Dear Young Investors: Stop Micro-Managing Investments and Become Market Agnostic

Friday, 17 June 2016
Robert E. Dockendorff, JD, LL.M

Dear Young Investors:  Stop Micro-Managing Investments and Become Market Agnostic
Inexperienced investors have trouble relinquishing their hard-earned funds to the ebbs and flows of market returns.

Inexperienced investors have trouble relinquishing their hard-earned funds to the ebbs and flows of market returns.   People just don’t want to buy and hold for the long term because there is a sense that boring diversified portfolios should be "doing more", or that investors should frequently react to market forces.

Rather than investing in a portfolio of low-cost index funds with an appropriate asset allocation and risk tolerance, and then stepping back (other than to rebalance and harvest tax losses), many young investors pay attention to market swings and act on impulse. They listen to pundits and succumb to media pressures to react in fear. Despite warnings, they try to time the market.

Unfortunately, this overactive behavior can undermine investment goals.

The Horrifying Results for Most Investors

Several studies have shown that the vast majority of all investors fail to achieve the returns of their own investments.

It sounds impossible, but let that sink in.

Congratulations on the New Job. Time to Reevaluate Your Finances.

Tuesday, 17 May 2016
Robert E. Dockendorff, JD, LL.M

Congratulations on the New Job. Time to Reevaluate Your Finances.
So you’ve just landed a new job after several years in your last position.

So you’ve just landed a new job after several years in your last position. You worked hard to establish yourself and develop the skills necessary for success, and now you’re ready for a higher level of responsibility and benefits. 

A mid-career change can be both exciting and daunting. Once again you’ll be out of your comfort zone and looking to prove yourself in an unfamiliar environment.

Of course, there’s a new office and set of colleagues, but there’s also a chance to change many other areas of one’s life that may need improvement or adjustment. A new income and benefits package could mean entirely different financial circumstances.

 

An Effective Stock Option Strategy for Startup Employees

Tuesday, 03 May 2016

An Effective Stock Option Strategy for Startup Employees
It’s true that timing is everything.

It’s true that timing is everything. For individuals that receive stock options during a company’s startup or pre-IPO phase, there can be an acceleration of wealth that is unlike any other form of employee compensation.  Working at a startup can provide the right mix of entrepreneurial upside with the stable salary and benefits of a competitive full-time job.

Although many people realize benefits of stock options and sometimes layer the proceeds from options into a long-term wealth building strategy, most do not understand the substantial planning opportunities available to minimize taxes around the exercise of options.

A well-timed stock option exercise and hold strategy with a sale at capital gains rates can provide significant tax savings.   From a wealth planning standpoint, it can be lightning in a bottle.

Stock Option Basics

A stock option grant is simply the right (or option) to purchase one share of company stock at a set price.

For example, Startup, Inc. could grant Eddy Employee 1,000 stock options at $5/share (known as the strike price). Eddy can now choose, within some set time frame, to purchase (or exercise) the options at the strike price of $5.

Three Essential Financial Planning Questions for Thirty-Somethings

Friday, 15 April 2016

Three Essential Financial Planning Questions for Thirty-Somethings
By age thirty, personal financial planning becomes, in many cases, necessary for long-term success.

During their twenties, people are finding their way personally and professionally.  Long nights at the office as “low man on the totem pole” can turn into a mid or senior level position and a well-established career track by the age of thirty.  

Likewise, the twenties lifestyle of living with friends and going out on weekends gives way to marriages, families, and moving to the suburbs.  By age thirty or thirty-five, especially when children enter the picture, there is less discretionary time and money, so every dollar needs to count.

For individuals approaching thirty and beyond, here is a quick litmus test to see whether you have a handle on your financial situation.  If you can’t affirmatively answer these questions, your financial plan may need attention.

  1.  How Much Do You Save Each Month?

Everyone knows what hits their bank account each pay period.  Some people know their monthly spending number.  Very few people know their monthly savings, or deficit, number.  This number could include retirement account contributions from payroll, but in general, people should have a good idea of the portion of their monthly income that goes towards achieving their long-term financial goals.

Don't Let Poor Planning Keep You From Crossing Retirement Home Plate

Friday, 01 April 2016
Robert E. Dockendorff, JD, LL.M

Don't Let Poor Planning Keep You From Crossing Retirement Home Plate
Why Early Retirees Should Reconsider the 4% Rule

Getting on base and ultimately crossing home plate are two very different things. Even after a fantastic at-bat, a subsequent mental lapse on the base path could end a scoring chance and possibly lose a game.

