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Be Empowered: Why Women Should Learn About Finances

Be Empowered: Why Women Should Learn About Finances

Consider this scenario of a couple. Jane is a successful surgeon who makes good money. Her husband, John, comes from an affluent family and has considerable wealth to his name, but all of it is held in a trust. The couple, for many years, lives off Jane’s salary because it’s plenty to cover their living expenses. Life goes on, and this setup works well for the couple for some time.

But then Jane and John get divorced, at which time John makes a claim for alimony. The court views it as a valid claim because the couple has been living on Jane’s earnings all those years. To make matters worse, because of the way that John’s trust is titled, that portion of his wealth is essentially untouchable in the divorce proceedings. Jane is caught completely off guard. She is forced to wonder whether she will have enough wealth to support her vision for retirement while also supporting her children and parents.

 

Far too often, women find themselves in unfortunate financial situations like this, partly due to not having been more prepared or empowered to manage their personal wealth. These situations continue to arise even as women constitute a significant and growing economic force. A recent Boston Consulting Group study found that women control a third of the world’s wealth — about $70 trillion as of 2019 — and are amassing wealth at a faster clip than men, outpacing the growth of the overall global wealth market.1

 

While all women should expect to be solely responsible for their financial well-being at some point in their lifetimes, many women feel underprepared to manage their financial wellness for a variety of reasons.

 

Potential causes of financial under-empowerment

 

 

A key reason that many women may not feel fully engaged in managing their finances might be the origin of the relationships that a male/female couple has with their financial professionals.

 

 

When it comes to married women, relationships with the financial advisor, the attorney and the CPA are often initiated by the husband. Women are often outsiders to these already-formed relationships. This can cause women to feel that they aren’t the top priority, or worse yet, that they aren’t even part of the team.

 

 

Division of labor in the household is another potential issue. Although they often handle the day-to-day financial matters, most married women are not similarly involved in the larger, more macro, financial matters such as financial planning and investing. While division of labor is typical of any household, dividing up financial matters this way might jeopardize the couple’s — and more likely the woman’s — financial future.

 

 

Potential consequences of not being fully engaged

 

 

When women aren’t fully engaged in the larger financial discussions, they run the risk of being isolated from important information and decisions regarding their financial futures. The consequences can be significant, particularly when women find themselves “suddenly single.”

 

 

Life events such as a divorce and the sudden death of a spouse can lead to very difficult situations without the right preparation. For example, a widow may face liquidity or cash-flow challenges that can undermine her ability to maintain her current lifestyle, especially if wealth is tied up in private businesses, real estate or other illiquid assets. Family discord, losing out on a fair share of a business, and hefty legal and tax bills can exacerbate these issues.

 

 

Simply put, individuals — and especially women — can’t afford not to take control of their wealth and financial resources. Thankfully, there are several ways to address this.

 

 

Three steps toward greater financial empowerment

 

1. Establish and build the necessary relationships. It is critical that you know — and are known by — your financial professional and other professionals involved in managing your wealth. This may require a deliberate effort to build or even start a relationship with the financial professional. You can begin by joining the meetings and calls that, in the past, your spouse may have attended alone.

 

It may even make sense to set up individual time with your financial professional for a one-on-one conversation without your spouse present. This isn’t meant as a time for telling secrets or undercutting your spouse, but rather as a safe environment and opportunity to discuss things from your perspective, ask questions on your own terms and get to know your advisor.

 

 

2. Know the fundamentals and ask the right questions. Before you can feel fully engaged about upcoming decisions, you need to understand the fundamentals of your financial plan and investment strategy. This is important for everyone in a financial professional-client relationship, but especially for individuals who may be looking for a way to get up to speed.

 

Women often find themselves in situations where they need to take action to ensure that their financial rights are protected and their obligations and risks are limited appropriately. But they need to feel comfortable to ask questions.

 

Sometimes it is hard to know what questions to ask your financial professional. Start by asking to see an overview of your accounts. Ask the advisor to explain any terms that are unfamiliar to you. Go to the library or go online and take some time to learn the basics and research the right questions to ask.

 

 

3. Normalize the financial conversation. Many women may feel a stigma about discussing financial topics, and “money talk” is often viewed as a social taboo. Unfortunately, this may contribute to a woman’s hesitation to take initiative with financial matters. One way to overcome this stigma is by talking about these issues more regularly. Sharing your experiences with people you trust can help you feel more empowered and ready to engage — and your friends and family members will likely benefit from the conversation, too.

