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Category: LGBT Investors

Investing in Uncertain Times

I know that many of you have been concerned about what will happen in the markets over the next few years. I wanted to take this moment to share some insight. I hope it quells your fears and concerns.

Remember to keep your short term money needs in short term investments. This is true in any market environment and for anyone of any risk tolerance. If you know that you’re going to need a new roof on the house in the next year, keep cash on hand for that!

What about the rest of your money? What if you are five years out from retirement or in retirement? How should you proceed?

It depends….
You need to do an analysis of your cash flow resources (pension, social security, etc) and the gap that you have to fill with your investments. Your investment choices will be an output of what your needs are. Sounds simple, right? It is, but it isn’t. With a universe of thousands of choices, which are the right ones for you? Don’t make the mistake and think that whatever your best friend is doing or the person at the cubicle next to you is doing is the best choice for you. Everyone’s situation is different. Have a financial advisor complete a review for you.

Ensure that you are optimizing your portfolio for upcoming turbulent times!

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

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How a good portfolio is like Thanksgiving dinner

Hello ladies and gents, yes, I’m going to talk about Thanksgiving!

Mmmmm…. Thanksgiving. What’s not to like?

Turkey, mashed potatoes, pumpkin pie, and watching my beloved Detroit Lions… Good portfolios are like a good Thanksgiving dinner – they have a little bit of everything! Even the weird Jell-O mold that Aunt Petunia brings with the walnuts and celery in it.

As an LGBT financial advisor, my clients usually ask me what kinds of investments they should have in their portfolio. Diversification can help your portfolio weather the good and the bad markets. It can help you take advantage of the upside and help temper the downside. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. No one asset class performs well in all market conditions. Some years bonds will do better, other years, blue chip stocks will do better. Sometimes, small cap companies are doing well, other times, well, it seems like everything is not performing well at all.

What to do:
Have a mixture of investments in your portfolio.
Some asset classes include:
Cash and cash instruments: These include CD’s, money markets and savings accounts
Fixed income investments: These would be bond investments. Bonds are debt instruments that pay a fixed interest rate. You can buy individual bonds with staggering maturity dates and investment grades to diversify the bond portion of your portfolio.
Growth and Income investments: These are usually large cap “blue chip” stocks . These investments usually look for modest capital appreciation and dividends. They are usually companies that have been around for many years and have a history of paying dividends. Many times, they may have years and years of dividend payment increases.
Growth investments: Small and midcap stocks. These may pay dividends, but are usually less than growth and income. They are looking more for capital appreciation of the stock and not as much of a focus on dividends.
Think of this like Thanksgiving dinner – you want your plate to have a little bit of everything!
How about balancing? Never put all your eggs in one basket. A mixture of all of the asset classes may be a better way to go.

Do you have a good mix in your portfolio?

The above is for information only. I suggest you speak to an ADPA (Accredited Domestic Partner Advisor) about 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. 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

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Downsizing your life – Part 1

We recently moved. Our house is slightly smaller.  I mean, it’s just 200 square feet smaller. But during the process, I tossed out and donated a bunch of stuff. I’ve never been one for having a ton of things, or so I thought. Over time, you collect stuff.  It happens.  It was very freeing to get rid of things. For some reason, having too much stuff was stressing me out.

I started with clothes. I went through all of my clothes. Have I worn it? Do I like it? It was amazing how much I was willing to let go, when I let myself. I know that sometimes we fall victim of the mental game of “it’s a perfectly good blah, blah, blah” or “I might need this down the road”. Well, if it’s perfectly good and you haven’t worn it, and know you won’t wear it, donate it. I donated at least 10 pairs of shoes and I don’t know how many shirts.

There are so many places that take clothing donations. Women’s shelters, the Humane Society, etc. Find a cause that you like and donate your clothes. It will make you feel good to be free of things you don’t use. It will make you feel good to help a worthy cause. It’s ok if you part with it. Honest.

 

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, NC, NJ, VA, TX. www.finra.org. www.sipc.org

 

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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

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Review your Retirement Plan Options

Does your current employer offer a retirement plan?
If they offer something above and beyond a 401(k), good for you!

Find out if this is a defined benefit or a defined contribution plan.

What’s the difference?

Defined benefit means you will get $X/month as a pension when you retire based on your salary and years of service. Pretty simple. They tell you the amount that you are getting.

Defined contribution plans mean that your employer will put in $X a year into a retirement plan on your behalf. It is usually a percentage of your salary. The difference is that they aren’t guaranteeing how much your will get at retirement. When you retire, the amount you get is based on how much they’ve added, and the performance of the account. You can choose to take a lump sum or an income stream as a pension when you retire.

