Avoiding Dogma: How to Keep Finance Personal

Imagine that you arrive for an appointment to see a new doctor. You have been experiencing chronic neck pain and want to ensure the symptom is not due to a major health condition. You enter the office lobby and walk up to the desk to check in. Before you even say who you are, the receptionist hands you a bottle of pills and tells you that you should have heart surgery next week. What?!? The doctor did not check your vitals, discuss your symptoms, run medical tests, or even see you for that matter!

Unfortunately, this is the same type of ‘treatment’ people receive in regard to financial wellness. Generic one-size-fits-all advice can be seen and heard across multiple mediums, including books, blogs, radio shows, courses, social media threads, YouTube videos, and family gatherings. Not all of this advice is intrinsically ‘bad’ or meant to harm you, but there is a disconnect between what’s best for others and what’s best for you. I believe it is not possible to give advice in the best interest of others without understanding his or her personal financial ecosystem. This article reveals some of the common dogmatic (“the only way”) financial responses, but also some alternative approaches to challenge assumptions and keep finance personal.


How to Create a Financial Plan

As your lifestyle and financial goals evolve over the years, creating a financial plan by yourself or with the help of a professional can help translate the complexity of financial topics and myriad of options into a simplified narrative and actionable plan – most importantly with YOUR personal values and objectives in focus. A financial plan is basically defined as an evaluation of an individual’s or family’s current position and a path forward to define, implement, and monitor financial goals over time.


Financial Planning – What to Consider Before Investing

As a financial planner, I am often asked how a family should invest their money. This usually means there is cash available to invest in the market and they want to know which securities (stocks, bonds, funds) to choose. Although it is tempting for me to jump into a thrilling discussion about asset classes, historical returns and low-cost options, I have learned the importance of taking a step back and starting from a place of discovery – after all, my planning philosophy is focused on ‘measuring twice.’

Investing certainly plays a major role along the path to financial independence, but there are other prudent steps to review before putting money to work in the market. Investing right away is similar to filling in the middle pieces of a jigsaw puzzle without first establishing the border. The goal of this article is to discover the frequently-overlooked areas of financial planning so we can create healthy boundaries and view our investments as a piece of a larger picture.


Target Date Retirement Funds – Are They Right for Me?

Congratulations, you are eligible to participate in your employer’s retirement plan! Your HR department sends you the overwhelming employee benefit packet that hardly any employee reads, but you are different – you are dedicated to understanding and getting what’s rightfully yours! If your employer provides a defined contribution plan like a 401(k) or 403(b), you get to select a percentage of your gross pay to withhold and invest each pay period. You hopefully elect to contribute at least enough to get the full employer match (if available), and now it’s time to choose how to invest these tax-deferred dollars. You may feel overwhelmed by the dozens of investment options or tempted to ask a colleague “hey, what did you choose?,” but thankfully there are resources available to help you understand this personal decision.


The Flight Path to Retirement

I often refer to retirement planning as being the ‘journey’ or ‘path’ to financial independence. When stepping back from the granular details of investment analysis, tax efficiency, and itemized expenses, we can imagine our financial journey like a long flight across the country to our retirement destination. The parallels between the path to financial independence and a pilot’s journey are only limited to our imagination, and I have found it useful to view financial wellness from this unique perspective.

A plane has fuel (savings), passengers (investment choices), and airspeed (investment return). A flight experiences turbulence (market volatility) and detours (financial crossroads), but usually arrives safely as long as the pilot doesn’t jump out mid-flight (sell everything during a bear market)! I hope this extended metaphor and the following steps help you approach long-term investing with a new frame of mind – and ultimately lead to an improvement of your own flight path to retirement.


Traditional or Roth: More Than Meets the Eye

Creating a disciplined retirement savings plan is one of your greatest tools for building wealth on the road to financial independence, with compound interest on your side. Retirement accounts are available in two popular flavors – Traditional and Roth – ‘simply’ identifying the tax characteristics. Having multiple options can make saving for retirement more complicated, but understanding the important advantages and disadvantages of each can help you make educated decisions and substantially improve your long-term financial journey. Financial planning is ‘more art than science’ and there is no definitive answer for going one way or another, but let’s study the road map before arriving at our retirement destinations.


Asset Location: The Right Investments for the Right Accounts

When developing investment strategies and long-term plans for our disciplined savings, we often focus on the investments – how well they perform, how much income they pay, and how much they cost. While these are necessary considerations, understanding the potential tax consequences of your investment decisions is equally important. After all, it’s not what you make – it’s what you keep!

Think of your total investment portfolio like a garage full of automobiles. Each vehicle has its own personality, speed, and purpose. The sports car has the potential to be aggressive at high speeds, but with the downside of increased risk and costs, whereas the slower hybrid car might be more comfortable for long road trips, saving money along the way. Just like automobiles, your investment accounts are aligned with their own characteristics – tax efficiencyrisk capacity, and time horizon. Aligning your investment vehicles with their appropriate passengers can significantly improve your experience on the journey to reaching financial independence.


How to Understand Your 401(k) Statement

As important documents have become ‘paperless’ within the past decade, most of us neglect to review them on a regular basis. Recurring pay stubs, monthly bills, insurance policies, and investment account statements often go unseen, as many of them are only accessible online. As an advisor, I notice that 401(k) statements are often neglected until a big market scare, exactly when it’s not appropriate to make changes! I like to say ‘don’t make improvements to your boat during the middle of of storm.’

Awareness of these accounts can provide clarity to our financial landscapes and future decision making, so I decided to turn this article into a financial wellness exercise – fun! I browsed account statements from 10 different 401(k) plan providers, and have summarized what to look for and how to interpret the data. I would like for you to access your latest account statement and follow along. Go ahead and find or reset your account password, log in, and let’s take a look!


Financial Independence: How to Retire Before Age 59 1/2

How do you define “retirement?” This word, and more importantly the concept, is ever-changing.

Hearing the word may evoke images of an elderly couple walking along the beach or lying in a hammock as they watch the sun set. This advertised lifestyle is usually funded by Social Security retirement benefits, private and public pensions, annuities, and distributions from after-tax brokerage and qualified retirement accounts – such as 401(k)s, 403(b)s, and IRAs.


Brokerage Accounts: Tax Gain and Tax Loss Harvesting

“It’s not what you make; it’s what you keep!” As mindful investors, it is important that we look for opportunities to legally reduce our tax liability. Strategies may include Roth conversions, health savings accounts (HSAs), tax-efficient investments, business deductions, charitable gifts, tax credits, and so on. In this article, we will be focusing on two unique techniques to reduce the tax liability of your taxable brokerage accounts.