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At Irwin Consulting, we perform according to high standards and base our continued success on the quality of service we provide our clients.
Philosophy
At Irwin Consulting, we perform according to high standards and base our continued success on the quality of service we provide our clients. Although our technical expertise aids us in attaining much success, it can never replace the good people that make this great firm thrive. We are proud of each and every worker and client we deal with. We are committed to provide the highest quality of service to our clients, giving them superior investment benefits, attaining progress for the firm, its employees and clients, establishing standards, and being the Prime Choice of Investment Management.
Mission Statement
To deliver the most wide-ranging Investment Management Service to our clients by offering a high degree of proven track-record in the industry. To establish the standards of Investment Management, provide creative approaches to our clients to aid them attain their investment goals.
Culture
At Irwin Consulting, we regard our culture to be among our many creative outputs. We have painstakingly developed through many years our culture into what it is at present - a venue for conceiving and creating ideas into realities. Today, that culture has produced unity among our workers and business associates throughout the world.
Team Consists of Professionals
People
Irwin Consulting attracts professionals with a superior blend of attributes: vision, passion and deep sensitivity to the large issues that confront the forthcoming creative ideas surrounding them. A noteworthy thing happens when you bring together workers who are motivated to make a difference: They Do.
Work Environment
Irwin Consulting is an energizing place to work in. Ours is a top-performance culture that highlights high-integrity corporate principles, as well as work/life balance. Why are gifted people from many parts of the world continually drawn to our stimulating workplace? Very simple -- our values and the way we view our work.
“Customize Solution to Financial Problems”
Professional Expert Advisors
Irwin Consulting is an autonomous brokerage and investment banking company that offers an assortment of financial services and products. Consultative and investment strategizing services are also offered. Whether you are investing for your retirement, saving up for your child's education or looking for other financial opportunities, our workers will furnish the information, insight and capability you need to attain your objectives. Numerous investors depend on the know-how, skills and reliability of Irwin Consulting. Discover what being number one feels like; at Irwin Consulting our top priority is you.
After more than ten years since the founding of Irwin Consulting, so much has improved. Our firm has transformed from being a conventional brokerage company to a complete-service financial banking, consultancy services and brokerage company. We maintain our vision to instill our family-first values through each member of the Irwin Consulting team. Irwin Consulting remains centered on its most valuable resource - its people, because every member of our executive group has managed portfolios, and the firm is ever committed to focus on improving the support and capability accessible to our independent representatives.
Benefits of Irwin Consulting
Irwin Consulting’s long-term accomplishment is founded on our custom-fitted set of solutions for every particular client. The solution to each financial challenge is the product of a sound, well-ordered process.
Brokerage
The asset management capability of Irwin Consulting has been developed over many years. Our financial approaches combine convention and creativity. Refined methods with a long-term perspective and a traditional color focus on stability and control. Most of all, we aim to deliver the requirements of our clients.
What do we provide
1. Reasonable and dependable indication of markets, securities and other investments. We stand firmly on the platform of reliability & market awareness.
2. Advanced Investment Opportunities. We chart our investments through meticulous planning, market scrutiny and investment indicators.
Financial Consulting and Research in all areas of Investing
The growing intricacy of the present market makes dealing with an experienced, capable investment advisor more essential than ever. From securities and financial banking services to real estate investments, oil and gas products, mutual funds, insurance and college savings plans, our wide-ranging variety of investment services and extensive access to investment markets are intended to assist you achieve your investing objectives.
Through innovative technology, access to impartial third-party research and non-proprietary financial products, your advisor will develop a special investment package suited to your short-term and long-term investment objectives. Because our representatives are autonomous, there are no favored products to sell, allowing them freedom to look for services and products that genuinely supply your needs.
The stock market provides a means for entrepreneurs to obtain capital for their business ventures from money coming from investments. When you buy stock you actually own part of a company. In exchange for buying stock in a firm, the investor becomes part-owner of the firm and derives a return on investment in proportion to the amount of shares purchased. Traditionally, they have had better returns than bonds and other investments but often possess a greater amount of risk. Stocks can be a vital part of your general portfolio.
Investing in Future & Commodities
Futures and commodities investments provide investors with more intricate financial requirements a means to hopefully gain from both the upward and downward movement of commodity and financial markets.
Basics of Futures & Commodities Investing
Futures and commodities speculators can benefit from greatly leveraged exposures in both financial and non-financial markets (commodities such as energies, meats, metals and grains). Hence, they can buy futures contracts by depositing even a little portion of the total contract price. Their aim is to gain from movements in the value of the futures contract.
Hedgers, those who hold a particular commodity (asset) or have a definite investment (such as energy cost), frequently choose a position opposite of the cash market to help lessen the risk of falling or rising commodity prices.
Risk of Investing in Futures & Commodities
Since futures and commodities markets can be extremely volatile, repeatedly fluctuating significantly, investing in them is not applicable for all investors. You could lose all your investment and in certain instances, even more than that. Moreover, you may at times encounter difficulty in liquidating your futures contracts, which limits your use of cash.
Before investing, consider the following:
• Financial Resources
• Investment Objectives
• Financial Track Record
• Risk Capacity
Commodities at Irwin Consulting
If you want to know more about the benefits of investments in futures and commodities, get in touch with your financial advisor. Both of you can consider the advantages and disadvantages of this type of investment and whether it is suitable to your particular circumstances and that it is within your risk level.
If futures and commodities investment satisfies your investment objectives but your financial counselor does not trade in these assets, he or she will refer you to another investment advisor who can assist you invest in this highly specialized market.
The Popularity of Mutual Funds
Mutual funds are common investments because they provide a cost-effective and effective means to vary your investments (or possess an assortment of securities -- stocks, bonds, etc.) without having to make a huge starting investment.
Basics about Investing in Mutual Funds
Buying shares of a mutual fund allows you to pool your money with other investors and letting the mutual fund (which is essentially a professional capital management firm) invest and administer the money to aid in achieving the fund's targeted financial objective (e.g., income, growth, or a mixture of both). This allows you to fast-track the setting up of a multi-faceted portfolio with as little investment as possible.
