With the push to increase the transparency with what investors pay for advice, one area that is not truly transparent are the costs associated with mutual funds. While mutual funds do disclose their expense ratios, many costs are not published, and can erode your real returns. Here are a couple of examples of these costs, and what you can look out for. Disclosed Costs: The disclosed costs of mutual funds are supposed to be revealed to you. But there are many of these costs. For example, there can be shareholder fees, which can consist of front-end loads, back-end loads, purchase fees, redemption fees, exchange fees, and account fees. There is also the expense ratio, which includes operating costs, management fees, 12b-1 distribution fees, and administrative costs. How much do they cost? According to a study published in the Financial Analyst Journal that was authored by finance professors at the University of California Davis, University of Virginia, and Virginia Tech, the average
August 21, 2017 We know that many of you have been interested in the events unfolding between President Trump and North Korean Leader Kim Jong-un. Keep in mind that: Rhetoric does not necessarily equal action:No doubt there has been much bluster in the media lately between President Trump and North Koreas Leader, Kim Jong-un. We should keep in mind, however, that rhetoric is not the same as action. Rest assured that military policy decisions are not being based on President Trumps tweets or Kim Jong-uns statements. President Trump is surrounded by a strong cabinet of highly accomplished and highly experienced military leaders including Gen. James Mattis, Gen. John Kelly, and Lt. Gen. H.R. McMaster. We should trust these leaders to guide our Nation through times of crisis. Market performance in times of conflict:History provides relevant context with respect to market performance in times of conflict. Since 1900, there have been 7 major geopolitical crises that have included
In our increasingly complex financial world, its important to discuss the need to have an overall coordinated approach when it comes to financial affairs. Think of 11 players going onto the football field, and hiking the ball without taking the time to get into a huddle and have the quarterback call the play. The chances of these guys getting into the end zone are slim. Without overall coordination of your financial affairs, getting into the financial end zone may be difficult for you as well. Most people dont think of all their advisors as a team, but its important to recognize that most of us already have a financial team; we are getting financial advice from a variety of sources. Your financial team is comprised of your different insurance agents, your CPA or tax preparer, your bank, any investment advisors with whom you are working, and your estate planning attorney. Everyone has a financial team, and they all need a Financial Quarterback. Lets look at some potential pitfalls of
Remember your parents constantly telling you to be careful? Im sure that most of us hear that reminder in our minds all the time. But sometimes, no matter how careful you are, events unfold that can have a devastating effect on you and your family. But, dont worry you arent totally powerless and many risks can be mitigated through insurance! First, start by reviewing your Life Insurance. Unfortunately, none of us are going to live forever. If youor your spouse were to pass away, consider - what would the ongoing financial impact be on your family? We recommend reviewing the reasons, necessity, and beneficiaries of life insurance policies as circumstances and objectives may have changed since the original purchase. Second, consider Long Term Care Insurance (LTC). Long term care is another topic no one wants to discuss. This alone could be the biggest financial risk you face, and is the most likely to be uninsured. There are several studies on the incidence of nursing home care, and
Following the strong start to the year, additional positive performance slowed in the second quarter as markets digested a tremendous amount of economic and geopolitical news. However, despite elevated levels of uncertainty throughout global financial markets, returns overall remain robust year-to-date. A few highlights from the second quarter: U.S. Equity markets added to gains from earlier in the year at a slower pace as compared to the first quarter. Economic data was mixed and overall GDP results fell short of expectations. Despite uncertainty, corporate earnings were stronger than anticipated which helped push equity markets to new highs. International equity markets were positive during the quarter and outperformed their domestic counterparts. Economic data in Europe continues to come in better than expected, and could be signaling a period of sustained growth. Emerging Market equities posted some of the strongest gains of all in countries such as China, India, and Brazil,
3 Tips For A Healthy Summer Its finally summer! Something we wait for all year in Cleveland. And, while you should definitely take some time to have fun, recharge, and spend time with family and friends, here are three health tips that will help you have a healthy summer! 1. Eat More Berries - An easy way to improve your diet this summer, is to have a cup of mixed fresh berries every day. Theyre full of antioxidants, which may help prevent damage to tissues and reduce the risks of age-related illnesses. Theyre also high in fiber, which helps keep cholesterol low and may even help prevent some cancers. 2. Drink alcohol for your heart! Ok, this one comes with a caveat. No one needs to be encouraged to have a drink during the hot summer months, but dont overdo it. Research shows that drinking alcohol in moderation defined as about two drinks a day can help protect against heart disease. 3. Plant a garden - Gardening is a great way to reduce stress. It helps you focus, beautifies
One of my favorite things about summers past, especially when the kids were young, was a tradition that my father-in-law started. At the beginning of each summer, hed take pictures of the kids on vacation, having fun, or just lounging around at home. At the end of the summer, hed make a little book out of it and give it to Kathy and me. I still have all those books! These are a few of my favorites of us as a family. I hope that you and your family have something fun planned this summer, and that youll take the time to make (and capture) a few memories of your own!
