Wednesday, April 27, 2011

In edition to the tweets, blogs, and videos Dan Danford, CRSP Principal / Chief Executive Officer at Family Investment Center, reports on about finance. He also contributes to magazines like Medical Economics. This week's article is called Deciding When To Retire. Here, Dan answers this retirement question from a reader:

I was planning to retire from my practice at 65, but now the age at which one can collect full Social Security benefits has increased, should I postpone my retirement?

To read Dan's answer to this question, click here.

Tuesday, April 26, 2011

Women of Exellence Nominates Elaine Coder & FIC

The Women of Excellence Awards is an event sponsored by the YWCA that recognizes a select group of successful women in the St. Joseph area. Last week the YWCA announced their 2011 nominations. Family Investment Center has been nominated for the Employer of Excellence category and Elaine Coder, Director of Client Services, has been nominated for the Woman in the Workplace category. The winners will be announced on Thursday, June 16th at Civic Arena. Good luck Elaine and congratulations to all of the nominees!

To read more about the 2011 Women of Excellence Awards, click here.

Monday, April 25, 2011

Brief Investment Message‏ from Jason White

Friends,

I hope this message finds you well! With the NHL hockey playoffs at full throttle, I felt compelled to take a stab at a hockey analogy. Our investment advisory services team works relentlessly on our clients' behalf to try and skate to where the puck is going to be, rather than where it is right now. Such a principle keeps us grounded in our fundamental diversified long-term approach, even when media screeching reaches a fevered crescendo...

A Bit of News:

Recently, I was invited to be a participant in a round table panel discussion on fixed income investing at Kansas City's Interncontinental Hotel just north of the Plaza on Ward Parkway. The nearly two-hour discussion was really fascinating, and I enjoyed sharing my perspective as well as hearing from peers on investment strategy, the economy, interest rates and many other topics.

What I took away from the meeting was further validation about what we believe at FIC, and the way we go about building our customized client portfolios, our manager selection process, and our evaluation of talent.

On behalf of our entire Family Investment Center team, we are very grateful to be blessed with so many wonderful friends, and from all of us, please have a safe and peaceful Easter celebration.
Yours truly,

Jason T. White, Ph.D.
Director of Investments Family Investment Center

For an audio version of this text, click here

Wednesday, April 20, 2011

Dan Explains Tax Refunds

With the deadline passed for having your taxes filed, financial adviser Dan Danford answers this timely tax question about how tax refunds work:

"Some years I owe money to the IRS, some years I get money refunded, and the amounts always vary. Is there a way to get a consistent refund or have an idea on how much I will receive or owe? If you live on a tight budget it's difficult when you receive an unexpected and unknown expense, such as owing additional taxes."

Danford, MBA, CRSP, of Family Investment Center, says while the tax refund process is easy to understand, there are many complicated factors.



Tuesday, April 19, 2011

Britt, Bell Study Financial Resiliency of Soldiers

Mary Bell is one of the students in Dan's personal finance Ph.D. cohort, and Dr. Sonya Britt is one of his instructors. This new study is pretty important for a lot of reasons, but national security is one of them.



Wednesday, April 13, 2011

What If You Make Tax Mistakes?

In this week's Money Made Easy, financial adviser Dan Danford answers a last-minute tax question:

"I'm always worried I'm doing the calculations wrong on my tax return because it's confusing to me. What should I do if I make a mistake on my taxes? Does it vary depending on the type of mistake I make?"

Danford, MBA, CRSP, of Family Investment Center, explains how the IRS treats inaccuracies on your taxes and what you need to do to correct any mistakes.



Philosophy

I was thinking about an old friend and our very different circumstances today. Then it struck me. Over the past thirty years, Chris and I endured some unpleasant financial times in our effort to accomplish larger goals. On the other hand, my friend – knowingly or unknowingly - gave up some things he might have enjoyed today in order to avoid sacrifice along the way. The irony is how little these two paths differed, and, yet, how much they magnify financial results.