 

 

Women may underestimate the significant and growing economic force that they represent given the massive amount of wealth that will shift to women over the coming decades. Perhaps this is part of the reason that many women feel underprepared to manage their own finances, especially when thrust into more of a leadership role due to the death of a spouse or a divorce. But most women will end up in control of their own finances at some point in life. Now is the time to begin preparing for this role.

 

 

By focusing on building relationships, asking the right questions and normalizing the financial conversation, women can begin to take greater control of their financial futures.

 

 

1. Boston Consulting Group. From 2016 to 2019, women gained wealth at a compound annual growth rate (CAGR) of 6.1%, versus 4.1% for men and 4.7% for the overall wealth pool. From 2019 to 2023, women are expected to gain wealth at a CAGR of 7.2%, versus 5.2% for men and 5.8% for the overall wealth market. The global wealth market size is expected to reach $271 trillion by 2023.

Are you on track for retirement?

Making sure you will be ready for retirement can be overwhelming. Funding your retirement accounts over the years is a critical part of your journey to the retirement of your dreams. An experienced Financial Advisor can help you navigate the complexities of investment management. Talk to a Financial Advisor>

Dream. Plan. Do.

Platt Wealth Management offers financial plans to answer your important financial questions. Where are you? Where do you want to be? How can you get there? Our four-step financial planning process is designed to be a road map to get you where you want to go while providing flexibility to adapt to changes along the route. We offer stand alone plans or full wealth management plans that include our investment management services. Give us a call today to set up a complimentary review. 619-255-9554.

Kids Need to Understand Taxes

Kids Need to Understand Taxes

Raising children who understand the value of money gives them an advantage. So, that means your kids need to know about taxes. Of course, receiving a check at their first job for much less than the $15 per hour stated on the employment agreement is one way to find out. 

 

Instead of believing that they’ve been robbed by their employer (or the government), by learning early on why taxes are deducted from their checks, they’ll understand that some of the taxes taken out pay for Social Security and Medicare when they’re no longer able to work. 

 

They’ll also find out that federal and state taxes pay for things like the police and fire departments in the town where your family lives, as well as roads and bridges in addition to national defense and parks. Maybe even more important to many kids today, the fiber optic infrastructure that allows them to stay online all day!

 

As a taxpayer, of course, you well know that taxes can be complicated. While you know that you don’t need to burden your five-year-old with the difference between marginal income tax rates and capital gains rates, you might not be sure what your kids need to know and when. 

 

As always, you know your children best, and you might want to let them in on some of these topics earlier or later than suggested, depending on personalities and experience. The ranges are pretty broad, though. Take the opportunity to make sure they’re clear on the foundations before you start teaching them more advanced topics.

 

Children ages 5-10 need to understand tax basics

Even in elementary school, your kids can absorb some fundamental and easy lessons about taxes. It’s probably easiest to start while you’re shopping at the grocery or toy store. Find an item whose price is easy to understand, like $1 or $5 or $10. (Good luck in some of the stores, which for behavioral finance reasons, charge $4.99 or $9.99 instead! But that’s a lesson for later.) 

 

Run the item(s) through checkout separately, so it’s clear on the receipt how much tax you paid. Point out that while the price was $5, the amount that came out of your pocket was slightly more than that. 

 

They’ll want to know where the money goes. At this age, there’s no need to get very specific. Your kids only need a high-level overview; that money goes to the government to fund things like parks, police, and schools. No need to get political here either; just the basic facts will do.

 

Middle school/junior high, ages 11-13 need to understand taxes in relation to their paycheck

At this point, your kids will be familiar with sales taxes, having seen you shop. Maybe they’ve been able to shop themselves.

 

They’re old enough to begin learning about other taxes, such as income tax, property tax, and Social Security/FICA. Show them your pay stub and discuss the various amounts that have been deducted and why. If you have Social Security statements, you can demonstrate where the money goes later on in life.

 

Let them know what the deductions for Medicare and Social Security pay for. You can also explain the federal, state, and potentially local taxes. They should have a basic understanding of the US government from school and know that the federal government is in charge of some things, and state and local governments run others. Taxes at every level support all these different branches of government.

 

Although you’ll explain the deductions from your paycheck to them in some detail, that’s not the central concept they need to know. The big lesson here is that the money they earned according to the stated pay rate is not what shows up in the paycheck. 