As an investment, the case for real estate remains a good one. Not only has the sector outperformed the SP 500 over the past 40 years (an average annual return of 9.3% for the NCREIF Property Index versus an 8.7% return for the SP 500), its done so with dramatically less volatility (7.8% compared to 16.4%), according to the S P Dow Indices and NCREIF. Real estate has a low correlation to stocks and bonds. Because its a lagging economic indicator it rises and falls well after the rest of the economy it moves differently than stocks or bonds. Whats more, real estate markets are unique. The factors that can sink home prices in one market can have no bearing on another, although thats not always the case. Although the real estate market has plenty of opportunities for making gains, buying and owning real estate is a lot more complicated than investing in stocks, bonds and mutual funds. Perhaps the biggest difference between a rental property and other investments is the amount
Theres nothing that says you cant do good in the worldand do well for yourself. You may even be able to reduce your taxes, secure and income for yourself or your beneficiaries, and help a charity or - several charities - of your choosing. Although there are many ways to accomplish your philanthropic and financial goals, today we will focus on four smart strategies. The first strategy is that of a Donor Advised Fund or DAF. A DAF has several advantages, including: There is generally a low initial minimum to open an account (usually $5,000-$10,000) There are generally low ongoing maintenance and administrative expenses There are no annual distribution requirements There are no annual tax filing requirements Gifts can be made publicly or anonymously There are higher charitable deduction limits relative to private foundations which we will cover in just a moment! But, there are also some disadvantages. Specifically: Some donor advised funds do not allow the donor to name successors These
There are many options when it comes to retirement, and it can be hard to know which is right for you. One of those options a ROTH IRA conversion, can be a great strategy for some people. First, aquick refresher on how a ROTH IRA differs from a Traditional IRA. With a Traditional IRA: 1. You receive an upfront tax deduction on your annual contributions 2. Growth is tax-deferred growth until its withdrawn 3. Withdrawals are taxable as ordinary income 4. There are penalties if you take withdrawals before the age of 59 5. You have required minimum distributions (RMDs) that begin at age 70 With a ROTH IRA 1. Your contributions are front loaded meaning you use after-tax dollars for your contributions 2. Growth is tax-free 3. Withdrawals are never taxed 4. Earnings can be taken income-tax-free if you are at least 59 and have had the ROTH IRA for at least 5 years 5. There are no required minimum distributions ever! If you currently have a Traditional IRA, but some of the
Every new administration brings new challenges and new opportunities. Six months into the Trump Administration, there hasnt been as much movement as we might have thought, but there are still some smart strategies you should keep in mind. First up, taxes. President Trump officially released his latest tax proposal in April. In it, he made a lot of suggestions. For example, hes suggesting a cut in the corporate tax rate, from 35% to 15%, and pass-through entities like corporations and LLCs would also qualify for the 15% tax rate. Hes also suggesting doubling the standard deduction, and reducing the number of tax brackets from 7 to 3 10%, 25%, and 35%. Hes also suggesting eliminating the federal estate tax, repealing the alternative minimum tax, and Net Investment Income Tax. In terms of repealing and replacing Obamacare, another major campaign promise, The American Health Care Act(AHCA), was proposed in the House of Representatives on March 6th but failed to make it to a vote March
Annuities can be great tools. Often, fixed annuities can offer higher interest rates than your bank account, a CD, or even Treasury Bonds, and they do it all with comparatively low risk. But, there are many alternatives that may be far better options for some people. One of the downsides to some annuities is that your portfolio cant grow if youre taking the interest as distributions, and there can be surrender charges as well.The 65-year-old retiree will see the value of his or her $500,000 stay the same over 10 years, and if you factor in an annual inflation rate of 3%, your purchasing power for that same $500,0000 will only buy $350,000 worth of goods. If that scenario doesnt seem ideal for you, here are a few alternatives you might consider. Dividend-paying stocks that pay monthly and quarterly dividends can be good annuity alternatives. With the help of an experienced advisor, you may be able to even buy a collection of dividend-paying stocks that will not only pay you more income
After the most recent interest rate increase in mid-Mach, The Federal Reserve has signaled that it is likely to continue raising interest rates both this year and next. Bond investors have been concerned about this for years, but this time it looks like its going to happen. That may have you wondering how do I manage my bond portfolio in the face of rising interest rates? Generally speaking, bond yields go down as interest rates increase. But remember, while bonds may decline in value, their moves tend to be smaller compared to other securities. Many investors are flooding into U.S. Treasury bonds, making the so-called flight to quality, because right now, the U.S. looks better than other economies worldwide. This means that medium and longer-term bonds whose rates are often more influenced by investor expectations than anything else are likely to be most affected. But, there are many strategies you can use to manage your bond portfolio in a rising interest rate environment. 1.
