WorkWithSharonBanner
Category: Financial planning

2018 Outlook

2018 is almost here! Here is our outlook for the stock market and GDP for the next year. Please read and enjoy! As always, if you have any questions, don’t hesitate to reach out to us. 2018 LPL Outlook

Sharon L. Herman AAMS, ADPA is the CEO of Silver Key Wealth Management

The opinions expressed in this material do not necessarily reflect the views of LPL Financial.

Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Independent Financial Partners. IFP is a registered investment advisor. IFP and Silver Key Wealth Management are separate entities from LPL financial.

Ms. Herman may only discuss and/or conduct transact securities business with residents of FL, MI, GA, CA, NC, NJ, VA, TX. www.finra.org  www.sipc.org

 

READ MORE +

Why paying off your mortgage early might be a bad idea

As a financial advisor, I have many clients ask me if they should use extra money to pay down their mortgage or invest the money. Let’s take a closer look, my savvy LGBT friends, at the math to see what makes sense.

The following is a hypothetical, purely for demonstrative purposes:

If you have a $250,000 fixed rate, 30 year mortgage at 4.25% interest, your total amount that you will pay over 30 years will be $456,018.
If you add $200 a month to your payment to be used towards the principal, you will pay off the mortgage in 23 years. Your total amount that you have paid will be $399,455.
Pretty good, right? You’ve saved yourself $56,563 in interest payments. That’s some real money!

What happens if instead, you invest the $200 a month in a tax free vehicle, such as a ROTH IRA?
For this hypothetical, we are investing $200 a month, over the course of 23 years (the amount of time we would be paying extra on our mortgage) with a 7% annual return on your investment. Keep in mind, this isn’t picking or recommending a specific investment, this is a hypothetical return. Whew.

So… $200 a month/23 years/ 7% annual return will get you: $133,059.

Holy cow! That’s quite a bit of money. Much more than the $56,563 that you would save if you were to pay more on your mortgage.

In this situation, where you invest the money, you are $76,496 richer!

This difference is even greater if you take into consideration the interest rate tax deduction you get every year. When you file your taxes, you have a line that allows you to enter how much you’ve paid in real estate mortgage interest.

Part of the amount that you pay in mortgage interest gets deducted from your taxes on your return. In effect, because you may potentially lower your taxes because of this deduction, your real out of pocket costs on borrowing that money isn’t the 4.25% on our hypothetical loan. It can be less than that. It depends on a myriad of factors, such as your income, etc. However, lets’ assume for a hypothetical, that your REAL cost to borrow money after your tax deduction is only 3%…
$250,000 mortgage/3% interest/extra $200 month – You still pay off the mortgage in 23 years, but you only save $32,927 in interest. This widens the gap between paying down the mortgage/investing even more!
The invested money will get you $133,059. The mortgage pay down will save you $32,927. That’s $100,132 more in YOUR pocket after 23 years.
I don’t know about you, but I’d rather have the $100,132 extra.

Disclaimer time: These are hypotheticals. Tax deduction is a hypothetical amount. ROTH IRA’s are something to discuss with a financial advisor to see if they are a good fit for your needs. You get my drift. We are playing with numbers. Also, this information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

Want to play with some numbers yourself? Check out these financial calculators
As always, speak to a financial advisor about the best course for you to take.
Sharon L. Herman AAMS, ADPA is the CEO of Silver Key Wealth Management
The opinions expressed in this material do not necessarily reflect the views of LPL Financial.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Independent Financial Partners. IFP is a registered investment advisor. IFP and Silver Key Wealth Management are separate entities from LPL financial.
Ms. Herman may only discuss and/or conduct transact securities business with residents of FL, MI, GA, NJ, VA, TX. www.finra.org. www.sipc.org

READ MORE +

Long Term Care for LGBT Couples

Yuk. No one wants to think about nursing homes, or assisted living, or anything in old age that has the yuk factor. I know that I don’t want to think about it…. But I do..

63% of people over the age of 65 will be in a nursing home, assisted living facility or need in home health care (www.caregiver.org). That’s nearly 2/3 of the population! You insure your car and your home, why not insure yourself. Great news – most LTC plans include partners for spousal discounts if they apply together, even if they aren’t married. This can be a great cost savings for same sex couples.