 

Show them the difference between the stated rate and what gets deposited into your account. Of course, not all deductions will be taxes since you likely have health care and retirement contributions taken out as well. Talk to them about the importance of budgeting with the net amount after taxes and other deductions, not the gross income.

 

Show them your property tax bill as well. Property owners fund local improvements and projects, so they need to understand where the money goes.

 

Teens 14 and over need to understand how to file their taxes

At this age, your kids are probably paying taxes in some shape or form already. They’re paying sales tax when they shop, and if they have jobs, they’ll also be paying income tax. They know the reality of paying taxes, especially if you’ve been educating them along the way.

 

If they do have part-time (or other) jobs, show them how to keep their documents organized for tax time. Let your kids know about the importance of W-2s and why they need to keep track. They should do their income taxes (with your guidance, of course) during this time. 

 

There are plenty of online software applications to use, which makes it easy. My dad made me do my taxes when I was in high school, and back then, we had to use paper forms and read the instructions. 

 

Doing their taxes each year helps your children understand the basic calculations and the importance of tax deductions. They’ll also be in the habit of doing their taxes annually, so they won’t need to worry about IRS fines and fees later on.

 

If they don’t have their own jobs, they can sit with you while you do your taxes online or go to the CPA with you. 

 

When your kids start asking why so much money goes to taxes, discuss how Congress sets the rates. You can also show them that income tax rates change over time. For example, income tax rates on high earners are currently significantly lower than when the government built the interstate highway network across America and other big infrastructure projects in the middle of the last century.

 

If they’ve been investing, or you’ve been investing on their behalf, introduce capital gains tax. Explain how they only pay it when investments are sold. Let them know about capital losses, which can reduce the amount of capital gains they’ll need to pay taxes on.

 

Understanding income and capital gains taxes is an excellent segue into the importance of tax-deferred accounts. You know your children will need a significant amount of assets in the future and the need to start saving early to take advantage of compound returns. Show them what a difference not paying income and capital gains taxes on the money they accumulate in these accounts makes down the road.

 

If you’ve been saving for their future in college 529 accounts, you have another chance to showcase the importance of deferred or tax-free (for qualified expenses) money. Depending on when you started funding the accounts, you can also demonstrate the power of compounding over time. 

 

There are many opportunities to teach your kids about taxes in an age-appropriate way. It’s critical for them to understand the difference between gross and after-tax income to know how to budget appropriately. Tax season is an excellent time to demonstrate to your older kids why they need to understand IRS rules and regs.

 

If you’d like to talk to us about investments for your kids, please feel free to give us a call at 619.255.9554 or email us to set up an appointment.

 

Are you on track for retirement?

Making sure you will be ready for retirement can be overwhelming. Funding your retirement accounts over the years is a critical part of your journey to the retirement of your dreams. An experienced Financial Advisor can help you navigate the complexities of investment management. Talk to a Financial Advisor>

Dream. Plan. Do.

Platt Wealth Management offers financial plans to answer your important financial questions. Where are you? Where do you want to be? How can you get there? Our four-step financial planning process is designed to be a road map to get you where you want to go while providing flexibility to adapt to changes along the route. We offer stand alone plans or full wealth management plans that include our investment management services. Give us a call today to set up a complimentary review. 619-255-9554.

Everything You Need to Know About RMD’s

Everything You Need to Know About RMD’s

As Ben Franklin said, “… [n]othing is certain but death and taxes.” Required Minimum Distributions (RMDs) are the method the IRS uses to ensure that you pay some taxes on your pretax retirement savings. They’re pretty straightforward, but there is a catch here and there.

 

What accounts are subject to RMDs?

To paraphrase George Carlin, Uncle Sam loves you and he needs money! Required withdrawals are generally only taken from retirement accounts that have pretax funds in them, with one exception. Because you haven’t yet paid any taxes on that money, you need to start taking money out to provide the government with some income tax revenue.

Traditional IRA, SEP and SIMPLE IRAs, and 401(k)-like accounts, such as TSP and 403(b)s, are subject to required minimum withdrawals. However, if you reach RMD age while you’re still working at the company whose 401(k) you currently contribute to, you don’t need to start taking them as long as you own less than 5% of the company. If you have 401(k)s from previous companies, however, you’ll need to take RMDs from them.