Youre a driver of the economy a true American entrepreneur and whether you have a team supporting you, or you are the whole team, it can seem like a challenge to make sure you are saving enough for retirement. If youre like many of our clients, youre probably constantly putting money back toward growing and reinvesting in your business. But what about your own future? Fortunately, the freedom of being your own boss also offers you several options to choose from in terms of your own retirement. It all comes down to how much you need to save, how close you are to retirement, and what your goals for retirement are. 1. Solo 401(k) (Sometimes called Uni-k or Solo-k) With a solo 401(k), for IRS purposes, you are considered both an employer and employee, and therefore, can contribute in both capacities. Your elective deferrals (meaning the part taken from your salary, pre-tax), can be up to $18,000/year. Total contributions for those under 50 years of age is $54,000 in 2017 and if you are
Life is full of uncertainty. What your career will bring, changes in your family, your health, and the market. And these are just a few! So its hard for anyone to predict the future, but there are really only two ways to figure out how much you need for retirement. And, as youll see, one offers a better future for most. 1. Save What You Can Its no secret that many people are putting off or avoiding saving for retirement. A recent article on CNN.com shared that about 26% of workers said they and their spouse have saved less than $1,000 for retirement, according toa reportfrom the Employee Benefit Research Institute. Another 16% said they have between $1,000 and $10,000 stashed away for retirement. While some of those are no doubt younger workers who have time to save, some are likely not. Its highly doubtful that theyd be able to retire at all on that! Some financial planners point out that planning retirement spending around your current income might not make sense. Many people drastically
Are You Spending Your Legacy? Retirement is supposed to be a well-earned reward a time when you can stop worrying about the day-to-day struggles of your career, and everything that went with it. A time to enjoy your family, and to scratch a few things off your bucket list. Confronted with so much freedom, it can be tempting to do all those things without considering a plan going forward. While we find that most of our clients arent afraid of running out of money for themselves, many of them do want to leave a legacy to help their children or grandchildren. So how can you ensure that youll be able to have the retirement you want and still help your loved ones? It all comes down to your spending rate. To find your rate, start by adding up your expenses, and subtract that from any non-portfolio income you might be receiving in retirement. That can mean things like rental property income, annuity income, or even Social Security. The amount left over is what youll need to withdraw. You
When it comes to retirement planning, its hard to know where to start. Many people put it off for years, only to discover that theyve put themselves at a distinct disadvantage. They often have to sacrifice to catch up financially, or work for far longer than they would have otherwise. When we talk to clients, they are interested in two things: they want to maintain their quality of life while saving for retirement, and they dont want to make sacrifices once they have retired. Weve put together a helpful guide that can help you do just that! To simplify the many options available to you, weve laid these out like a pyramid you shouldnt think about progressing to the next level before youve completed the other levels from the base up. We think that this makes it easier to understand by helping clients strategically, thoughtfully, and thoroughly build the retirement of their dreams, and to have a roadmap to understand what they should be doing now, and what comes next. Level one: Make
Your retirement portfolio may look pretty good right now. Were in the midst of a bull market, and still enjoying the effects of the so-called Trump rally. You may be looking at those balances and thinking maybe for the first time This might be an actual possibility, and sooner than I thought! But there are many things to consider before you make the jump. For example, what if the market declines? Do you have the right insurance in place? What about taxes will you retire into a higher bracket, or maybe a lower one? Here are a 4 important retirement planning considerations before you make that big decision. 1. Healthcare Healthcare is a huge concern for most retirees, and with the current uncertainty about the future of the ACA, it can make it hard to know what the best plan is. Some retirees incorrectly assume that at the age of 65, Medicare eligibility immediately eliminates your healthcare costs. According to an estimate by Fidelity Investments in August of 2016, the average