Not only does LTC help take care of you when you can’t do so anymore, it takes care of your surviving partner. How? The typical assisted living facility runs about $5000/month. That’s $60,000 a year. Four years is $240,000. If that’s spent on your LTC costs, will your surviving spouse have enough left for them self to live on? Protect your nest egg and your life savings. Get the insurance. You didn’t work hard your entire life to leave it to the nursing home.

Sharon L. Herman AAMS, ADPA is the CEO of Silver Key Wealth Management, and affiliated with LPL Financial. www.silverkeywealth.com
The opinions expressed in this material do not necessarily reflect the views of LPL Financial.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Independent Financial Partners, a registered investment advisor and separate entity from LPL financial.
Ms. Herman may only discuss and/or conduct transact securities business with residents of FL, MI, GA, VA, NJ, TX. www.finra.org. www.sipc.org

READ MORE +

Review your life insurance

Do you have enough life insurance?

As time goes on, sometimes our debt load and obligations change. We buy a bigger house, we might have some loans, we might have kids.

Do an analysis to see if you have the proper amount of life insurance.
You may have life insurance through your employer. That’s great, but it isn’t portable…. Meaning if you separate from service with your employer, you won’t have life insurance. Most employers have group plans that are good while you are an employee. So don’t count on that insurance as a major part of your life insurance planning. The exception to this is if you are uninsurable on your own. Then you have no choice but to count on what you get at work.

How much is enough?
Add up the total of your debts. This includes mortgage, car loans, credit cards, personal loans. Do you have children? Do you want to provide for them? Maybe have enough for college costs if you were to pass away before they finish school? How about your spouse? Will they be able to get by on what you have saved? Add up your outstanding debt, the amount you would like to leave your children and spouse and that gives you a pretty good idea of how much insurance you will need. After you know much you need as a total, you can divide it up into time frames. Will your mortage be paid off in 10 years?
I suggest that you speak to a financial advisor regarding insurance needs. Many have tools to help calculate how much insurance you need and for how long of a period of time. You don’t want to underinsure and leaved your loved ones short of funds. You don’t want to over insure and waste money that could be invested in other things.

Sharon L. Herman AAMS, ADPA is the CEO of Silver Key Wealth Management, and affiliated with LPL Financial. www.silverkeywealth.com
The opinions expressed in this material do not necessarily reflect the views of LPL Financial.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Silver Key Wealth Management, an independent investment advisor. Silver Key Wealth Management is separate entity from LPL financial.
Ms. Herman may only discuss and/or conduct transact securities business with residents of FL, MI, GA, NJ, VA, TX. www.finra.org. www.sipc.org

photo credit: Ruben Holthuijsen

 

READ MORE +

Will or a Trust?

Should I get a will and/or a living trust? What’s the difference?  p.s. Don’t forget the Medical part!

Everyone wants to ensure that their worldly possessions go to whom they want in the case of their demise.

What’s the difference between a will and trust?
In a nutshell, wills have to be probated through court. That means it costs money, it takes months to settle and people can contest your will. Plus your financial affairs are a matter of public record. But, they are a great way to be specific about who gets what items (Aunt Petunia gets the piano…).
Living trusts avoid probate, allow you to control how and when your assets are dispersed when you are deceased and also allow for you to spell out who will handle your affairs if you become incapacitated. In general, they cost more than a will, but they keep your estate from having to go through probate. They are also more difficult to contest.
Durable Power of Attorney– Make sure you get this document when planning your affairs. This is particularly important for LGBT couples. Durable Power of Attorney documents are good for day to day items (you need your partner/spouse to sign a legal document on your behalf).It is also important if you become incapacitated or have a medical emergency. You have it spelled out, in writing, who is going to be making medical decisions for you. We’ve all heard of incidents where a partner is shut out of the family decision on how to care for someone in the hospital because they aren’t“next of kin”. This is problematic in states that don’t recognize gay marriage. So don’t leave it to chance. Get it in writing. Most Durable Power of Attorney forms do cover medical incapacitation. General Power of Attorney forms do not. They terminate when a person becomes incapacitated. It is best to see an Estate Planning Attorney to see what set of documents best fits your situation. This is not meant to be specific legal advice for your particular situation.

