A financial advisor can offer invaluable services and guidance in several critical financial areas. They can help you plan for retirement, manage your investments, and save for significant life events like buying a home or starting a family.
Kids Can Have Roth's too
Anatomy Of A Recession
You may or may not have heard that we are currently in a recession. Knowing that might make you wonder what exactly is a recession? A recession is a notable decline in an overall economic affair for two consecutive quarters. Unfortunately, recessions are an inevitable aspect of the business cycle and economic flow in the U.S. There are a few factors that are caused by a recession such as a negative gross domestic product, lower retail sales, and cut prices of income and manufacturing throughout a certain period just to name a few.
When there is an official economic recession, several factors are a part of the cause. To start, any sudden economic surprises such as the oil supply being cut off or for an even more recent example, a virus outbreak can lead to a recession. Overwhelming debt causes people and or businesses to file for bankruptcy which when done in excessive amounts will lead to a recession. Large amounts of inflation and deflation both can cause a drastic change in individuals’ and businesses’ spendable money. Whenever there is a drastic change, especially when dealing with money on a large scale it oftentimes can and will lead to a recession.
You might think that a recession is like depression. While in fact, they are similar with only a few differences. The main differences between a depression and a recession are the time frames and the extent of decrease the economy is going through. Recessions typically range from a few months to a few years while depression may last a few years to even decades later. In a depression, the GDP falls much more, and the unemployment rates are much higher compared to that of a recession.
Predicting a recession can be difficult but there are a few things to look at that might indicate one is soon to come. The yield curve is a good place to look when trying to predict a recession. It is a graph that shows the market value of different government bonds. In a properly functioning economy, the yield is higher on long-term bonds. The opposite is an inverted yield curve which shows long-term yields lower than short-term yields which is often a sign of a recession. Consumers spending less than months or years prior is another sign of a recession approaching. An unexpected decline in the stock market may also lead to a recession. Increasing unemployment levels are another factor that will lead to an upcoming recession. Of course, there is nothing that will predict a recession every time, but these are a few indicators that have happened before a recession.
No matter how prepared you are for a recession, it can and most likely will be a difficult time. You should prepare for the worst and hope for the best. Recessions are a part of the business cycle and economic flow. It is important to not make irrational decisions and push through because there is always light at the end of the tunnel. If there is something positive to take from this, it’s that history often repeats itself and there will most likely be a strong time of economic growth to come after the recession.
Opinions expressed are those of the author and are not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice.
How Much Should I be Saving For Retirement?
Determining how much money to save for retirement can be difficult, but it does not have to be that way! There are many things that go into saving for retirement. Let’s walk you through key sections step by step to ensure you understand the fundamentals of your plan.
The main goal of this process is to give you confidence in reaching your goals. Your plan evaluates your goals in three different ways. It looks at the estimated percentage of goals funded using both average returns and bad timing. First is average return – if your plan has a steady return over time, the plan estimates the portion of goals funded. It is important to note that markets do not always act this way, so just looking at average return is not enough. The second is bad timing – alternatively, this approach assumes you get a steady return, but in the early stages of retirement, you experience negative returns, which can have a big impact on how well you can fund your goals when you are withdrawing assets from your portfolio. This is a somewhat conservative approach to help you understand what can happen if you retire in a down market. Lastly is the probability of success – this is the most realistic analysis that considers many future possibilities to ensure you are confident about reaching your goals. It represents 1,000 different possible scenarios and evaluates how well your portfolio performs in each, to determine an overall level of confidence that you may be able to meet your goals.
If your current scenario does not put you in the confidence zone, this section will highlight some changes that you can consider increasing your chances of success, i.e., your recommended scenario. This is a good section to review with your advisor so you can discuss where you are willing to consider trade-offs.
Are you in your confidence zone? Your probability of success should be high enough to inspire confidence in the future without sacrificing too much today. The higher the better, and a number in the 90% range may mean you can do even more than you originally planned.
It’s time for action! What steps should you take to get started? Compare your current and recommended scenarios to see how specific changes to your plan can help improve the likelihood of reaching your goals. Review your goals for retirement that you and your advisor developed as well as the resources you identified to fund those goals. These are the key factors that drive the results of your plan, so it is important to make sure they accurately reflect your expectations.
Behavioral Finance
What Does Behavioral Finance Mean?
When you hear the term “behavioral finance” it may be confusing for some and is often misunderstood by others. In general, behavioral finance is a subcategory of behavioral economics, which describes the psychological persuasion and biases that investors and financial professionals have, which alter their financial behaviors. The influences and biases are a source of explanation for many types of market peculiarities and certain market oddities in the stock market, such as drastic rises or falls in stock price.
Behavioral Finance Explained
Behavioral finance can be broken down into a variety of perspectives. Returns on the stock market are a major area of finance where psychological behaviors influence the market outcomes and returns. The reason for the classification of behavioral finance is to help explain why people make certain financial decisions and how those decisions affect the markets. When dealing with behavioral finance, it is often thought that financial contributors are not always logical and sensible but often psychologically influenced by normal and self-controlling tendencies.
Mental and physical health play a major role in financial health. When you are physically and mentally healthy, you tend to make responsible decisions for your finances which then allows you to have positive financial health. The same goes for if you are mentally and physically unhealthy. You may make irrational decisions financially due to your mental and physical unhealthiness which can negatively affect your financial health. Stress plays a major role in the
Kylie Slocum
the physical and mental health of an investor making financial decisions. While this is not the case for everyone, it can be a contributing factor to your finances.
Behavioral Finance Terms
• Mental accounting: Mental accounting is the ability for people to dedicate money for specific purposes. An example of this is budgeting
• Herd behavior: Herd behavior is the tendency for people to copy the financial behaviors of much of the herd. An example of this is a bandwagon
• Emotional gap: Emotional gap is when people make decisions based on extreme emotions or emotional strains such as anxiety, anger, fear, or excitement. Emotions are a major reason why people do not make sensible choices.
