Investors want to enjoy a good night’s sleep each night because they’ve done their work, know what to expect, and that nothing comes as a surprise to them. However, in times of uncertainty, most of us let our emotions get the best of us, especially about our investments. Part of the luxury of a good night’s sleep is being financially educated and planning for when things don’t go as expected, as well as when they do. With the uncertainty of today, keep in mind what you can and can’t control and help avoid emotional investing:
Aside from political battles, public health pandemics, and social injustices, choose to make a difference by helping others and, in turn, feel better about what is going right for our country.
Saving, investing, being debt-free, and planning for all that can go wrong, as well as when things go right, is something an advisor can help you accomplish.
Maybe it’s time to look for a new job, or perhaps you’re currently unemployed? Use your time at home over the next few weeks to make decisions about changing jobs or retiring as you have planned for possible.
Staying healthy, the access to and costs of affordable healthcare, future health problems, and how to pay for them can lead to anxiety. Financial planning includes having adequate healthcare coverage, an HSA, and an emergency fund in place.
The economy reflects stock market performance, which is why planning for a stock market correction is imperative. Consider investments that are not correlated to market performance or are asset-protected products such as fixed-indexed annuities.
Navigating ‘fear selling’ is what advisors train investors to overcome. Fear causes us to make mistakes, to not sleep at night, and may lead to emotional investing. Still, if we can educate ourselves to navigate away from our inappropriate reactions. Or perhaps our portfolio can be spared from bad decisions.
Helping investors to determine when to sell a fund or stock may be best, and when to wait out the market correction for the right time saves investors hundreds of dollars over the lifetime of their portfolios. Stock market corrections come on average about every 357 days, as the US economy peaks and troughs. But as we’ve seen with COVID-19, a volatile market can be devastating and unpredictable.
One way that investors avoid loss is by including annuities in their retirement portfolio. Annuities, which are becoming more widely used in the financial services industry. It is a contract with an insurance company to provide investors with a guaranteed stream of income in retirement. They offer tax-deferred growth of earnings similar to other traditional tax-deferred investments.
When it comes to your investments and money, nothing can be done to help the current state of the U.S. economy. We cannot stop a stock market correction, but together we can plan for it and avoid emotional investing.
Disclosure: Any guarantees are backed only by the claims-paying ability of the issuing insurer.
The opinions expressed here are those of the author and not necessarily those of the investment advisory firm. Please discuss these matters thoroughly with your financial advisor prior to making any investment decisions.
Withdrawals and death benefits are subject to income tax. If you are investing in an Annuity through a tax-advantaged plan such as an IRA, you will get no added tax advantage
There are many roads to Wealth Accumulation and Wealth Distribution. However, more and more retirees are realizing that conventional investment and financial planning strategies are just not as effective as they once were. Retirement planning has changed just as the markets have changed. Contact us today to learn more about our strategies.
The CARES Act (The Coronavirus Aid, Relief, and Economic Security Act) became law on March 27th, 2020. It contains significant legislation for Required Minimum Distributions (RMD) for those over age 70 ½ who have already started RMD. Under previous IRS distribution laws, a minimum distribution from a pre-tax retirement savings account, such as a 401(k), IRA, or other tax-sheltered accounts, would have to happen in 2020 to avoid the penalty for not taking a distribution. Under the CARES Act, no RMD is required for individuals or beneficiaries of inherited retirement accounts in 2020 due to COVID-19. How will this help investors?
When investors think of ‘safe investments,’ they tend to think of bonds or CDs, which calculate from a pre-determined timeline and interest rates. During a low-interest-rate environment, both provide safety, but not necessarily, the returns investors are seeking. Bonds and CDs have differing benefits and risks despite being viewed by investors as ‘safe.’
COVID-19 has changed the way we interact with others and our ability to work. Currently, one in four worldwide confirmed COVID-19 cases is occurring in the U.S. The halting of economic activity is expected to damage our economy more than any other previous occurrence. While remote work is happening at some companies, many Americans are unable to collect their regular paychecks and are waiting on unemployment assistance from their state. Undoubtedly this will negatively impact Social Security tax collection and the Social Security Retirement System. Here’s why:
When you think about tax-free income in retirement, the traditional vehicles likely come to mind. Such as your 401(k) or 403(b), traditional and Roth IRAs, and your personal savings account. What you may not consider, however, is that life insurance can also function as a form of retirement income – with tax advantages.