Happy New Year! Its time to make your 2017 resolutions, and we believe that one of the smartest things that you can do in the new year is to resolve to learn more about all the ways you can be handling your finances. Thats an especially important task for high income-earners, and so, to help you keep those financial new years resolutions, we at Lineweaver Financial Group have some tips to help you this year. 1. Pay taxes now rather than later on retirement accounts: Many high-income earners, or those on their way, will likely be in the top tax bracket even after retirement when they consider any pensions, investment income or other income accumulated over time. That means any deferred income put into a traditional 401k may be taxed at the highest rates in the future. Consider using a Roth 401k if your company offers it. The Roth 401k has a few distinct advantages over a traditional 401k for those with high incomes: 1. There is no income limit to making Roth 401k contributions, unlike
Its difficult to predict the market over the short term, and 2016 has proven that point. Here are a few things that surprised the markets this year. Interest rates remain mainly unchanged for the year. In December 2015 the Fed increased interest rates for the first time in 9 years, and indicated plans to raise rates slowly in 2016. Due to concerns about less than robust economic growth, rates have remained at historic lows. Only post-election have interest rate sensitive sectors moved in response to anticipated rate increases in 2017. Late year rising bond yields during the quarter resulted in outright declines in bond-proxy sectors, such as utilities, staples, and real estate. In 2015 the China stock market declined, setting off global market declines and a return to volatility, but by late year that was all behind us or so we thought. 2016 started with another steep sell-off in the Chinese stock market which in turn caused global markets to sell off. World markets also tumbled after
For a lot of people, 2016 was a challenging year. Following a year of contentious rhetoric on the primary campaign trail, the presidential election was perhaps even more divisive. We lost music icons Prince, David Bowie, and Leonard Cohen. Even Brad and Angelina - the epitome of the Hollywood love story gone right - announced that they would part ways. For a lot of people, 2016 was a challenging year. Following a year of contentious rhetoric on the primary campaign trail, the presidential election was perhaps even more divisive. We lost music icons Prince, David Bowie, and Leonard Cohen. Even Brad and Angelina - the epitome of the Hollywood love story gone right - announced that they would part ways. On a personal note, time is flying for the Lineweaver family. We sent our oldest daughter off to college at the Farmers School of Business at Miami of Ohio. She is actively pursuing a finance degree (I cant imagine where she came up with that idea) with a minor in entrepreneurship. She made
In many ways, 2016 has proven to be predictably unpredictable as highly covered events and predictions have not met up with outcomes (a few examples: Growth concerns in China, Fed uncertainty, Global slowdown fears, and Brexit). Q4 proved to be no different with the surprise election outcome of President-elect Donald Trump, and continued shifts in the political landscape abroad. Optimism about the incoming administrations plans for fiscal stimulus through reduced taxes and increased infrastructure spending, along with a move toward deregulation in the financial industry, seemed to drive sentiment for Q4. This positive sentiment was the primary driver of outperformance in the financial and industrial sectors, the expectation of nationalistic trade policies weighed on EM Equities, while positive sentiment surrounding U.S. equities drove investors out of Treasury and into U.S. equities, sending the yield on the 10-year Treasury Note to 2.37%. Some key highlights over the quarter: According
In a Japanese study that examined how to make the most of a nap, people who took a coffee napconsuming about 200 milligrams of caffeine (the amount in one to two cups of coffee) and then immediately taking a 20-minute restfelt more alert and performed better on computer tests than those who only took a nap. Why does this work? A 20-minute nap ends just as the caffeine kicks in and clears the brain of a molecule called adenosine, maximizing alertness. Adenosine is a by-product of wakefulness and activity, says Allen Towfigh, MD, medical director of New York Neurology Sleep Medicine. As adenosine levels increase, we become more fatigued. Napping clears out the adenosine and, when combined with caffeine, an adenosine-blocker, further reduces its effects and amplifies the effects of the nap. To read the full article, please go to Health.com.