• Anchoring: Anchoring is when people attach a spending level or dollar amount to a certain task. An example is spending a certain amount based on a budget level or rationalizing spending on certain satisfaction levels.
• Self-attribution: Self-attribution is when people tend to make decisions based on the confidence of their knowledge or skill. An example is betting based on prior knowledge or skills.
Biases of Behavioral Finance
Confirmation bias is when an investor has a bias that confirms their preconceived belief in an investment. If information backs their bias, the investor confirms their belief about their investment decision—even if the information is false.
An experiential bias is when a memory or recent event makes the investor biased or leads them to believe that an event is more than likely to occur again. An example of this was the stock market crash in 2008 and 2009. Many investors withdrew from the stock market. Many people had a negative view of the markets and thought there was more economic hardship in years to come. That was not the case. A couple of years later the economy recovered, and the market bounced back.
Loss aversion is when investors put a greater weighting on their concern for losses rather than the satisfaction of gains from the market. The investor is more likely to have a higher priority in avoiding losses than making investment gains. If this is the case, some investors tend to buy more conservative stocks and stay away from investing in aggressive stocks that are subject to a higher reward but also a higher risk.
Familiarity bias is when someone invests in what they know, such as popular companies or have locally owned investments. Within this bias, investors are usually not diversified across multiple sectors and typically only have one certain type of investment. People tend to invest in what they have a history or familiarity with.
What to Learn From Behavioral Finance?
Behavioral finance lets us learn and understand how financial decisions such as investments, payments, risk, and debt are influenced and manipulated by emotions, biases, and intelligible limitations of our minds in processing and responding to what we learn.
How to use Behavioral Finance to Help you?
By learning how, when, and why people diverge from rational expectations, behavioral finance lays out a map to help make smarter, more rational decisions when financial decisions arise. It also helps you see where your personal thoughts are coming from and where your decisions let you end up.
Disclosure
The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material nor is it a recommendation. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of (Paul D. Snow ) and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of the strategy selected. Past performance does not guarantee future results. Future investment performance cannot be guaranteed, investment yields will fluctuate with market conditions.
The Gift That Keeps On Giving
With the holidays approaching fast, coming up with gift ideas can be extremely difficult. But it does not need to be! Whether it is a birthday or another holiday, stocks are often a great gift to give! They are the gift that Keeps on giving! It also outlasts many other traditional gifts that you may receive and throw away a few years later. There are many different choices available to you!
Gifting to Children
If you decide to gift your child with a stock, many different options can be presented to you. If you buy a stock for a child with a custodial account, you or another family member has complete control over the account until the minor reaches age 18. You can also gift a stock from an existing account that you have. With this option, you will have to contact your financial advisor to walk you through the necessary steps to make the transfer. Whoever is receiving the stock, will need to have an account established regardless of whether it is a custodial or a Traditional account.
Gift Exclusion
Giving stock as a gift has never been easier! Whether you are gifting to a child or a friend you can use what is called the Annual gift exclusion. Gift exclusion allows individuals to give up to $15,000 annually to any number of people without paying the gift tax. If you are filing jointly as a married couple you can give up to $30,000 annually. Gift exclusion ends at the end of every calendar year for the previous year so to qualify it must be before December 31st. If you don’t meet the cut-off this year, your gift will go towards next year’s exclusion. It can require time and paperwork so make sure to talk with your financial advisor.
Overall, gifting stock has several benefits. Not only is it the gift that keeps giving, but it is also a great way to teach your children and young relatives about investing. Making the choice on which stocks to give can be tough so make sure to consult with a financial advisor on any questions you may have when gifting stock this holiday season.
Any opinions are those of Paul D. Snow and not necessarily those of RJFS or Raymond James.
Investing involves risk and you may incur a profit or loss regardless of the strategy selected. Raymond James and its advisors do not
offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.
Years Ago
There comes a time in life when your children begin to ask questions. Some serious and others not so serious. Years ago, my youngest child asked, “What do you do every day? You just talk on your phone all day.” I got to thinking about what I do on a day-to-day basis which is a fair question. A lot of adults do not know what we as wealth managers do. Many assume that we trade stocks all day which is understandable because that is one aspect of our job but as a wealth manager, we do several other tasks throughout the course of a week to assist clients.
Here is a quick snapshot in just the past week of how I have helped clients:
-Establish retirement plans for a midsize business.
-Hedge against the expense of long-term care
-Consult with a widowed spouse about the next steps after the death of a loved one.
-While going through divorce coordinate with CPA and attorney on settlements of assets.
-Consult with high-net-worth client on the direction of their inheritance.
- Tax reduction for clients who are planning on filing taxes soon.
- Consult with clients on most recent interest rates and how it effects their portfolio.
-Educate our intern about the stock market and wealth management.
-Research for a client reallocation of managed portfolio on stocks paying high dividend yield.
-Consult with clients on the best way to pay for their kids’ college.
-Answer questions with clients on how crypto and blockchain technology works.
-Buy and sell stocks on the behalf of clients.
-Answer questions about the purposes and details of financial plans and strategies clients have.
-Analyze financial information obtained from clients to determine strategies for meeting their financial goals.
-Manage client portfolios, keeping clients and their plans up to date.
-Prepare and interpret client’s information such as investment performance reports, financial document summaries, or income projections.
All of these are accomplished by a conversation or two, sometimes many more. There is value in conversation as well as face to face meetings. I am always on the go, but I am never too busy to have a conversation because you never know what it might lead to. An introduction, an opportunity, a new perspective, or a better understanding can all result from conversation. I love what I do and always enjoy visiting with clients when they stop by. I am always opened to having a conversation with you no matter what it entails. There is value in genuine conversations, difficult conversations, and serious conversations that come along with a little laughter which is what I am here for.
How much money or how many assets you have is not always the most important, but money is in everything you do. From earning a living, planning a trip, finding the best mortgage to paying taxes and many more aspects of our lives. In the end our door is always open for an open-ended conversation. Money intersects with every aspect of your life, so let us have a conversation about it. You never know where it might lead you!
Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional,
Dividends are not guaranteed and must be authorized by the company’s board of directors.
Any opinions are those of Paul Snow or Snow Financial Group and not necessarily those of RJFS or Raymond James. Investing involves risk and you may incur a profit or loss regardless of strategy selected.
Curious About Cryptocurrency
Curious About Cryptocurrency
You may have heard people talking about Bitcoin or Ethereum and wondered what it was or what they were talking about. Bitcoin and Ethereum are both forms of cryptocurrency. Cryptocurrencies are a form of payment or digital currency that can be used online for goods and services. There are over 10,000 different cryptocurrencies otherwise known as “coins”. There are few barriers to creating new coins although there is no perceived or calculated value to them. The market value for Bitcoin and Ethereum is over one trillion!
Bitcoin and Ethereum
Bitcoin is the most common and widely used form of cryptocurrency. It is used with what is known as a blockchain which is required to carry out its transactions. The blockchain can be compared to a train. The train holds records of every bitcoin transaction that is accessible to the public. Every time a trade is carried out through a cryptocurrency platform, the specifics of the transaction are recorded and sent with several other transactions, to a large network of users called bitcoin miners. The miners compete against one another to add the next car to the train by putting together several transactions into what are known as blocks for the blockchain. Miners use a formula that assigns the specific block a code that it is known as or goes by. The chosen block is sent and approved by all the miners affiliated with crypto and is then added as a part of the blockchain. One block is allowed at a time meaning it is the only way to add a new coin into circulation and allows it to be checked for legitimacy and gives proof of validity. The technology is created to operate without a central authority so the records created cannot be duplicated or changed. Ethereum is used with an open-source blockchain network. It is primarily used for the built-in function to create “smart” contracts that can be carried out without a mediator. Life insurance is an example of a “smart” contract. If someone passes away with an insurance policy, the notarized death certificate would allow the contract to release the payments to the beneficiaries listed. Ethereum is the cryptocurrency that allows smart contracts to be utilized.
Comparing Cryptocurrencies to Traditional Currencies
Cryptocurrencies are not backed or supported by government authorities like traditional currencies are. They are unregulated and have no claims against any assets. Cryptocurrencies are also all digital so there is no physical coin to represent its value like traditional currencies have. They are rarely used to conduct financial transactions which makes them not widely accepted although there are a few companies that accept them as a form of payment. There
are some similarities to traditional currencies. Often Bitcoin is compared to gold. There is a limited supply because the creator only allows for 21 million coins to be in use. The coins must also be mined by the digital extractors. Most of the interest in cryptocurrency comes from the speculation that its value will increase due to supply limitations and the popularity of blockchain technology.
Benefits and Risks
There are many benefits and risks when dealing with cryptocurrency transactions. One of the major benefits of cryptocurrencies is the cross-border transactions that can happen any time of day throughout a week, month, or year. As the market develops, the value of cryptocurrencies increases although there is not a correlation between blockchain adoption and the value of cryptocurrencies. With the benefits, there are also risks. A few of the risks are that cryptocurrencies are not regulated by government agencies or a central bank. The currencies are bought, sold, and stored online meaning they are vulnerable to cyberattacks and hackers. The custody and standards used to trade have not been implemented by cryptocurrency exchanges. An abundant number of cryptocurrencies are owned by early adopters who are unlikely to trade or sell, which creates price volatility. Overall, there are positives and negatives to cryptocurrencies, but it is up to you to decide if you will jump on the trend or not.
Opinions expressed are not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete and does not constitute a recommendation. Some investments mentioned may not be suitable for all investors. Past performance is not a guarantee of future results. Investing involves risk and investors may incur a profit or a loss.
Before making an investment decision, please consult with your financial advisor about your situation. The prominent underlying risk of using bitcoin as a medium of exchange is that it is not authorized or regulated by any central bank. Bitcoin issuers are not registered with the SEC, and the bitcoin marketplace is currently unregulated. Bitcoin and other cryptocurrencies are very speculative investments and involve a high degree of risk. Investors must have the financial ability, sophistication/experience, and willingness to bear the risks of an investment, and a potential total loss of their investment.
Privacy vs. Social Settings In The Workplace
Privacy vs. Social Settings in the Workplace
When you first hear the word “work” there are many different reactions you might have. More times than not there is a negative response. We hope to change the connotation to a more positive one. The two main settings in the workplace are private and social settings. The workplace is constantly changing and evolving with time. Everyone that works is different in their own ways which means their work style is also different from the others they work with. There is often a difference in preferred work styles and work settings between generations. Studies have shown that baby boomers prefer to work privately, Generation Xers prefer open settings, and millennials prefer a flexible setting and schedule that has less interaction with the people around them. There is no “correct” work style or work setting. The goal is to create a work environment and setting that allows everyone to not only be successful with their own style, but also comfortable.
Work Settings
Creating a work setting that allows employees to feel comfortable is key. In today’s world the workplace is best when it is functional and flexible. Everyone has a setting that they work best in and that setting is different for each employee. Those who prefer working in privacy will enjoy enclosed offices with workstations that have panels taller than six feet. Those who enjoy in-between work settings work best with collaboration hubs, conference rooms, and workstations with panels lower than six feet. Lastly, those who enjoy a social work setting might prefer an open office space with tables and no panel separation, break rooms, and lounge areas. The key to achieving the best setting for employees is by giving them choice and control in the environment that they work in. Giving a variety of places employees can work is especially important. If you have an office that is open where everyone is free to walk around, you want a space where employees can go and sit down in a more in private setting and vis versa. Providing a variety of places employees can work goes a long way and can potentially increase productivity. When employees have choice, they are happier. The happier employees are, the more productive they tend to be, which helps everyone in the end.