Safeguarding your financial future is important. No one likes to think about the impact of their death on their loved ones. But the reality is, not having certain elements in place can turn a tragic situation into a financial crisis. Having these safeguards in place can help provide your family with the financial security they need should the unexpected happen.
Not everyone experiences a life-changing event in their lifetime, one that impacts them for better or worse. As we continue to experience the pandemic, we are witnesses to our own experiences. We don’t know the outcome will be for ourselves, our neighbors, community, and so on. It can be an unnerving, but positive experience if it is a life-changing event that changes us for the better. As you reflect on the pandemic in the next weeks and months, consider your life as it is today and the changes that you intend to make to rebalance your life.
With coronavirus (COVID-19) all around us, investors may be wondering how their investments will fare as this ‘global pandemic’ spreads. Is COVID-19 capable of moving markets? We know it is and came at a time when the economy was already stressing. Earlier market movements starting in February 2020 were the result of unassociated economic factors and the public’s reaction to fear. Now, while the U.S. economy is being impacted, investor’s resilience to react will be tested. The ‘markets’ hate uncertainty. How much and how long COVID-19 will affect economies is to be determined. Let’s take a look at Coronavirus and the markets.
The term HENRY (High Earners Not Rich Yet) refers to individuals who have the potential to become wealthy in the future because of their income. These individuals or families earn between $250,000 and $500,000 per year and are between 25 and 45 years of age (Gen Z, Millennials, and Gen X). Despite their income, after paying their living costs, taxes, and other expenditures, HENRYs have little left over to save and invest for their retirement. HENRYs are a demographic that politicians consider being ‘rich,’ referring to them as the wealthiest Americans during the 2008 elections. However, there’s more to the HENRY story.
The past 100 years have seen changes in how people plan for their financial futures and how they live. Borders no longer restrict people from living in one country; their profession often takes them to parts of the world they never anticipated. Today, it’s not uncommon for a family to live part-time in one country or become citizens of another country to work or have a business there. Living globally is a lifestyle that many high net worth families, and others, are choosing. Financial planning and living globally what are the risks?
The U.S. doesn’t formally recognize dual citizenship but has not taken any stand against it either politically or legally. U.S. law doesn’t mention dual nationality or require a person to choose one nationality or another. However, a U.S. citizen may ‘naturalize’ in a foreign state without losing their U.S. citizenship. Not all countries are this liberal, creating financial planning complexities for U.S. citizens that choose to live abroad. Additionally, many foreign governments don’t recognize trusts that were formed outside of its borders on assets located inside its borders.
For high net worth families, protecting assets across multiple borders needs to be well planned out and consider the ‘laws of the land’ the individual occupies at the time of their death. Therefore, setting up trusts within each country of citizenship is imperative if the assets are within that country’s borders.
A secondary issue is the taxation of beneficiaries regardless of where they live. Since the financial crisis, many countries now participate in a global Common Reporting Standard and Exchange of Information agreement. The goal of this agreement is to determine and clarify the personal financial information they must share regarding assets, income, and taxable amounts across international borders. The agreement helps prevent tax evasion by individuals who choose to live globally, as a means of avoiding paying taxes.
While working or owning a business located in another country may not be the only reason for living globally, for many, retiring to another country to stretch retirement assets is.
There’s a tremendous amount of change occurring globally- economic uncertainty, political unrest, rising tax rates, gender equality, and changing views of marriage. These reasons are why financial planning is essential to protect your assets and those you intend to leave to beneficiaries. Before deciding to live globally, or if you already are, consult legal professionals in the countries you plan to reside in, even if for only part of each year.
With the expansion of wealth, planning for divorce, same-sex marriages, gender fluidity, and extended families through new marriages while living globally intensifies financial planning. The world will continue to evolve. Investors must keep themselves informed of laws that enhance or create financial planning problems for them or their heirs.
If you are considering living or working globally, I encourage you to meet with me to discuss your investments before relocating.
In addition Safe Haven Wealth Management specializes in providing strategies and guidance for those who are seeking a better lifestyle in retirement. If you have retirement savings of five million dollars or $50,000, we can ensure it works as hard. As a result, we offer our experience and knowledge to help you design a custom strategy for financial independence. Contact us today to schedule an introductory meeting!