Since you paid taxes on your Roth contributions, you won’t have to take any money out of your Roth IRA. That’s for both contributions and conversions, because either way you already paid your taxes. Roth conversions often make sense in certain years with lower tax brackets, and to “fill up” your tax bracket. You get the added benefit of reducing the size of your Traditional account and thereby reducing required income in addition to accumulating more tax-free money.

The one exception for Roth accounts is for 401(k)s and similar employer retirement accounts (though not SEPs and SIMPLEs). Roth 401(k)s are subject to the same rules as the Traditional 401(k). Even though it’s after-tax money, RMDs are still the rule. Unless you’re still working for the company whose 401(k) you’ve been contributing to, in which case you don’t have to begin at age 72.

It’s easy to avoid this particular complication. Just roll your Roth 401(k) money into a Roth IRA instead. A direct rollover has no tax consequences, and you’ll eliminate the RMD from that account.

 

How much am I required to take out?

Fortunately, you’re not the one who has to calculate the amount! The financial institution that holds your retirement account will tell you how much you need to withdraw. If you have multiple accounts, the institution calculates the amount for each account.

The requirement is based on the account balance as of the previous December 31 and your life expectancy factor taken from IRS tables. The beginning requirement is usually around 4% of the balance, and the percentage increases as you age.

 

Which accounts can I use to satisfy the RMD requirement?

The money must come from a pretax retirement account in your name. The IRS doesn’t keep track of the individual amount that you owe, just the aggregate amount.

For example, suppose you have three IRAs at different brokerage firms. The RMDs are $2,000 on one, $3500 on another, and $1500 on the third so the total withdrawal is $7,000. You can take the entire amount from one account or split it up between them all, whichever makes sense for your financial plan.

We recommend consolidating accounts, especially retirement accounts. Fewer accounts makes keeping track of your RMDs much easier. If you miss a withdrawal, the penalty is pretty steep.

 

When do I have to start my RMD’s?

For many years, the starting age was 70 ½. That was changed during the last administration to age 72, and RMDs were waived for the 2020 tax year in the CARES Act, due to the coronavirus.

If you are age 72 or older you need to start your distributions (subject to the caveats noted in question 1). For the first year of RMDs, you can delay your distribution until April 1 of the following year. For every other year, you’ll need to make the withdrawal by December 31 of that year.

It’s usually not a good idea to delay your first withdrawal. If you don’t take it in the year you turn 72, then you’ll have two required withdrawals the next year: the one you were supposed to take at age 72 plus your RMD for age 73. The option is available to you in case there is some reason that it makes sense.

 

Is there any way I can avoid RMDs?

There’s no legitimate way to avoid the required withdrawals once you’re age 72 and no longer working for the company you were contributing to. However, you can avoid paying taxes on up to $100,000 of your RMD by using the Qualified Charitable Deduction or QCD.

Sending a withdrawal from your retirement account directly to the qualified charity of your choice satisfies your distribution requirement, but you don’t owe taxes since it’s a charitable donation.

The QCD strategy only works if the money comes from an IRA, because it doesn’t count from an employer retirement plan. In addition, the funds must leave the IRA institution and be sent immediately to the charity (a nonstop transfer). Any donation that makes a stop at your bank account loses QCD eligibility.

 

What if I don’t take my RMDs for the year?

The IRS levies a pretty hefty penalty of 50% of the RMD if you elect not to take it out, or on the portion that you didn’t withdraw if you did take some out.

Unless you can prove that you didn’t know you had to take it and you never received the notification from your financial institution, you’ll owe that penalty.

 

What happens if I die in the year I start my RMDs?

Your beneficiaries are required to take the required withdrawals by the end of the year (December 31), even if it’s the year you turned 72. Each of the beneficiaries has to take their proportional share, no matter if another beneficiary takes more than their share.

For example, suppose your RMD is $1,200 and you have four beneficiaries. Each one must take $300 before December 31, even if another beneficiary already took out the full $1200.

If your beneficiary is a trust or the estate, the trust (or estate) must make the withdrawal before December 31.

If you have questions about consolidating your accounts or potentially reducing your RMD exposure, please give us a call at 619.255.9554 or send us an email to set up an appointment.

 

 

Are you on track for retirement?

Making sure you will be ready for retirement can be overwhelming. Funding your retirement accounts over the years is a critical part of your journey to the retirement of your dreams. An experienced Financial Advisor can help you navigate the complexities of investment management. Talk to a Financial Advisor>

Dream. Plan. Do.