Small things produce large results. It’s the cumulative value of modest amounts over long periods. I heard an industry colleague profess that one pizza a week equates into $250,000 by retirement! From a lifestyle perspective, trading cars every three years isn’t a whole lot different than trading every two years. But the cumulative value of that change equals tens of thousands of dollars over several decades.

The same thing can be said for restaurant dining or rounds of golf or an extra thirty minutes of work each day. How much difference can any of these make in our quality of life? Cut back one pizza a week or skip the foursome on the fifth Saturday each month when it rolls around. Start work at 7:30 instead of 8:00 and see how much more productive (time is money) you can be.

Obviously, none of these little things are earth-shattering in and of themselves. Still, the differences they make are worthy of note. A few sacrifices today can make a huge difference later on!

- By Dan Danford, MBA, CRSP® at Family Investment Center
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Monday, April 11, 2011

Bank Certificates Trade Performance for Certainty

Bank Certificates Trade Performance for Certainty
- By Dan Danford, MBA, CRSP®

A fellow visited St. Joseph last January for a job interview. When he arrived back home, he complained to his wife, “I could never live there. It’s always cold and blustery and there wasn’t a speck of green anywhere.” A different man (in several ways) came home from a July conference. “Hot and humid,” he explained, “why, I couldn’t bear that heat without a year-round air conditioner.”

Both men took a limited look at Missouri weather and drew mistaken conclusions. Actually, each explanation contains an element of truth, but either conclusion by itself is completely and totally wrong. By their faulty reasoning, everything depends on when you visit!

I sometimes hear a similar “bank rate” argument; it goes like this: “I could put my money in the bank and make as much as you made me through Family Investment Center.” Or, another way it’s said is “a bank paying two percent a year would have made me more money.” There may be some truth to these statements, but – like our example above - the logic is dangerously flawed.

Here’s why: Banks offer a sure low rate instead of a possible higher one. If you think about it, banks agree to pay two (or three, or four) percent only because they’re certain they can invest the deposits to earn more. Only, with the bank, they get to keep the difference as profit! I spent fifteen years in banking, and I can assure you this is true.

They know something that many customers don’t: guaranteed bank rates are short-term (usually forty-eight months or less), while most longer investments grow at a steeper pace. In essence, banks pay customers a guaranteed low rate, while using the deposits for more rewarding longer-term investments.

Bank accounts and certificates don’t fluctuate in value because their principal and interest is guaranteed. Balances grow at a very slow predictable rate. Common stocks or longer-term government bonds change value on a daily basis, because there’s a vibrant market for them.
In order to attract investors, these longer-term investments must offer higher potential rewards - it’s a basic foundation of economics. Generally, things that fluctuate will reward long-term investors by compounding at a higher rate.

So, high quality client portfolios containing stocks, bonds, or other kinds of investments will surely endure some slower times. Because of these fluctuations, there will always be periods of time – usually short-term - when bank deposits outperform them.

Banks look best when other investments fluctuate downward, and worst when portfolios explode upwards (customers rarely complain about this, though!). Like our earlier weather watchers, though, neither of these circumstances is really representative of long-term performance.

In most types of solid investing, there will be limited periods where a bank would have done better. That’s not the whole story, though, and bank customers trade performance for certainty. It’s an expensive choice to make.



Friday, April 8, 2011

7 Things You Should Never Say to Your Kids About Money

Here's a link to an article that was published yesterday on Yahoo Finance. It gives 7 ways to avoid raising financially dysfunctional kids.


Here's another blog Dan wrote on this topic.

What are you teaching your children about money?

Wednesday, April 6, 2011

Family Investment Center Referrals

Our business is fueled by referrals. Various studies show that investment management services are chosen on the basis of friendship. Not necessarily friendship with the manager, but people generally choose managers recommended by friends and associates. Even among the wealthiest households, these informal referrals carry tremendous impact.

Referrals are even more important for me because I don’t like to sell. I’m at my best when someone approaches me to help solve a problem or organize investments. I don’t persuade people to buy our services; Instead, I show what we do and they decide whether I can help. If I can, great. If not, that’s okay, too.