Work Styles
Everyone has a different style in which they work. Having a work setting that allows different work styles is often beneficial. As stated previously, baby boomers prefer to work privately, Generation Xers prefer to work socially, and millennials prefer a flexible work schedule that has less interaction with the people around them. The people who prefer working in privacy might enjoy focused, heads down, individualized work with no collaboration, and a more stagnant workflow. People who have in-between work styles prefer collaborative teamwork and a more fluid workflow. Lastly, those who prefer working socially might enjoy short work breaks, small pockets of time during the day, and lunchtime to work. In an office it is common to have employees from multiple generation groups, resulting in differing work styles. Creating an environment that allows several different work styles allows employees to be happier which increases their productivity.
Facility Design and Location
The design of an office influences the work setting and styles of its employees. Two major factors that influence the way people work within an office are acoustical and visual privacy. It is important to have both in a workspace. Employees that prefer a more private workspace will work best with complete acoustical control and adequate insulation. Visually, they prefer full-height walls with other opaque finishes. Employees that have in-between work styles prefer white noise and sound masking. Visually, they work best with screens and panels with semi-transparent glass. Lastly, those who enjoy working socially do not need acoustical control. Visually, they prefer open space and glass used for transparency.
Here at Snow Financial Group, we accommodate for all work settings and styles to achieve the best performance for our employees. In our new office space, we thought deeply about our employees and how we could make our space fun and enjoyable while still maintaining an efficient quality of work. We took and the itinerary of historic downtown Covington came to mind. After four years of planning, our NEW office location now lies in the heart of downtown Covington, Louisiana. A small city just South of New Orleans that has been consistently growing since the devastating storm, Hurricane Katrina. Covington is a charming place to spend the day (or weekend) among fine galleries, eclectic shops, excellent restaurants, and more. The historic district is just steps away from several bed and breakfasts and the renowned Southern Hotel. Working in a place like Covington allows our team to love our work setting, location and what we do even more. We would love for you to stop by and get the full experience!
4 Financial Tips for Gen Z
Introduction
You’ve graduated and are searching for - or have landed - a great job. Maybe you’re even engaged or newly married. You might be living in your first apartment, your first house, or even adding children to your family.
But wait! What do you need to do in order to get your post-schooling finances together, and how do you do it? Why didn’t they teach this stuff in high school?
Don’t worry. There are easy-to-follow steps to planning a bright financial future for yourself - ones that you may enjoy right now as well as 40 years from now when you retire. In this eBook, you’ll learn how to:
Find a job you love and earn an income that you can actually live off.
Paying off debt like student loans, car notes, and credit cards using either the debt avalanche or the debt snowball approach.
Save for emergencies so you don’t have to put unexpected expenses on credit.
Invest early for retirement to take advantage of the power of compound interest.
Get ready, because your future is now and there’s no better time than today to reap the benefits of smart money choices.
About Me
Hi, I’m Paul Snow. I’m a Northshore financial advisor who’s been helping Louisianans plan for their futures for 25 years. I’m passionate about helping young people plan for their financial futures, especially with all the uncertainty of our times.
Tip #1: Find a Job You Love to Increase Your Opportunities for Career Advancement and Success
Sometimes, you need to land a job quickly to make ends meet. There’s nothing wrong with doing this for the short-term. But one of the keys to having a successful career with opportunities for advancement and pay raises is to find a job you’ll love.
Some jobs just aren’t loveable. You may currently be working a job that is too long of a commute from your home, has hours that don’t fit with your personal and family life, or is at a company that isn’t a good cultural fit for you. That’s okay. The key is to always be seeking the right opportunity to come up and to be ready to apply as soon as it does.
In your 20s, you should:
Be active on career social media sites like Handshake and LinkedIn so you can meet others in your career field - or the field you want to work in - and find out about job opportunities. Keep in mind, lots of people on career social media sites will look for a new hire recommendation from their own connections first before posting an official position announcement.
Keep your resume updated. During your 20’s, your job responsibilities are most likely growing all the time. Make sure to update your resume every three months so it’s ready to send as soon as you find out about a career opportunity for which you want to apply.
Soak up everything you can about where you work, or where you want to work. Read blogs in your industry and follow your favorite companies and professional organizations on social media, too.
What to Do When You Don’t Know What You Want to Do for a Living
It’s completely normal for you to not be 100% certain what type of career you want long-term. That’s okay. If you’re not sure what you want your career to be yet, then:
Secure a job that will help you make ends meet while you research career fields.
Look for jobs in industries that you think you might want to work in for the long haul to see what the work environment is like.
Think about what skills you have - or want to acquire - that can be useful in the marketplace. For example, if you love talking to people, you may love a career in sales. If you love helping people, perhaps a career in healthcare is right for you.
Follow blogs and social media to research industries that are interesting to you.
Talk to your friends and family, many of whom are starting their careers, too.
Tip #2: Pay Off Debt Using Either the Debt Avalanche or the Debt Snowball
Most young adults have some form of debt. You may have student loans, credit card bills, or a car note. One of the biggest barriers between you and financial success is your monthly payments. After all, the money you pay someone else is money you can’t pay to yourself and save or invest.
In the financial world, there are two popular methods for paying off debt: the debt avalanche and the debt snowball.
What is the Debt Avalanche?
The debt avalanche is a debt repayment plan that’s focused on paying off debt while simultaneously paying the least amount of interest possible. If you want to pay off debt while paying the least amount to do so, you should consider the debt avalanche. Here’s how to do so:
List out your debts from the highest interest rate to the lowest interest rate, regardless of the accounts’ balances. If two debts have the same interest rate, place the debt with the lowest balance first on your list.
For everything but the first debt on your list, pay only the minimum payment.
Pay as much as possible on the first debt on your list (this will be the debt with the highest interest rate) every single month.
Once the first debt on your list is paid, take the money you were paying towards it and apply it - and the minimum payment you were already paying - to the second debt on your list. Keep following this formula until all your debts are paid.
What is the Debt Snowball?
The debt snowball is a debt repayment plan that is focused on paying off a single account as quickly as possible. With the debt snowball you pay off your debts from the smallest balance to the largest balance. Here’s how it works:
Make a list of all your debts, putting them in order from smallest to largest. If you have two accounts that are the same balance - or very close to it - put the debt that has the highest interest rate first.
