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Archive for investment management

Financial Education Basics

by Kirk Hoffman

For many children, basic financial education is not part of their school curriculum.  Many adults didn’t have this offered either and generally learned from their parents or on their own.  Here are some financial education basics that you can share with your children to help them be better prepared.

Clarify your financial experience
Share your own perspective on money, including how you got to where you are now, your views on cash management, debt and liquidity, and how your outlook has changed over the years.  Sometimes the discussion of financial matters is uncomfortable or considered taboo.  Being open about financial issues is a great benefit for your children and can help them avoid mistakes that you might have made.  Let them know if you’ve managed things yourself or if you’ve had a financial advisor.  

Establish and maintain a simple budget
Budgeting in its most basic form is just a plan for spending.  Teach your children to think about how their purchases impact one another and how the budget can help them make better spending decisions.  You can use anything from a simple spreadsheet to an online tool like Mint.com.

Encourage savings and investing
Saving and investing are tools for reaching financial goals.  Explain different saving and investing alternatives.  Share the choices you’ve made in your own plan.

Establish a bank account
Help your children learn what a savings and checking account are.  Show them how to view the accounts, how to make deposits, withdrawals, transfers, and how to write a check.  Explain how to balance their checking account.  Teach them how to read a bank statement.  Get them in the habit of reviewing their account regularly.

Learn about credit
Explain how credit cards work and how you feel they should be used.  Explain how mortgages, car loans, and personal loans work.  Discuss how to build a positive credit history.

Stress the importance of insurance
Encourage your children to establish an emergency fund. Help them understand the importance of homeowners and auto insurance, life insurance, disability insurance, health insurance, and long-term care insurance.  Share how you have used insurance in your own plan.

Encourage retirement planning
The earlier you start planning for retirement, the more funds you will accrue.  Explain how Roth and traditional IRAs work.  Talk to your children about company sponsored retirement plans like Roth and traditional 401(k) plans and how to take advantage of company match offers. 

Develop financial relationships
If you have a financial advisor, give your children the opportunity to meet with him or her on their own. This can give them the opportunity to ask questions they may be embarrassed to ask when you are there.  Use your financial advisor as a resource to help explain any of these issues.

Don’t take for granted that your children know the basics.  Discussing these with them is a good way to see how much they already understand and it allows you to share your values in these important areas.

Year-End Financial Checklist

As we near the end of the year, it is time to look back at what has happened and see how it will affect your financial future. Check off these important items so that you can start the new year’s finances with peace of mind.

Review your tax withholdings.
Have you had a major life change (employment change, marriage/divorce, a new child) that affects your income tax? Check to make sure your tax withholdings have been properly adjusted. Having low withholdings can lead to tax penalties, while having too high of withholdings prevents you from accessing your money until your tax return is filed.

Donate to charity as a way to reduce taxes.
You can lower taxable income by 50 or 30 percent with a gift to a public charity or by 30 or 20 percent with a gift to a private foundation. If your gift exceeds these limits, you can roll over the excess deduction for up to five years.

Reduce your estate through gifts. 
You are permitted to give up to $14,000 ($28,000 for married couples) a year per recipient as an untaxed gift. Gifts above this value will consume part of your lifetime gift/estate tax exemption amount ($5,490,000 in 2016). If a gift directly funds education tuition or pays for qualified medical expenses, it will go untaxed no matter what the value.

Check to see when you last rebalanced your portfolio.
Although you don’t need to update your investments every year, many people go far too long without making necessary adjustments as they age. As GuideStream clients, we monitor your account and rebalance your portfolio a minimum of once per year.

If you are retired, make sure you have taken all necessary required minimum distributions (RMDs).
RMDs may be one of the most important items to review when going over your finances at the end of the year. Standard IRAs require these distributions be taken annually after the year you turn 70 ½; standard 401(k)s require them annually after you retire or turn 70 ½ (whichever is earlier). Failure to take an RMD will trigger a 50 percent excise tax on the value of the RMD. At GuideStream, we strive to be proactive in helping our client’s awareness of their RMDs. However, if you ever have questions, please contact us immediately.