Any referral is a nice compliment. It’s one person telling another that they know me, they like me, and – most importantly – they trust me. In a sense, it is a Stamp of Approval on my professional competence issued by the very best source: a trusted friend or respected colleague.
The ultimate compliment is a referral to someone’s parent. As adults, most of us worry about our parents. We want to help (if they need it) but we respect their independence and privacy. We are fairly protective and particularly cautious in recommending help, especially financial help. In brief, the standard of trust is exceedingly high.

Friends are always good to me and I help many parents and in-laws. But, this case was especially gratifying because the family genuinely needed assistance. We helped them identify assets, organize record keeping, plan their estate, and consolidate a variety of bank and investment accounts. They are such nice people and they were so grateful for my help.

It was touching. Their accountant son introduced us and I consider it the highest compliment I can get. It’s precisely why we started Family Investment Center.

Monday, April 4, 2011

Family Net Worth


A family statement of net worth (balance sheet) is a powerful financial tool. A statement is easy to compute, updated quickly, and offers a great way to evaluate decisions.

First, to build your family’s statement, start by listing the honest resale value of all things you own. List all houses, cars, boats, household goods (the national average for families is around $30,000), collectibles, and anything else of value. Next, add financial assets. Include bank, brokerage, or mutual fund accounts. Include IRA accounts or retirement plans from work. Include the cash surrender value of insurance policies. In short, this list should include everything you own with the current value.

The second half is -- hopefully -- a much shorter list. Here, list everything you owe with today’s payoff value. Start with the mortgage. Then, add any car, student, or consumer loans. List the balances on credit cards or money you owe family members. Don’t forget loans on insurance policies or money owed to a company retirement plan.

Simply, Family Net Worth (FNW) is the difference between what you own and what you owe. It’s the liquidation value of your financial life. If you sold and liquidated everything you own and paid off all debts, what would be left in your wallet?

Knowing this number helps you financially. It’s a running tally of financial progress. Update the numbers occasionally and see if your FNW is rising or falling. A rising number indicates progress; one that slips requires attention. (Of course, there are life stages where FNW is expected to fall -- college years for children is one.)

It’s also a spectacular decision-making tool. Say, you’re trying to decide whether to replace a car or start a mutual fund account. Consider what will happen to your FNW five years from now. Estimate the future worth of the car and the mutual fund in 2004. Does this help decide? Similar processes can help decide between two cars (which will have better resale value?) and houses (ditto).

Not every family decision is reached on the basis of finance. But, finance should be considered as part of any major decision. Understanding FNW helps all of us make better choices.

Lipper Fund Awards


For the second consecutive year, Lipper selected the Scout International Fund (UMBWX) as Best International Large-Cap Growth Fund. The award was based on consistent return among 197 funds evaluated on risk-adjusted returns over the three-year period ending December 31, 2010.


"In a field as competitive as International Large-Cap Growth funds, Scout International didn't rest after last year's win - they added to it."

- Jeff Tjornehoj, head of Lipper Americas Research


"Recognition like this simply affirms our selection process. Not every manager wins an award, but they are proven, consistent, and reasonably-priced. It's a good combination and clients enjoy the benefits."

- Dan Danford, CEO of Family Investment Center


UMBWX is a core holding in many of our clients' portfolios. Family Investment Center has no financial relationship with Scout Funds. One key service we provide is researching the mutual fund universe to help clients choose top fund managers for their portfolios. This type of recognition just confirms our selection processes.


The advisors at Family Investment Center specialize in managing large portfolios ($100,000 or more) of traditional investments. They do, however, advise investors on a broad range of wealth management services. Family Investment Center is a commission-free investment advisory firm registered with the SEC. More about this unique firm can be found at http://www.familyinvestmentcenter.com/, on the firm's blog at http://www.familyinvestmentcenter.blogspot.com/, or on Twitter at www.twitter.com/family_finances. Visit them at 3805 Beck Road, St. Joseph, MO 64506 or call (816) 233-4100.

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