Just like with the debt snowball, only pay the minimum payments for everything but the first debt on your list.
Put all extra money you have in your budget every month toward paying off your smallest debt.
When you’ve paid off your smallest debt, apply that monthly payment to the second debt on your list - and then so on - to get your debt snowball rolling.
Debt Avalanche vs. Debt Snowball - Which is Best for You?
From a purely financial standpoint, the debt avalanche lets you settle all your debts while paying the least amount of interest - and thus lets you pay off debt for a lower overall cost than the debt snowball. This is why the debt avalanche is so popular; it helps you pay off debt while saving the money that you would otherwise be paying toward high-interest accounts.
However, paying off debt isn’t fun. And depending on how much debt you have, it may take a while to do so. Some people find that the debt snowball - which helps you close accounts quickly - gives them the motivation they need to stay focused, even though they may ultimately end up paying more in interest.
Tip #3: Save 3 to 6 Months’ of Expenses for Emergencies in a High-Yield Savings Account
Life is full of the unexpected. Your check engine light comes on, you may get sick or injured and have unexpected medical expenses, or your computer might die. And as we’ve seen with the pandemic, sometimes we lose hours at work, or our jobs altogether.
Experiencing an emergency can be stressful - both emotionally and financially. But by planning in advance, you can take the financial stress of an emergency off your plate by having an emergency fund.
What is an Emergency Fund?
An emergency fund, or e-fund as many people call it, is a savings account that you set aside and only use when you have an unexpected emergency occur. E-funds shouldn’t be used for planned expenses like vacations, or wants, like an Xbox Series X or a new pair of shoes. Instead, an e-fund is meant to be saved, set aside, and used to avoid racking up debt to pay for an emergency.
Your emergency fund should be 3 to 6 months’ worth your monthly expenses. Exactly how much you save depends upon your unique situation. Generally, you should lean more towards saving 6 months of expenses if:
You’re single or have a single-income household. When there’s only one paycheck coming into your checking account, you should save more of it for emergencies.
Your income is variable. If your work hours fluctuate or you get paid on commission, it’s a good idea to have a bigger e-fund.
You have a medical condition that may necessitate an unexpected leave of absence from work. This is especially true if you don’t have disability insurance.
Where to Save an Emergency Fund?
By design, an emergency fund isn’t an investment. It’s more like insurance you save for yourself for when the unexpected happens. But that doesn’t mean you need to save it in a brick-and-mortar bank’s savings account where it will earn very little interest.
Instead, research high-yield savings accounts - many of which are offered at online banks - or a money market account and look for the highest interest account possible. A money market account is a savings account that has aspects of a checking account, and typically pays more interest than a traditional savings account would.
Wherever you ultimately save your emergency fund, make sure you have a debit card for it so you can quickly use your funds to pay for emergencies as they happen.
Tip #4: Save 20% of Your Income for Your Future
The best way you can have a great financial future is to pay yourself first. This means you should save 20% of your income to invest into your retirement funds, purchase a home, and buy additional investments such as non-retirement brokerage funds, rental real estate, or land.
Start Investing in Your Retirement Funds Early
If you think that, since your retirement is 40 years away, you don’t need to worry about it yet, you’re wrong. Consider this example.
Zack starts investing $500 into the stock market every month the year he turns 25 and continues to do so for the next 40 years. If you estimate an average annual return of 8%* Over the next 40 years, Zack will have $1,745,502 at age 65.
Cole, however, waits to invest until he’s 35, and keeps investing this amount every month for the next 30 years. He invests the same $500 a month as Zack. You would think since Cole only invests 75% of what Zack does, he would end up with a retirement fund that is 75% the size of Zack’s. However, Cole only ends up with $745,179 - less than half of Zack’s retirement fund.
What happened?
Zack had the power of compound interest working for him.
What is Compound Interest?
When you invest in the market, you don’t only earn interest off your contributions. You also earn interest from the combined total of your contributions and your previously earned interest. The earlier you start investing, the more compound interest you can earn.
This is why Zack’s retirement fund is more than double that of Cole’s. Zack started investing early and therefore earned more compound interest than Cole.
What to Invest In?
There are two types of retirement funds you should know about - a 401(k), which is offered through work, and a Roth IRA, which you can invest in through a financial advisor like me.
401(k)
401(k)s are funded with pre-tax income. You fill out a form to tell your employer what percentage of your paycheck to invest every month, and your contributions are automatically deducted from your gross pay every paycheck. You can contribute up to $19,500 into your 401(k) every year. You can start withdrawing from your 401(k) at age 59.5, and you’ll be taxed on the disbursements
*This is a hypothetical illustration and is not intended to reflect the actual performance of any particular security. Future performance cannot be guaranteed and investment yields will fluctuate with market conditions
Roth IRA
A Roth IRA is funded with after-tax income. You can open a Roth IRA with a financial advisor like me, and we can set up your contributions to auto deduct from your checking account every month. You can contribute up to $6,000 to a Roth IRA every year. Since you contribute money to a Roth IRA after you have paid taxes, your Roth IRA disbursements, which you can begin to take at age 59.5, will be tax free.
How Much to Invest Specifically in Retirement Accounts
It is generally recommended to invest at least 10% of your gross income into retirement. To maximize your growth potential, one strategy is to:
Invest in your 401(k) only up to the match. This automatically doubles your investment.
Take the rest of the money you are going to invest for retirement and invest it in a Roth or Traditional IRA because they are tax- advantage accounts. I can help you open and manage this account.
If you both invest in your 401(k) up to the match and max out a Roth IRA and still have money to invest for retirement, meet with me to discuss a personalized retirement plan for you.
How Do You Choose What to Invest In?
When it comes to choosing what to invest in, the world is your oyster. You can choose to invest in single stocks, mutual funds, exchange-traded funds (ETFs), bonds, and more. You should choose funds that are growing based on their past performance, though even that data can’t predict what your investments will do in the future.
Your investments need to be balanced to meet your risk tolerance level. Some investments are more risky than others. The performance of single stocks has historically been more volatile than the performance of bonds.