When to consider Investing in Mutual Funds
Since they are efficiently administered by experts and because they provide variety with essentially low starting cash input, mutual funds can be a viable option for the majority of investors. Many investors opt to invest in mutual funds instead of selecting a vast assortment of particular investments.
Investing at Irwin Consulting
Irwin Consulting advisors provides one of the wide-ranging choices of fund groups in the industry, and your Investment Counselor has the facilities to aid you in selecting the proper fund or basket of funds to satisfy your specific needs. Coordinate well with your Investment Counselor to design a mutual fund portfolio which fits your particular circumstances.
Investing in Stocks to help you achieve your Financial Objectives
In terms of stock investing, understanding your financial objective is critical. That, together with your investment time targets and your risk capacity when investing in stocks, will aid you in determining how your stock investments should perform with the rest of your financial portfolio.
When to consider Investing in Stocks
Stock investing can enhance your financial portfolio by allowing you to attain growth, profit from dividends or achieve both. Nevertheless, the worth of any stock you buy in can vary, and when you sell your stock, may be more or less than what you paid at the start. When choosing stocks to buy in, you should cautiously reflect on the risks of investing in stock and design an assorted asset allocation strategy that suits your objectives, investment time target and risk capacity.
Diversifying your Stocks
Having a varied stock portfolio helps to offset the risk your investments are subjected to. The objective is to widen the range of your stock investments among various sectors and incorporate various investment characteristics so that when a certain stock or sector does poorly, the performance of your stocks in other sectors may aid in offsetting the changes in the overall worth of your stock portfolio.
Some Basic Guidelines you can utilize when selecting a Variety of Stocks for your Portfolio are:
• Invest in about 20 to 30 stocks in a minimum of six to eight sectors with various investment characteristics.
• Limit to only 25% of the overall worth of your stock portfolio should be in any particular sector.
• Limit to 15% of the overall worth of your stock portfolio should be in any particular stock.
• You need to invest at least about 3% to 4% of the overall worth of your stock portfolio in every stock.
• Your investment counselor can assist you in designing a mixed financial plan that fits your circumstances and your financial objectives.
“Expert Advice on Complex Securities Issues”
Asset Management & Planning
The asset management know-how of Irwin Consulting has been developed over many years. Our financial methods combine convention and creativity. Refined strategies with a long-term perspective and a traditional slant focus on stability and order. Most of all, we aim to satisfy the needs of our clients.
Our approach is definitely unlike most asset management companies, who seem to use rather sluggish “portfolio theory” asset diversification methods mixed with fairly dynamic stock-picking strategies founded on “bottom-up” elementary investigation and/or technical study.
Our clients, we believe, deserve a better deal by providing them with an overall, holistic method intended to keep them completely invested in a semi-passive, finely-assorted portfolio of ETFs, taking protective steps to safeguard asset only during comparatively rare times of major downside fluctuations (bear markets).
Irwin Consulting issue stock-picking in lieu of having finely-assorted baskets of stocks, such as low-cost index funds and exchange traded funds (ETFs). Not only does much of the research show that personal security choice plays a much smaller part in influencing long-term gains than asset class, style, and sector selection do over less time, having too much exposure in one particular firm that explodes can cause great harm to the whole portfolio.
Solution
A. Irwin Consulting delivers wide-ranging capital management services for individuals, pension accounts, and charitable endowment funds.
B. Irwin Consulting use a custom-fitted method which is client-driven and designed to attain short and long-term objectives
C. Irwin Consulting provides expert, personal track-record in stocks and bonds, including economic history, trends, and correlative theory.
D. Irwin Consulting involves a member of your own personal and professional group. The company works closely with your attorney, accountant, and personal counselors and mentors.
“Working with Clients to Maximize”
We Work for our Partner’s Benefit
Irwin Consulting provides an assorted and coordinated portfolio of creative, client-centered brokerage products and services by building upon Global's powerful regional presence, as well as its market-pioneering and value-enhanced research expertise. Irwin Consulting can deliver to its clients the proper tools and know-how they need to reach their financial goals.
Irwin Consulting encompasses the primary asset markets spanning many countries worldwide. Irwin Consulting delivers a wide-ranging service package, with an unrelenting commitment to provide first-class client service. We aim to assist clients attain their financial goals through our award-winning investigation and disciplined professional advices on listed and non-listed securities.
Irwin Consulting advisors provides one of the largest assortments of fund groups in the industry, and your Financial Advisor has the facilities to assist you select the proper fund or basket of funds to satisfy your special needs. Coordinate well with your Investment Counselor to design a mutual fund portfolio that satisfies your particular condition.
Solution
A. Planning Tools
Customized internal tools to assist you enhance your portfolios.
B. Strategy and Planning
Irwin Consulting will design a strategy to improve a portfolio’s potential to achieve a client's goals.
C. Market Analytics
Irwin Consulting consistently undertakes market studies to enhance your positions.
“Happiness,” it’s been said, “is like a butterfly. The more you chase it, the more it will evade you.” In other words, by actively pursuing a happy state, you reduce your chances of achieving it.
That may be true from a philosophical standpoint, but when it comes to retirement planning, new research suggests there may in fact be specific steps you can take to enjoy a more rewarding post-career life.
Researchers from The American College, Eastern New Mexico University, and Texas Tech looked at financial, lifestyle and other data on 1,526 retirees to see what makes for a more satisfying retirement.
When it comes to having a more enjoyable retirement, the experiences of older Americans shows that there are three main ways you may be able to tilt the odds in your favor.
1. Spend more money on having fun.
When the researchers examined how retirees spend their money — on everything from cars and housing-related items to food and insurance — they found that spending in only one category tended to predict retirement satisfaction: leisure, or “experiential commodities” as they say, which includes such activities as dining out, travel, entertainment, and hobbies.
It’s hardly shocking that splurging on dinner at a nice restaurant will leave you feeling more warm and fuzzy inside than forking over the same sum to have your car’s oil changed and the tires balanced and rotated.
But don’t put the bump in satisfaction down to mere hedonism.