Max contributions to an IRA and employer retirement plan for the year.
Both IRAs and 401(k)s have annual contribution limits. If you find you have excess savings and have not reached your annual limit, it may be a good idea to make additional contributions. Similarly, you may also consider making greater monthly contributions to your accounts next year, spreading out the cost of contribution. The deadline for IRA contributions is usually April 15 of the following year, though this may vary; 401(k) deadlines may be restricted to the calendar year, depending on your employer. If you would like to make a contribution, we are always available to help.

Check your flexible savings account (FSA).
The government only permits a $500 annual rollover in an FSA; any excess funds disappear if unused by the end of the year. If you have extra money in your FSA, you may want to schedule necessary medical or dental procedures before the end of the year.

Check your health savings account (HSA).
HSA funds don’t disappear at the end of each year like with an FSA; however, many with few medical needs discover money accumulating in their HSAs much faster than they are using it, which is a good thing.  Consider increasing contributions as this is the only savings option where both contributions and distributions for health related purposes are tax free. 

Consider contributions to a 529 plan to fund your children’s/grandchildren’s education.
529 Plans allow for you to make contributions to a tax-free account that may be used to pay for qualifying secondary education expenses. (Investors should consider investment objectives, risks, charges and expenses associated with 529 plans before using them. Information about 

How money affects couples

It is no secret that money is a hot-button issue for most couples. Discussing finances can be uncomfortable, and some couples may avoid these conversations altogether. Financial issues may also cause some to avoid marriage entirely as individuals may be worried about sharing debts and assets or justifying their ingrained spending habits to each other. 

Whether you are recently married, celebrating an anniversary, or simply thinking about taking the next step in your romantic (and financial) life, consider these suggestions to the common financial challenges that most couples face.

If you marry your financial opposite
While most people say they want to find a mate that has similar spending habits to their own, what we want and what we choose may be vastly different. Some research suggests that when it comes to spenders and savers, opposites attract. This could be attributed to the fact that we sometimes seek out those who have opposite characteristics of what we find unappealing about ourselves. Regardless of the reason, if you find yourself a spender married to a saver, it can quickly lead to conflict.

On a positive note, compromising on personal spending habits can lead to healthy, moderate spending habits as a couple. By setting common spending goals together and establishing a system for working toward those goals, you can focus on something beyond the everyday sacrifices or splurges you try to avoid. The important thing is to set a clear budget that keeps both of you accountable to something other than each other.

If one of you makes more money 
It would be rare to meet a couple who made the same amount of money; chances are, either you or your spouse are pulling in the larger income. Whether the discrepancy is small or large, a difference in pay could cause tensions in how money is saved, spent, and earned.

It is important to remember, however, that whether you are the higher earning spouse or not, you both ultimately share responsibility for your family. 
Your importance to your family and the role you play in your loved ones’ lives is not completely tethered to your paycheck.

If you enter marriage with a hefty combined debt 
For Millennials, this is becoming more and more common. According to a Federal Reserve Report, approximately 40 percent of adults under the age of 30 have student loan debt, averaging $32,731 per borrower. That means that Millennials may be starting their marriages with about $65,000 in debt, and with the average cost of a wedding exceeding $35,000 in 2016, getting married may put you even further in the hole. 

Unfortunately, this debt burden may be scaring Millennials off from marriage altogether. According to a 2013 survey by the American Student Assistance, 29 percent of Millennials said they have postponed marriage to deal with their student debt. Conversations about debt may range from whether you will pay off your debt separately or together to how much should be spent on a fancy ceremony or new home. By establishing “debt goals,” you can make sure both you and your future spouse are on the same page and that you start your life together with a plan to reduce your loans in the future. 

If your marriage is the victim of financial infidelity
One in three adults who have combined their finances in a relationship admitted to lying about a financial issue, according to the National Endowment for Financial Education. 
While lying about money may be relatively common, these “little” money lies truly do matter; 76 percent of those who lied about a financial issue said that it affected their relationship. To avoid letting financial infidelity get the best of your relationship, it is important to talk with your spouse about what each of you considers financial infidelity. Something that one of you sees as a minor financial setback may sound like a financial disaster to the other. Establishing financial thresholds from the beginning can keep you both aligned on budgeting goals and foster better transparency when setbacks do occur.