Everyone has a different comfort level with risk. I typically recommend you invest in higher risk investments while you are younger, and gradually reduce your exposure to risk over the years.
As a financial advisor, I study equities to evaluate which ones are growing, and which investment options best fit into different risk profiles. By meeting with me, I can help you determine what you want to invest in now, and we can evaluate performance at a minimum once a year.
What’s Next?
Whether you have any questions about this information, or you’re ready to start investing, I’m here to help. You pay no out-of-pocket fees for my services. I get paid a small percentage of your investments.
You can reach me by calling (985) 792-5232 or emailing paulsnow@snowgroupllc.com.
Any opinions are those of Paul Snow and not necessarily those of Raymond James.
An investment in a money market fund is neither insured nor guaranteed by the FDIC or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.
Investors should consider the investment objective, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other important information, is available from your Financial Advisor and should be read carefully before investing.
Matching contributions from your employer may be subject to a vesting schedule. Please consult with your financial advisor for more information.
Like Traditional IRAs, contribution limits apply to Roth IRAs. In addition, with a Roth IRA, your allowable contribution may be reduced or eliminated if your annual income exceeds certain limits. Contributions to a Roth IRA are never tax deductible, but if certain conditions are met, distributions will be completely income tax free.
Investment products are: Not deposits. Not FDIC Insured. Not guaranteed by the financial institution. Subject to risk. May Lose Value.
Tax-Free Savings Accounts Available to All Americans That Help You Save on Taxes and Boost Your Wealth
Wherever you live in the US, there are tax-free and tax-advantaged savings options that help you boost your wealth, pay for your healthcare expenses, and pay for your children’s college tuition or daycare expenses. These include:
Roth IRAs for Retirement Savings That Grow Tax-Free
When you work with us, we help you come up with a retirement savings plan that can help you build a solid nest egg for after your working years. If you have a 401(k) or 403(b) at work that offers a match, I always recommend you contribute up to the match. If you don’t, you’re giving away free money.
However, since a 401(k) or 403(b) is funded with pre-tax money, you’ll end up paying taxes on your withdrawals during your golden years. For this reason, I work with all my suitable clients to contribute to a Roth IRA every year (you can contribute up to $6,000 every year, or $7,000 if you are age 50 or older). Because Roth IRAs are funded with post-tax money, they grow tax-free. This means when it’s time to make regular qualified withdrawals from your Roth IRA when you’re living in retirement you won’t pay any taxes on those funds.
Use a Flexible Spending Account or Health Savings Account to Pay for Your Medical Expenses
There are two tax-advantaged options for paying for yours and your family’s medical expenses. A Flexible Spending Account (FSA), which may be offered through your employer, allows you to earmark up to $2,750 of your income, pre-tax, for healthcare expenses to be used during the current calendar year.
A Health Savings Account (HSA), lets you invest money to be used for your healthcare expenses indefinitely. In 2021 individuals can contribute $3,600 a year with after-tax money, or a maximum of $7,200 a year for an individual with a family health insurance plan. The money in your HSA can grow tax-free, and can be used any time during your life. In order to qualify, you must have a high deductible health insurance plan
College Savings Accounts with Tax-Free Growth
All parents want to give their children the best future possible. For many, this means helping to pay for college expenses so their young adult children don’t need to take out excessive student loans.
The Federal government wants to help you meet this goal. For this reason, they’ve created two different college savings programs that grow tax-free: The Educational Savings Account (ESA), for which you can contribute up to $2,000 depending on your modified adjusted gross income (MAGI), and the 529 plan, which allows $15,000 per donor, per beneficiary qualifies for the annual gift tax exclusion. Both accounts can be invested in mutual funds and bonds, allowing for the potential growth of exponential growth over the years.
ABLE Accounts for Minor of Adult Children with Special Needs
If you have a disabled child with a qualifying disability who also receives SSI, you know that there are net worth limits for your child that, if exceeded, reduce or eliminate their monthly SSI payments. An ABLE account, which stands for Achieving a Better Life Experience, allows you to invest up to $100,000 total for your disabled child - regardless of his or her age - without affecting your child’s SSI eligibility. You can contribute up to $15,000 a year into an ABLE account.
Use a Dependent Care Flexible Spending Account to Pay for Your Childcare Expenses
Childcare is expensive. If your employer offers a dependent care flexible spending account (DCFSA) and your child attends a qualifying daycare, preschool, or summer camp, we recommend you contribute to it. Individuals and married couples can contribute up to $5,000 of their pre-tax income to these plans, which must be used in the calendar year exclusively for qualifying child care expenses.
Contact My Office to Create a Personalized Financial Plan!
Any opinion are those of Paul Snow’s and not necessarily those of Raymond James.
This material is being provided for information purposes only and is not a complete description, nor is it a recommendation.
Investing involves risk and investors may incur a profit or loss
How to Find a Great Financial Advisor
How to Find a Great Financial Advisor
I’ve been a financial advisor for 25 years. During that time, I’ve come to learn there are several reasons why some of you reading this blog post may be hesitant to interview financial advisors and select one with whom to work.
Some of you may have never worked with a financial advisor before - regardless of your age or stage in life. Whether you’re just getting started with your professional career and are looking for financial advice, or you’ve managed your investments on your own for years and are unsure how an advisor can benefit you, I understand your hesitation.
Others of you have, unfortunately, had bad experiences with financial advisors before. Maybe you worked with someone who had the title of “financial advisor,” but really seemed more like a salesperson. Instead of offering you personal financial advice based on your unique situation - and educating you about the investment option he or she was recommending you consider - this person may have been seeming to push a particular mutual fund, stock, or investment vehicle without considering what makes you and your family unique. If this sounds like you, your view of the field of financial advisement may sadly be tainted.
Wherever you fall on this spectrum, I am here to offer you some advice on how to find a great financial advisor.