Rather, it’s because shelling out dough for leisure activities — or what one of the study’s co-author’s, The American College’s Michael Finke described to me as “social spending” — takes us outside of ourselves and keep us more engaged with the world.
You don’t want to overdo it, though, and have an initially blissful retirement devolve into a survival test in your dotage because you spent too freely on leisure pursuits early on.
But to the extent you have discretionary funds built into your retirement budget, don’t be afraid to target them to activities that give you the biggest happiness bang for your buck.
2. Nurture your personal relationships.
How close you feel to family and friends can also affect how much you enjoy retirement. For example, the researchers found that when it comes to relationships, how well you and your spouse get along had the biggest impact — even larger than that of leisure spending — with retirees who described their relations with their spouse as being very or quite close likely to experience higher levels of life satisfaction than those with a poor spousal relationship.
This stands to reason. After all, if you’re married, your spouse is the person you’re probably going to be spending the most time with. And if that relationship is sour, it will likely be harder for you to truly savor other aspects of retirement.
Surprisingly, the researchers found “no evidence to support children contributing to retirees life satisfaction,” although having close relationships with friends and, to a lesser extent, other family members does.
I have to admit I did a double-take on this assertion about children, as it seems inconsistent with the importance most parents place on their relationships with their kids.
But the issue here isn’t how much we love or value our offspring, but whose company is likely to provide us with the most enjoyment in retirement. “And it appears that the people we get the most satisfaction from spending time with,” says Finke, “may not be our children, but the friends with whom we have more in common and share similar interests.”
In any case, relationships, not to mention physical intimacy, can play a major role in how much you enjoy life after work. So as you near and enter retirement, you’ll want to be sure to evaluate your relationships with the people who matter to you and try to sustain and improve those relationships (and if possible cultivate new ones) as you age.
3. Do all you can to maintain your health.
You can also improve your shot at a happy retirement by staying healthy. Indeed, retirees who reported they were in good, very good, or excellent health were more likely to feel satisfied with their retirement than those with poor or even fair health. What’s more, health status was even more likely to lead to retirement satisfaction than good relationships or leisure spending.
Other research bears out just how much good health is linked to retirement happiness. According to a recent Nationwide Retirement Institute survey, a third of recent retirees say that health problems are interfering with their retirement.
Of course, you don’t have absolute control over your health. But there are a number of things you can do to reduce the chance that an illness or other physical problems will cast a pall on your post-career life, including staying active and exercising regularly, getting regular checkups, and receiving proper treatment for any ongoing health issues.
Aside from enhancing your enjoyment of retirement in general, looking after your physical well-being may also help you feel more financially secure by possibly lowering the amount of money you’ll have to shell out for health care, which is one of retirees’ largest expenses.
There are other ways aside from those mentioned in this paper that may also be able to help you can improve your prospects for a more satisfying retirement. For example, a 2015 Merrill Lynch report found that seniors who give back in some way, such as by volunteering, were more likely to say they were happy and had a strong sense of purpose in their lives.
To make your retirement years truly golden, understand what may be coming your way.
Many of us look forward to retirement as the reward for a lifetime of hard work. While the post-work years can truly be golden for those who plan for them, many retirees are caught off guard by the facts of their new life. Here are six things you should know about before you leave the working world for good.
1. Required minimum distributions can seriously raise your costs
Once you reach age 70 1/2, you're typically required to take money out of your traditional IRA and your traditional 401(k) plan each year. While those distributions start relatively small, they increase as a percentage of your account balance each year after that until you reach age 115.
Withdrawals from these account types are treated as taxable income, which means you'll owe income tax on the amount distributed. This increase in your taxable income may expose your Social Security benefits to taxation as well. As if that weren't enough, your Medicare Part B premium also rises along with your income. If your income is high enough, Part B can cost you as much as $428.60 per month.
Those are some tremendous costs to bear for accessing your own retirement savings.
2. Medicare premiums can eat up your Social Security increase
Most retirees are relieved to find out that their Social Security benefit can receive an inflation adjustment every year to help keep pace with rising costs. What few realize, however, is that raising Medicare Part B premiums may wind up chewing through most, if not all, of that entire increase. Thanks to the "hold harmless" provision, hikes in Medicare Part B premiums can eat up all -- but not more than -- the increase in a recipient's Social Security check.
The table below shows how that has worked in recent years. Standard Medicare Part B premiums increased from $104.90 per month in 2015 to as much as $134 per month in 2017. They're expected to remain at $134 in 2018, but that's cold comfort to a retiree whose net monthly Social Security check has gone up by less than $8 since 2015 because of Medicare Part B premium hikes.
3. It gets substantially harder to wait out a bad market once you retire
While you're working and adding money to your retirement accounts, your salary covers your costs of living. That makes it much easier for you to power through a nasty bear market and wait for the ensuing recovery. Indeed, in many respects, while you're still working, you can look forward to bear markets as an opportunity to buy great companies' stocks on sale.
Once you retire and start pulling money from your portfolio to cover your costs of living, however, a down market takes on an entirely different meaning. If you need to sell stocks to pay your bills, a market slump may leave you with no choice but to sell at a low point and rapidly deplete your retirement assets. That's why you should structure your retirement finances so that you have at least a five-year buffer of bonds and cash to see you through bad spells. Then you won't be forced to sell during a typical downturn.
4. You could finish retirement with a larger nest egg than you had when you started it
A common guideline for retirement spending is known as the 4% rule. This rule indicates that with a diversified stock and bond portfolio, you can spend 4% of the initial value of your nest egg in the first year of your retirement and then increase your withdrawals annually based on inflation. Following that strategy, over the course of a 30-year retirement, you'll be very unlikely to run out of money.
The benefit of following the 4% rule is that it has been back-tested and shown to survive some pretty tough market conditions. The potential downside, however, is that because the rule was designed to withstand tough market conditions, you may end retirement with more money than you had when you started it -- especially if you're invested primarily in stocks, which have far outpaced inflation over the long term.