Platt Wealth Management offers financial plans to answer your important financial questions. Where are you? Where do you want to be? How can you get there? Our four-step financial planning process is designed to be a road map to get you where you want to go while providing flexibility to adapt to changes along the route. We offer stand alone plans or full wealth management plans that include our investment management services. Give us a call today to set up a complimentary review. 619-255-9554.

Financial Independence for Women

Financial Independence for Women

Your road map to financial security.

 

Women face many unique challenges when it comes to personal finance and investing.

  • Physical and emotional – longevity, more subject to elder abuse, more likely to struggle after divorce or death of partner.
  • Workplace – lower salary over fewer earning years, out of workforce caring for family.
  • Behavioral – less confident about investing skills, more likely to start investing later, invest in less risky assets, less likely to participate in workplace retirement plans.

What does freedom mean to you – starting your own business, going part-time or leaving the workforce, moving abroad, leaving a relationship or job that isn’t right for you, living without debt hanging over your head?

 

Make your future self happy.

In his TED Talk, Daniel Goldstein tells us that our present self doesn’t want to save but wants to consume and have fun but our future self wants our present self to save. Present self is the one that’s in charge, so how do we convince our present self to pay attention to our investment accounts?

Click here to view on YouTube >>

Draw a persuasive picture.

 

  • Imagine yourself in the future.
  • Anticipate your emotional reaction when future self is able to retire without stress.
  • Visualize reaching your goals.
  • Positive reinforcement about good things your past self has done.
  • Remove obstacles such as inertia.
  • Put decisions on automatic pilot

Where do you want to be?

 

  • When do you want to retire?
  • What does retirement look like to you?
  • How much will that retirement cost?
  • Do you have flexibility?
  • Do you have short-term goals that also need to be funded?
  • What is your time horizon?
  • Do you know how much your Social Security Benefit will be?
  • How much do you need to save?
  • How will you bridge the gap?

.

Debt Best Practices

Pay on time every time! Call your credit card company and request a rate decrease. Transfer high rate balances and consoldate into a low interest loan. Clean up your credit report. Review your credit activity yearly. www.annualcreditreport.com

 

 

4% Rule

You can withdraw 4% each year from a  balanced portfolio (60% stocks 40% bonds) over a 30-year retirement period with a high probability of success of not running out of money.

1M portfolio x .04 = $40,000 per year.

 

Reading List

Lean In by Sheryl Sandberg

Don’t Ask by Linda Babcock and Sara Laschever

The Marshmallow Experiment

4% Rule by Bill Bengen

 

Action Plan

Now is the time to review your accounts, to check for diversification, and to make sure your asset allocation matches your risk tolerance.

So, what is the right portfolio for you?

The asset allocation decision is driven by your risk tolerance.  Risk tolerance is actually a two-prong test.  It encompasses your willingness to take risk and your ability to take risk, which are sometimes at odds with one another.  Willingness is determined by how much portfolio volatility you are comfortable with, which is a subjective choice.   The ability to take risk is an objective determination based on a number of factors including, but not limited to, your goals, your cash flow needs, and tax considerations.   

    Would you like to know your risk tolerance score?

     

    We invite you to complete our online risk tolerance questionnaire. You will receive a personalized and comprehensive risk report. Once you have an idea of your risk number, you can give us a call and we will be happy to review the results and look over your investments to make sure your allocations are aligned with your risk profile

     

    Risk Tolerance Questionnaire

    Find out your personal risk capacity and risk tolerance.

    Medicare

    After reading through the information, you might still have questions. Call us.

    Social Security

    Get started with your account and access to your benefits information.

    Would you like to receive more tools, resources and education? 

    Sign Up

    In a couple of weeks we will have a secure portal for you to sign in and view the full Women’s Alliance Round Table presentation, along with questions and answers from coworkers, tools and downloads for your continued financial journey.

    Would you like to receive our informative Newsletter?

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    Platt Wealth Management offers financial plans to answer your important financial questions. Where are you? Where do you want to be? How can you get there? Our four-step financial planning process is designed to be a road map to get you where you want to go while providing flexibility to adapt to changes along the route. We offer stand alone plans or full wealth management plans that include our investment management services. Give us a call today to set up a complimentary review. 619-255-9554.

    Dream. Plan. Do.