Why do you need to know this? A couple of reasons… Frequently, when someone retires and they get a pension, they can elect to take a smaller pension amount and have the pension extend to their spouse after they pass away. This is great for financial planning purposes.

If you aren’t married and have a partner, many employers do not extend this benefit to the unmarried partner. Particularly if it’s a government agency, such as a school system, law enforcement, etc. This changes the financial planning landscape. If you are unmarried and partnered, you might be better off to take the lump sum upon retirement instead of the pension. Or take the pension and get additional life insurance.

Either way, planning is a little tricky in these situations. So find out what you have and how it works.

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

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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

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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

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How Marriage Affects your Credit Score

I get this question frequently – “We are thinking about getting married, what’s that going to do to my credit?”

This is usually a concern when one person has good credit and their significant other has bad credit.
The good news is that marrying a person with bad credit doesn’t automatically drag down your credit score.

However, there are situations where it can become an issue, so you need to be careful.
If you and the bad credit person want to purchase something together and want to apply for a loan, be wary!

When applying for a loan jointly, the loan folks will pull up your credit report jointly. This means at this point, your credit history will be commingled with the other person. At that point forward, it is difficult to get them split apart.

If one person has good credit and the other person has bad credit, the loan should only be applied for by the person with the good credit.

Unfortunately, this means that only the salary and assets of the person applying for the loan will count for debt/income ration, work history, etc.

A person’s income and assets who isn’t on the loan – even a spouse – isn’t taken into account. It doesn’t matter if they will live at the same address or will be contributing to the household payments. They aren’t on the application, so they aren’t taken into consideration.
In a nutshell, until the person with bad credit straightens out their credit issues, don’t apply for anything jointly.

Another thing to look at is why the other person has bad credit. Money is usually the number one thing that couples fight about in a marriage. Before tying the knot, take a good, long, look at how the bad credit situation happened and make sure it’s a situation that you can live with now and down the road. Is it constant poor spending judgment and money management? Or a one time life event that put them in this situation? Not a romantic way to look at a relationship, but a very pertinent factor when looking at spending the rest of your life with someone.

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: Dennis Skley

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Easy ways to get your financial house in order

Happy New Year!

If you are like me, you want to start off the year with a bang – you promise to eat healthier, work out more and read more meaningful books… but what about getting your financial house in order?

Here are some easy things that you can do to improve your financial situation!

• Look over your bills!
o Is your cell phone plan what you really need? Maybe you can do with less minutes or data. Some employers have discount programs through designated providers. Ask your HR department if you have this perk – you could save 20% on your cell plan in some cases.

o The dreaded cable bill… Are you watching all of those movie channels? Do you need those extra channel packages? Assess what you watch and if you need it. I know folks who are ditching cable completely and going to internet streaming using a ROKU box. All you need is internet. No cable at all!

o Brown bag your lunch. I know. Eating out is easy and convenient. But if you go out for lunch twice a week, it can easily end up costing you $75 – $100 extra a month.

o Same thing for coffee. I bought a Keurig a few years ago and make my own “foo foo” coffee. A lot less expensive. And I control the calories.

• Up your retirement savings!

o Can you add more to your 401k? 401k additions are pre-tax. That means you have less taxable income when you increase your 401k contribution AND you get to have additional savings toward retirement.

o Open a Roth or Traditional IRA. Ask a financial advisor which option is best for your situation. You can even have monthly contributions sent from your checking account straight into your IRA. If you don’t see it leave the account, you don’t miss the money.

o Have someone look at your portfolio. You already have a chunk of money socked away? Great! Now the question is – Is it allocated properly? Talk to a pro to make sure you have it invested the right way.

• Take care of your stuff!

o I know, sounds silly, right? But clean out a closet or a kitchen cupboard. You might find things that you forgot you owned. Maybe you can use it. Maybe you can sell it on Craig’s List. Hey – a buck’s a buck. Dust doesn’t make you any money.

o Spring clean the house and make repairs. Not only do your fine items last longer if they are clean and taken care of, but how many times are you going to say to yourself “I should really fix that loose doorknob”.

o Take care of your car maintenance! Get an oil change. Rotate the tires. Wash and wax the car. Let’s face it. We don’t usually run around town looking like a dirty mess, and our car shouldn’t be that way either. Looking for some great car cleaning products? I highly recommend Meguir’s. The stuff is the bomb. (ok, am I the only one who says that anymore?)

It doesn’t take much effort to save a few bucks!

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: Anthony Quintano

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