Michael Kitces of Pinnacle Advisory Group analyzed models of the 4% rule over various 30-year periods all the way back to the late 19th century, and he found that the median follower of the 4% rule would end up with about 2.8 times their starting balance at the end of those 30 years.
So what's wrong with ending retirement with more than you started with? Well, as the old saying goes, you can't take it with you. If that money is available to you at the end of your retirement, it means you didn't spend as much as you could have earlier in your retirement, when you may have been able to enjoy it more.
5. Other than health-related costs, your expenses may actually go down in retirement
Americans' annual household spending tends to decrease once a family is headed by a person aged 55 or older, according to the U.S. Bureau of Labor Statistics. That's partly because they have paid off their mortgages, and their adult children are self-sufficient. They also enjoy various tax benefits like a larger standard deduction, greater medical-expense deductions, and freedom from the Social Security and Medicare payroll tax.
There's also the fact that people generally slow down as they age. While early retirement may be marked by periods of frequent travel, older retirees tend to stay put more and thus spend less. Keep that in mind as you plan out your retirement, because you'll want to be able to spend more while you're young enough to enjoy that spending to the fullest.
6. You still have 24 hours in your day and seven days in your week
Depression is a widespread issue among retirees. When you leave the workplace, you lose the regular socialization that goes with it, along with the daily mental and physical activity. The deaths of aging friends and family members are also a contributing factor. The happiest retirees find meaningful ways to fill their days. Caring for family members, charitable volunteer work, or even a low-stress job can keep them active and provide them with purpose, stimulation, and social support.
Working late in life is not a sign of failure. Even Warren Buffett, one of the richest people in the world, chooses to keep working despite the fact that he's well into his 80s. His secret is doing work that he loves, finds meaning in, and can continue to do despite his age. While you may never be CEO of a multibillion-dollar business, you can certainly use him as inspiration to keep active and engaged well into your golden years.
A friend recently asked if I would invest $10,000 for him. I shrugged it off but he proceeded to tell me that he needed to make a quick buck to pay for some medical expenses he was about to incur...
Many people view the stock market as a "get rich quick scheme" -- you just need to know how to play the game.
This wasn't the first time I've been asked by someone to invest their money to make some fast cash. I know it won't be the last, either.
In these sorts of situations, I try to tamper their expectations by letting them know that it's really not that simple (or easy). I tell them that even if I were to generate a "quick" 10% annual return on their investment, it doesn't really add up to much in the short term. After all, a 10% return on $10,000 is only $1,000... And that's over the course of 12 months. It's most definitely not going to be enough to cover any major medical bills.
Unfortunately, stories like this are common. The thinking is that we can invest small sums of money and turn ourselves into "overnight" millionaires. But this couldn't be further from the truth.
As much as I would like to help these folks invest and learn about the market, it's hard to overcome these kinds of expectations. Investing can be a frustrating endeavor, but it also can be rewarding. I do believe that the stock market is one of the greatest tools we have at our disposal to build our wealth... over time.
But in order for it to be less frustrating, less stressful and more enjoyable we need to keep our expectations and perspectives in check. And, of course, we need to keep it simple. Investing doesn't have to be complicated, nor should it.
It's when we expect to turn a $1,000 or $10,000 investment into hundreds of thousands of dollars overnight that investing can become unhealthy. When those are the expectations, that's when you begin to try complicated strategies, or you put all your eggs in one basket on that one stock, hoping that it will be the stock the allows you to retire early. That's also when stress levels and sleepless nights become routine.
That's no way to build wealth or live life.
Instead, it's best to keep those expectations in check and keep investing simple. Keeping it simple is how investing legend Warren Buffett became one of the world's richest men.
Buffett didn't get caught up in the whirlwind of investing in internet stocks during the dot-com bubble in the late 1990s. Yes, he was chided for "missing out" on these hot stocks. But he didn't understand them, so he stayed away. Instead, he kept his focus on buying some of the best businesses in the world. He stuck to what he knew and he kept his investing simple: buy great businesses at fair prices and let them reward you over the long term.
Buffett's investing script is straightforward: buy companies that dominate their industries, sell their products around the globe, have high operating margins and strong balance sheets, and generate massive returns for shareholders. These are companies that have likely been around for decades and won't be going away anytime soon.
The funny thing is that Buffett's investing strategy is easy to understand. He even provides a blueprint of what he looks for in companies in his annual letters to shareholders. Yet, few investors have the patience to invest in these great businesses. They're usually too "boring." Instead, investors look for that next hot stock pick and expect it to immediately shower them with the sort of wealth that Buffett has accumulated over the last 50-plus years.
As I've said time and time again in my Top Stock Advisor premium newsletter... we want to buy wonderful businesses at fair prices. This is a time-tested strategy, with Warren Buffett is living proof that it works.
Investing takes patience. Keep your expectations and perspective in check, and remain focused on buying the best companies on the planet. And, of course, remember to keep it simple.
While you're at it, I strongly advise you check out my latest report: The Top 10 Stocks for 2018. We're convinced -- based on our cumulative decades of experience and expertise -- that these stocks are your best bet for building wealth in 2018 and beyond.
Why? Because we keep it simple, only recommending companies with huge long-term advantages over the competition, that make products and services their customers can't live without, and that reward shareholders with growing dividends and massive buybacks over the long haul.
Retirement security is a holy grail that many investors chase. A recent AARP survey revealed that 74 percent of private sector workers are anxious about having enough money to live comfortably in retirement.
Although increasing savings may seem like the answer, creating a sustainable retirement strategy is a bit more complex. Investors must also plan for costs that can detract from their portfolio's growth. "Taxes, long-term care and inflation all have the potential to eat away at your retirement savings," says Marcy Keckler, vice president of financial advice strategy at Ameriprise Financial in the greater Minneapolis-St. Paul area. "Not planning properly could result in a substantial blow to your portfolio from a sudden need for extended care, or inflation could slowly chip away at your nest egg."
