Small businesses and start-ups often believe that they cannot set up a 401(k) plan based on the size of their business and limited resources. But that is not true. All small businesses can set up a retirement plan to attract and retain talent by following a few simple steps. [Read more…]
Prioritizing Home Renovations
As I’ve said previously, K and I are moving back to our home in Oconomowoc, WI. We’re head over heels excited about it, but there are some things we need to do and some things that we want to do. Today, I’m going to talk about some of the projects we have planned and help you prioritize your home renovations.
What we need to do
There are two/three things that we need to do once we move back.
The first thing is to sure up the foundation. Our house is old, really old. The foundation is not as secure as we need it to be, so that’ll be the first thing we do. Get some extra support posts installed in the basement and secure/replace some of the old joists that have seen better days.
The second thing we have to do is insulate the kitchen. I don’t know what the prior owners did (they remodeled the home and flipped it to us), but the kitchen bleeds AC/heat. In the winter, it’s very clear because it’s darn cold in the kitchen. What’s more, the kitchen sink and the dishwasher will stop working if it gets too cold. To ensure the pipes won’t freeze and burst, and make the kitchen more energy-efficient and comfortable, we have to insulate.
The third thing is not incredibly important but should get done at some point. Off of the kitchen is the back door entrance. You enter into a “three-seasons room” and then enter a second door to get into the kitchen. The three seasons room needs insulation as well. Beneath it, we need to lay a vapor barrier on the ground and spray insulation into the floor joists. Now, this is not very important because of the second door. However, more insulation will allow for more utilization of that room.
What we want to do
This list is pretty long, as is the case for most homeowners. Some of the windows need to be replaced, we want to install an island in the kitchen, and we want to remodel the downstairs bathroom.
With regard to the bathroom, the current setup is one full bath and one-half bath. They are right next to each other, but the half bath (in terms of square footage) is much bigger than the full bath. What we would like to do is demo the wall in between and make it one, big bathroom. The price tag for this is a little higher than the other projects, so it’s a little farther down on the list.
How to prioritize
The first three renovations are no-brainers. These need to get done. Securing the foundation is paramount for our family’s safety, the insulation is important to avoid possible water damage and lower heating costs, and taking care of the back porch/three-season room will expand the usable square footage.
You have to take into account a few things:
- Family safety
- Family comfort
- Financial sense
- ROI – Return on Investment
Safety is your number one priority. That’s what makes a home, being comfortable living there. Replacing windows can be expensive, but they will pay for themself over time with savings in utility costs. In terms of the bathroom, it should increase the value of the home, but how much we spend versus how much the value increases is a factor to consider.
Conclusion
Projects and renovations go hand in hand with home ownership. What’s important is prioritizing home renovations so you take care of what’s needed before you tackle what you want.
Related reading:
How Buying a House and Saving for Retirement are Similar
5 Surprising Things Not Covered by Homeowners Insurance
**Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Securities America and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation. Please see the website for full disclosures: www.crgfinancialservices.com
My name is Jacob Sensiba and I am a Financial Advisor. My areas of expertise include, but are not limited to, retirement planning, budgets, and wealth management. Please feel free to contact me at: jacob@crgfinancialservices.com
How To Ask for Reimbursement of Travel Expenses
At this point in time, business travel is less common than it used to be. I have a hunch that it will never return to pre-pandemic levels, as employers found it easier and less expensive to accomplish this through Zoom. It’s still important to know the ins and outs. Today we will cover how to ask for reimbursement of travel expenses.
What are travel expenses?
Travel expenses occur when an employee travels for business purposes. A business trip can include conferences, business meetings, client meetings, training, job fairs, etc. One thing about travel expenses, is you need to be sure you’re getting the best jet card program. You want to get as many points or cash back rewards as possible.
Travel expenses include lodging, food, rental car, tips for servers and bellhops, etc. Most organizations that require employees to travel on a regular basis have policies in place.
If an employee is traveling for an extended period of time or is at a particular location for an extended stay, the business may also include reimbursement to pay for your family to visit.
When entertaining a client or a business partner, there are limits on entertainment expense reimbursement, so make sure you check your company’s guidelines so you don’t breach that threshold.
How do employees pay for travel expenses?
Company credit cards, personal credit/debit cards, cash, or allowances given by the employer.
