A Focused Financial Life: New Tool to Aid Financial Fitness

1) Set financial goals; 2) Understand where your money is going; 3) Manage your debt; 4) Put your finances on autopilot; 5) Maintain a steady lifestyle; 6) Invest wisely; 7) Obtain knowledge and advice.

At Nvest, our primary goal we strive to achieve with each client is “delivering financial peace of mind.”  We believe this goal is best achieved through regular communication; a prudent, time-tested approach to investment management; and via a strong and detailed understanding of how your accumulated assets form the big picture, “financing” you through each stage of your life.  In these respects, we are excited to introduce and make available to clients a new tool we call the LIVING LIFE client portal.

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When Life Throws You Lemons, Make Lemonade – Strategies During a Bear Market

No sugar-coating it; the start of this New Year is not what any of us hoped for.  Day to day life is highly uncertain, and investments are bruised.  While the cause of the current environment is unique and uncharted for every living generation, this too shall pass.  Periods like this can cause one to feel paralyzed, with nothing to do but wait it out.  However, there are strategies individuals can pursue that will position them to benefit when the storm begins to clear, and simultaneously help you restore a long-term mindset.

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The “SECURE” Act

Against a noisy political backdrop and busy holiday season, it would be easy to miss a key piece of legislation called the SECURE Act that was signed into law in late-December that touches in one form or another most all investors and current retirees.

We are receiving some questions regarding the act’s passage and would like to call attention to the two sections we believe are of greatest impact. Before we jump to discussing The Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), we want to remind you that we view it important to stay abreast of changes to laws or rules that could impact your financial future.  We monitor them almost as closely as we monitor the markets.

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Transitioning From A “Saver” to a “Spender” In Retirement

I  carefully saved for most of my life… now you are telling me that I need to spend my retirement nest egg?

One of the most difficult transitions many individuals will face in financial life is moving from being a “person at work” (the accumulation phase where you are saving and building wealth) into  someone now living off their “money at work” (the “decumulation” phase).  A recent study by BlackRock Retirement Institute found that “instead of actively and systematically decumulating assets, retirees display a tendency across all wealth levels to retain assets and not spend down their initial principal.” The study also found that, “More than one third of current retirees actually grew their assets – leaving considerable potential consumption on the table.”

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Life Insurance is NOT for Saving

Careful! Avoid buying life insurance as a savings strategy!  Stop buying it as a tax-deferral vehicle for retirement savings!

Insurance of any kind is a risk-management tool.  From our perspective, an individual should buy life insurance for one reason: because there will be a financial impact on one’s family or business if they unexpectedly die.  For most individuals, that financial impact is typically highest early in life when working years ahead are many, financial assets accumulated are low, and financially dependent children and/or significant debts (such as home mortgage) exist.  Over time, one’s insurance need generally declines and ultimately reduces to zero at some point prior to retirement.

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Plan for a High Definition Life

According to a recent study, 90% of Americans will spend more time planning for vacation than they spend planning for retirement.   Similarly, we often observe firsthand how many do not truly know where their money is spent; and they do not devote time to gain more clarity about it.  Life becomes a foggy trip without rich meaning.

No one purposely sets out to have an undefined financial life… it just happens to us as we become a part of the culture in which we live.  It’s human nature which spans all of time; we repeat actions generation after generation.  One of the wisest men to ever live, Solomon, offers sage points in the Bible’s Ecclesiastes which can be simplified to these thoughts:

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“The Best Laid Plans…”

It’s often said that “no matter how carefully something is planned, things may still go awry”.  The saying is adapted from a well-known line in the Poem “To a Mouse” by Robert Burns.  Perhaps Mr. Burns was in the process of retirement planning when crafting this poem?  Regardless, its cautionary tone can be applied.  As we work with clients helping them articulate and achieve financial goals, there are a number of areas that can be underestimated relative to actual spending.

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Your “Family Love Letter”

Did you ever write and share your “family love letter?”  It’s probably safe to say that each of us is aware of tragic situations where a loved one died at too young an age, maybe suddenly and unexpectedly.  These experiences are shocking, and it is natural to catch yourself wondering how those closest to the deceased will be cared for or work through the situation.  Loved ones often find they are ill-prepared to attend to many aspects of another’s life.

On the topic of estate planning, we are regularly encouraged to plan properly for a sudden incapacitation and/or death.  Unfortunately, the focus begins and ends with the execution of proper documents, titling of assets, and naming beneficiaries to various financial accounts.  Often overlooked however, is ensuring that appropriate family members and decision makers can access adequate information about their loved one’s assets, liabilities, and intentions.  And, even if deliberate thought was given to these matters, is information available and quickly accessible?

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Annuities: Free Lunches & Magic Bullets?

If you are at the doorsteps to retirement, you might regularly receive invitations to enjoy a free lunch/dinner as part of an “educational” seminar on various retirement, estate planning, or trust topics.  Often these invitations are made extra enticing by featuring a fancy restaurant for the presentation.  Yet as the saying goes, few of us believe these meals/events are without any strings attached; we know there will be some “catch” or pitch of a product or service.

One topic we regularly encounter with new clients approaching us for help is in the area of annuities.  While there are advantages and disadvantages to these complex products, in our experience, they are often sold without full and adequate explanation. While we prefer and advocate the use of more customizable, and traditional investment structures (wherein you retain full control of your time horizon, investment options, and access to money), we would stop short of saying or suggesting that annuities are never appropriate. So let’s objectively review one of the most misunderstood financial products available.

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