Health care may be the biggest threat. Long-term care poses two problems for retirees. First, the cost can be staggering. Genworth Financial puts the average annual cost of nursing care in a semi-private room at $85,775. Assuming a typical two-and-a-half-year stay, the total bill for end-of-life care easily surpasses $200,000. The second issue is that these expenses don't fall under the Medicare coverage umbrella. Medicaid will pay for long-term care but requires seniors to spend down their assets to qualify.
Long-term care has the potential to be the most devastating to an investor's retirement strategy, says Steven Yager, a financial advisor with Yager & Associates in Northville, Michigan. The root problem is longevity. "People often assume that since their parents or grandparents lived to a certain age, they'll live to a similar age. They then base their retirement plan on this uneducated assumption about their own life expectancy."
Health care can encroach on your retirement security when expectations don't match reality. There are two possible solutions: Self-fund these expenses or invest in long-term care insurance. Self-funding may require you to increase your current savings rate or rethink your overall strategy. For example, you may need to maintain a larger share of stocks to generate growth in your investments for a longer period if you're trying to fill a long-term care funding gap.
Long-term care insurance can cover health care costs while leaving your portfolio intact, but because of their high premiums, these policies may suit some investors better than others. "It comes down to your asset base," says Jason Laux, vice president of Synergy Group in White Oak, Pennsylvania. "For people without a lot of assets, long-term care insurance usually isn't appropriate. For those who are wealthy, it may make more sense to be growing and investing your money."
Investors in the middle, with assets ranging from $350,000 to $1 million, could benefit most from a long-term care policy. Although these investors may not have enough wealth to self-fund, they can afford the higher premiums to avoid the Medicaid spend-down requirement.
Protection from higher prices comes at a cost. Inflation can be detrimental to retirement savings. Research from insurance consultancy LIMRA suggests that a retirement portfolio could lose more than $73,000 in purchasing power from a 2 percent inflation rate. The effects of inflation may be compounded when increases in certain expenses – such as health care – outpace rising prices in general.
Including inflation-hedging investments in your retirement plan offers a measure of protection for your portfolio. Annuities and Treasury inflation-protected securities are two options for taming inflation's effects.
Annuities are designed to provide tax-deferred growth and generate a guaranteed stream of income, which can supplement income from tax-advantaged retirement accounts, taxable investments or Social Security benefits. With TIPS, the principal value of the investment adjusts up or down in tandem with changes in the consumer price index. These investments yield lower returns compared to stocks, but they can be useful by shielding investors against the negative effects of inflation.
While both annuities and TIPS can benefit investors in retirement, there are some downsides to consider, says Joy Kenefick, managing director of investments with Wells Fargo Advisors in Charlotte, North Carolina. Annuities can offer guaranteed income or guaranteed protection in volatile or declining markets, but the expenses, complexity and lack of liquidity may make them a less than perfect fit for your investment needs.
TIPs, by comparison, offer modest returns in exchange for protection against market volatility and inflation. The benefit they offer comes at the cost of performance and growth, Kenefick says. Before buying into either one, assess the value and purpose of these investments for your retirement strategy.
Diversification should address this overlooked risk. Many investors diversify their assets for risk but not for taxes, Laux says. "They funnel the majority of their investments into pre-tax accounts and are told they'll be in a lower tax bracket when they retire but often don't find that to be true." Without tax diversification, he says, you could end up paying the maximum taxes on all your retirement assets.
Creating tax diversification begins with knowing what you've invested in and where those investments are held. Tax-inefficient investments, such as bonds, belong in tax-deferred accounts, while tax-efficient vehicles, like stock index funds, should be held in taxable accounts. Growth stocks can be used in a 401(k) or similar account to capitalize on the compounding benefit of tax deferral, says Melinda Kibler, a certified financial planner with Palisades Hudson Financial Group in Fort Lauderdale, Florida.
Minimizing the tax bite on your investments becomes even more important when you begin withdrawing money from those accounts. "The way in which an investor harvests from their portfolio is more consequential than the way one saves," Kenefick says. Investors should tap non-qualified accounts first, she says, leaving tax-sheltered accounts to compound and avoid "the eroding effects of paying taxes for as long as possible."
Calculating your target withdrawal rate accurately also matters. Daniel Prince, head of product consulting for BlackRock's iShares U.S. wealth advisory business, says an optimal withdrawal strategy requires retirees to be accurate on both sides of the ledger. Retirees should be realistic about their income and assets, and balance that against their spending. "Taxes will always be a cost," Prince says, but between long-term care and inflation, it's the easiest of the three to proactively reduce.
Whenever things are going really well — as is the case right now on Wall Street and probably in your retirement portfolio — it's only natural to want to leave things be. Why try to fix what's not broken? But even the most patient buy-and-hold investors understand that you must revisit your strategy from time to time to make sure things are unfolding as you originally envisioned. The end of the year, when your thoughts are naturally focused on family, the coming year, and to-do lists, is a perfect time to do just that. To make this process easier, MONEY has put together a checklist of seven important steps to take now before the year ends to set your investment portfolio up for 2018 and beyond.
1. Remember to give yourself a raise.
Chances are, you got a slight bump in pay this year—perhaps a modest cost-of-living adjustment or a merit raise. Average pay for American workers rose a little over 2% over the past 12 months.
If you can, boost your 401(k) savings rate by that amount in the New Year.
The beauty of an employer-sponsored 401(k)—especially one where you're automatically enrolled—is that inertia works for you. You don't have to keep remembering to sock away money into your retirement account. Your company automatically does that for you with each paycheck.
But inertia cuts both ways. If you simply stay the course and fail to raise your contribution rate periodically, you're leaving money on the table. That's because over time, being an aggressive saver and mediocre investor beats being a good investor with just average saving habits.
Case in point: A 35-year-old making $75,000 a year, putting 7% of pay in a 401(k) and earning a better-than-average 10% annual return would have nearly $1.2 million after 30 years. That same worker who socks away the recommended 15% of pay while earning more-typical 7% annual gains winds up with $1.4 million. "Your goal should be maxing out your retirement contributions. If you can't do it all at once, adjust your savings rate gradually over time," says Jan Blakeley Holman, director of adviser education at Thornburg Investment Management.