If you are reluctant to combine finances 
If your spouse does not want to combine your finances right after your wedding, it may make you feel like they do not trust you. Try to remember that there is no unilateral approach to finances, and there may be practical reasons for keeping your finances separated. If this is the case, one option is to have both joint and separate accounts until you find out which works better in your marriage. If you are hesitant to merge finances, you may find comfort in the fact that there are certain aspects of your financial life that will not merge when you get married. For example, your credit report is yours and yours alone (although if you apply for a home loan or a joint account, both of your scores will be considered).

The most important thing to realize is that disagreements over money are often manifestations of deeper communication struggles. Money represents complex feelings for a lot of people — feelings about power, trust, or self-esteem that may be masked in a fight over your shopping budget for the month. Just recognizing which of these common issues may be causing friction is a key first step in resolving these common interpersonal challenges. The positives of transparent financial communication can impact far more than just your new joint checking account.

Keep Reaching For Your Financial Goals

Few things are able to motivate us like self-improvement. However, despite initial enthusiasm, our personal goals can seem like impossible challenges after just a few days.

Financial goals are particularly difficult to accomplish. Spending money is inherent in modern life, and financial goals can easily get lost in other money issues. What’s worse, the feedback from financial goals is blunt and immediate. As soon as we get started, our finances begin to define our success with clear positives and negatives. Financial goals also remember our mistakes. A one-time slip-up, like a costly purchase, can disrupt progress towards a goal for months or even years.

The success of a goal often comes down to the strategies and tools used to support them. However, valuable techniques are often abandoned as soon as a little bit of progress is made. Use some of these steps to help make your goal a reality:

Be reasonable – It’s always important to be realistic; In regards to financial goals, it is essential. If you make your goals too extreme, you set yourself up for frustration and disappointment. It’s better to have an attainable goal you can more easily reach than an impossible goal that discourages you and could lead to giving up on the goal entirely. Once you have a little success, you can raise your expectations.

Set solid milestones and celebrate them – Milestones are a great way to track progress and boost your morale, but you need to make them an important part of your life. If you’ve made it halfway to your goal, celebrate in some way and give yourself a taste of what success will feel like. Stay positive; milestones are meant to show you how far you’ve come, not how far you still have to go.

Find some accountability – Telling someone else about your goals and having them check up on your progress can massively boost your discipline. Even if your confidant only asks for occasional updates, being accountable for your actions can provide a lot of encouragement to stick to your plan.

Automate what you can – Constantly trying to make the right choices can wear down your motivation. Automating your target savings or debt payments can help you avoid the potential mistakes and will allow you to save your energy for other challenges.

Break and build habits – It’s often said that it takes 21 days to break a habit or build a new one. While the psychology isn’t exact, it’s clear that our habits are a lot easier to change than we usually imagine. If you can force yourself to stick to a plan for just three weeks, progress should become much easier.

Limit the number of goals – Reaching goals can be difficult, so don’t try to accomplish several of them simultaneously. Only start one or two financial goals at a time and don’t create new ones until your current efforts have become second nature.

Bend so that you don’t break – Interruptions are inevitable. Much like setting a realistic goal, it’s important to have realistic expectations for your progress. If there is an unavoidable problem, adjust your goal accordingly and keep trying. Don’t give up on a goal just because of an unplanned setback.

Reaching goals is a skill that takes practice and experience. In accomplishing one goal, you learn which strategies work best with your personality. Even when you fail, you’ve learned more about what it takes to reach success. The important thing is being willing to try again.

Remember that past performance may not indicate future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, strategy, or product referenced directly or indirectly in this newsletter will be profitable, equal any corresponding historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. You should not assume that any information contained in this newsletter serves as the receipt of personalized investment advice. If a reader has questions regarding the applicability of any specific issue discussed to their individual situation, they are encouraged to consult with a professional adviser.