How to ask for reimbursement of travel expenses
If the corporate policies are unclear about the process, write a letter first. Before you go on a trip or take a client out for lunch, request the payment of the expense, or at least ask for some information about what is covered, what isn’t, and what the limits are. Establishing communication upfront is very important.
Per diem, aka travel allowance or an expense account, is recognized by the IRS. Per their guidelines, your expense report is due to your employer (usually HR) within 60 days. The report should include dates, location(s), and receipts.
If you have any allowances or advancements that haven’t been used or can’t be justified as a business expense, then you must return that to your employer. If you don’t return it, that money can be classified as taxable income.
Conclusion
As I said in the opening, I don’t believe business travel will return to pre-pandemic levels, but it’s important to know what travel expenses are and how to ask for reimbursement of travel expenses.
Review your company’s business travel policy for more information, and if your company doesn’t have one, speak to them about what’s covered, what’s not covered, and any limitations.
Related reading:
Why Financial Literacy Matters
Top Reasons you Need Car Insurance
**Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Securities America and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation. Please see the website for full disclosures: www.crgfinancialservices.com
My name is Jacob Sensiba and I am a Financial Advisor. My areas of expertise include, but are not limited to, retirement planning, budgets, and wealth management. Please feel free to contact me at: jacob@crgfinancialservices.com
COVID-19 Crisis: Is Our Money Safe in Banks?
The future is uncertain, and this uncertainty can cause you to wonder if your money in the banks is safe or not during an economic downturn.
The coronavirus pandemic has caused so many concerns that we otherwise wouldn’t have. In some cities and countries, the lockdown has caused panic among citizens and made them stock up on food, toilet papers, medicines, and cash. This is what an economic crisis will do to people around the world. [Read more…]
Signs That You May Need a Financial Advisor
The key to financial freedom is planning your financial future wisely. [Read more…]
Red Flags When Choosing a Financial Advisor
Finding a qualified, trustworthy financial advisor can be very tough. Not all of them are created equal. What requirements and/or rules they follow are not the same. There are some financial advisor red flags you need to be aware of when shopping. We’ll explore those in today’s post.
How was the first meeting?
What kind of vibes did you get from the person you met with? Did you have a good gut feeling or a bad gut feeling? Was there good rapport? Did the conversation flow naturally? Did they answer your questions?
These are all great questions to reflect on after you met with your first prospect. You have to trust your gut. If the conversation was good and flowed naturally, but you just didn’t get a good vibe from them, shop elsewhere.
If you think they were walking a line of honesty, whether they held back on telling you things or they made contradicting statements, I would either address it directly or walk away. This is your financial future we’re talking about. You have to make the right decision.
How are they governed?
Do they operate using the fiduciary standard or are they only required to do what’s suitable? As a fiduciary, the advisor is legally obligated to do what’s in your best interest.
For example, when making investment recommendations, an advisor that operates using suitability is only required to make recommendations based on what’s optimal for your investment objective, time horizon, and risk tolerance.
With the fiduciary standard, they use that same suitability but take it a step further. If there are two options for investment – one charges 1% and one charges .50%, the advisor will use the lower of the two because that’s in the client’s best interest.
What are they offering?
If you meet with a potential advisor and they say that they’ll beat the market, run the other way. If an advisor recommends annuities or variable products, I’d either stress that you’re not interested or move along. These are insurance products and there could be a conflict of interest.
How are communications?
Are they honest with their pay schedule? When you asked them about what they charge, were they clear with their answer? This is important. A wishy-washy answer is enough grounds for you to walk away.
Do they talk a lot or do they take time to listen to you? Advisors that talk more than they listen are often pitching a narrative that they believe instead of listening and creating a plan customized to your needs/wants.
How are they with following up? Does it take them forever to get back to you? An advisor that doesn’t make you feel important is a red flag.
Are they a “yes person”? Do they always agree with you? A key characteristic of good advisors is the ability to correct you or express their opinion about your financial plan. If there’s something that you would like to do, but they don’t think that it’s a wise move based on the plan you created, they need to tell you that.
Conclusion
Are there financial advisor red flags? Absolutely. We illustrated them here. Keep them in mind when you’re shopping and trust your gut. There are fantastic advisors out there, you just have to do a little work to find one.