Tip #1 - Interview Financial Advisors Before Choosing Someone With Whom to Work
Whenever selecting a professional to partner with, it’s always a great idea to interview them first. Some of you with children may have researched and then interviewed, pediatricians while you were expecting your first child. If you need work done on your house, you have likely heard it’s best to meet and then get three no-obligation quotes before selecting a contractor. And if you’re looking for a care facility for your elderly parents, you of course want to tour the location and meet the staff before deciding on a place for your loved one to live.
The same is true when it comes to selecting a financial advisor. After all, a financial advisor will be your go-to person for financial planning questions and advice regarding important financial decisions you’ll make throughout your life, such as:
How much should you save for retirement?
What should your monthly budget be?
How much house can you afford?
How much should you save for your children’s college funds?
When you interview financial advisors, I recommend you ask the following questions:
How Long Have You Been a Financial Advisor?
While novices can be great financial advisors, there’s something about decades worth of experience that speaks for itself.
Do You Offer Investment Advice Only, or Do You Also Help with Other Financial Planning Tasks?
You’ll likely find that you have several financial questions, outside of investing, and need someone familiar with your family and your finances to help make suggestions over the years.
On Average, How Often Do You Meet with Your Clients?
All financial advisors should meet with their clients at least once per year to review their portfolio performance, and when life changes occur, or a client has a question about their portfolio performance.
How Do You Get Paid?
Commission-based financial advisors have a sort of conflict of interest, in that they are financially incentivized to sell certain investments because selling them gives them a paycheck. A fee-based financial advisor gets paid a small percentage of your portfolio on a quarterly basis.
Tip #2 Look for a Financial Advisor Who’s Personable
While it’s true that financial advisors like myself love numbers, the best financial advisors love people, too. Over my 25-year career, I’ve come to develop great professional relationships with my clients as I advise them to help make the best financial and investment choices for their families.
Tip #3 Your Mom’s/Brother-in-Law’s/Neighbor’s Financial Advisor Might Not Be the Best Advisor for You
No matter how you slice it, we live in a society in which talking about personal finances - even with our closest friends and family members - is still considered taboo. You may be tempted to choose a financial advisor based on who your coworker, neighbor, or cousin is working with. But unless you know the person referring to you is smart and focused on their money, you may want to think twice about their recommendation. Look for people you know who are winning with money - perhaps a professional mentor or a very generous family at your church - for recommendations, not just the neighbor you meet at the mailbox every day after work.
I work diligently to do everything possible to give my clients the best financial advice - for things outside of traditional investments such as how much house they can afford or whether or not they should choose one college for their child over another based on tuition cost. The goal for my clients is to help them become financially confident and the type of people who make good recommendations to their friends and acquaintances. But still, every year I gain several new clients who have no connection to my firm, but have heard of me through my blog posts, social media, interviewed me, and decided to partner with me for their investment and financial planning advice.
Contact Me to Schedule an Interview I’d love to meet with you - either in person or over the phone - to learn more about yourself and your family, your financial needs and goals, and how I can best advise you so that you achieve them. To reach my office, call Snow Financial Group today at (985) 792-5232.
Advice for Your Portfolio Leading Up to the 2020 Presidential Election
Advice for Your Portfolio in the Weeks Leading Up to the 2020 Presidential Election
2020 has certainly proven to be quite the election year. First, we’re in the middle of a contentious presidential election between President Trump and former Vice President Biden. Second, our country - and the world - is in the midst of a global COVID-19 pandemic that has sent the stock market on a roller coaster ride, cost millions of Americans their jobs, shuttered many businesses and industries, and even infected President Trump. Finally, there’s the uncertainty about mail-in ballots and current Postal Service delays, and whether or not our country will even be able to declare a winner in the presidential election on November 3rd or if it will take days - or perhaps even weeks - later to know who will be inaugurated in January 2021.
With all the uncertainty surrounding the upcoming presidential election - as well as the potential for a Senate flip if Vice President Biden and Democratic Senators win - many of our clients are coming to us to ask what changes - if any - they should be making to their portfolios in the weeks leading up to the 2020 Presidential election. We’ve written this blog post to offer you our advice.
Now Is Not the Time for Major Changes to Your Portfolio
As an experienced New Orleans area financial advisor, I’m here to tell you that it’s never a good idea to try to time the market, especially when you’re working on building long-term wealth and financial stability for retirement. And that’s particularly true right now.
While all of my clients have different risk tolerance levels, I am constantly focused on helping them create balanced portfolios based on those unique risk profiles. If you’ve already been working with me, then you know this is true from our regular update meetings. We believe your balanced portfolio is your best defense at any potential market downturns in the upcoming weeks and months due to the 2020 presidential election.
Why You Shouldn’t Try to Time the Market
During his first term, President Trump has lowered taxes, and until the COVID-19 pandemic hit our country, the stock market was yielding record returns. Some economists are concerned that former Vice President Biden’s plan to increase taxes if he wins the election will result in a stock market drop.
But it’s important to remember that given that the Senate is currently controlled by Republicans, even if Biden wins the presidency, he will be unlikely to pass any tax increases unless this upcoming election flips the Senate to Democratic control. And even though former Vice President Biden is currently leading in polls, we all know how unreliable polls can be. Since none of us have a crystal ball, we shouldn’t try to predict what will happen with the presidential election and down-ballot voting and make big changes based on what the polls are currently reporting.
What Can You Do to Stay Financially Sound with Current Election and Pandemic Uncertainty?
Whether your portfolio includes retirement accounts like 401(k)s and IRAs, or non-retirement accounts for bridge investing, there are a few universal tips we recommend you follow until the dust settles from the 2020 presidential election. They are to:
● Keep Your Emergency Fund Stable
Having an emergency fund is always a must. As we anticipate market volatility during the weeks leading up to the presidential election (and perhaps the weeks and months afterwards), having a beefed-up emergency fund is more important than ever. If you’ve had to dip into your emergency savings during the pandemic, we recommend you reduce your discretionary spending as much as possible to add to your emergency savings. Depending on your personal and family situation, you should have at least three to six months of expenses in this account. If you need help determining how much to save in your emergency fund, we’re happy to meet with you to discuss a game plan based on your unique situation.