And if you're 50 or older, remember to play catch-up. The IRS allows older workers to stuff an added $6,000 into their 401(k) s. The 2018 cap for workers under 50 is $18,500.
Case in point: A 35-year-old making $75,000 a year, putting 7% of pay in a 401(k) and earning a better-than-average 10% annual return would have nearly $1.2 million after 30 years. That same worker who socks away the recommended 15% of pay while earning more-typical 7% annual gains winds up with $1.4 million. "Your goal should be maxing out your retirement contributions. If you can't do it all at once, adjust your savings rate gradually over time," says Jan Blakeley Holman, director of adviser education at Thornburg Investment Management.
And if you're 50 or older, remember to play catch-up. The IRS allows older workers to stuff an added $6,000 into their 401(k)s. The 2018 cap for workers under 50 is $18,500.
2. Fix your mix of stocks and bonds.
"We're entering the ninth year of a bull market, and we've hit more than 45 new highs just this year alone," says Francis Kinniry, a principal in Vanguard's investment strategy group. "Chances are, rebalancing will be an issue."
So take care of it now, to set your portfolio up for success in the coming year.
If you started out with a moderate 60% stock/40% bond portfolio five years ago—and neglected to routinely reset that mix back to your original strategy—your portfolio would have drifted into a far more aggressive 75% equity/25% fixed-income strategy. That may seem harmless, but in the event of a market downturn, having 75% of your nest egg in stocks will lead to far greater losses than a moderate 60% equity stake.
Research shows it actually makes little difference when you rebalance—at year-end, on your birthday, or whenever your allocation drifts slightly. So now is just as good a time any.
But if you are resetting your allocation, remember "that the best way to rebalance is the most tax-efficient way," says Kinniry.
Before you start selling your winning investments—which will trigger a tax bill—start by redirecting new contributions for the following year into lagging investments. In other words, since your stocks have been outperforming your bonds by a wide margin, use most of your new contributions to pad your fixed-income exposure. Also, rather than reinvesting dividends and gains back into the same funds; use those distributions to add to your weakest-performing asset class.
3. Maximize your other tax shelters.
As you "top off" the contributions you're making to your 401(k), don't forget to fund all your other tax-sheltered investment accounts that often get overlooked.
Start with your IRAs. While most Americans with income have access to at least one type of individual retirement account—a traditional IRA, a Roth, a spousal IRA, or even a nondeductible account—only 33% of Americans currently contribute to these accounts. You can save up to $5,500 in 2018 or $6,500 if you're 50 or older.
Though you have until April 15, 2019, to make your 2018 IRA contribution, don't delay. By immediately contributing when you're eligible on Jan. 1, you'll maximize the impact of that tax-deferral.
In addition to IRAs, don't overlook health savings accounts. "HSAs are kind of a stealth retirement savings vehicle," says Rob Williams, director of income planning for the Schwab Center for Financial Research. That's because HSAs are triple tax advantaged: Money goes in tax deferred, grows tax sheltered, and, if withdrawn for qualified medical expenses, comes out tax-free.
You're likely to have plenty of those costs in retirement, which, if not addressed, can eat into your nest egg. A recent Fidelity analysis found that a typical 65-year-old couple retiring this year can expect to spend $275,000 in health-related expenses throughout the course of their retirement.
To qualify, you have to be covered by a high-deductible health plan. In 2018 the maximum contribution for an eligible individual is $3,450. For families, it's $6,900. As with other tax-deferred accounts, it's important to max out if you can, yet only 15% of HSA users actually do.
4. Make sure your hatches are battened down.
Diversification serves many purposes. In addition to ensuring that some of your money is held in assets that outperform when times are good, you're also making sure that you have some exposure at all times to investments that are likely to hold up in a market storm.
But how sure are you that you have enough defensive investments heading into the New Year?
"Everyone should look at their accounts now and make sure they have some ballast," says financial planner Lewis Altfest.
What steps should you take? After a spectacular year for equities in 2017—with the Dow Jones industrial average up more than 20%—now's the time to "trim some of the high-flying stocks with high P/Es," he says, referring to companies sporting lofty price/earnings ratios. That's because in a market downturn, stocks with high P/E ratios tend to fall more.
Altfest says you can replace those holdings with exposure to defensive stocks, such as shares of consumer-staples companies that make things people need, not want, like toothpaste and soap. You can also look to economically insensitive companies such as drug makers that aren't reliant on a robust economy to thrive.
And if you're worried about market turmoil in the coming year, now is a good time to trim some of your holdings in non-investment-grade "junk" bonds. This is debt issued by companies with less-than-pristine balance sheets and financials.
Because of that risk, junk bonds have historically acted more like stocks than bonds. In 2008, for instance, the typical junk-bond fund lost nearly 30% of its value, according to Morningstar, which was on par with the 37% decline for the S&P 500 index of blue-chip stocks.
5. Make your wish list.
If the goal of investing is to buy low and sell high, at some point you have to commit to investing in assets that are beaten down or unloved. Alas, after nearly nine years of rallying, stocks are pretty expensive across the board.
But just as you put together a Christmas shopping list well before the holidays, investors ought to list the stocks they'd like to own before the next downturn comes around so they'll know what to buy once the price is right. Among highly profitable companies that will trade at single-digit price/earnings ratios if their shares fall by a third (which is typical in a bear market): Apple (ticker: AAPL), Intel (INTC), HP (HPQ), and Applied Materials (AMAT).
Meanwhile, as you wait for buying opportunities to open up after a downturn, you can start putting new money to work now in the one place that's relatively cheap: foreign stocks.
"We have a significant position—40% if you X-ray our funds—in international securities," says Altfest. "They're all cheaper than the U.S.," he says, adding that not only is Europe growing faster than the U.S. now, many foreign economies, including the emerging markets, aren't as far along in their recoveries as is America.
In our MONEY 50 recommended list, you can go with Vanguard Total International Stock Index (VGTSX) for broad exposure or T. Rowe Price Emerging Markets Stock (PRMSX), focusing on the fast-growing emerging markets, which trade at a P/E ratio half that of the U.S.