For individuals that have "reached first base" in saving enough to stop working, retirement success could require a whole different mindset than successfully saving for retirement.  Actually, the first five years of retirement can mean the difference between winning and losing. Although retirement rules of thumb can be helpful with long-term goals, when it comes time to tap into retirement assets, retirees need flexibility and proactive risk awareness.

Financial Planning Checklist for New Parents

Friday, 11 March 2016
Robert E. Dockendorff, JD, LL.M

Financial Planning Checklist for New Parents

Having a baby is an extraordinary, life-changing event. Although positive emotions can overwhelm new mothers and fathers, parenthood also creates significant responsibility—and sometimes anxiety.  Without proper planning, a little bundle of joy can lead to a very large financial burden.  There is no way to fully anticipate the emotional, financial and lifestyle shifts of becoming a parent, but here are some key areas that all parents should address with their financial planner: 

  1. Review Additional Living Expenses and Plan Accordingly

If your financial house is in order, you may already have a strong handle on your monthly cash flows and budget.  But everything changes when you have a baby. Evaluating the major additional expenses and understanding how to optimize after-tax savings is imperative for long-term financial success.

2. Health Insurance Family Coverage

Health insurance costs are rising. According to Zane Benefits, the cost of family healthcare has tripled since 2001 and continues to grow at an increasing rate, climbing 6.3% in 2015.  At the very least, new parents should expect family coverage to cost...

Over 59 1/2? Consider the Benefits of an In-Service Withdrawal from Your Company Retirement Plan

Tuesday, 08 March 2016

Over 59 1/2? Consider the Benefits of an In-Service Withdrawal from Your Company Retirement Plan

Many employees love the convenience of investing in 401(k)s, 403(b)s or other qualified employer retirement plans.

With automatic contributions, prepackaged investment choices, and employer matching—the system enables an easy retirement savings process.

But many feel stuck with the inflexibility of 401(k)s. The investment choices can be limited and may only include expensive actively managed mutual funds or target date funds. Depending on the individual, these options might not be the best.

When It Comes to Finances, Get A Routine and Stick to It

Tuesday, 09 February 2016
Robert E. Dockendorff, JD, LL.M

When It Comes to Finances, Get A Routine and Stick to It

“Everyone has a plan until they get hit in the mouth.” – Mike Tyson

As January gym crowds shrink and many Americans slip into their old routines, we’re reminded of the difficulties in developing disciplined and consistent habits towards achieving a long term goal. As busy professionals, our schedules change rapidly, and too often, our best laid plans go awry. After a few weeks of work, there are no immediate results and it becomes easier to ditch the gym for drinks after work, or have a few too

Enhancing Retirement Cash Flow with the New and Improved Reverse Mortgage

Enhancing Retirement Cash Flow with the New and Improved Reverse Mortgage
Part I: The Basic Retirement Planning Equation

Retirees must fund an enjoyable lifestyle without working, which is no small feat. With fewer pensions, lackluster social security benefits, low-interest rates, and significant market volatility—hard-earned retirement savings may not last until age 90 or later.

Retirement is generally considered sustainable if total portfolio withdrawals during the first year of retirement are no higher than 4% of portfolio value (the so-called 4% rule). But it turns out even 4% could be too much if retirees suffer a market downturn in early retirement. Or any number of other things can go wrong.

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Disclosure: Claro Advisors LLC ("Claro") is a Registered Investment Advisor with the U.S. Securities and Exchange Commission ("SEC") based in the Commonwealth of Massachusetts. Registration of an Investment Advisor does not imply any specific level of skill or training. Information contained herein is for educational purposes only and is not to be considered investment advice. Claro provides individualized advice only after obtaining all necessary background information from a client. This report is not a financial plan and is not intended as a solicitation or advice to purchase specific investments, but the information provided can assist you in evaluating your current financial situation and your ability to achieve your investment goals. Any projection of investment outcomes is hypothetical in nature, does not reflect actual investment results, and is not a guarantee of future results. Similarly, other information regarding various investment outcomes are hypothetical in nature, do not reflect actual results and are not guarantees of future results. The projections may not include all taxes applicable to your situation. Past performance is no assurance of future results. Investments may fluctuate and lose value, and unexpected market movements may result in changes in rates of return and anticipated performance. Claro does not provide legal or tax advice. The information herein is general in nature and should not be considered legal or tax advice. Consult an attorney or tax professional regarding your specific situation. Claro will provide all prospective clients with a copy of our current Form ADV, Part 2 ("Brochure") prior to commencing an Advisory relationship. Please contact This email address is being protected from spambots. You need JavaScript enabled to view it. or toll free at 800-604-2838 with any questions.

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