● Pay Down Any High-Interest Debt
If your emergency fund is stable and you have money remaining in your monthly budget, we recommend you use those funds to pay down any high-interest debt you may have, such as credit cards with high APRs. Focusing on debt reduction will help you save from paying high-interest payments in the months to come, which may have some increased market volatility.
● Consider Refinancing Your Home to Take Advantage of Historically Low Mortgage Interest Rates
2020 has brought the banking industry historically low mortgage interest rates. Depending on your current mortgage rate, you may be able to save significantly on your monthly mortgage payment by refinancing right now. Reducing your mortgage payment will also help free up cash flow so you can focus on emergency fund savings or paying down high-interest debt*
Contact Us if You Have Any Questions
We know that the uncertain times we’re experiencing can create confusion, anxiety, and fear regarding your nest egg. As your trusted financial advisors, we’re here to explain our current market and economic situation to you. If you have any questions about your portfolio or current financial position, we’re happy to meet with you. To schedule an appointment, call our offices today at (985) 792-5232.
*Raymond James Financial Services and your Raymond James Financial Advisors do not solicit or offer residential mortgage products and are unable to accept any residential mortgage loan applications or to offer or negotiate terms of any such loan. You will be referred to a qualified Raymond James Bank employee for your residential mortgage lending needs.
There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Past Performance does not guarantee future results.
5 Ways Families Lose Wealth From Generation to Generation
After a lifetime of hard work and earning, it all comes down to the legacy you are leaving behind. The real question is, how many generations will your wealth survive?
Build something that outlives you!
Passing family wealth from generation to generation is a harder task than many of us expect, but it can be done. At Snow Financial Group, we pay particular attention to the smallest details necessary to help preserve a family’s legacy. If your wealth is managed correctly, it should continue to increase overtime and not deteriorate over time!
The Problem
As many as 90% of wealthy families lose their wealth within three generations, largely due to poor interpersonal dynamics. The most common ways we fail to pass wealth from one generation to another begin with: a lack of meaningful communication, trust, or lack of shared vision.
At Snow Financial Group we believe that it’s not all about money or transferring the wealth once it’s accumulated. It’s about hard work, good habits, and core values over a long period. You must be disciplined!
5 Ways we lose Wealth From Generation To Generation
1. Lack of Meaningful Communication it’s easy to get swept up in money talk. Engaging in structured, productive dialogue about the components of a lasting family legacy, however, requires more planning and preparation than most people expect. At Snow Financial Group, we encourage conversations about the intangible values of the family legacy.
2. Lack of Shared Vision
Unless you establish a shared vision for your wealth, it’s likely each family member will spend the money according to his or her plan; yet, that kind of aimless spending could lead to the deterioration of family legacy and wealth over time. At Snow Financial Group, we help each family member understand the purpose of his or her wealth, so you can arrive at these decisions as a family — and protect them together.
3. Disregard for Intangible Wealth Assets
Most families fail to focus on the intangible assets — such as philanthropy, higher education, community involvement, a perspective of gratitude, and impactful life experiences — because you can’t easily measure the contribution of these assets with numbers. At Snow Financial Group, these intangible assets are at the center of our family legacy planning. When the conversation becomes too focused on wealth, we bring everyone back to the meaning behind the money.
4. Erosion of Trust
When there’s wealth to be shared, there’s often trust to be lost. Communication and transparency are crucial in creating the kind of trust that binds a family together — rather than the secrecy that tears a family apart. While that doesn’t mean you need to disclose everything immediately, these conversations help family members feel like they can trust your plan for the future, so they are much more likely to honor it.
5. Attitude of Entitlement Over Gratitude
When you’ve spent a lifetime generously providing for your family, that level of comfort can also come hand-in-hand with a decrease in productivity and motivation in the next generation. If you pass on your work ethic alongside your wealth, however, you are much more likely to ensure the survival of that wealth.
Start Protecting Your Family Legacy: If you’re struggling with communication, trust, and the transfer of values, the Snow Financial Group team can help you start a new dialogue and establish a framework that protects these powerful conversations for generations to come. Contact us Today! Snowgroupllc.com (985) 792-5232
The Three Levels of Making Money
Did you know that the average millionaire has seven different sources of income? If you are working over 40 hours a week with no additional sources of revenue and want to see seven figures in your financial statements, your financial goals may be far out of reach.
When it comes to making money, there are three different levels of producing wealth – trading your valuable time for money is only level one. Although this is the most common and basic way to generate income, it is also evidently the most inefficient.
Level One
As previously stated, the first level of creating income is the exchange of time for money. This level includes your typical nine to five job whether it be financial consulting, a marketing coordinator, or even a fast-food worker.
There is only a finite amount of time in a day which means that if your time is the only thing making you money, there is only a finite amount of income that can be made. Level one provides a stable means of income but because of its restrictions of time, it exposes its inefficiency.
Level Two
The second level of making money is where you begin to generate income from what you’ve earned at level one. At this level, your money begins to earn you additional revenue through the investment of assets, securities, or real estate.
Through the collection of dividends, rent payments, or buying and selling securities, the income you have already earned is able to grow and produce extra earnings. With level two, there is no restriction of time and supplemental income can be earned while you are sleeping! At this level, you are now working towards your financial goals much more efficiently since you are generating revenue from multiple sources.
Level Three
The third and final level of making money is a continuation and expansion of level two. This level requires having several different sources of income or revenue streams, with the option of having people work for you.
At level three, income can be generated from a variety of places – the time that you exchange for money, your investments, and now your potential businesses such as house cleaning services, lawn care, or investing in franchises that allow you to have people working for you. Having several sources of income such as these is a major key to building wealth and achieving your financial goals.
Where do we come in?
If you find yourself stuck in level one, simply trading your time for money, but have financial goals that you want to talk to a financial professional about, we’re here to help! We want to help you create additional sources of revenue and take you to the next level. With the help of a financial planner, you can climb out of level one and work your way towards achieving your financial goals.