Related reading:
Robo-advisers: What I Like and What I Don’t Like
The Pros and Cons of Being a Financial Advisor
**Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Securities America and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation. Please see the website for full disclosures: www.crgfinancialservices.com
My name is Jacob Sensiba and I am a Financial Advisor. My areas of expertise include, but are not limited to, retirement planning, budgets, and wealth management. Please feel free to contact me at: jacob@crgfinancialservices.com
How To Regain Control Of Your Finances Amid The Pandemic
Who knew the global health crisis would have such a negative impact on personal finances? Close to a year after the coronavirus pandemic started, many people are hanging on by a thread. As if being self-sufficient in America wasn’t already strenuous, reduced hours and unemployment only added to the problem. Government assistance (though better than nothing) is minuscule compared to their rising expenses, leaving many to make poor financial decisions to survive.
Emergency savings and retirement accounts are all but tapped out. Robbing Peter to pay Paul has become the concept for paying bills. Credit cards (that you don’t have the means to repay) seem to be the only way to handle medical expenses, utilities, and groceries. Though these practices provide temporary relief, they come with consequences that will take years to recover from.
Turning Things Around
Though the coronavirus pandemic continues, failure to get your finances back on track now will only lead to more significant problems down the road. As difficult as these times are, you can start taking steps towards turning things around. Continue reading to learn more.
Take Advantage Of Assistance Programs
The stimulus package isn’t the only form of assistance available to Americans struggling amid the pandemic. If you haven’t done so already, look into other financial assistance programs. Whether you’re having a hard time paying your mortgage or you can’t afford groceries for your children, you’ll be surprised to learn that there are several options for those in need. Even if you’ve been turned down in the past, many programs have altered their eligibility requirements to accommodate those affected by the pandemic. The best thing you can do is apply as any assistance is better than none.
Re-Evaluate Necessary Expenses
One of the first things you learn about maintaining financial stability is being mindful of your spending. By reducing or eliminating unnecessary items from your budget, you can free up cash to use for essentials. As hard as you try, however, there are some costs you can’t (or shouldn’t) get around. For example, allowing your car or life insurance to lapse could leave you or your family with a financial burden in the middle of a pandemic.
Though these things are crucial, you don’t have to break the bank to have them. Review your necessary expenses to determine if there are ways to save money. Comparing insurance providers and using tools like a term life insurance calculator could help you find a more affordable policy. Using coupons or sales flyers when shopping for groceries can take quite a bit off food for you and your family.
Start Generating Cash
You may have a hard time finding a full or part-time job at the moment, but there are still opportunities to generate some extra cash. Whether it’s a few bucks or several hundred dollars, it can go a long way in helping you cover expenses, pay down debts, or boost your emergency savings. You can have a yard sale, help seniors in your neighborhoods with odd and end tasks, become a rideshare driver, deliver groceries or takeout, answer surveys, or start a small business.
Consider Downsizing
If you’re in dire straights amid the pandemic, you may need to consider downsizing. Although not an ideal solution, it may be the only way to regain control of your finances. Review the equity in your home and the housing market to determine if selling would be lucrative. If necessary, move in with relatives or find an affordable place to rent. If you have a car you’re still making payments on; perhaps you should trade it in or sell it and use public transportation.
If you’ve made ineffective financial decisions amid the pandemic to survive, you’re not alone. Millions of people felt they had no choice. If you’re going to avoid the substantial consequences that come with making these decisions, now is the time to start. By implementing the strategies suggested above, you can begin the process of regaining control of your finances amid the pandemic and beyond.
Crypto, Reddit, Stock Market Thoughts
The last couple of weeks have been crazy in the stock market. With Reddit putting a short squeeze on Wall Street, crypto assets going gangbusters, and speculation about what inflation will do in the near future, there’s a lot to talk about.
Reddit vs Wall Street
Gamestop and AMC Entertainment are the two biggest names when we talk about Reddit investors.
A large number of shorts were put in by hedge funds and other big players on Wall Street. A specific Reddit account “recruited” its following to pile into the two companies named above. This group of “retail” investors drove the stock price up (as well as other investors that caught wind of their efforts).
Those hedge funds were forced to cover their shorts so they didn’t lose more money. The stock price for those two companies plummeted in the following days, but that doesn’t negate what Reddit did – they beat the big guys.
What’s a short?