6. Harvest your tax losses.
Admit it: You hate it when the government takes a cut of your profits every time you sell any investment that has gone up in price. But you can get Uncle Sam back by making him share your pain when you sell investments that have lost value. It's called tax-loss harvesting, and "now's the time to be looking at that strategically," says Schwab's Williams.
Isn't selling at a loss admitting defeat? It doesn't have to be. When you sell a stock or fund at a loss, you are realizing the loss for tax purposes. And you can use that loss to reduce your taxes—by offsetting gains elsewhere in your portfolio or reducing ordinary income up to $3,000.
But you can turn around and reinvest in the same type of asset, as long as it's not "substantially identical." Or wait 30 days and step back into the exact same investment.
7. Check your automated settings.
When in doubt, put it on autopilot. In most situations, that's wise financial advice. "There's a huge benefit to having your accounts automated, so that contributions are automatically deducted into your 401(k) and invested for you without requiring you to think about it," says Holman.
It goes well beyond putting money into a 401(k), though. Automation now allows for savings rates to be increased over time, or for your portfolio to be rebalanced at periodic intervals, or even for tax losses to be realized.
Still, "you need to check on your autopilots annually to see what's being deducted and how it's being invested," says Holman.
Start by making sure your 401(k) contribution increases aren't too conservative. Many plans allow for savings rates to rise by one or two percentage points a year. If you can afford more, override the autopilot to put your portfolio on a faster path. Also, make sure the stock-and-bond mix that you are being automatically rebalanced into is still appropriate for you. Chances are, you set up your allocation strategy several years ago and may have forgotten about it. But as the end of the year should remind you, time marches on quickly. And things change.
Many of us enter January financially stretched. Lots of people overspend at Christmas and those paid monthly have to wait five weeks to be paid. Here are some tips for tackling your finances in 2018:
1. Draw up a monthly budget. You need to include all your income and expenses, and try your best to stick to it.
If you can manage to put some money into savings each month, then that's even better.
2. If you have long-standing credit card debt that you are finding hard to shift, think about switching to a card with a 0pc balance transfer offer, making sure to pay the balance off within the interest-free period.
It is little use having a savings account if you are also paying off credit card debt at a rate of 22pc.
3. Ensure you are not paying more than you need to for your household essentials. If you have not switched your energy, broadband or phone plan in some time, make it one of your new year's resolutions to do this.
You will be amazed at the savings you can make, with some switches taking no more than a half-hour phone call. Switching energy alone could save you up to €335, while savings of up to €432 are available on some broadband packages, according to Switcher.ie.
4. Take time to review all of your monthly payments. This should include fees being paid to the gym, a cinema membership, or a streaming service. And cancel any you no longer use.
You might be surprised at the monthly membership fee that is still going out of your account for a member of your family, or yourself, but the service is no longer being availed of.
5. Make the most of any tax reliefs or benefits you are entitled to by checking the Revenue.ie site. You can claim tax relief on some medical expenses that are not covered by the State or by private health insurance.
There's loads of information on benefits and taxes on the Revenue website, so take some time to check these out. Up to a third of eligible taxpayers are unaware they can get sizeable tax reliefs to offset some of the cost of nursing home fees, home-care costs and medical expenses. Tax relief at 40pc is available for those funding nursing home fees.
Tax relief is also available for expenditure incurred by an individual for themselves or family members which have not been fully reimbursed by a private health insurer or local authority. Relief is granted at the 20pc rate.
6. Take some energy-saving measures around the home.
Simple changes, like turning down the heating by just one degree, can knock up to 10pc off heating bills, while turning appliances off, rather than leaving them on standby, will reduce the appliance's energy use by around 20pc.
7. See if you can get a discount by switching from monthly to annual payments. The chances are you are paying extra for the convenience of paying things like gym membership or insurance on a monthly basis.
Although paying upfront will be larger outlays of cash in one go, it will save you in the long run.
8. See if you are eligible for fee-free banking.
Although many banks have reintroduced fees on current accounts in recent years, many still have accounts that offer fee-free banking once you meet certain criteria.
This may involve keeping a certain amount of money in the current account at all stages, or you may be entitled to fee-free banking because of your age.
Would you rather have one marshmallow now — or two marshmallows later? It's an iconic scenario made famous by psychologist Walter Mischel, the administrator of the 1960s "marshmallow test" measuring self-control and instant gratification. Most people go for the here and now. Swap out marshmallows with money, and you've got an all-too-common problem for the modern-day: People everywhere feel behind on saving for retirement. In fact, one in three American adults has nothing at all socked away, according to a survey by GOBankingRates. If that hits close to home, never fear. We've laid out some of the biggest obstacles we put in our own way when it comes to retirement saving — plus, how to get past them.
Obstacle: Being too optimistic about the future
Why we do it: It's an ego thing. We tend to think we're different; we're special and that nothing bad will ever happen to us, say Dr. Daniel Crosby, psychologist and president of Nocturne Capital. For example, we're more likely to entertain the idea we'll win the lottery than to think about our chances of divorce, cancer and other negative possibilities. This type of confidence can benefit us in some areas of life, but when it comes to finance — especially long-term savings — it can hurt us in the long run. Many people who are behind on savings think they'll make up for it by working forever, but unexpected events and health concerns can put a wrench in those plans. In a survey by Prudential Retirement of over 20,000 401(k) plan participants, 22 percent said "optimism bias" was their greatest challenge when it comes to retirement savings.
The fix: Aim to compartmentalize your rosy outlook. This type of confidence can insulate your feelings of self-worth and make you happier, but "know it has no place in investing," says Crosby. Block out some time on your calendar to do a "retirement reality check," says Snezana Zlatar, a senior vice president at Prudential Retirement. Use a retirement calculator like this one to see where you stand realistically, and then adjust your savings plan based on the results. And if you don't have a savings plan? It's not too late to make one to get your savings closer to where you'd like them to be. Take full advantage of your workplace retirement plan and any available matching dollars, and automate savings to come directly out of each paycheck. If you don't have a workplace plan, mimic one by automating contributions into an IRA.
