WorkWithSharonBanner
Category: Retirement

What is a Leading Economic Indicator and Why is it Important?

Hello LGBT investors! Often, investing terms can make you feel like you are lost in a maze of strange vocabulary. Today I thought I’d tackle one that people talk about on the news frequently.
Leading Economic Indicators
A leading economic indicator is a tracked measurement of economic activity. It’s called leading because these indicators can be used as a tool to help predict how the economy and markets may change in the future.
Why are they important
Economists look at the trends of different leading indicators to see what industries are performing well or are in decline. Leading indicators are one of many precursors as to how the economy may react in the future.

 

Indicators include:
• Building Permits
o If more new houses are being built, people have money and feel confident in their current financial situation.

• Unemployment claims
o If unemployment goes down, more people have jobs.

• Inventory changes
o If inventories go down, that means that people are purchasing the goods

• Average weekly hours, manufacturing
o If weekly hours go up, that means the manufacturing plants have more orders to build

• Manufacturers’ new orders, consumer goods and materials
o More new orders means more demand

• Manufacturers’ new orders, nondefense capital goods excluding aircraft orders
o More new orders from businesses means more manufacturing and industrial needs

• Stock prices
o Stock prices go up when consumer sentiment is high and earnings are good.

• Bankruptcies
o If bankruptcies are down it means that less people are having financial issues

• Retail Sales
o People buy more retail items when they have more discretionary income

So the next time you hear a new report about the economy and they discuss leading indicators, you’ll have better idea of what they mean. Plus, you’ll look really smart at your next cocktail party!
How are you feeling about the economy at the moment?

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 +

The 6 steps for a Good Financial Plan

My LGBT friends – let’s not be willy nilly about how we establish financial plans! Let’s be savvy folks who strive to have financial freedom! My goal is to help the LGBT community have a step up when it comes to investing and retirement planning!
The first thing to do when wanting to gain financial freedom is to come up with a financial plan. Here are the six steps:

steps

Credit Hakan Dohlstrom flickr
Establish a Relationship
You’ll want to find a financial advisor. Someone that you get to know, like and trust. Go interview someone. They’ll be interviewing you, too, to see if both you and they are a good match. Find out how long they’ve been in business. What their philosophy is. Check their history on http://brokercheck.finra.org/Search/Search.aspx FINRA is the governing body over investment folks. You can see if your potential advisor has any disclosures (bankruptcies, complaints, etc.) I suggest using someone who is a broker and an investment advisor. They are fully licensed to dispense advice. Also, strongly think about using someone who is independent and doesn’t work at a firm that uses proprietary products. There isn’t a conflict of interest between the client and the firm when it comes to giving unbiased investment advice.
Gather Information
After you find the advisor, you’ll need to gather all of your financial information. Investment accounts, 401k info, pensions, tax return, social security information. Your advisor will need that at your appointment.
At this appointment, the advisor will talk to you about goals and expectation. What do you want to accomplish? When? These will be quantifiable goals. They will also discuss qualitative goals such as your health, do your children get along well, do you have parents you make have to take care of in the future.
Analyze the Data
Next, your advisor will analyze the data. This is where the advisor takes a look at your big picture and sees where you are currently. She will look at your trusts, wills, budget sheets, tax situation, savings, investments and see where your strengths and weaknesses lie.
Presenting the Financial Plan
After the data is analyzed, your advisor will present you with a financial plan. There will be recommendations on where you need to shore up your portfolio, your life documents (wills/trusts), insurance, etc. They will show you where you need to improve your plan , why it will help and how you can resolve the issue.
Implementing the Plan
Once the plan is presented , and both the client and the advisor are in agreement to move forward, the plan gets implemented. A plan is great, but it has to be implemented to work! There may need to be involvement from other parties, such as CPA’s and Estate Attorneys for plan fulfillment.
Monitor the Plan
Ongoing monitoring of the plan is of utmost importance. An annual review is necessary to ensure that any changes in the plan are made if needed. If you have a major life change in between visits (moving, marriage, change of job) make sure to discuss this with your advisor to keep them in the loop!
Do you have a financial plan?
An ADPA (Accredited Domestic Partner Advisor) designated Financial Advisor can assist you with your choices if you need help from professional.
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, 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 +

The Rule of 72 and the 4% Draw

0

Hello my savvy LGBT investors! Here’s a handy formula that I think you’ll find helpful. It’s called the rule of 72
72 pic

Credit: Kristy Hall
The Rule of 72 helps you figure out how long it will take to double your money
It’s pretty easy. First, take your rate of return on your investment.
For this example, let’s say you are getting a 10% return.
Divide 72 by that number.
In this case 72/10 = 7.2
The answer (in this case 7.2) is the number of years it will take for you to double your money.
Let’s do another one!
8% return
72/8= 9
So it’s 9 years to double your money.
So those people who have “safe” investments, like CD’s, that pay .5% interest?
It will take them 144 years to double their money!
That’s why you don’t want to put your long term money into short term investments!
I’m not saying that market volatility doesn’t play a role. It does. Certainly some years your portfolio will perform different than others. You may get 20% one year and -10% in others. Again, depends on you and your investments. But it’s handy for illustrative purposes. The rule of 72 is purely a mathematical concept and does not guarantee investment results nor functions as a predictor of how an investment will perform. It is an approximation of the impact of a targeted rate of return. Investments are subject to fluctuating returns and there is no assurance that any investment will double in value.
Why do you want to know this?
First off, you look pretty impressive at cocktail parties. But more importantly, you can use another rule of thumb that I like to use for an “off the cuff” calculation.
Many consider the safe standard to withdraw money from an investment account is a rate of 4%.
Now this isn’t written in stone. It can be higher, it could be lower. It all depends on what your investments are and risk tolerance. The 4% is a “be safe” sort of guideline.
You can use this to figure out how much money you will need for retirement.
Of course, this is a ballpark estimate. I have to emphasize ballpark.
Another example: If you need to pull of $30,000 a year off of your investment accounts, that means you’ll need to have $750,000 saved.
Using 4% as our draw rate:
30,000/.04 = 750,000
Where 30,000 is how much you want to take out of the account each year
The .04 is the 4% draw rate
The 750,000 is the resulting amount of principal with which you need to start.
Like I said before, this is not a hard and fast rule. Things like risk tolerance and investments in your account will make a difference. Certainly don’t use this formula as a substitute for a real financial plan. It might make you feel better about the amount you currently have saved. Maybe it will have you strive to save more.