Sharon L. Herman AAMS, ADPA is the CEO of Silver Key Wealth Management and affiliated with LPL Financial. www.silverkeywealth.com
The opinions expressed in this material do not necessarily reflect the views of LPL Financial.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Silver Key Wealth Management, an independent investment advisor. Silver Key Wealth Management is separate entity from LPL financial.
Ms. Herman may only discuss and/or conduct transact securities business with residents of FL, MI, GA, NJ, VA, TX. www.finra.org. www.sipc.org

READ MORE +

1 thing every investor should do today

What’s the one thing you should do today?

Review your beneficiaries on your IRA’s, Roth IRA, 401k/403b, life insurance policies, and annuities.

You really want to do this. Why? Because you want to make sure that whoever is supposed to get the money, actually gets the money. Here is where I insert a sad story…

Several years ago in New York there was an older couple. The wife worked for the school system her entire life. She had a million dollars in her retirement account. When she started working for the school system, she was very young and hadn’t met her husband yet. She had made her mother and her sister as beneficiaries on her school system retirement account. Many years later, the woman passed away. She had forgotten to change her account to have her husband as the beneficiary. The woman’s mother was long deceased, but her sister? Well, the sister was a million dollars richer, and the husband didn’t get a penny. He had the school system review all documents to see if it was a mistake. It wasn’t. He and his wife had planned for that money for their retirement, but her simple error of forgetting to change her beneficiary decimated her husband’s retirement. Ouch.

Sharon L. Herman AAMS, ADPA is the CEO of Silver Key Wealth Management and a financial advisor in the LGBT community.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Silver Key Wealth Management, a registered investment advisor and separate entity from LPL Financial.
Ms. Herman may only discuss and/or conduct transact securities business with residents of FL, MI, GA, VA, NJ, TX. www.finra.org. www.sipc.org

photo credit: Images of Money

READ MORE +

5 Things to do when the Market is Volatile

Hello savvy LGBT investors! I frequently have people who are concerned about what to do when the market takes a significant drop. They get worried. They feel like they want to sell their investments and put money into cash until the market gets better. That could be the very worst choice you can make. Here’s why:

1. Market Volatility is Normal – Traditionally, the stock market has three to four drops a year that average 4-5%. It’s normal. Growth doesn’t happen in a straight line when it comes to investing. It goes up, it goes down. It goes up again.

2. If you have good investments a temporary downturn in the market isn’t anything to worry over. If your investment has good fundamentals, a good management team and a good future, DON’T PANIC. You have a good investment. The value of your investment may be down at the moment, but you know it has a solid management team. Don’t lose sight of the long term.

3. If you have your long term money in long term investments, don’t worry about day to day fluctuations. Just don’t; that’s silly. It’s like baking a cake that has to be in the oven for 45 minutes. You don’t worry because it isn’t done baking at the 15 minute mark, right? Same thing for your investment portfolio.

4. Keep your short term money in short term investments. Need money in the next year or two from your investments? Keep that portion in cash, or a CD. Then you don’t need to worry about market fluctuations.

5. Add more money to your investment! A downturn in the market is a good time to add money to your current investments! You get to buy them on sale. You like it when it was a higher price; maybe add to your positions when the price is lower, too.

photo credit: Kate Ter Haar

Sharon L. Herman AAMS, ADPA is the CEO of Silver Key Wealth Management, and affiliated with LPL Financial. www.silverkeywealth.com

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Silver Key Wealth Management, a registered investment advisor and separate entity from LPL financial.
Ms. Herman may only discuss and/or conduct transact securities business with residents of FL, MI, GA, VA, NJ, TX. www.finra.org www.sipc.org

READ MORE +

Why dollar cost averaging can be your best friend

What is Dollar Cost Averaging?

As an LGBT focused advisor, I get many questions about investing money each month to seek growth of your wealth. Dollar Cost Averaging is investing equal amounts of money into an investment over a period of time, and may be just the investment plan you need.

For example, let’s say that you want to contribute $12,000 into an investment account. You can deposit the $12,000 all at once. Another option is to Dollar Cost Average and invest $1000 each month.

Why not invest all at once?

