New Book - Coming November 2010

New Book - Coming November 2010
Help! My 401(k) Has Fallen - And Must Get Up!

Wednesday, April 29, 2009

Don't Stop Now

Yesterday we talked about why we should not take money out of a 401(k). The Bargains are too good (for long term savings) to pass up.

Whether you see this economy as "half full" or "half empty", you need to make sure you are taking adavantage of a 401(k) is it is offered by your employer. And if they offer matching contributions or profit sharing - there's no reason NOT to do it. Your employer is giving you FREE money to help fund your retirement.

What if you've never started a 401(k), or are starting over at "Ground Zero"?

Did you know that a 40 year old, earning $50,000/year, putting 10% into their 401(k) ($5000/year) would have saved $459,632 by age 65??
That is based on the employer matching dollar for dollar up to 4%, and averaging a 7% return over 25 years.

Want to see where you will be at retirement? Just use the 401(k) Calculator at . Plug in your own numbers to fit your situation.

Can you imagine how much less this would be if you stopped?

For more information, please contact me at

Tuesday, April 28, 2009

401(k) Bargains

I've been talking with several clients lately (even in their 30's & 40's) who aren't sure what they should be doing with their 401(k)s. A few of them have even taken money out of the 401(k) or IRA, because they "don't want to lose anymore".

We need to remember that while the market goes up and also goes down, over time IT GOES UP. Putting money into your 401(k) now (while prices are low) can only help, especially if your employer matches your contribution. We MUST get back to thinking big picture, not just what is happening today. As one advisor likes to say, "Short Term thinking is very murky, but Long Term is crystal clear."

Walter Updegrave mentions this in his article "Don't Miss Out on 401(k) Bargains" in Money Magazine.'t-Miss-Out-on-401k-Bargains;_ylt=Ajq2DWlNpxka9nV4LwU8Qf.VBa1_?mod=fidelity-readytoretire

The best time to invest is when prices are low, and you don't want to take money out if you don't have to. It has the same effect as uprooting a plant - You are killing your money tree, in addition to paying taxes and a 10% penalty.

When would you prefer to buy groceries - at regular price or on sale?
Treat your investing the same way.

Want to lower your risk? How diversified are you?

The one thing missing in most 401(k) plans is professional advice & education for the employees. It's not enough for the guy (or lady) to come out a couple of times a year and ask if anyone has questions. My job as a professional must be to sit down with you and help you with a road map. We need to see where you are now, and where you need to be. The 401(k) is a vehicle which can (and should) be used to help you get there.

Don't miss out on 401(k) bargains!

For more information, please contact me at .

Monday, April 27, 2009

Are You Saving Enough?

Boston College’s Center for Retirement Research recently found that about 64% of Americans aren’t saving enough to maintain their standard of living in retirement. Some ways to tell if you’re at risk:

Find A Percentage -

The general rule of thumb is that retirees need about 70% to 80% of pre-retirement income to maintain their standard of living. To get a better sense though, consider using software that helps take into account factors like paying college tuition or taking fewer vacations. ESPlanner, which costs $150 and is available at , is one place to start.

Map Out Withdrawals -

Many retirees will withdraw 4% of their portfolio in the first year of retirement and adjust that dollar amount each year to account for inflation. Find out if you can live comfortably on that amount plus Social Security payments; if you’ve had heavy portfolio losses, consider skipping the inflation bump initially.

Consider Health Care -

Because lower-income seniors have their long-term care covered by Medicaid, and wealthier seniors can self-fund their care or buy insurance, those in the middle often have the hardest time paying for such services, a big drain on a nest egg. Anthony Webb of Boston College says that non-Medicaid seniors with less than $1 million in assets should plan early for big health costs by cutting expenses elsewhere or delaying retirement.

Figure the Odds -

Financial planners can often do modeling that helps calculate the chances you will still have a nest egg to draw from at a given age. Many retirement experts urge workers to wait to retire until their percentage chance of outliving their nest egg drops to 15% or below. To be safe, it’s good to assume you’ll live to age 90 or 95, especially with longer life spans.

For more information, please contact me at

(Text reprinted from Smart Money Magazine, March 31, Angie C. Marek)

Saturday, April 25, 2009

A "Golden" Opportunity?

My job is to help others to grow their savings and improve their financial health. These days, we all need to get healthy. A common question I get is whether or not to invest in gold.

Gold is an investment that can be part of your portfolio. Talk with your advisor to decide how much, part should be.

Warren Buffett likes to say, " We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful."
I don't know about you, but when I hear every other commercial on Financial TV & Radio
promoting gold, it sounds pretty "greedy" to me, wouldn't you agree?

Dave Ramsey put on a Town Hall for Hope on Thurs. April 23. Over 6000 watched and decided it was time to put fear aside and start making smart choices with their money. From the site , Dave shares some interesting facts about gold & other investments.