This article was written by Advicent Solutions, an entity unrelated to Guidestream Financial, Inc.. The information contained in this article is not intended to be tax, investment, or legal advice, and it may not be relied on for the purpose of avoiding any tax penalties. Guidestream Financial, Inc. does not provide tax or legal advice. You are encouraged to consult with your tax advisor or attorney regarding specific tax issues. © 2014-2017 Advicent Solutions. All rights reserved.

Retiring Early

It seems as if there has been increasing coverage in the media recently regarding early retirement. The prospect of having an extended retirement is incredibly appealing for many Americans.—However, with pensions becoming increasingly less common in the workplace, workers are required to be more autonomous in how they plan for their retirement; for many, the need to bolster self-directed savings makes the prospect of an early retirement seem more like a pipedream than a possibility. Though everyone has varying financial situations and future expectations, here are a few things to keep in mind when working towards your own early retirement.

Create a current household budget
Before you solidify a plan of action for retiring early, you need to take inventory of your current expenses and general spending habits. If your spending habits inhibit you from saving a sizable portion of your earnings in pre-retirement, it will be incredibly difficult to retire early. If possible, try to find ways to cut discretionary expenses and evaluate your saving habits. By developing a budget, you will put yourself in an advantageous situation. In fact, maintaining a household budget will put you in the minority of American adults; according to a Gallup poll, only one in three Americans maintain a detailed household budget.

Forecast future needs
In addition to considering how inflation will affect your budget in the future, it will be wise to also consider that certain costs, such as healthcare, will increase significantly in retirement. When calculating your needs in retirement, be sure to include rising costs and unforeseen expenses. Failure to account for increasing needs could potentially leave you short of cash at a time when you may not be physically fit enough to work the hours required to cover the shortfalls.

Stay disciplined
Cutting out your favorite guilty pleasures in order to save for the future can be difficult, especially when those around you might be going on lavish vacations and buying luxury cars. By saving your money in the meantime and remaining focused on your goal, you will significantly improve the likelihood of being able to retire early.

Consider investing
Though everyone has a different financial situation and tolerance for risk with their money, investing in the stock market has historically produced higher returns over a long timeline than keeping money in a bank. Given low interest rates on most bank accounts, a savings account may not grow your money significantly enough, especially if your retirement plan is predicated on seeing significant growth on your savings. Though investing in the stock market inherently carries risk of potential losses, investing long-term has historically proven beneficial to investors.

Work with your financial professional
In addition to personally taking measures to ensure an early retirement, remember that your trusted financial professional is dedicated to working with you to help achieve your goal. Reach out to your Guidestream Financial, Inc. professional to help you work towards achieving your dream.

Remember that past performance may not indicate future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, strategy, or product referenced directly or indirectly in this newsletter will be profitable, equal any corresponding historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. You should not assume that any information contained in this newsletter serves as the receipt of personalized investment advice. If a reader has questions regarding the applicability of any specific issue discussed to their individual situation, they are encouraged to consult with a professional adviser.

This article was written by Advicent Solutions, an entity unrelated to Guidestream Financial, Inc.. The information contained in this article is not intended to be tax, investment, or legal advice, and it may not be relied on for the purpose of avoiding any tax penalties. Guidestream Financial, Inc. does not provide tax or legal advice. You are encouraged to consult with your tax advisor or attorney regarding specific tax issues. © 2014-2017 Advicent Solutions. All rights reserved.

Succession Planning

by Kirk Hoffman
April 2017

A succession plan for a business is one of the most important safeguards that can be used to ensure the company’s future success.  Approximately one-third of family businesses that transfer to the next generation result in success, and only 12 percent make it to the third generation.  Choosing tomorrow’s leaders and formulating a plan for retirement, death, disability, or even divorce are tasks that should be done early and reviewed often.  The transfer of power and wealth can provide a smooth transition or can be the demise of a company, depending on how future leaders are chosen and groomed, and how tax and estate planning implications are handled.

There are various business succession options available to the owners of privately held businesses. These include:

o   Transfer of ownership to the next generation

o   Employee stock ownership plan (ESOP)

o   Public offering

o   Recapitalization of the business

o   Sale of the business to a third party

o   Liquidation of the business

Transfer Ownership to Next Generation

When choosing and grooming successors for a business, business owners must consider the person’s business strength and savvy, and the psychological and emotional impacts of any decision on employees and family members.

