Asset protection strategies

Asset protection is an area of law in which your attorney works with you to ensure that the assets you have worked to accumulate are legally safeguarded from third parties.  In the video below, Dan Danford, CFP® and Principal/Chief Executive Officer of Family Investment Center, explains several asset protection strategies.

It is best to implement an asset protection strategy early to avoid the appearance of fraudulent transfer and to ensure you will be protected should the unexpected arise. It is much easier to create an asset protection strategy when the creditors are hypothetical future collectors and not creditors currently knocking on your door.

7 Money Mantras To Live By

Check out this new article from the Oprah.com website called "The 7 Money Mantras Experts Live By".  Here are seven tips that can help you save hugely over time (click here to read the full article):

Mantra #1:  Manage your finances like you manage your social life.  For example, place bill due dates on your calendar right alongside your social outings.  This serves as a good reminder.

Mantra #2:  Find the bigger "yes."  Set your priorities.  Make spending cuts in areas that matter.

Mantra #3:  You can't out-frugal your way to rich.  "You don't have to eat lobster every night, but you do have to eat."

Mantra #4:  Sober up your spending for free.  Free (general) financial advice is available if you look for it. 

Mantra #5:  Buy more good times than good things.  We typically don't look back and regret the things we didn't purchase.  Look for experiences instead of material things.

Mantra #6:  Don't do anything smart.  If you're feeling jumpy, relax.  Try not to act out of emotion.

Mantra #7:  Wait a day or two... or three.  Before making a purchase, sleep on it.  It will still be available in a day or two and you'll often decide it's something you really don't need. 

12 steps to take in your 60s

Liz Weston's recent MSN Money article, "Money in your 60s: 12 steps to take," explores 12 steps you can take to proactively prepare for retirement during your final years of work.  These steps include:
1)  Zero in on a retirement date.
2)  Figure out where you're going to live.
3)  Consider long-term-care insurance.
4)  Don't forget to include medical costs.
5)  Deal with your debt.
6)  Draw up a retirement budget.
7)  Review your Social Security and pension options.
8)  Check your withdrawal rate.
9)  Consider an immediate annuity.
10) Stress-test your plan.

Click here to read the full article.

Protecting CDs in Trust Accounts

There is a lot of misunderstanding about trusts.

In the video below, Dan Danford, CFP®, CRSP®, MBA, and Founder/CEO of Family Investment Center, answers this question about bank CDs and trust accounts:

"How do I purchase bank CDs and make sure they are protected in my trust account? I purchased one already, thinking that because I used trust fund money to buy it, it would be held in the trust. It isn't and I don't want to make the same mistake twice. Also, is there a way that I can move the existing CD into the trust without penalty?"

101 Ways to Build Wealth

In CNN’s July 2012 Money Magazine, an article was published called “101 Ways to Build Wealth.”  Here are some highlights, taken directly from the article, on how investing smarter can help you save, protect, and build your assets:

·         Get a pro to help with the plans.  Participants in 401(k) plans who receive some form of guidance earn annual returns an average three percentage points higher than those who don’t, according to Aon Hewitt and Financial Engines.  You may be able to get financial advice for free; an increasing number of companies offer it as a benefit.  Ask HR. 

·         Know your number.  People who have calculated the total amount they’ll need to retire have more saved than those who haven’t, the Employee Benefit Research Institute recently found.  Not among the 42% of works who’ve fun this math?  It’s easy enough to do: Plug your info into the “How much will you need for retirement” calculator at www.cnnmoney.com/tools.

·         Strategize, don’t improvise.  Go a step beyond simply knowing the target – know how to hit it.  A study last year conducted at the University of California at Irvine found that people who had a specific plan for their savings amassed between 28% and 85% more than those who didn’t.  “A formal plan makes you a more disciplined saver,” says Chicago financial planner Cicily Maton.  The “What you need to save” tool at www.cnnmoney.com/tools can help you determine how much to put away. 

·         Be passively aggressive when investing.  Few actively managed funds consistently beat their benchmarks.  That means for a diversified portfolio, you’d have to pick right a bunch of times.  Good luck with that.  Instead, put the bulk of your money in index funds and ETFs from the MONEY 70 that cover the market, then invest the rest in managers you think have the goods.

·         Merge and purge.  Some 50% of Americans have at least one retirement plan from an old employer hanging around, according to a survey by ING Direct.  Got a few yourself?  Roll your accounts over into a single IRA, or even into your current employer’s 401(k).  That way you’ll be able to track progress more easily, see which funds are failing you, assess your mix, rebalance the whole package, and cut your fees.  Since you can set up an IRA with a bank, brokerage, or fund company, you’ll also have access to more investment choices than you had in that old 401(k).

·         Take tips with a (large) grain of salt.  “Following the latest stock tip is a sure way to avoid the steady gains a diversified portfolio offers.  A tip from an acquaintance is just interesting conversation.” – David Thompson, League City, Texas

·         Don’t be so quick to erase the mortgage.  While paying off your credit card ASAP is Personal Finance 101, it’s not always better to pay off your home loan faster than needed.  “Between low rates and deductibility, there are better things to do with your ‘extra’ money,” says T. Rowe Price planner Stuart Ritter.  If you put an added $100 a month toward a $100,000, 30-year mortgage at 5%, you’d pay the loan off in 21 years.  But invest that $100 a month for 21 years with an annual return of 7%, and you’d have $57,000 – enough to pay off the remaining $45,000 loan balance, with a lot left over. 

·         Keep your emotions in check.  A recent report from Barclays Wealth identified four of the most common mistakes people make: 1) focusing on single investments rather than the big picture – consequence: not being appropriately diversified, 2) concentrating on a short-term time horizon – consequence: mistiming the market, 3) taking more risks when comfortable and less risks when not – consequence: buying high, selling low, and 4) taking action in hopes of gaining control – consequence: high fees from trading too frequently. 

·         Don’t flee with the crowd.  Minimum allocation to stocks if you are at least 15 years away from retirement: 50%.  In the past year nervous investors have pulled $170 billion out of stock funds, while pouring money into bonds.  But over all the 20-year rolling periods since 1926, a 50/50 stock-bond portfolio – what conservative target-date funds suggest for near-retirees – delivered annualized returns of 8.7%, vs. 5.5% for a 100% long-term government bond portfolio. 

·         Be like Buffett.  “I follow Warren Buffett’s advice: Be fearful when others are greedy, and greedy when others are fearful.  It’s a reminder that down days are good buying opportunities and nothing goes up forever.” – Brian Frain, Milwaukee

·         Men: invest more like a lady.  Many studies during the past dozen or so years have suggested that women investors have better results than men, largely because their lack of confidence about their financial prowess stops them from making foolish mistakes.  The consensus: Women’s portfolios generally beat men’s by about one percentage point a year on a risk-adjusted basis.  Big deal, you say?  Well, yes.  On an account with $250,000 in assets and contributions of $10,000 a year, that extra point would translate to about $215,000 in additional profits over 20 years, if you average 7% a year on the portfolio rather than 6%.

To read the entire article, click here.