Why I disagree with this “rule of thumb” from Fidelity.

I’ll keep this short.

One thing I have seen ruin #investment plans over and over is relying on a “rule of thumb” when it comes to financial planning.

Here are some of the most common:

1️⃣ The market always comes back

2️⃣ The market will make X% per year

3️⃣ In the video below I take a look at “you need X dollars” to retire successfully.

Will most rules of thumb work? Most likely. But WHY would you take a chance if you don’t have to?

See the “rule of thumb” in my financial planning software below👇.

The investments in your 401k may be putting your retirement at unnecessary risk.

You DON’T have to roll an old 401k into a new 401k.

There may be better tools available outside of a standard 401k account.

Rolling into an IRA may be a better way to go.

I had a client build a business and contribute to everyone’s favorite, the 401k. We were creating a passive income 💸 plan with some institutionally available investments that weren’t available in his 401k.

He said “man, I wish I could use my old 401k for this, we just sold and I have to roll it into my new 401k.”

This is NOT the case. If you are collecting a “junk drawer” of accounts, full of old 401ks, IRAs, checking accounts, cash under the mattress 🛏 , and pocket full of BTC 💱 , I have found it is often best to roll them into an IRA, rather than a 401k.

But why would your rollover an old 401k into an IRA?

1️⃣ Better investments. You have access to a better selection of traditional investments like stocks, bonds, ETFs, mutual funds.

P.S. Half this video I get on my soap box again 🤦‍♂️ about TARGET DATE FUNDS, I can’t help myself.

2️⃣ More flexibility. Did you know in a self-directed IRA you can invest in real estate, gold coins, or a dog walking business?

3️⃣ Simplicity: Rather than having 23 different log in and password combos 🤮 you have one place to see your finances.

As an example of #1, and the impact it can have, watch below. 👇

 

What are you doing to protect your financial plan from this big threat?

I get a little “tin-foil hat” sometimes.

BLUF (bottom line up front)

If you aren’t, AGGRESSIVELY, creating TAX FREE wealth, you are setting yourself up for a lot of pain.

No. Roth is not enough.

People often see the threats to their retirement investing through an entirely market driven lens.

– Inflation 📈

– Volatility 🎢

– Poor earnings 🤮

– The economy 🏭

If any number of those turn out bad, you stand to lose 📉 a chunk of money (and, worse, time.)

People often overlook one of the major events that can IMMEDIATLEY cost you 5, 10, 20, 50% of your assets.

Case in point in the article below. “But it only applies to people with big $$$!”

The point is that the federal and state government can change what they like, when they like?

Don’t believe me. For 133 years the State of Washington considered a capital gains tax to be unconstitutional. In 2022….never mind, JK, LOL.

The tax man can not only change tax RATES, but the NATURE of taxation.

Today’s capital gains could be tomorrow’s ordinary income.

This is why I am outside the box, kind of obnoxious, and occasionally cost myself potential clients by using every tool available to create tax FREE wealth in my client portfolios.

Could the IRS/State attack the Roth? Absolutely. The government could:

1️⃣ Income test Roth distributions (yeah, you might pay income tax twice.)

2️⃣ Net worth test Roth distributions

3️⃣ Take away Roth contributions based on income/net worth.

We cannot control what the legislatures do. What we can control is how we prepare.

So the question is NOT what they will do. The question is what are YOU doing to protect your financial plan.

AVOID a costly mistake with your money, have your investments reviewed.

Every have a second opinion and a doctor catch something the first one did not?

How important was that?

Sometimes taking bad investments 😒 out of a new client’s portfolio is as important as what I put in…

I recently had a client sign up because I “was the first advisor to buy them dinner who didn’t just try and sell them an annuity.”

Listen, I try and be as charitable as possible to my industry.  Different investment vehicles are complex and most advisors are trying to do the best they can.

But

I will not soft peddle when it comes to products and advisors who wreck a financial life for their own benefit.

In this case I just made a client who had a seminar “instructor” convince him to cash out his 401k and put the money in a whole life policy.

 

The taxes…

The fees….

The lost retirement years….

 

You may think “no way I would let myself be talked into something like that” but I see it every day.  I have seen hundreds of thousands of dollars wasted 💸 because someone was embarrassed and didn’t want to ask for help.  Luckily in this case I was able to rescue this client’s money.

Anyhow, I thought this video might help you avoid a costly mistake 🤢.  If you would like a review of an investment you don’t understand just fill out the below form. 👇👇👇👇👇👇👇👇👇

YOUTUBE VIDEO BELOW THE FORM.

 

The secret to MAXIMIZING your retirement income.

Two of the most common questions I get when it comes to financial planning is…

When can I retire, and how much income will I have in retirement?

The honest answer to those questions is…it depends.

