoid fear-driven panic selling during extremely volatile periods in financial markets, it’s also wise to avoid greed-driven euphoric buying during extremely bullish periods — again, it all boils down to avoiding mixing emotions with investments!

Panic can be sneaky and almost always rationalizes itself. You might think: I have to get out until we see who wins the election, I need to get past depression, wait for this deficit to get under control, for inflation to get under control, for unemployment comes down.

If you look hard enough for a reason to panic, you’ll find one. For many investors, the source of their panic is driven by current events.

Bottom line? It is perfectly normal and okay to feel fear about current events/political climate/market performance but it is generally not advisable to act on the fear.

Speculating when you think you’re still investing

When you’re investing, at some point you’ll probably hear the siren song of a new era and be tempted to chase hot price trends instead of evaluating investments on their intrinsic values.

Remember, an investment is an identification of value. Speculation is a bet on the continuation of a price trend. Speculatory behavior is not a suitable strategy for most people.

This ties into the whole euphoria/under-diversification class of mistakes — you chase what’s hot, what’s working right now. Performance chasing can be thrilling, but again, it’s probably not going to play out well next quarter, next year, next decade.

Some recent examples of hot trends include: tech stocks in 1999, real estate in 2005, oil in 2008, gold in 2010. Investors look to recent patterns: typically investments that have done well for the past 5 or so years, and assume that this record is strong enough to bring them success over time. Speculating on hot trends always seems intelligent at the moment, but can be costly in the long-run.

Letting your cost basis dictate your investment decisions

One common mistake you might make is asking your investments to behave differently because of what you paid for them. After all, you put in the investment; now you want the payout. This kind of thinking can cloud your judgement and make it difficult to know when to cash in or offload under-performing investments.

Some investors make great fortunes by owning one spectacularly successful stock, but end up giving it all back by refusing cash in and to pay capital gains taxes on the earnings. In reality, capital gains taxes are lower than ordinary income taxes, but some investors lose sight of the big picture when they view the tax as a loss on their big gain.

Of course, there’s always the temptation to hang onto a poorly performing investment for too long because of the mentality that you need to stick it out long enough to earn back what you put into it. Maybe you’ll earn it back, maybe you won’t. In many cases, your money would do better elsewhere.

Want to avoid these investor mistakes?

It’s hard to avoid investor mistakes, since most of avoiding investor mistakes simply means keeping a clear head and considering your investments in purely objective terms. Removing emotions from money is a challenge!

Instead of trying to check yourself and risking the primary investor mistakes, look for a financial advisor who can help you to stay on track and act as a voice of reason when you are uncertain.

If you’re ready to approach your investing with a new perspective, contact Jake today to identify the investor mistakes you’re most likely to make and how to avoid them in the future!

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

Ready for Retirement? Assess Your Retirement Readiness with this Handy Checklist

October 4, 2019 Tags: 401(k), Retirement, Retirement readiness Jacob Sturgill

As you look forward to your retirement — whether it’s two years or two decades down the line — you’re probably considering how you can prepare yourself financially to enjoy each moment of your retirement days. After all, you’re working hard for that big break!

Many investors prepare for retirement by considering questions like: “How much money do I need per week?” and “How long will my retirement last?”

These questions are important, but they don’t tell the whole story. For example, you might be able to pay your bills on a certain figure and save toward that target. However, if you haven’t budgeted for tee time, you’re never going to be able to recognize your dream of being the best golfer in your retirement community.

In addition to crunching the numbers, take some time to run through this retirement checklist to see whether you’re heading in the right direction with your retirement planning.

Who?

Who do you spend the most time with in a day? Your family? Friends? Colleagues? A volunteer network?

Now, think about who you’ll be spending your time with during retirement. Does the lineup change or stay pretty consistent?

Also consider who will be part of your health and wellness team. Are you going to maintain strong relationships with family members who will be able to assist you when needed? And are you planning to participate in the care of another family member or close friend?

Your social network is as important in retirement as it is now. Look at ways that you can strengthen relationships and prepare for longevity in your family and social connections.

What?

Visualize your first day of retirement. What are you going to wake up and do? Cook an impressive breakfast spread? Spend time with your grandchildren? Read a book?

The activities you do today might influence the activities that you’ll pursue in retirement. After all, you’re still going to be the same person. That being said, you will have more time to pursue various interests in your retirement years. Which ones will you choose?

More importantly, how can you make changes today to help you live a vibrant retirement lifestyle that’s fulfilling and rewarding? Should you set aside funds for future travels? Are you interested in a hobby that you can get started with to some degree even now? Look into opportunities to invest time or assets in thoughtful ways for your future enjoyment.

When?

To some extent, you’ve probably already considered the question of when you’ll retire. If you haven’t, it’s important to get a firm idea of what age you’d like to retire at and start taking steps to achieve that goal.

Your retirement age and the number of years that you think you’ll be in retirement are some of the biggest factors in determining the magic number for your total retirement income need.

Of course, age need not be the only factor in deciding a retirement year. Perhaps your asset level is a more pressing factor. If this is the case, simply adjust your retirement age to coordinate with the year when you anticipate that you’ll achieve the asset level at which you’ll feel prepared for retirement.

Where?

Planning your retirement “where” involves two parts: the location to which you wish to retire and the home that you’ll live in while you’re there.

Deciding on your retirement location can be tricky. Do you want to live close to family or in a destination you and your spouse have always dreamed about? Do you prefer an urban or rural environment? How about proximity to your favorite hiking trails or conservatory? Each investor will have a unique, very personal response to these questions.

Of course, budget should factor into your retirement location, as well. Some locales are inexpensive and offer a nice financial reprieve for those who have lived and worked in major cities for the bulk of their careers.

If you move, you might be able to comfortably settle into a home that’s grandkid-friendly for a fraction of what you would pay in your current zip code. But maybe you want to downsize anyway and location isn’t so important. Or perhaps you plan to live with family or in a retirement community instead of maintaining your own property during retirement.

Think carefully about how much time you want to spend “keeping house” during retirement when you decide on what type of house, condo, or community you’d like to retire to.

Why?

Research suggests that retirees who have a compelling “why” to their daily retirement lifestyle and routines stay healthier and more vibrant throughout their retirement. What’s your why?

When you’re not waking up every morning to head off to work, what will you be doing instead? Think about fulfilling activities, hobbies, volunteer work and travel that will enrich your retirement and give you purpose.

Planning your retirement isn’t something you can tackle in an afternoon. You might need to do some serious soul searching to paint a picture of the retirement lifestyle that will bring you joy and fulfillment.

As you determine the details of your retirement “who, what, when, where, and why”, your financial advisor can help you to connect the dots between the day-to-day retirement living you imagine and the financial resources that’ll help you work towards getting there.

To learn more about aligning your financial portfolio to help you pursue your dream retirement, contact Jake Sturgill today to schedule a consultation!

Financial Planning