Are you earning 15% or more on your portfolio?

If you are, congratulations, BUT … you may not be diversified enough to help protect yourself from the next market correction.

As advisors, one of our fundamental jobs is to partner with clients to assess their tolerance for risk and make sure their portfolio is constructed in a way that reflects their individual outlook and circumstances.

We tend to see an uptick in new client inquiries when the market is more volatile. In recent years, as the market has generally done well, most investors have not seen significant market declines in their portfolios. However, if you or your advisor have not constructed your portfolio according to some of the tenets of asset allocation, you may be in for a rude awakening when the market dips.

It bears repeating that no one can predict when the market might turn, or why or how dramatically it may spike back up when it does. As always, we counsel against shifting your portfolio in reaction to near-term forecasts or results.

So, how can you prepare?

First, if you don’t feel comfortable going solo, please reach out to someone who can help. Both Andrew and Bob are CERTIFIED FINANCIAL PLANNER™ certificants, which we believe should be the minimum bar you should require when considering an advisor. In addition, we hold the Chartered Financial Consultant® and Chartered Life Underwriter® designations. Lastly, Andrew holds the Accredited Investment Fiduciary® designation. We believe knowledge is essential to providing superior service.

Second, when is the last time you had a conversation with your advisor about your personal goals and risk assessment? Did you really consider what a 30% market downturn would mean to you? If you have a 20-year investment time horizon, maybe you would consider it just a blip on your investing radar. If you are closer to retirement, maybe it would truly affect your lifestyle?

Some other questions to consider:

Market Risks – Are you fortifying your exposure to market risks and expected investment returns with enough lower-risk holdings (e.g. fixed income/bonds)?

Personal Risk Tolerance – Have you been through past bear markets? Does your current portfolio mix of safer/riskier holdings accurately reflect what you learned?

You can prepare for the next down market by having a well-planned portfolio in place today – one you can stick with throughout any market upheaval. It should be structured to capture an appropriate measure of expected investment returns during good times, and allow you to pass what we call the “sleep test”. If you are worrying about your portfolio too often (e.g. perhaps you lie awake thinking about it), you may have decided to take on too much risk for your personal circumstances. A change may be in order?

When is the last time you’ve thought about your portfolio from this perspective? If it’s been a while – or never – let’s talk. Because there’s never a better time than today to ensure you are well prepared for tomorrow.

Schedule a free consult today.

Disclosure: There is no assurance that a diversified portfolio will produce better returns than an undiversified portfolio, nor does diversification assure against market loss. A plan of regular investing does not assure a profit or protect against loss in a declining market. You should consider your financial ability to continue your purchase through periods of fluctuating price levels. Past performance is no guarantee of future results.

Oct

How can an advisor help me?

Many times we have clients that have come to us for the first time because of some event. A new baby is born, executive stock options are granted as part of incentive package, a new incorporated business, perhaps an inheritance from a relative.

Typically the client has reached a point where they recognize that they are in over their head. Perhaps it is a knowledge issue. Or sometimes it’s a time issue. Other times it is an issue of comfort. They have decided they would like a professional advising them on their financial affairs.

With the further march of technology, there are so many resources online it can be confusing trying to understand what types of resources to trust. It isn’t hard to execute a couple of Google searches, stay in tune with the financial press, and believe that you are in control. Your time is valuable and an advisor may allow you to focus on the other important things in your life.

As advisors, Bob and Andrew provide risk assessments, portfolio reviews, cash management, college funding, and many more services – as intensive or as broad-brush as you want. Our aim is to help eliminate some of the stressors in your life.

And our services don’t include purely investment related items. Risk management is an important area that may want to be considered in tandem with building an investment portfolio. Many clients don’t realize that there is more than a little chance of a disability during one’s career. For instance, individuals in their 20s have a 25% chance of a disability (whether short or long term) before they retire.* We have helped many executives, doctors, and other professionals with disability insurance. Did you know that the benefits paid by policies provided by employers are subject to income tax and personally owned policies are not?

An advisor can help cut through the options and provide expert recommendations seasoned with many years of experience. Risk management reviews can identify options to help provide family income protection, long term care insurance, retirement income planning, and estate planning.

As former corporate executives, we understand the need for client service. Eddy Financial is dedicated to providing a high level of responsiveness and high touch service.

If we can answer any questions, or provide a complimentary consultation, please don’t hesitate to contact us.

*U.S. Social Security Administration, Fact Sheet February 7, 2013

Jun

Education Funding – 529s

529 plans can be a great way for families to save for college. Each state sponsors a plan with one or more providers and some states provide tax deductions for residents participating in the plan. However, there are exceptions. For instance, California does not provide a tax deduction for residents participating in it’s plan. This allows Californians to seek out the best plan from across the country without fear of losing any tax favored treatment.

529s savings plans are not restricted to individuals based on income. 529s offer tax deferred growth much like an employee’s 401k, but unlike a 401k used for retirement, any 529 withdrawal used for qualified education expenses (include tuition, books, room and board) is federal tax free. Maximum contributions vary among states, but our provider allows up to $400,000 to be contributed to a 529 plan per beneficiary, and it is permissible for the account to grow past $400,000.

A common question we hear is “What if my child decides not to go to college?” 529 plan beneficiaries can be changed. If an older sibling decides not to go to college; the plan beneficiary can be changed to a younger child. If that is not an option, there is a 10% federal tax penalty and earnings are subject to income tax.*

Our provider of choice for 529 plans provides enrollment based portfolios, which are time sensitive portfolios targeted towards the freshman year of college for distribution of plan assets.

Andrew has two young children, and is already participating in 529 plans and looks forward to sharing his experience in selection and funding strategies.

* Participation in a 529 College Savings Plan (529 Plan) does not guarantee that contributions and investment return on contributions, if any, will be adequate to cover future tuition and other higher education expenses or that a beneficiary will be admitted to or permitted to continue to attend an institution of higher education. Contributors to the program assume all investment risk, including potential loss of principal and liability for penalties such as those levied for non-educational withdrawals. Depending upon the laws of the home state of the customer or designated beneficiary, favorable state tax treatment or other benefits offered by such home state for investing in 529 college savings plans may be available only if the customer invests in the home state’s 529 college savings plan. Consult with your financial, tax or other adviser to learn more about how state-based benefits (including any limitations) would apply to your specific circumstances. You may also wish to contact your home state or any other 529 college savings plan to learn more about the features, benefits and limitations of that state’s 529 college savings plan. For more complete information, including a description of fees, expenses and risks, see the offering statement or program description.

Are you earning 15% or more on your portfolio?

Are you earning 15% or more on your portfolio?

How can an advisor help me?

Education Funding – 529s

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