Did you know that gold has only risen an average of 2.14% per year? And that includes a surge since 2001 to present.

Did you also know that the S & P has grown by 1250% since 1974, from 63 to 850? That includes recessions in the 1970's, 1980s, 2001-2002, and the present.

Check out these other interesting stats at

Before investing, talk with your advisor to determine your goals, time horizon & risk tolerance.
For more information, or to contact me directly, visit my site at .

Thursday, April 23, 2009

Time For Plastic Surgery

This morning, I watched a report on NBC's Today Show by Lisa Myers "Credit Card Backlash - Are Banks Gouging With Credit Cards?" According to Ms. Myers report, some credit card companies have raised interest rates significantly on balances owed. Apparantly, this is one way for banks to recoup some lost profits from last year.

Its also stirred anger from the credit card holders. Whether or not you own a credit card, this should make you angry. Credit cards, like many things have a good and bad side, but often we use them to pay for things when we don't have the money. This kills our chances of growing our savings. When you think about it, the big reason we are in a recession now is because too many people lived beyond their means and bit off more than they could chew.

Want to do your part to get the economy going again?

Do what Dave Ramsey ( says - perform "plastic surgery" on your cards.
Shred 'em & Get Rid of 'em!!

Like ripping off a band-aid, it may hurt at first, but you should also feel a huge sense of relief - like a giant boulder lifted off your shoulders. Without the card, you can't add debt. You can only lower it by making your payments. With the average credit card debt in America at $8400, this is the time to dump the debt and start growing savings.

Check out Dave Ramsey's "Town Hall for Hope" 8:00pm EST
South Bend, IN area residents can attend at Clay Church

For more information on improving yhour financial health, please contact me at .

Wednesday, April 22, 2009

How Should I Invest?

Everyone has beeen asking lately - "How should I be investing my money?" or "What's Good Right Now"?

The answers to those questions should provoke several other questions from your advisor.
I could say "Depends", which doesn't mean to invest in adult diapers, but you should give your advisor more information.

How you should invest your money really does depend on you.

* What are your goals?

Is it to be 'debt free'? Is it to own a 60 foot yacht? Golf everyday? Spend time with grandkids?
What does having money mean to YOU? Once you figure that out and communicate that with an advisor, he or she can help to give you the right place to put your money.

* What are your financial circumstances?

Someone with $100,000 in savings and no debt is in a different place in their life than someone who has $500 to "play with", but no other savings. As an advisor, I do not want to "gamble" with anyone's money. I look to provide appropriate long term solutions to help you reach your goals.
My job is to give you the "Map" you need to get from where you are now, to where you want to be - and make sure you are happily involved every step of the way.

* What is your tolerance for Risk?

OK I said it - the "R" word. To which you may say "I don't want any risk."
It's important to understand that ALL investments have risk. Even your savings account which
is FDIC insured has risk.

"How is that?" you ask.
Savings & CDs have "inflation risk", which means they are not good long term vehicles to keep up with the rising cost of living - inflation.

The best way to minimize risk is to use a mix of different investments that have different purposes - like different clothes in your closet - or "Diversification". There are also questions which your advisor may ask you to help you understand what risk means.

It all boils down to one question - Money means different things to different people.
What is important about money to you?

For more information, or to contact me directly, please visit

Monday, April 20, 2009

Muni Bonds vs CDs

Buying CDs (Certifcates of Depression) now must feel something like eating a stale leftover bologna sandwich (Ugh).

For those of you that simply need more income from your savings (everyone) and don't want the volatility of stocks - municipal bonds are a fantastic option. You can invest either in single bonds or mutual funds that hold munis.

I've already written about several advantages which muni bonds have over CDs right now - especially with interest rates on CDs being about the same as burying money in a coffee can in your backyard.

Franklin Templeton offers a great illustration on what your get (or don't get) with a CD. Over a 20 year period, investing in 6 month CDs would have gotten an average annual return of 0.64% after taxes and inflation.

Yes, that was 0.64% - not a typo. (Was that a Folgers can or Maxwell House?)

If you are not able to view the illustration, or would like more information on this or other investment ideas, please contact me at .

Friday, April 17, 2009

How Diversified Are You?

Diversification - Now there's a word you hear a LOT in the investing world. For those of you who may not have a Series 7 license - WHAT DOES IT MEAN in layman's terms? WHY is "diversification" important to me & my money?

Good question - Here's what diversification is NOT -
* Having Money at different banks.
* Dealing with different financial advisors.
* Owning CDs due at different times.

The simplest way I know of to define "Diversification" that most of us can relate to is this.

Think of your closet at home, where you keep your clothes. We all may prefer a different style or taste in clothing, but clothing generally falls into these main groups.