Ed had a great adventure this summer when he had the chance to take his 24 foot Sea Ray 110 miles up the Erie and Seneca Canals. Ed and his wife, Gladys, took several days to make the journey and take in the history of the canals from Amherst to Seneca Falls. You can read all about Eds trip, the old canal and lock system, and his thoughts about the trip as part of his article this past August in the Lakewood Observer. A retired sergeant with 37 years of service to the Lakewood Police Department and member of the Lakewood Board of Education, Ed is a member of the Lakewood Chamber of Commerce, the American Legion, and Lakewood Kiwanis. He stays busy as Marine Patrol Supervisor for the Lorain Port Authority and as a polygraph examiner in the government and private sectors. Gladys will retire from Lakewood Schools in March and they are traveling to Hawaii.
Click the video below to watch Jims 2017 market outlook, and learn why diversification is so important for your portfolio.
If your annual household income is $200,000 or more, you have some unique financial challenges. While in many ways, you have the same needs as other people saving for retirement, childrens college funds, and making sure that your family is insured for the various challenges that life can throw at you - you also have needs and strategies to consider that many people do not. Here are a few tips that we at the Lineweaver Financial Group suggest, and a few things to consider in your planning. 1. Concentrated Stock Positions Its relatively common for higher income earners to receive a significant part of their income concentrated in employer stock or options as a way to encourage employees to grow the company. While this is great as long as the stock keeps going up, there are often strict rules about selling, which can tie up your money and can over-expose your financial portfolio to the risks inherent to your industry. We usually recommend that you keep no more than 25% of your portfolio
Stockpile A Unique Gift That Keeps on Giving Were almost there time is running out! Theres only a week left until Christmas. This year, theres a new financial gift everyones talking about. Featured in Forbes, The Wall Street Journal, CNBC, and Consumer Reports, the company is called Stockpile, and they allow you to buy gift cards for fractional shares of stock to give as gifts. From the Stockpile website: Stockpile makes it easy and affordable to buy stock for yourself, or give gifts of stock to family or friends. We have nearly a thousand different stocks, ETFs, and ADRs to choose from, and you can buy or give the exact dollar amount you want using fractional shares. For example, if Google stock (now known as Alphabet Class A) is trading at $500 per share, you dont need to come up with $500 to get started. You can spend $50 to buy 0.1 shares of Google. If you do decide to make the gift of stock, they offer physical gift cardsor an e-gift. Once you buy the stock (or redeem your
As expected, the Federal Open Market Committee announced a .25% increase in the federal funds rate Wednesday. Its the first increase this year and just the second since June 2006. The question now is what that means for interest rates in 2017 and beyond. Click the video below to learn more about how this increase could affect your portfolio. .
As wonderful as they can be, the holidays are usually pretty stressful. Between juggling your usual responsibilities, attending holiday parties, spending time with family and friends, and braving the crowds to shop or go out, there is never enough time or money. Here are a few tips we think are worth sharing to help ease your stress and get the most out of your time and money this holiday season. 1. Make a budget:Our recommendation for most families is that they dont spend more than 1% of their annual household income on the holidays. So, if you have a combined income of $200,000, you would have $2,000 to spend. 2. Make a list: By making a gift list and thinking about how much to spend on each person, youll have a better idea of what your budget should be. Although its easy to overlook the small costs, those are the ones that can add up quickly. Remember that this budget should also include things like cards, postage, dcor, wrapping paper and bows, food, parties, and even travel. 3.
The Department of Labor has new rules which go into effect in April, 2017. The Fiduciary Rule requires retirement advisors to adhere to a fiduciary standard, putting the best interests of their clients first rather than their own. The new rule expands the types of retirement investment advice covered by fiduciary rules to include IRAs for the first time Previously brokers and advisors were held to a less rigid standard, and could recommend products that put their own profits ahead of the best interests of their clients. The revised Fiduciary Rule will require retirement brokers to be more accountable for the advice they provide to their clients, making sustainable retirement income more likely for many retirees. The important point is that as a fiduciary, we are required to act in the best interest of our clients. This means that any advice and recommendations must be driven by what is best for you and cannot be influenced by any other considerations. The fiduciary standard also requires