Obstacle: Letting emotions reign over your financial decisions
Why we do it: Whether we like it or not, there's an emotional component to every decision we make. That's why research shows that people with serious injuries to the emotional centers of their brain can't make certain decisions, such as which tie to wear or what to have for breakfast in the morning. The kicker: Since fear doesn't affect their decisions, they tend to beat neurotypical people in investment tasks. The lesson here: "None of us should be suckered into thinking we aren't emotional about money — because we absolutely are," says Crosby. The key is to know how to use those emotions to your advantage.
The fix: Instead of letting an emotion like fear or insecurity keep you out of the stock market, flip the switch and use them to keep you aligned with your long-term goals. Research shows that low-income savers who looked at a photo of their children before making a big financial decision saved over 200 percent more than those who didn't. Or, consider values-based investing — putting your money in investments that support causes you believe in — to help you stay the course.(You're less likely to pull money away from funding something you really care about.) And if you're still worried about the markets? Take a quiz to determine your risk tolerance, and then get started with the asset allocation that's right for you. (Many investing platforms offer risk tolerance questionnaires — here are two from Vanguard and Charles Schwab.) "For the average American investor, the risk is not that they're going to lose 25 percent or 30 percent in the stock market," says Crosby. "The risk is that they're not going to compound it fast enough to get to where they want to go."
Obstacle: Procrastinating on saving
Why we do it: In Prudential's survey, 26 percent of respondents said procrastination was their biggest savings challenge. The idea that our brains are wired for short-term thinking plays a big part in this. Humans are about 2.5 times as upset about a loss as we are pleased by a comparably sized gain, says Crosby, and it can be difficult to imagine a gain so far in the future. Plus, the idea of compound interest — and how much of an impact it can have on our bottom lines — can be hard to wrap our minds around.
Good Cents
The fix: Think about what you specifically want your own retirement to look like. Then, in your mind, replace the vague idea of "retirement" with something concrete, like a beach house with a view of the bay, traveling with your partner or having more free time to spend with your family. Every time you think about retirement, picture your goal. Even better, look at it every day on a vision board, whether online (on Pinterest, for example) or on your wall. And if you need to give yourself a serious reality check to get moving? "Get educated about how much of a difference a few years' delay might have on your ability to retire on your own terms," says Zlatar. Play around with a compound interest calculator like this one to see how much you could gain in the long term by starting to save sooner rather than later.
Millions of Brits overspend at Christmas, leaving them in financial difficulty come the New Year.
In fact, a whopping 7.9 million people in the UK will struggle to pay their bills this month after an excessive festive period, according to the debt charity Money Advice Trust (MAT).
Severe debt isn’t just a financial problem either. The stress of owing money can lead to mental health issues and relationship breakdowns, according to charity Mind.
If your new year’s resolution is to be better with money in 2018, Money Saving Expert Martin Lewis can help you alleviate your debt.
The 45-year-old has already revealed the best bank accounts for interest rates on savings, but in his most recent Money Tips newsletter he revealed some key tips for cutting the cost of debt this year.
Here are five simple steps to help you pay off your debt quicker:
1. Stop borrowing money
It can be easy to get into a downward spiral with debt, but you need to stop borrowing money.
Only pay back what you can afford each month or you’ll make the situation worse in the long-run.
2. Identify which debts need paying off first
Start paying off the debts with the highest interest rates first.
"Use all spare cash to clear it and just pay the minimum on everything else. Once it's clear, focus on the next costliest,” said Martin.
3. Cut credit card costs
If you’re currently paying interest on your credit card look for a better option. You will have to pay a fee to transfer the debt, but it will be cheaper than paying the interest in the long-run.
Martin recommends swapping to either a Barclaycard or MBNA card to get the longest 0% interest period.
Barclaycard
Offers 38 months with 0% interest and they offer a low fee to shift your debt.
MBNA
They also offer a 38-month 0% periods, but a slightly higher fee to transfer your debt.
Cut overdraft costs to 0% (and make some extra cash doing it)
Martin reveals two key options when it comes to cutting your overdraft payments:
• Switch to a 0% overdraft
First Direct offer a 0% overdraft of up to £250 and they also give you £125 to switch to the account.
Nationwide Flexdirect 0% overdraft is much bigger, but depends on your credit score. It only lasts a year, so you’d need to have it payed off by then or consider swapping again.
If you've a friend who already has a nationwide account, you both get £100 if you switch, via their recommend a friend scheme.
• Use a 0% money transfer card
A few specialist cards also allow money transfers.
“This is where the card pays cash directly into your bank account, thus clearing your overdraft, so you owe it instead, at up to 37 months 0% - very useful for larger overdrafts,” Martin explains.
4. Cut big personal loans to 2.9%
If you’re clever about it, you can get a new cheaper loan to pay your old, more expensive one off.
On his website, Martin offers up this useful four-step process to find out if you could save money on your existing loan:
STEP 1: Ask your current lender for a settlement figure. This is how much it'll cost to repay your loan in full now including early repayment costs (i.e., the amount you'd need a new loan for to pay off your old one).
STEP 2: Work out how much it'll cost you to stay where you are. Check what your monthly repayments are and how many you have left (ask the lender if you don't know). Then multiply the two to see how much it'll cost you if you stick.
STEP 3: Find the cheapest new loan for the settlement figure. For borrowing under £3,000, the cheapest route is likely to be doing a money transfer (see above). Above that, a cheap loan wins. Use our free Loans Eligibility Calc to see your likely cheapest deal. Yet remember; with loans, only 51% of accepted customers need get the advertised rate.
STEP 4: Find out which is cheaper. Use the MSE Loan Switching Calculator to see whether you should stick or not.
Cut store card costs
Store cards are basically just credit cards, but a lot of them have much higher interest rates.
For example New Look's is 28.9% APR and Argos’ is 29.9%. You can transfer the balance on these to a better credit card too.
5. What about student loan?
Martin suggests leaving your student loan while you get your other finances sorted. He said: “While it's counter-intuitive, you're actually better off just to leave it.”