    Smart Credit for Smart People

    Smart Credit for Smart People

    In the consumer economy, credit is pretty easy to obtain. That often leads to problems for those who don’t know how to use it wisely. At the other end of the spectrum, some people avoid using credit altogether. Smart people use smart credit strategies to maximize their financial position.

    Credit provides leverage to help consumers build assets and wealth. In honor of March being National Credit Month, here’s the lowdown.

    Why do most Americans need credit?

    Now that credit scores are national, standardized, and organized by the three credit-reporting bureaus, it’s become a popular measuring tool. Before 1989, credit scores were localized affairs and used mainly for just obtaining loans or credit cards. 

    Today that’s no longer the case because credit scores aren’t just for lenders anymore. It’s essential to monitor your score since there can be a lot riding on it. In today’s world, it’s necessary to have one in the first place. 

    Americans who don’t have at least one credit card will likely find themselves disadvantaged in various financial situations. Not only when it comes to arranging for a mortgage to buy their house but also in finding a job and renting an apartment. 

    Landlords and employers often request a check on the applicant’s credit history. Some consider the lack of a credit score even worse than a bad one. Good landlords may not rent to someone with no credit at all.

    Most Americans must build a retirement nest egg through contributions to a retirement plan. Still, a significant source of household wealth remains the family home. Buying a house for cash is beyond most people’s means, so financing through a mortgage is critical. A history of good credit means a much lower interest rate added to the principal cost than a higher rate for someone with poor or no credit at all.

    That’s why young adults need a credit card and learn to use it responsibly by paying off the balance every month to avoid interest charges. That’s the best way to start a history of good credit, as well as avoiding the pitfalls of having too much revolving debt.

    Maximizing the use of credit cards

    As long as you pay off the card balance each month, the amount due doesn’t continuously increase with interest payments. Using credit cards can help consumers build wealth. 

    In addition to making money, wealth depends on not losing money or giving up too many gains. If someone gains unauthorized access to your card, it’s easier to dispute a transaction compared to a debit card.

    Make money with your credit by finding cards that provide rewards that match your lifestyle. If you do a lot of traveling (and will resume after the coronavirus pandemic), then a card that offers travel rewards makes a lot of sense as long as the annual fee doesn’t wipe out the reward. 

    When you have good credit, it’s easy to find a credit card with low or no fees that give you rewards on your purchases. Cashback is a great reward, but many cards these days offer points instead. You can still benefit from the points rewards because you can exchange points for various merchandise and gift cards. Now you’ve got presents for birthdays and holidays covered.

    Smart credit as leverage

    While credit cards are one example of credit, they don’t provide you with any leverage because you pay the balance every month. Using different credit types to buy assets gives you the ability to invest more without paying the entire amount upfront.

    What kinds of assets does credit help you leverage? Technically vehicles are listed as assets on the balance sheet, but they depreciate quickly. Taking out a loan to buy a car doesn’t provide you with an asset. 

    However, taking out a loan (mortgage) to buy a property or taking out a loan (student loans) to increase your human capital will help you accumulate wealth when used correctly. 

    Being smart about leverage allows you to invest in something that you can’t afford to pay for entirely right now but will be able to in the future (given some reasonable assumptions). Using leverage to buy an asset (or capital) that you won’t be able to maintain in the future sets you up for potential disaster. Keeping it reasonable helps ensure the loan amount won’t wreck your finances down the line.

    Using credit for smart timing

    For example, initially, interest-only (IO) mortgages were used for people who logically expected enough income in the near future that would then allow them to pay down the principal. A typical example (at least here in California) is a Hollywood director who could expect millions from one film released after nine months. The IO loan helped them buy a decent house now rather than wait a year for the money to come in. 

    These loans weren’t intended to finance too much house for people who didn’t expect they’d be able to afford the payments. Of course, IO loans aren’t the only ones that can be misused. You’ve probably heard of the phenomenon known as being “house-poor,” where the housing and associated payments eat up most of the homeowner’s income. 

    Sometimes that’s due to something unexpected like job loss. But sometimes, it’s due to a mortgage that’s larger than the homeowner can reasonably expect to carry for 15 or 30 years. While layoffs and recessions aren’t predictable, the amount of income you need to sustain a mortgage and associated housing payments is. 

    Using smart credit for better returns

    Home equity loans make sense when you’re making improvements to the home that will increase its value. They make less sense when you’re taking the money out to buy something. 