* Winter or cold weather wear
* Summer wear
* Spring wear
* Dress up or formal wear
* Casual wear
* Sleepwear
* Working clothes (Painting or yard work)
* Shoes
* Rain gear

In other words, different clothing for different occasions. No matter what's happening in your life or with the weather, you have clothes to wear that fit the situation. And we need to have the right amounts.

If you don't like the weather in Indiana, don't worry. It will change soon. It would be silly to own all t-shirts & shorts. Wouldn't it also be silly to live in Arizona, and own too much winter wear?

The same is true for investing. You need a full "closet" of clothing so that you are ready for whatever the economy is doing. That's how you minimize all the types of risk.

Talk with your advisor today to make sure your "closet" is full of the right financial "clothes".
(Is it time to get rid of the Nehru Jacket & Leisure Suit yet?)

For more information, you can contact me at

Thursday, April 16, 2009

Remember The Pony

Anyone ever tell you to have a "Positive Mental Attitude"? Or try to explain what it is?

To me, this is the best story which describes a "Positive Mental Attitude" which I have ever seen. And in over 25 years of being involved in sales and customer service - BELIEVE ME, I have seen or heard almost everything about PMA.

This is such a great story, the video is only about 2 minutes long, by a gentleman named
Mort Utley. I assure you, this will make your day and put a smile on your face.

Never heard of him? After seeing this, I would be willing to bet, that you will always
"Remember The Pony". Enjoy, and 'keep digging'!

Wednesday, April 15, 2009

What Else Do You Know About Munis?

Over the past few days, I have been promoting the value of municipal bonds. Right now, they offer a better bargain for your long term savings than CDs.

One of the things I dislike about CDs is that they are really just a holding place for your money.
Money falls into 2 main categories -
*Liquid Money - Money that can be used now or held in an emergency fund (about $10,000
or 3 -6 months of expenses).
*Invested Money - Money that is invested that you don't have an immediate need for.

Looking at those two groups, CDs are kind of a "tweener" - your money seems tied up, so you
can't get to it. Also, the rates are so low currently that it really isn't invested either. Talk about being caught between a "rock" and a "hard place"!

CD yields are so poor, that you may even consider the idea of early withdrawal to take advantage of better (and tax FREE) yields with munis. The penalty usually is forfeiting some interest (WHAT interest??), as much as 6 months.

If you had $10000 in a CD, paying 2% ($200/year, taxable), you would lose $100 to the bank. If you re-invested it in a 5% muni bond, you would earn $500 on the same amount, and not pay federal taxes (perhaps even no state or local taxes) on the interest.

You do the math.

Here are a couple of other articles which support the idea of using muni bonds.

MARKET WATCH - "Muni Yields Aren't Puny"

KIPLINGERS - "Steals In Tax-Free Bonds"

Warren Buffett likes munis too, and you could do a lot worse than listening to Mr. Buffett!

For more information on municipal bonds, or any other savings ideas, please contact me at .

Tuesday, April 14, 2009

Single Bonds or Mutual Funds?

What's the best way to buy municipal bonds? Should I buy single bonds or mutual funds?

Like most decisions, there are pros & cons with both methods. You should talk with you advisor about which method is right for you - possibly a mix of both.

One of the advantages of owning a single bond is that you have a fixed rate of return - you know exactly what you are getting. For example, on a $100,000 muni bond paying a 5% coupon, you will get $5000 per year in interest income. Because you don't have to pay federal taxes and you may not need to pay state taxes, that may be similar to getting 7% or more, depending on your tax bracket.

Interest from a single bond is usually paid ever; 6 months, so you would get $2500 with each installment. You may also ask your advisor to structure your bonds in such a way that you are able to receive income every month.

Another advantage it that while your advisor does get paid, his or her commission is built into the price of the bond when you buy it. This is a common question I am asked.

Think of buying soup at your local grocery store. The grocer buys soup in large bulk quantities, with all brand names & flavors. Because they buy so much soup at once, they can buy at a wholesale price. When a customer buys soup, they pay a retail price and may only buy 1 can, or a few cans at a time.

Bonds work the same way. If you buy a bond worth $10000, you will get $10000 when it comes due. Along the way, you have gotten a great tax free rate of return every 6 months. If you are fortunate enough to be working with a great advisor, you may have even been able to buy the bond at a discount, so that when it does come due, you even had a small gain. (Woo-Hoo!)
Its great when everyone wins!

One more thing about a single bond - You know exactly which project you are supporting.
(Example - St. Joseph Regional Medical Center Bond)

A big disadvantage is that a single bond is not diversified. This is where mutual funds are better. Going back to the "soup" example, a mutual fund allows you to carry all the "flavors" in one investment, which is managed by professionals at a mutual fund family.

Most bond mutual funds also pay interest monthly, because they own hundreds of bonds. This can be helpful if you are counting on monthly income from your investments, and a huge advantage over CDs.