An ADPA (Accredited Domestic Partner Advisor) designated Financial Advisor can assist you with your financial planning and investment needs.
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.
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 +

5 Common Retirement Planning Mistakes

3

There are five common retirement planning mistakes that many people make

Train 

Train Wreck!!
Photocredit: Tom Brandt

1.    Changing investment strategies based on emotions.
It never feels good when the market goes down. And seeing your account value go down is never pleasant. The emotional side of you wants to stop the pain. In other words, pull your money out of the market. Then when the market goes up, you want to be a part of the party and put money in! Analyze what you are really doing when this happens. You are selling an investment low, then buying it back when it costs more money. Does that make sense? Would you sell your house when the price went down and then buy it back when the price went up because it was worth more? No. No you wouldn’t do that. So why do that with good investments?

2.    Not being honest about retirement costs
I see this all of the time. People want to retire so much that they choose to tighten the belt when they budget for retirement.  They hack things out of their life right and left on paper. Then they try to live it and find that the parameters are totally unreasonable. If you like to travel, then you like to travel. If you like to golf, then you like to golf. Don’t stop working too early just to be done, then punish yourself for the rest of your life. A few extra years of work may make the difference between having that annual vacation for the next 20 years or not. Think about that.

3.    Not starting to save early enough
Don’t be this person! By saving earlier in life, you don’t have to put as much away each year to reach your retirement goal! All due to the magic of compounding.
Starting at age 25, if you invested $3500 a year at an 8% return, you would have over $1,000,000 at the age of 65. That’s it! Only $3500 a year!

If you wait until age 45 to start saving, then you have to invest $20,000 a year for 20 years to get a million dollars. That’s quite a difference. Don’t ignore the power of compounding. This is a hypothetical example and is not representative of any specific situation. Your results will vary. The hypothetical rates of return used do not reflect the deduction of fees and charges inherent to investing.

4.    Not practicing good asset allocation
You need to spread the love in your portfolio, so to speak. Putting all of your investment dollars in one basket is never a good idea. This year’s hot performing asset class might be next years worse. Seek balance in all you do, including investing. Consider seeking the help of a financial professional for advice. Asset allocation does not ensure a profit or protect against a loss.

5.    Leaving your 401k behind
You got a new job. Yay for you! Don’t forget about that 401k that’s been sitting there. You took the time to invest in it. Take the time to explore your distribution options. You can be losing out on the opportunity to grow your nest egg if you ignore your money! A good retirement plan is like a garden. It needs to be tended to and watched over to thrive.

 


 

Sharon_Herman_HeadshotSharon L. Herman AAMS, ADPA is the CEO of Silver Key Wealth Management, and affiliated with LPL Financial, the largest independent broker/dealer* in the United States. 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

*Financial Planning Magazine (June 1996-2013 based on total revenue)

 

READ MORE +

Developing A Game Plan

OK, my LGBT friends! First things first! You need to develop a game plan. What are your financial goals? Do you want to retire at a certain date? Take a dream vacation? Provide an education for your children or grandchildren?

Even Godzilla had a game plan!

Godzilla
Photo by: futuristmovies.com

You need to know what you want to accomplish before you set out and start to randomly invest money
If you were going to bake a cake, you’d make a list of ingredients that you need. Then you’d probably check your cupboards to see what you already have. After that, you’d go to the store and buy the rest. It wouldn’t make sense to go to the store and buy random ingredients and hope you end up with the right things to bake a cake…. Same goes for setting up a plan for investing your money. Write down what you want to accomplish and when and choose investments that match your timeframe and risk tolerance.

You need to be patient with your investments!
There are quite a few investments to pick from in the investing universe. – Stocks, bonds, mutual funds, alternative investments. Diversity is key. You need to be disciplined about saving money and patient with market returns. Don’t abandon a plan because of short term market setbacks. I suggest you speak to an LGBT financial advisor with an ADPA designation to assist you with your plan, if you are seeking professional assistance!

Your game plan should be looked at periodically. Have your goals changed? Are there life events happening that change our long or short term goals? If so, then maybe your investment strategy needs to change with it.

What are some of your goals?

 


 

Sharon_Herman_HeadshotSharon L. Herman AAMS, ADPA is the CEO of Silver Key Wealth Management, and affiliated with LPL Financial, the largest independent broker/dealer* in the United States. 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

*Financial Planning Magazine (June 1996-2013 based on total revenue)

 

READ MORE +