- The Finance Gourmet

Will ChatGPT Hurt Finacial Advisors

May 13, 2023 by Finance Gourmet

ChatGPT AI for Financial Advisors The hot topic in many industries is ChatGPT and artificial intelligence (AI). Will ChatGPT hurt financial advisors or will ChatGPT help financial advisors? And, what about Google’s Bard and other AI platforms? Are they helpful or harmful? Are Index Funds and ETFs AI? An interesting argument can be made that the personal finance and investing world has been using AI for decades. It was crude, rudimentary AI for sure, but an ETF is nothing more than a computer investing your money without further input. This is the most basic of AI. You input $100, and a computer records, invests, and tracks your money autonomously making adjustments where necessary, all without human intervention. As these products got more complex, they resembled AI more and more. RoboAdvisors and AI Unlike many industries, financial planners have seen attempts to replace them before. First came the online trading and the discount brokerage invasion, pushing back on the paradigm that required a broker or financial advisor. Just as important, the financial world made room for the self-advised with lower available investment dollars by discarding the extra cost of buying less than a round lot, or 100 shares. This change may …

Achieving Financial Independence Is About More Than Money

January 23, 2023 by Finance Gourmet

Financial independence is a topic that has gained increasing attention in recent years. The ability to live life on your own terms, free from the constraints of financial stress and dependence on others, is something that many people strive for. Add that to an internet full of people living the financially independent dream, or at least pretending to, and the idea that being born rich isn’t the only path to financial independence and you have a sizable movement. But achieving financial independence is not just about having money, it’s about having the freedom to live life on your terms. How To Achieve Financial Independence Tl:dr – Live below your means. Invest the difference. Keep doing it until you are financially independent. The first step in achieving financial independence is to set clear financial goals. This means identifying what you want to achieve financially and creating a plan to get there. Setting financial goals is essential because it gives you something to work towards and helps you stay focused and motivated, not what everyone else is trying to accomplish. One key goal to consider when working towards financial independence is creating an emergency fund. An emergency fund is a savings account …

Roth 401k and Roth 457 Plans

January 17, 2023July 16, 2022 by Finance Gourmet

By now, many people are familiar with the basic concepts of a 401k retirement savings plan. But did you know there are different kinds of 401k plans? Do you know what a 457 plan is, or what its variation, the Roth 457 plan is? If you already have a good understanding of regular 401k plans, or traditional 401k plans, then it’s pretty easy to see the difference. If not, don’t worry, we’ll walk you through it step by step. Standard Features 401k and 457 Plans The regular parts of a 401k plan are relatively well known. An employer must start and run the 401k plan. Contributions made to the 401k plan are traditionally made with pre-tax dollars. That means that you pay no taxes on the amounts you contribute to a 401k plan. Also, no capital gains taxes or taxes on dividends are due while the money grows inside of the 401k savings plan. In exchange, you cannot withdraw money from a 401k plan prior to age 59 1/2 except in very specific circumstances without penalty. In addition, you will have to pay taxes on the money as you withdraw it from the account. And, finally, once you turn 70 1/2 …

Are Robo-Advisors Worth It?

December 7, 2022June 4, 2022 by Finance Gourmet

Are Robo-Advisors good enough at what they do? As most regular readers of this financial planning blog know, I used to be a professional Certified Financial Planner for several years. That gives me a lot of insight into just what a financial advisor does and does not do for their clients, and how much that is worth. Susie Orman is a former financial planner who decided that the whole profession was basically rubbish. Other former financial advisors are now out there saying that these professionals are indispensable. The truth, as with most things lies somewhere in between. So, how does a robo-advisor stand up to a real financial advisor? Are robo-advisors safe? And, most importantly, are robo-advisors worth it? What Is Robo-Advisor? Let’s start with getting some facts straight. First, robo-advisor is a fancy, sensational term for bold headlines. The reality is that the so-called robo-advisors are just computer programs that build an investment portfolio, usually out of mutual funds and ETFs, for you. There are no robots sitting behind desks anywhere (although that would be cool.) Second, a robo-advisor isn’t an advisor or financial planner so much as an investment manager. Robo-Advisor vs Financial Planner The reason these things …

Do I Need a Financial Advisor?

September 14, 2022August 28, 2021 by Finance Gourmet

To read financial advice magazines and websites, you might think that anyone who uses a financial advisor is either dumb, or very rich. These money publications all say that with a little research and education, everyone should be able to do all financial planning and investing themselves to achieve financial independence. In the real world, however, real finance doesn’t always work that way. Getting Stuck Doing Finance Theoretically, getting your finances in order and investing can be a fairly simple process. However, it turns out that in reality, there are all of these places to get stuck. Once you get stuck, you lose all of your forward progress. Eventually, enough time passes and you have to start all over. As a financial advisor, I met with dozens of potential clients who walked out of my office without signing up to work with me. The vast majority never went forward with doing anything. Chances are, they met with a different advisor years later having done nothing in between. This all occurred to me while trying to work with fellow writers to set up their own online writing businesses. No matter how straightforward the instructions seemed, folks kept getting stuck. What struck …

