At times, life could be very uncertain. A single wrong decision can literally turn everything upside-down for us. So, as an individual, we must plan beforehand to cope with the snarling challenges. That’s where insurance swings into action. [Read more…]
Every transaction you’re involved in will include taxes in some form or another. Income tax, sales tax, property tax; paying taxes is one of our most prominent responsibilities as American citizens.
In most cases, our tax matters can be handled by accountants or accounting software. The question is: when do you need a lawyer for taxes? There are a number of different scenarios that call for a tax lawyer, which we’re going to discuss below.
Understanding how to deal with a disaster is crucial.
Whether you’re a business owner, homeowner, investor, or anyone else with money on the line, you can’t let yourself fall into a hole when disaster strikes. Several financial recovery strategies will help you get back on your feet and become a stronger person.
I’ve been in the investment advising business for almost six years now. During that time, my role in this business changed. I started as an office assistant and learned the ropes for 2 years.
Since then I’ve been in charge of other people’s money. Sometimes it’s someone’s brokerage account that they have with me to diversify among financial institutions.
Sometimes it’s someone’s life savings.
Obviously, when I started, I was in charge of very little until I gained enough experience and was able to prove myself as a capable advisor and investor.
From then until now, my investment philosophy changed. How I view investing and my approach to managing clients’ money is different from when I started.
In the beginning, it was very straight forward. I was a value stock picker. I charged a 1% fee (industry average) for that service, but the client also got unlimited access to me during business hours and other financial planning services.
Then I figured out, picking stocks was not a good use of my time. The research and analysis took far too long, and my time could be better spent engaging with clients and prospects.
I changed my method of doing business. Instead of picking stocks, I would utilize passive ETFs. Because I was not putting in as much time with client accounts, I charged them less. It seemed fair and logical.
I still offered the same “extra” services, but I didn’t have to spend nearly as much time researching stocks. Instead, I had a basket of investment options to pick from and would allocate clients’ portfolios according to their age, risk tolerance, and time horizon.
Don’t get me wrong, I still believed in active management, but being able to do that and grow my book of business was extremely difficult.
Yeah…passive has outperformed active for the last decade (source). That’s because we haven’t had anything to, really, panic about. Since the Great Financial Crisis, the market has been up and to the right with minimum volatility. Certainly, well below average (source).
I thought low fees and passive ETFs were going to be the way forward.
That was until I watched a video on Real Vision. In the video, the guest being interviewed brought to attention the danger of passive ETFs.
He explained that once passive overtook active, in terms of net assets, we’re in trouble.
And it began to make sense. ETF custodians (Blackrock, for instance) need to sell underlying securities when investors sell the ETF. They don’t have a significant amount of cash on the side at the ready for redemptions.
The lightbulb came on. When the market actually crashes and we experience a recession, there’s going to be a barrage of selling. Everyone is going to try and get out of the market and minimize the damage.
That’s the problem. If half of investors are in passive funds, then those funds will have to sell loads and loads of securities to meet client demands.
Selling will exacerbate and the sell-off will intensify until we have a 1987 type moment. Thankfully, there are “circuit breakers” now in place.
If the S&P 500 index falls enough, trading will halt. There are three levels of circuit breakers. Level 1 is a fall of 7% and trading halts for 15 minutes. Level 2 is a fall of 13% and, again, trading halts for 15 minutes. Level 3 is a fall of 20% and trading ceases for the remainder of the day.
After that video, my philosophy shifted. Instead of utilizing passive funds, I use active and smart-beta ETFs. I get the best of both worlds. Active management and low fees.
I wanted to make two points when writing this.
I’ve made two changes in my process so far and I hope there are more changes coming, but those changes didn’t happen overnight.
I poured over hours of research, reports, and charts. I needed to make sure that the change I made would benefit my clients.
One last thing I wanted to mention. When my philosophy changes, I don’t make sweeping changes to my clients’ portfolios.
That would a) be incredibly annoying as a client to have your portfolio transform because my ideas changed, and b) selling and buying could incur fees and taxes. Clients shouldn’t be penalized for that.
The Difference Between Mutual Funds and ETFs
Are You Taking Too Much Investment Risk?
Jacob Sensible is a financial advisor with decades of experience in the financial planning industry. His journey into finance began out of necessity, stepping up to support his grandfather during a health crisis. This period not only grounded him in the essentials of stock analysis, investment strategies, and the critical roles of insurance and trusts in asset preservation but also instilled a comprehensive understanding of financial markets and wealth management. Jacob can be reached at: jake.sensiba@mygfpartner.com.
The modern Forex market is considered as a land of opportunity for traders if they play their cards right. The introduction of fx expert advisors in the market has seen a massive influx of small to medium scale traders from around the world. Beginners need to be careful and consider some of the top forex robots list which will help them make informed decisions. [Read more…]
In 2019, consumer debt in the US was rapidly approaching $14 trillion. That’s more than $40,000 for every man, woman, and child in the country.
Debt in itself isn’t a bad thing. Without debt, very few of us would be able to buy our own homes or drive a new car.
