financial planning

Can I Text My Financial Advisor?

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text broker financial planner advisor

When it comes to technology, the financial industry often moves slowly. Back when I was starting out as a financial planner and financial advisor, I was forbidden from having a website, or financial blog like this one for fear that it would constitute non-compliant advertising. The irony was that as someone a bit ahead of the curve on that, I likely could have built up the financial planning practice I wanted, without doing something I didn’t want, cold calling. These days, numerous financial advisory firms run websites and blogs exactly like the one I wanted to run a decade ago. It begs the question how it can be perfectly fine, and non-scary now, but not then. I also never understood how a person who feels good fast-talking strangers on the phone would be considered “more honest” than someone willing to put into writing what they were saying. But, rules are rules. Text Messaging Financial Professionals and Brokers Not long after I left financial planning, I wrote some articles about the SEC and FINRA slowly loosening rules on various forms of electronic financial communications, in particular releasing things like Quarterly Reports on a company website, instead of the, then current, default …

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The Uncorrectable Housing Shortage

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low cost housing density home

Here in Colorado, there is a housing shortage, especially near the bigger cities where the majority of people live, like the Denver metro area, Boulder, Ft. Collins, Loveland, Colorado Springs, and so on. The problem is in many ways self-inflicted. There are only so many buyers looking for houses above $500,000. There are many more buyers looking for houses below $500,000, and even more looking for houses below $300,000. A subdivision of homes priced between $200,000 and $250,000 would likely see a months-long waiting list in just hours. Why No One Builds Lower Priced Homes Anymore During the last housing crunch, buyers (like me) lined up to by houses from builders based on models. You put your name in the lottery for a lot, and then got to customize the house. The downside was that you had to wait the better part of a year to actually move into your new home while they were buying it. Back then, different builders built to different price points on large tracts of land. If you couldn’t afford the houses being built by one builder, you went with a different builder in that development. Check out my WalletHub review. Today, most builders are …

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Lowest Cost Mutual Funds No Minimums

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low cost investing mutual funds

When it comes to getting started investing, it is often that first step that becomes the biggest hold up. For many would-be investors the most formidable barrier is actually free, that of setting up an actual account. However, for those with the momentum to cross that line, the next barrier is the cost of investing, most often in the form of a minimum investment. Skipping over these two barriers is one of the things that makes automatic investing apps like Acorns so attractive to new investors. They both eliminate the need to choose and set up a brokerage account and offer a way to get started investing with as little as five dollars. No Minimum Investment Mutual Funds with Low Costs Theoretically, a single investment in a mutual fund with a $1,000 doesn’t sound insurmountable. However, when every reputable financial advisor recommends diversifying your investments among several different funds, that $1,000 minimum quickly adds up to a $5,000 or even $8,000 minimum, to obtain the right kind of diversification. Throw in a 5.25% up-front load for many mutual funds sold by advisors, and that’s a lot of initial overhead. Fortunately, there are many low-cost, do-it-yourself mutual funds that you can …

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All The Basics

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Coming this week on the Finance Gourmet, all of the basics in one week of posts. That’s right, all the things you need for a successful basic financial plan, retirement plan, and college savings plan all in one place in a series of easy to read posts. Consider this the intro to personal finance that you always wanted to read, but never really found. We’ll continue next week with some interesting reviews of financial apps, like our Acorns review, and Digit review, as well as reviews of various online financial services such as Credit Karma and Credit Sesame. I’ll probably bail on Thanksgiving, but I’m willing to bet that most of you won’t be looking to brush up on your personal finance knowledge on that day either. So, no harm, no foul. Going into the new year, we’ll get back to what started it all here on Finance Gourmet, a series of financial recipes. These are recipe style financial solutions and personal finance plans that you can implement without an in-depth understanding. Instead, just gather the necessary “ingredients” and then follow the recipe. We’ll cover everything from a 401k plan to more complicated topics. We are also going to start …

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What Is Fiduciary Responsibility?

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Fiduciary responsibility, sometimes referenced as fiduciary duty, is the best term in finance, with the possible exception of fungible. So, what is fiduciary responsibility, and do you need someone with a fiduciary duty to help with your finances? Fiduciary is a fancy word for the concept of doing what is in the best interest of someone, typically a client or a trustee. Most people are shocked to find out that most financial planners, financial advisors, stock brokers, and the like do not have a fiduciary duty to their clients. In other words, the guy you have managing all of your money is not required, by law, regulation, or contract to act in your best interests. Rather, they typically have a much more easier standard called suitability. Suitability means that the investments or other recommendations they make are merely suitable for someone like you, not the best for you. So, if it isn’t wildly inappropriate for you to be investing in Apple stock, then they can recommend Apple stock, even if they feel like another investment would be better. Any attempt to ever make any of these financial professionals required to be fiduciaries is met with immediate and ravenous attack from …