Also, it is much easier to invest a smaller amount. For those who don't have the 5000 or 10000 minimums required by many single bonds, you can establish a mutual fund for as little as 1000.
Once you have a fund, you can add to it or even withdraw money easily.

Sales charges on bond funds purchased through your advisor may be as high as 4.25%, although you may qualify for volume discounts, also known as "breakpoints" if you are able to invest large amounts of money.

For more information on municipal bonds or other investing, please contact me at

Monday, April 13, 2009

Tax-Free Bonds - - Are They Safe?

On Friday, we talked about how a municipal bond can pay higher interest then a CD, and its even better when you consider you don't pay Federal taxes on the interest you earn. You may also be free from State & Local taxes depending on where you live, and where the bond(s) was issued.

A common question which I am asked is - "How safe are they?"

Muni bonds are very safe investments. They are backed by the taxing power of the state which issued the bond. Bonds are given ratings based on the credit quality of the issuer.

AAA - Very High Credit Quality
AA - High Quality
A - Good Quality
BBB - Investment Grade (still a safe investment)

For obvious reasons, I would not advise buying bonds with less than a BBB rating. For my clients, I generally prefer at least an A rating or above.

When we say 'safe', it means that you should have a reasonable expectation of receiving your interest payments on time and also receiving your principal investment repaid on time. Think of your car. When you go to start your car, you would have a reasonable expectation that it would start when you turn the key.

On the very slim chance it didn't, of course you would take steps (i.e. jump start, battery change) if needed to get it started, and return to having a 'reasonable expectation' for it to start when you need it. Bonds work much the same way, even if you are worried about the ability of a certain state to repay its loan, the state may simply levy a tax to pay back the bond.

You can also buy muni bonds which are insured for that extra layer of safety. Common insurers are MBIA (Municipal Bond Insurance Association), AMBAC (American Municipal Bond Assurance Corporation), and FSA (Financial Security Assurance) .

Tomorrow, we can talk about the 2 main ways to buy muni bonds - individual bonds or mutual funds.

For more information on muni bonds, you may contact me at .

Friday, April 10, 2009

How To Get Higher Interest and Lower Taxes

Want to get more return on your savings?
What if you didn’t have to pay taxes on the interest you earned?
And you could still sleep at night, knowing that your savings are…

Sound too good to be true? Well, municipal bonds do all of that. Munis have long provided funding for projects such as libraries, hospitals, schools, airports, and roads. They are a fantastic bargain right now, paying you a much better return on your savings than CDs.

According to as of April 9, 2009, the highest CD rate I found was 3.6% for 5 years, and 2.6 for 1 year. Dave Ramsey, Financial Talk-Radio host, likes to refer to CDs as “Certificates of Depression”, and its easy to see why.

You can easily find investment grade (safe, not junk) Municipal Bonds through a good advisor, paying 5% or better, for a period of 5 years or less. When you consider that you don’t have to pay Federal income taxes on the interest, 5% is an excellent return!

If you live in Indiana, where I’m located, you are also exempt from state and local taxes. That can be similar to earning at least 7% on your savings if you paid taxes on the interest.

So why do people still buy CDs? I guess its like the story about the railroad track width measurement. The width is 4 ft 8 1/2 inches. Why? That’s what it was in England. Why? That was the measurement the tramways used before railroads. Why? Tramways were built using the same width as wagons and that was the spacing between wagon wheels. Why? The wagons had to fit the ruts in the road made by Roman Chariots. Chariots were built to accommodate the width of 2 horses. In other words, "We've always done it that way."

If you still believe CDs are better for your savings, ask yourself this -
When you buy a CD, what does your bank do with the money?

Thursday, April 9, 2009

5 Reasons You Should Own A Roth IRA

April 15 is coming up fast, and that means taxes. How would you like to have income at retirement that is totally free from taxes?

The Roth IRA is surprisingly simple. The idea is that your retirement savings will grow completely tax free. Most people know of it, but very few own a Roth or use it. According to the most recent Federal Reserve Survey of Consumer Finances, Roth IRA’s hold only 4% of all IRA assets.

Here are 5 reasons you should have a Roth.

1. Your money grows tax-free and won’t be taxed at withdrawal.

2. You can contribute any amount up to $5000 ($6000 if you are 50 or older.) If you can’t put
in $5000, figure out what you can afford, or set up a monthly contribution into your Roth.

3. Because of the tax free withdrawals at retirement, Roth IRAs are great for estate planning.

4. There are no required minimum distributions (RMDs) which you must take at age 70 ½,
unlike a traditional IRA.

5. There is a variety of investments available which you can use within your Roth. It is best to
meet with an advisor to figure out what your income needs will be when you retire, and which
investments are right for you.

Please contact me today to learn more about Roth IRAs.