It’s when debt gets out of control that you need to worry. If you’re struggling to make repayments or just covering the bare minimum each month then you may be thinking about debt consolidation.
Credit is important. We all know this by now, so we’re constantly looking for ways to improve our score. If you find yourself in a less than desirable situation, there might be a solution for you; enter the secured loan.
In this article, we’re going to explore what a secured loan is, what types exist, how it one can help, and what to be wary of.
Let’s go.
A type of lending, whether it’s a traditional loan set up or a credit card, where you put up collateral. Collateral is an asset that you own, which could include, but isn’t limited to your home, car, artwork, jewelry, stock, and money.
There are several different types of secured loans. Let’s look at a few of them.
Unsecured loans, like personal loans or standard credit cards, like to see good credit scores. If you don’t have a good score, a secured loan could help you build yours back up.
I’d like you to refer back to the secured credit card section. The lender is out, literally, nothing by giving you a secured credit card. You put the money down. If you don’t make the payments, they’ll take the card back and keep your deposit to pay off the outstanding balance.
The most important point to be made here, however, is when you’re building your credit score, you HAVE to make payments on time. This is the number 1 factor considered when calculating your credit score.
The biggest concern with a secured loan is the lender has the ability to take ownership of your asset if you’re not making the payments.
When you’re borrowing money, whether it’s secured or not, you have to make sure you’re making your payments on time. Another thing, don’t borrow more than you need to and stay within your means.
Strategies for Improving Your Credit Score
How to Pay Off Credit Card Debt
What Affects Your Credit Score
Jacob Sensible is a financial advisor with decades of experience in the financial planning industry. His journey into finance began out of necessity, stepping up to support his grandfather during a health crisis. This period not only grounded him in the essentials of stock analysis, investment strategies, and the critical roles of insurance and trusts in asset preservation but also instilled a comprehensive understanding of financial markets and wealth management. Jacob can be reached at: jake.sensiba@mygfpartner.com.
As I’ve gotten older, my relationship with money has changed. I’ve made mistakes, learned some things, and I found a new dynamic that works for me and suits my goals.
To be perfectly honest, my memory isn’t great, so if I was taught anything about money and how to handle it, I don’t recall it.
It wasn’t something that was openly discussed in our family. My folks took a fairly hands-off approach when it came to teaching us, besides our morals, character, and work ethic. Other than that, they let my siblings and I figure things out on our own.
Over this past year, as I’ve explored my upbringing I went through a phase of being angry with them for not being more hands-on, but after having an opportunity to really reflect, I’m incredibly grateful.
Because of their approach, I’m a very fast learner and a very good problem solver. I wouldn’t change a thing.
During the last two years of high school and a few years after, my buddies and I would always go get fast food, bring it back to one of our respective homes, and hang out.
Because of that, part of socializing I attributed to getting food, and as a result, spending money.
I also went through a period of “keeping up with the Joneses”, so I often spent money on things I didn’t need or I agreed to things I couldn’t afford because I didn’t want to be left out.
The last mistake I made was charging, darn near, everything when we went on our honeymoon. A very costly mistake at that.
The lessons I learned I pretty remedial in terms of financial common sense, but it took making those mistakes in order to learn:
My relationship with money has changed a lot over the last few years. I think as I’ve matured (and had a child) I’ve realized what is more important, and that spending on frivolous things, and gifts for that matter, is wasteful.
Money isn’t everything, but it’s an important tool. It’s a tool that deserves to be used in a thoughtful way.
I pay my bills, I pay down debt, I save, and set aside a little for fun. The money I save goes into three buckets: retirement savings, short-term savings, and emergency savings.
The short-term bucket is broken down further. Holiday spending, college savings, and experiences.
Spending money on experiences and precious time with my son has taken precedence over spending it on stuff.
He doesn’t get a lot of gifts from his mother or me (Santa) for Christmas, as he gets spoiled by the rest of our families.
More importantly, however, we would rather spend the money on things that create memories, which could include trips or a day at the zoo.
I’d rather him remember the time he spent with myself and others, rather than playing with toys. That’s what creates a happy, memorable childhood.
Related reading:
My House and What Brought Me Here
Different Ways to Think About Your Finances
Jacob Sensible is a financial advisor with decades of experience in the financial planning industry. His journey into finance began out of necessity, stepping up to support his grandfather during a health crisis. This period not only grounded him in the essentials of stock analysis, investment strategies, and the critical roles of insurance and trusts in asset preservation but also instilled a comprehensive understanding of financial markets and wealth management. Jacob can be reached at: jake.sensiba@mygfpartner.com.
Americans aged 34 years and younger have an average of less than $5,000 in their savings account.
For those that save money, it does not leave much room for emergency expenses and preparing for retirement. How much should you be saving if you want to be best prepared for life?
With Americans 13.8 trillion dollars in debt, trying to learn how to be smart with money is a wise move.
Debt can make you feel like your life is going downhill, but when you learn how to manage your money and get financially smart, it is possible to achieve your goals. Continue reading this article to learn how to have the best financial year you’ve ever had.