For starters, most people aren’t very good at saving up a big sum of money then writing a check. Something always seems to come up and their money gets diverted to something else. That’s a pretty easy way to have your financial goals get off track.

If you set up your bank account to automatically have money sent to your investment account each month, then you don’t have to worry about writing that check. It’s done. Finished. Invested. A beautiful thing. Odds are that you going to “set and forget” and not notice the money being transferred.

Dollar Cost Averaging helps to stabilize your investments during a volatile market

Sometimes the market is up, sometimes the market is down. Sometimes your investment is up, sometimes your investment is down. If you invest some money each month, you are going to buy at both the lows and the peaks. It normalizes over time. That’s where the name Dollar Cost Averaging comes from. Your investment purchase price averages out over time. Actually, if your investment is going up over time, the price will go up over time. But when the market dips, you wouldn’t have put all of your money in at the high just to watch it drop.

How to get started

It’s easy! Most investment management firms, including mine, can set up DCA program for you. We can help you pick the right investment(s). You can pick the amount and the day of the month to invest. Then just watch your nest egg!

*Note – not all investments are available for dollar cost averaging. Some investments have a minimum amount to start, then you can DCA after the initial purchase. Please talk to an advisor for more information.

Dollar cost averaging involves continuous investment in securities regardless of fluctuation in price levels of such securities. An investor should consider their ability to continue purchasing through fluctuating price levels. Such a plan does not assure a profit and does not protect against loss in declining markets

Sharon L. Herman AAMS, ADPA is the CEO of Silver Key Wealth Management, and affiliated with LPL Financial. Sharon.herman@silverkeywealth.com

The opinions expressed in this material do not necessarily reflect the views of LPL Financial.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Silver Key Wealth Management, a registered investment advisor. Silver Key Wealth Management is a separate entity from LPL financial.

Ms. Herman may only discuss and/or conduct transact securities business with residents of FL, MI, GA, NJ, VA, TX. www.finra.org www.sipc.org

photo credit: Robert Donavan

READ MORE +

4 Main Points When Choosing a Financial Advisor

Hello my savvy LGBT investors! Today we are discussing how to choose a financial advisor!

Choosing a financial advisor can be a daunting proposition. Today, we’ll tackle some of the biggest questions and points that one should take into account during your search!

What kinds of registration(s) does the advisor have?

A well rounded advisor has a series 7, series 66 and a life/annuity registration.

A series 7 allows the advisor to sell all security products, except for commodities and futures.
A series 66 allows the advisor to be an Investment Advisor Representative.
An annuity/life license allows the advisor to handle annuity and life insurance transactions.
Having the series 7 and 66 allows an advisor to conduct fee based or commission business.
Having only a series 7 registration allows the advisor to only conduct commission based business.

Ideally, your advisor will have all three of these qualifications
. The reason I suggest this is that if a financial services person only has, say, an annuity/health registration, those will be the only products they can offer. Since one size doesn’t fit all, clients often are missing out on viable investment opportunities with a financial services person who isn’t fully qualified.

Are they independent?

There are basically two ways financial advisors work.
One is through a wirehouse broker/dealer.
These are the big firms whose names you are probably familiar with. These firms have production/sales numbers that their advisors must meet each month. They also frequently have proprietary products – meaning house brand products. They may not be the best investment product on the market, but the payout to the firm is usually more, because it’s their in house creation. Being that production numbers must be met and proprietary products are sold – sometimes there are situations where there is a conflict of interest between the goals of the advisor and the needs of the client.

The second way that financial advisors work is by being independent.
Being with an independent broker/dealer offers all of the same compliance oversight for the advisor and client as a wirehouse, but allows the advisor much more freedom to run their practice. There aren’t monthly production quotas, and most don’t have any proprietary products. For example, www.lpl.com is an independent broker/dealer.

I find independent advisors much more desirable, as they aren’t being pushed by the home office to hit a certain sales number. They also aren’t being nudged to use proprietary products. An independent advisor with series 7, series 66 and a life/annuity registrations is the solid combination for a client to have for transparency, ability to be placed in the appropriate investments, and unbiased client portfolio management.