Children who are active in the family business present both unique opportunities and potential pitfalls. There is the opportunity to take advantage of gifting and valuation discounts when transferring the business to family members.  A Family Limited Partnership often works well in these circumstances. However, there is always the risk of family disagreements and the challenge of balancing the estate with family members who are not active in the business.

Whether the successors are family or not, it’s important that the succession process begins early.  The first step is to recruit talented employees from the beginning and help them develop their leadership skills within the company.  They should also get comfortable with taking over long before they actually do so, to ensure a smoother transition.  It may also be helpful to get clients used to the new leadership before they take over.  Adequately preparing the successors is one of the best things that can be done to maintain a company’s success in the next generation.

ESOP 

If the choice is to transfer the business to the employees, an Employee Stock Ownership Plan (ESOP) may be the solution.  An ESOP is a qualified plan designed to benefit all employees and must be non-discriminatory.  Unlike other qualified plans, an ESOP can borrow money to purchase investments in the stock of the sponsoring corporation.  An ESOP is an excellent method for business owners to plan for the transfer of ownership.  In addition, an ESOP provides tax advantages to the selling shareholders that assist in maximizing the value of the business.

With an ESOP, the business owners sell their shares to an ESOP trust.  The trust in turn makes annual contributions to the accounts of the employees.  One key issue that must be addressed with an ESOP is the concept of repurchased liability.  The sponsoring corporation must create a market for the employees to redeem their vested shares upon certain events (e.g. death, retirement).  It’s important to give careful attention to this issue.

Public Offering

An alternative to the ESOP is to go public.  Using this method, corporate shares are offered to the public and traded on the stock market.  Going public is usually an expensive option that requires a sufficient revenue base and a strong business plan.  It is not optimal as an exit strategy if the business owner is near retirement; rather, this strategy is best employed early in the succession planning process while the owner is still very active in the business.  This option is most useful to provide growth capital for the business; however, it can provide liquidity to an owner in the long run.

Recapitalization

If the business owner would like to begin to transfer value while retaining control of the company, recapitalization may be the answer.  Using this method, the business issues two classes of stock: voting preferred and non-voting common stock.  The non-voting stock is transferred either through sale or gift to the successors.  The business retains the voting preferred stock until the owner are ready to transfer control.  This is more commonly appropriate when transferring a business from parents to the next generation and may be most useful to provide growth for the business.

Sale

The business owner may choose to sell the business to someone who is not currently involved in the company—a competitor, an existing customer or supplier, for example.  This can be done as a lump sum sale or in the form of an installment sale that spreads the payments and tax implications over a number of years. The sale of the business may be structured as an asset sale, a sale of stock or a combination of both.  The business owner is motivated to sell the stock in the company to take full advantage of the lower capital gains tax rates (a sale of assets usually subjects a portion of the gain to ordinary tax rates).  However, the market and other factors may dictate the nature of the sale. 

Liquidation

If there is no market for the business as an ongoing entity and other options are not available, the business owner may choose to close the business and liquidate its assets.

Buy-sell agreements

What will happen to succession plans if a business owner or a partner dies prematurely, becomes permanently disabled or gets divorced?  Most closely held businesses need to have a buy-sell agreement in place when other partners, principals or shareholders are involved.  Most commonly, this agreement states what occurs if a partner/shareholder should die, but it should also include provisions for retirement or other departure, disability and for the divorce of a partner.

A properly structured buy-sell agreement stipulates in a binding contract what occurs in each of the events outlined below.

Death: There are two general structures to the buy-sell agreement in the event of death–a cross purchase or an entity purchase.  In a cross purchase plan, each of the partners owns life insurance on the lives of the other partners.  In the event of the death of a partner, these life insurance proceeds are used to purchase the business equity from the estate of the deceased partner.  This type of plan works well in a company with few partners.  The entity purchase plan is similar, except the company owns the life insurance on each of the partners, and the company purchases the deceased partner’s shares.  This is easier to administer when the business has many partners.