New Biden Covid Student Loan Help

February 16, 2021 by Finance Gourmet

A whole lot of Covid financial relief protections were scheduled to end in December. As expected, some of those money helping tweaks have been extended in 2021. For example, the Biden administration recently extended the mortgage foreclosure moratorium and forbearance protections. Student Loan Relief Flexibility On January 20, 2021, various student loan relief measures were extended through September 30, 2021. Student Loan Interest Rate Set to Zero Most federally owned student loans have had their interest rate set to zero percent during the pandemic. This continues through September 30, 2021. The zero percent interest rate is pared with student loan payment suspension. Technically called administrative forbearance, student loan payment suspension allows borrowers to skip student loan payments without late payment penalties, or any other negative effects. If you have lost your job, or are having other financial difficulties during the Covid pandemic, then this is a useful way to help save some money for use toward other things. Is Acorns safe? However, if you are not having financial difficulties, and are still getting your normal paycheck from your job, this is an excellent opportunity to improve your overall financial health. Although your loan administrator will automatically place your student loans …

Real World Retirement Planning

March 3, 2021November 3, 2020 by Finance Gourmet

If you’ve read much in the personal finance world, or even just the occasional news story from the business section of your local paper, you are probably well aware of the non-stop stream of headlines about how people are not prepared to retire. Chances are you have visions of old people shut up in their homes clustered around a single candle for light and warmth. But, is this reality, or just great financial copy? A recent Marketwatch article reports on a survey where almost 80 percent of retirees found it easier than they thought to adjust their lifestyle and spending for retirement. This matches more closely with my experience as a financial advisor than the alarmist headlines do. Some real world retirement planning is all you really need. Retirement Crisis for All? As is so often the case, the reality of finances is very individual. As a result, generalizations are often inaccurate for large swaths of people, even while being correct for many others. When I was a Certified Financial Planner, the reality is that I had a lot more clients who were planning for retirement than those who were actually retired. I never did a financial plan for someone …

Financial Planning 2019

January 10, 2019 by Finance Gourmet

Stock Market 2019 Look Ahead 2019 is here, and it’s time for Finance Gourmet to take a look forward at what is going to happen with the market in 2019, the economy in 2019, and how you and your personal finances should be setup to weather the storm, and take advantage of the opportunities. 2019 Economy Let’s start with an easy one (Hah!). The 2019 economy looks to be a transition year. This is either the year, that the the economy and the markets consolidate their success and move forward into another expansionary period, or the year that the recession starts. Under normal circumstances we might have a pretty good idea of where things were heading, but these are not normal circumstances. The Trump Presidency alone adds a measure of volatility and uncertainty that just can’t be predicted. That being said, we do have several things to look at to help get an idea of where the economy is heading in 2019. First up is the Federal Reserve, which, at long last, appears to have finally noticed that the economy is slowing and shaking, and that inflation is nowhere to be found other than the always volatile fuel prices. That …

Contribute a PERCENTAGE to Your 401k

July 12, 2018 by Finance Gourmet

Sometimes, it’s easy to let the small (but BIG) stuff get lost among all of the other information and knowledge out there. I’m just as guilty as anyone else, and that’s why I’m ashamed that there are already hundreds of other articles on my personal finance advice blog before I got around to writing this one. It comes from a friend who was “running some things by me” who showed me that his 401k contribution is $750. “Why isn’t a percentage instead of fixed amount,” I said. “What difference does it make,” he said. Oh boy. Have you seen my Credit Karma reviews? Set a Percentage to Save Into Your 401k You’ve already heard it a million times before. There are fancy names for it, like “paying yourself first,” or whatever you like. But, in order to save, to really save you need to get money out of your hand, before it ever gets into your hands. It’s just human nature. We spend what we make. That’s why, no matter how old you are, and no matter how many times you’ve said it before, it still seems like just another hundred, or thousand, dollars a month is all you would need …

Basic 401k Recipe – How To 401k

January 9, 2018 by Finance Gourmet

When I was a financial advisor, it always surprised me how often people who didn’t know the first thing about money, investing, or 401(k) plans ended up being so successful at saving for retirement. For them, when they got their first “real” job all those years ago, they signed up for the 401k — because someone told them to — put in 6% of their salary — because that’s how you get the full match — and just chose a basic stock index fund as their investment choice — because that’s all you really need to do right now. Then, 30 years later, after having contributed 6% into a basic stock index fund every paycheck, during every recession, during every boom, during every bust, they ended up with a pile of money thanks to dollar cost averaging and compound interest — all without ever knowing anything about it. In contrast, I also met many people who knew “everything” about money. They quizzed me on minutia like where a company becomes a mid-cap stock versus a small-cap stock, or what month the Federal Reserve raised interest rates, but ended up with very little money in their 401k plans. As it turns …