In most cases, independent advisors are seasoned professionals. Most independent firms only allow experienced advisors to become affiliated with their broker/dealer. The advisor, in most cases, has an opportunity to utilize many more investment products when they are independent, as opposed to when they are with a wirehouse firm. Choice is good, right?

What kind of background do they have?
A fantastic, but little known resource is the FINRA broker check. http://brokercheck.finra.org/Search/Search.aspx
FINRA is the ruling entity over advisors. You can find out :

1. What registrations the advisor has (FYI – they do not track insurance registrations)
2. How long they’ve been in practice
3. How many firms they’ve worked for (ask questions if they have changed firms several times over their career)
4. Have they had any reportable events – arrests, bankruptcies, client complaints.

Do they have any professional designations?

There are many professional designations available that advisors can have. Most seasoned advisors have one. Ask the person you are working with if they have one and what it means. It’s nice to know that your advisor has taken the time to go above and beyond to educate themselves in their field.

Sharon L. Herman AAMS, ADPA is the CEO of Silver Key Wealth Management, and affiliated with LPL Financial. www.silverkeywealth.com

Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Silver Key Wealth Management, a registered investment advisor and separate entity from LPL financial.
Ms. Herman may only discuss and/or conduct transact securities business with residents of FL, MI, GA, VA, NJ, TX. www.finra.org. www.sipc.org

photo credit: Dennis Jarvis

READ MORE +

Don’t be a Donkey with your Money!

Hello my savvy LGBT investors! We see it all of the time. Commercials for the sleekest sports car, the latest and greatest gadget, or whatever the newest “must have” item is.

Most people don’t even realize that they fall victim to corporate marketing and it may lead them down a bad financial path.
Advertising to purchase goods, whether it’s car, clothes, jewelry, or whatever, is a way to make you think that you can’t live without their product. That your hard earned money, your time, your effort is worthy for exchanging for their item.
Think about it. Let’s say you make $40/hr. Luxury car maker guy wants you to buy their car for $40,000. You have to give up 1000 hours of your life for that vehicle. Actually, you give up more than that, once your figure in gas, insurance, maintenance, etc. Is that car worth giving up a half of a year of work? Really? It will still get door dings. It will still depreciate. Most people I know get over the excitement of a new car within the first year that they own it. It’s just a car.

The same thing can be said for other high priced items. A Rolex watch costs from 5k up to 300k. I hate to tell Rolex owners this, but time is the same everywhere whether you own a Rolex or a Timex. Who made it a luxury brand? Rolex did with their expensive advertising! They convinced the consumer that they really need to have a Rolex watch to be somebody important! It’s just a watch.
You exchange some of your time on this planet for money
I understand that people get enjoyment from owning certain things. I certainly want people to enjoy their lives. All I am saying is that you are exchanging a certain amount of time on this planet for working to make money. Are the things you are buying worth the time you are exchanging? Think about it the next time you decide to make a big ticket purchase.

As a financial advisor, I frequently see people who “wear their money”.
They drive the fancy car, have the expensive clothes, jewelry, toys, and have nothing saved. They get 5 or 10 years out from retirement and start to panic. They didn’t have their priorities right.

Don’t be a Donkey!
I like donkeys. They are loveable and rather cute. I wanted to use a word that begins with an “A”, but this is a family blog. Just don’t be a dumb “donkey” when it comes to your money.
I’m not saying that you shouldn’t treat yourself to nice things from time to time.

But make sure when you purchase these things, they don’t detract from your most important financial goal – taking care of your future.
Save for financial freedom first. If you have extra money AFTER all of those things are set aside for, then look at how you spend your discretionary income. Don’t spend your money on expensive doo dads first, then figure out what you have left for retirement, college for the kids, etc.

What do you think of buying luxury brand items?

Sharon L. Herman AAMS, ADPA is the CEO of Silver Key Wealth Management, and affiliated with LPL Financial. www.silverkeywealth.com Sharon.herman@silverkeywealth.com

The opinions expressed in this material do not necessarily reflect the views of LPL Financial.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Silver Key Wealth Management, a registered investment advisor. Silver Key Wealth Management is a separate entity from LPL financial.
Ms. Herman may only discuss and/or conduct transact securities business with residents of FL, MI, GA, NJ, VA, TX. www.finra.org www.sipc.org

READ MORE +