Disability: A disability buy-out provision specifies the method and timing for the buy-out of a disabled partner.  This can be done with an installment sale (providing the company can afford the payments) or more likely with a disability buy-out insurance policy.  This policy provides a lump-sum benefit to purchase the business shares from the disabled partner.

Divorce: A divorce decree or the operation of provincial law can stipulate that all assets are divided between the spouses, including business interests.  Unless the couple had a pre- or post-nuptial agreement protecting the partner’s business assets, the business may end up with a new and potentially unwanted partner.  To prevent this from happening, the buy-sell agreement should include provisions in the event of a divorce.

Creating a business succession plan may be one of the most difficult management challenges.  Juggling the selection and preparation of successors with tax and estate concerns makes succession planning a complicated endeavor, as evidenced by the failure rate of second and third generation businesses.  The best way to successfully send a company into the future is to start forming a plan now.  Each type of plan has its own strengths and tax implications, so it is important to discuss the decision with a professional well versed in business succession.


The information contained in this article should not be considered legal or tax advice.

 

Year-End Financial Checklist

As we near the end of the year, it’s time to look back at what’s happened and how it will affect your financial future. Check off these important items so that you can start the new year’s finances with peace of mind.

INCOME TAX
Review your tax withholdings.
Have you had a major life change (employment change, marriage/divorce, a new child) that affects your income tax? Check to make sure your tax withholdings have been properly adjusted. Having low withholdings can lead to tax penalties, while having too high of withholdings prevents you from accessing your money until your tax return is filed.

Estimate your AGI.
Determine your adjusted gross income (AGI) with the help of your tax advisor. Your AGI will help determine your tax bracket, which you’ll need for investment and retirement planning.

Estimate your AMT.
Determine whether you will be subject to the Alternative Minimum Tax (AMT) and if there are ways to mitigate your AMT liability.

INVESTMENTS
Assure that your investment portfolios align with your long-term plan. 
If you don’t have a plan or have questions about the alignment, contact your GuideStream Financial advisor. 

Systematically review your portfolios and rebalance when appropriate.
As a client of GuideStream Financial, we handle this step for you. We systematically review each portfolio and periodically rebalance to make any necessary adjustments. We just completed a rebalance in early November. 

RETIREMENT ACCOUNTS
If you are retired, make sure you’ve taken all necessary required minimum distributions (RMDs).
RMDs may be one of the most important items to review when going over your finances at the end of the year. Standard IRAs require these distributions be taken annually after the year you turn 70 ½; standard 401(k)s require them annually after you retire or turn 70 ½ (whichever is earlier). Failure to take an RMD will trigger a 50 percent excise tax on the value of the RMD.

Max contributions to an IRA and employer retirement plan for the year.
Both IRAs and 401(k)s have annual contribution limits. If you find you have excess savings and have not reached your annual limit, it may be a good idea to make additional contributions. Similarly, you may also consider making greater monthly contributions to your accounts next year, spreading out the cost of contribution. The deadline for IRA contributions is usually April 15 of the following year; 401(k) deadlines may be restricted to the calendar year, depending on your employer.

Consider converting a traditional IRA to a Roth IRA.
Did you have a good tax year? It may be an opportune time to convert a portion (or all) of your traditional IRA to a Roth IRA and pay your taxes at a lower rate. It is important to understand, however, that Roth accounts have contribution limits placed on them, so keeping a traditional IRA might be beneficial. Before making any changes, consider seeking the help of a professional   accountant who can help you with the conversion and calculate your new tax liability.

GIVING
Donate to charity.  
In additional to the joy received by assisting causes your care about, you can lower taxable income by 50 or 30 percent with a gift to a public charity or by 30 or 20 percent with a gift to a private foundation. If your gift exceeds these limits, you can roll over the excess deduction for up to five years.

Reduce your estate through gifts.
You are permitted to give up to $14,000 ($28,000 for married couples) a year per recipient as an untaxed gift. Gifts above this value will consume part of your lifetime gift/estate tax exemption amount ($5,430,000 in 2015). If a gift directly funds education tuition or pays for qualified medical expenses, it will go untaxed no matter what the value.