There is really two components to figuring out the answers to these questions.

1️⃣How much money will you have?

2️⃣How much can you safely and comfortably take out?

These two principals fit in with the investing strategy at my firm.

1️⃣Lose less than everyone else when the market stinks.

2️⃣Do a little better than everyone else when the market is good.

So, what are the benefits of maximizing your retirement income?

  • Have more money in retirement 💰
  • Retire earlier 💪
  • Have more confidence and peace of mind when you retire 🧘
  • Leave more behind to those you care about 💸

Watch here to learn how to create the most income possible in retirement.

👇👇👇👇👇👇👇👇👇👇

5 ways and investment manager can add to your bottom line.

When thinking about how a fiduciary can help you in your life a lot of people think it is about money.

While we do have a rule here at my firm, namely, our clients do better with us than without us, at the end of the day every client tells me it is the peace of mind that makes the biggest difference in their life.

One client said “if the money ain’t right, nothing is right”.

Fiduciary financial planners are actually pretty rare.  Here in the Sammamish area (Issaquah, Bellevue, North Bend, Snoqualmie, Maple Valley) there are surprisingly few.

Once you find someone you can trust with your financial life (in my process, we use DPT, Diagnose where you are, Plan for where you want to be, Treat your finances with the right tools) the final step is to let that financial planner get you invested the right way.

This investment management is like the medicine a doctor prescribes you you are sick.  If you don’t take the medicine, you don’t get better.

For example.  When a client says “I would like passive income when I retire” I may prescribe an investment that pays a 9% dividend.  This passive income then solves my client’s pain point of needing to replace their earned income.

Note, I do NOT consider buying a “well diversified basket of mutual funds” investment management.  I tell every client, if that is what you want, I will help you set it up on your own, don’t pay someone to do that.

Anyhow.  Here is 5 WAYS AN INVESTMENT MANAGER CAN ADD TO YOUR BOTTOM LINE.

!!!High income earners with large stock grants reduce your #taxes!!!

ATTN: High income earners with large stock grants.

One strategy to reduce your overall taxes ⏬ and avoid concentration risk is tax loss harvesting.

I did a portfolio review with a client who works at a local tech company who wanted help balancing 🧘‍♂️ his portfolio.

He was in the following position:

1️⃣ Annual income: $250,000
2️⃣ Company stock (from ESPP and grants): $700,000
3️⃣ A “junk drawer” of old 401ks, IRAs: $700,000
4️⃣ Short and long term realized capital gains.

When I looked at his portfolio I noticed he had short term capital losses and long term capital losses in his portfolio.

Unfortunately a lot of his company stock was granted near the company’s all time highs 🎢 . His company then reported less than enthusiastic earnings and took a 10% correction.

By using tax loss harvesting of his unrealized short and long term capital gains we were able to save him $7,000 in income tax and $13,000 in capital gains for the year.

While this is a common practice for high net worth individuals it can apply to anyone to help avoid paying unnecessary taxes 💸

hashtagfinancialadvice hashtagtaxes

How much does a financial advisor cost is the wrong question.

How much is a financial worth is a better question to ask.

Want to feel better about your money?

It’s not so much that having a #financialplan is such a fantastic, life altering thing.

Its that having uncertainty about money makes us have less confidence in the things we want to do. It makes us think about money when we should be watching our kids.

The #1 thing that starts my process is a

🗒 WRITTEN FINANCIAL PLAN 🗒

Ask yourself:

1️⃣ Would you start a 30 year road trip without a map?
2️⃣ Would you take a 30 year airplane ride relying on old tropes like the plane probably has 30 years of fuel (i.e. “the market 📉 always comes back.)

Whether you are just beginning your #retirement and #investing journey or you are standing at the gate ready to retire knowing these things are what give you the confidence and peace of mind to be able to forget about money and focus on what is important to you:

1️⃣ Where you money 💰 is coming form.

2️⃣ How much you can spend without running out 💸 .

3️⃣ That the market 📉 won’t cause you to lose sleep or sacrifice the things you want.

If you want a FREE, quick, one page financial plan just take the 2 minute quiz below.

 

No, 9% passive income isn’t “too good to be true…”

Man, when I tell people they can have over 9% passive income with some decent safety, I get my feet held to the fire.

 

I won’t say the words “too good to be true” were thrown around, but they kind of were.

 

I recently was talking with some folks who had their retirement accounts with a big box planner.  They said:

 

“Two grand kids live in California and two grand kids live in Missouri….we gave xxxxxx xxxxx $500,000, and it has turned into $460,000!  We really want to travel but we don’t feel like we can without taking some money out, and now we don’t want to do that!”

 

I built a custom income note (see my email from last week) that generated to many quesitons I thought I would make a quick explainer, check out the YouTube video below 👇to see how this investment works.