    Similarly, refinancing a mortgage is a great idea when either rates have dropped or your credit has improved to the point where you can substantially save on payments. It’s a bad one when you’re trying to take money out for a purchase because you don’t have any other cash available. Especially an investment that doesn’t result in ownership of an asset.

    If you’re building a business that’s likely to grow and prosper, taking out a business loan to get through those first lean years is an excellent use of leverage. It works with investment real estate, too. Many lenders will allow you to use the property’s expected rental income to increase the loan principal. 

    Making sure that the amount is within reason applies to student loans as well. Taking out a 6-figure loan to pay for school may make sense when you’re entering a field, like medicine, where you’ll be richly rewarded with hundreds of thousands of dollars a year. But it’s way too much for a job where the average income is only in the five figures annually.

    Using credit wisely and as leverage to accumulate capital and build assets is an integral part of a smart financial plan. Debt isn’t necessarily a bad thing, as long as you manage your credit exposure and avoid incurring unnecessary interest charges.

    Good credit is necessary for the modern world, so having at least one credit card paid off monthly is helpful for many financial decisions.

    Are you thinking about refinancing a mortgage or investing in property? Feel free to give us a call at 619.255.9554 or send us an email to set up an appointment.

     

    Are you on track for retirement?

    Making sure you will be ready for retirement can be overwhelming. Funding your retirement accounts over the years is a critical part of your journey to the retirement of your dreams. An experienced Financial Advisor can help you navigate the complexities of investment management. Talk to a Financial Advisor>

    Dream. Plan. Do.

    Platt Wealth Management offers financial plans to answer your important financial questions. Where are you? Where do you want to be? How can you get there? Our four-step financial planning process is designed to be a road map to get you where you want to go while providing flexibility to adapt to changes along the route. We offer stand alone plans or full wealth management plans that include our investment management services. Give us a call today to set up a complimentary review. 619-255-9554.

    Financial Planning and Investing for Women

    Financial Planning and Investing for Women

    We’ve put together some ideas for women to get comfortable talking about financial planning and investing.

    Women face many unique challenges when it comes to personal finance and investing. One big challenge is that money is a taboo topic for women. By one estimate, 90% of women will be solely in charge of their money at one point in their lives. It can be hard to take control of your financial situation if you don’t feel comfortable talking about it.

    According to research by Fidelity, 80% of women investors refrained from talking about money with people close to them, citing reasons like it’s too personal or uncomfortable, or not wanting people close to them to have that knowledge. Only 47% of women said they would be comfortable talking about money with a financial professional.

    These statistics are seemingly at odds with results from the same study that showed a huge majority of women would like to become more engaged with financial planning and learning more about money and investing.

    With these statistics in mind, we put together a quick list of ideas to help you start talking about your money, finances, and investments.

     

    Find your tribe of women investors.

    Find a community of people that you trust to discuss financial issues. If you have specific goals (like saving more or getting out of debt), surrounding yourself with like-minded people can give you support and encouragement. A group of women can help you feel comfortable enough to ask questions and learn from each other.

    Learn more about financial planning for women.

    Commit time to learning more about personal finance, investing and financial planning. There are many books and online resources dedicated to helping people learn.  Start with our video series on Financial Fundamentals.

     

    Ask your financial advisor questions.

    Don’t be afraid to ask questions if something is confusing or if there are terms you aren’t familiar with. A good financial advisor knows that it is important that you understand your finances and investments for you own security and peace of mind. 

    Be compassionate to yourself when relearning how to talk about money.

    Understand that most people feel some discomfort talking about money, not just women. Personal finance reveals how you spend your money and what is important to you in your life. Talking about it is deeply personal and emotional. You might have to take a hard look at your upbringing and social or cultural teachings about money. If you were taught that it isn’t polite to talk about money or if finances were a source of stress in your family, you may have to relearn some of the beliefs that you were raised with. This can be difficult, so be kind to yourself as you go through this process. 

    Find a financial advisor who understands women investors and their unique concerns.

     

    Find a financial profession that wants to understand your situation and your concerns, answer your questions in a non-judgmental way, and explains your options with the pros and cons of each course of action.

    Platt Wealth Management offers financial plans to answer your important financial questions. Where are you? Where do you want to be? How can you get there? Our four-step financial planning process is designed to be a road map to get you where you want to go while providing flexibility to adapt to changes along the route. We offer stand alone plans or full wealth management plans that include our investment management services. Give us a call today to set up a complimentary meeting. 619-255-9554.

     

    Dream. Plan. Do.

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