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Fast Retirement Math

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retirement income

Want to make a quickie calculation about how much money you’ll need for retirement? I’ve talked before how, for most people, knowing “your number,” or whatever you want to call it isn’t really all that helpful. The simple reason is that most people cannot save as much for retirement as they should be, so they should just be saving as much as they can. Simple. But, what if you are getting ready to retire, or if you just want to know how much retirement income you have stored away? Quick Retirement Income Calculation The quickest way to calculate your current retirement income is to take the amount of money you have saved, and multiply it by 4%. That’s your current “safe” annual income in retirement. As in, if you have $1 million stashed away in your 401k plan, you can count on $40,000 per year in income. Sucks, doesn’t it? Before we get to some info that might help you feel better, let’s take a look at where the 4% comes from. Check out my review of Credit Karma here. A chimp with a hammer can get you 4% income without ever running you out of principal. In fact, at …

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myRA IRA Review – Safe and Legit

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myRA Roth IRA review

No matter how helpful the government could potentially be to its citizens, it typically won’t/can’t get involved in finance because there are huge lobbying dollars behind financial services companies. For example, it would be relatively trivial for the IRS to create a free, online, auto-filing system that would work for most taxpayers, increase tax collections, and be a win-win for everyone involved. Everyone, that is, except for TurboTax, who, obviously, spend millions of dollars each year keeping such a system away from its lucrative tax software business. This is why I was surprised to find out about myRA, a no-cost government Roth IRA program aimed at people who might otherwise have a hard time getting started saving for retirement. What Is myRA and Is It Safe and Legitimate? The myRA account is a government run Roth IRA. As such, it follows all of the same rules as a regular IRA. There is a maximum Roth IRA contribution amount allowed each year. This year, it’s $5500, with an additional $1,000 “catch-up” contribution allowed for people 50 or older. So, what’s the benefit of using the myRA program?   The myRA IRA has no start up cost, no IRA annual fees, and just …

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Stock Market Reality Check and When To Panic

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10 years invested in SP500

I’ve written a few articles recently about the start of the year stock market freak out and about not panicking when the stock market makes sudden moves. In response I’ve heard from people about if there ever is a time to panic, and if there isn’t, if there is ever a right time to sell. The problem is that there is some knowledge missing from these questions. So, here is a reality check on the current stock market situation, and some advice on when to panic and when to sell your stocks. Long-Term Diversified Portfolio Let’s start from the beginning. There are a lot of different kinds of investing. When people forget this fact, it often causes them to make incorrect decisions. Remember, every decision you make should be consistent with your investing strategy and financial plan. So, for those of you investing for the long-term, particularly for retirement, with a decade or more to go, your reactions should be very different from someone who is investing for other reasons, or for a shorter time frame. As a long-term retirement investor, your strategy should be to construct a well diversified portfolio that matches your return needs with your risk tolerance. …

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Who Needs a Financial Planner?

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financial planner helpful

Ask any financial advisor, and they’ll tell you that everyone (with money, at least) needs a financial planner or advisor. Ask any do it yourself financial planning type and they’ll tell you that no one need a financial advisor or planner. The answer, of course, is much more complicated than that. However, there are some people who are very likely to actually need a financial advisor. Big Money Quickly People who suddenly come into large amounts of money almost always benefit from a professional financial advisor. Unlike those who slowly grow into their fortunes, people who suddenly acquire wealth don’t have time to slowly build up experience with bigger finances. Consider someone who takes 5 years to grow into a $1 million net worth. That first year, they realize there are some tax things they need to consider. During the second year they find out other things, that maybe only really impact people with more than $500,000, and so on. But, when the money comes all at once, there is no time to build up that experience, and, unfortunately, many financial mistakes are irreversible. People who sell their company, or whose stock options finally come in, or otherwise come into a …

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World’s Easiest Retirement Plan

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easy retirement plan

So, you want to do some retirement planning, but it all looks very complicated. There are numerous ways to save for retirement, and there are a lot of different investment accounts, and so on. You may be wondering if you need a financial advisor or financial planner just to make heads or tails of everything. Don’t worry. Most of that stuff isn’t necessary. There are a few facts that will help you develop a rock solid retirement plan for free, in no time at all. Easy Retirement Planning Keep in mind that most of the complications that come from talking about things like financial planning or retirement planning come from the fact that there are actually a lot of different people and a lot of different financial situations. But, when it comes to building a retirement plan yourself, or with a professional, the reality is that 90 to 95 percent of people just need a basic retirement plan with no bells, whistles, or complex calculations. Fact #1: It is almost impossible to save too much money for retirement. The reality is that most people are very much under-saving for retirement. Fully funding a retirement at a lifestyle nearly equal to the …

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