FAMILY FUNDING
Check your flexible savings account (FSA).
The government only permits a $500 annual rollover in an FSA; any excess funds disappear if unused by the end of the year. If you have extra money in your FSA, you may want to schedule necessary medical or dental procedures before the end of the year.

Check your health savings account (HSA).
HSA funds don’t disappear at the end of each year like with an FSA; however, many with few medical needs discover money accumulating in their HSAs much faster than they are using it. Consider reducing your contributions to your HSA if your account has reached a comfortable amount and you know of better uses for your money.

Consider contributions to a 529 plan to fund your children’s/grandchildren’s education. 529 Plans allow for you to make contributions to a tax-free account that may be used to pay for qualifying secondary education expenses. (Investors should consider investment objectives, risks, charges and expenses associated with 529 plans before using them. Information about 529 plans is available in their issuers’ official statements.)

Remember that past performance may not indicate future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, strategy, or product referenced directly or indirectly in this newsletter will be profitable, equal any corresponding historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. You should not assume that any information contained in this newsletter serves as the receipt of personalized investment advice. If a reader has questions regarding the applicability of any specific issue discussed to their individual situation, they are encouraged to consult with a professional adviser.

This article was written by Advicent Solutions, an entity unrelated to Guidestream Financial, Inc.. The information contained in this article is not intended to be tax, investment, or legal advice, and it may not be relied on for the purpose of avoiding any tax penalties. Guidestream Financial, Inc. does not provide tax or legal advice. You are encouraged to consult with your tax advisor or attorney regarding specific tax issues. © 2014-2015 Advicent Solutions. All rights reserved.

HOW TO KNOW YOU’RE INVESTED IN THE RIGHT PORTFOLIO

From time to time we come across lists and articles on investing. And we’ve taken a few of the items we’ve seen over the years and written a little commentary based on how we serve you.

A year from now, you plan to own similar investments.

We believe ‘winning’ in the market begins with understanding ‘why’ you are allocated as you are.  Timing and changing strategies rarely produce the long term results investors need to fund their retirements.  Sticking with an allocation that is rebalanced and invested with purpose is the best way to ‘Win’ in retirement.

You’re so well-diversified that you always own at least one disappointing investment.

This is probably one of the hardest lessons in investing and represents the value in diversification.  A properly diversified portfolio is always going to have some asset classes (i.e. investments) out of favor with others being the bright spots.  The key is to own them both since timing them consistently is impossible.

When the stock market is volatile, or even decreasing, you are not uncomfortable.

You realize that the stock market is volatile and the temporary declines of 14% inter-year and greater than 20% every 5 years are normal. That’s precisely why stocks return more over the long term than other less volatile investments.

For every dollar you’ve saved, you have an eventual use in mind — and you are invested accordingly.

Dollars that you have saved, but aren’t needed for many years in the future, should be invested accordingly.  The dollars needed soon should be in less volatile (i.e. lower return) investments.  However, don’t shortchange your resources the ability to outpace inflation when they are needed far into the future.

You can remember the last time you rebalanced.

Well, you might not be able to recall if you have, but the good news is that as a client of GuideStream Financial, you have your portfolio(s) rebalanced at least annually.  We help you stay true to your long term investment and retirement objectives.

You never say to yourself, “Wow, I didn’t expect that.”

This is our goal.  Through preparation and education, you understand that year to year, your portfolio will fluctuate depending on contributions, withdrawals and returns – but that in the end, you have a good working knowledge of how your cash flow will work over time.  We know you don’t like surprises and neither do we.  Some years, things may be fruitful and other years they may not be. What’s most important is that we both know the long term goals and that is where we focus.

We appreciate your continued trust and are honored to assist you on your stewardship journey. 

Contact us

We look forward to connecting with you

Keep in touch with us

Please use the following information to contact us. For security reasons, please do NOT send sensitive information such as account numbers, social security numbers, balances etc. through the website. 

Name: GuideStream Financial, Inc.
Phone: 800-325-8975
Fax: 517-750-2752
Address: 8050 Spring Arbor Rd., PO Box 580, Spring Arbor, Michigan 49283