A short is a type of trade. What you do is you borrow shares of a stock at a specific price in hopes that the stock price will drop. If it does, you buy back those shares at a lower price and collect the difference.
For example, if you bought shares of XYZ company at $20 and the share price of XYZ drops to $10, you would cover your short and earn $10 per share as a return.
It’s not for the faint of heart because stock prices effectively have no ceiling, so you could lose A LOT of money.
Crypto
Cryptocurrencies gained traction over the last few years as investors saw potential. After Bitcoin rose to $20,000 per BTC and crashed, it lost its allure.
Social media brought it back, thanks to Elon Musk. Slight changes in his Twitter bio moved the needle very effectively. Bitcoin is now hovering at $50,000 per BTC. Tesla invested a healthy sum in Bitcoin and will now accept payments in Bitcoin.
I believe other companies will adopt this policy and we will see Bitcoin used for purchases more regularly. There is a place for cryptocurrencies in this world, but it’s uncertain what kind of role it will play.
Short-term Thoughts
I go through quite a bit of research each week to get an idea of what the market environment looks like, what the economy is doing, and where there are risks and opportunities in the market.
With that said, the amount of times I’ve read the word “bubble” is alarming. The comparisons to the Dot Com Bubble and the Great Financial Crisis (GFC) are also a cause for concern.
Pundits are using the word “euphoria” more often.
There are a few things to pay attention to:
- The divergence between the stock market and the economy. Typically, near the end of the business cycle, a difference between how the market is doing and how the economy is doing grows. Eventually, things will revert to the mean. That’s to say, the difference between the two will shrink.
- Inflation. The Biden Administration is taking a different stance from past presidents. Inflation and overstimulation of the economy were areas of concern. President Biden is taking the other side of this argument, saying that he’d rather do too much, than not enough. Look for increased stimulus and less regard for inflation. If inflation starts to run hot, expect the FED to cool it down somehow.
Conclusion
Short-term policy changes and speculative movements in the stock market have little to no impact on the long-term performance of your portfolio. The one thing that really moves the needle is your behavior and how you respond to the news.
If you keep your long-term perspective in mind and keep your emotions in check, you should fare better than those that don’t.
Related reading:
Why Financial Literacy is Important
What You Can Learn from Different Market Environments
Some of the Practical Methods to Make Money Through BTC in 2021
*Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Securities America and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation. Please see the website for full disclosures: www.crgfinancialservices.com
My name is Jacob Sensiba and I am a Financial Advisor. My areas of expertise include, but are not limited to, retirement planning, budgets, and wealth management. Please feel free to contact me at: jacob@crgfinancialservices.com
What Is the Difference Between Strategic and Tactical Asset Allocation?
We’ve talked a lot about asset allocation on this platform. It’s my preferred method of investing and is often the one I recommend to my clients. There are different types of asset allocation, though. Tactical and strategic. What’s the difference between strategic and tactical asset allocation?
Asset Allocation
Before we explore the difference between those two, we should define what asset allocation is.
Asset allocation is a simple, but effective approach to investing your money. It takes into account your risk tolerance, investment objective, and time horizon (also known as suitability).
Using those three pieces of information, you divvy up capital to three (sometimes more) asset classes. Those are stocks, bonds, and cash. Other asset classes that can be included in your allocation include precious metals (i.e. gold and silver) and real estate.
For example, if someone has a moderate risk tolerance, an investment objective of using those funds for retirement, and a long term time horizon, an adequate asset allocation could be 60/30/10. 60% stocks, 30% bonds, and 10% cash.
The goal is to balance the risk/reward dynamics in a way that’s comfortable to you as the investor, using those three suitability items as the barometer.
What is strategic asset allocation?
Strategic asset allocation uses a long term approach. Uses your risk tolerance, investment objective, and time horizon to create the optimum asset allocation that balances risk and reward to fit the above criteria.
What is tactical asset allocation?
Tactical asset allocation uses a short to mid-term approach. Requires more flexibility as you will move in and out of securities as they fall in and out of favor. Strong discipline and understanding of markets are required to utilize a tactical approach.
The difference between strategic and tactical asset allocation
For the everyday investor, strategic allocation makes the most sense. It accomplishes what you’d want in any portfolio – it balances the risk and reward, and creates a portfolio that maximizes return potential while minimizing any inherent risks tied to those asset classes. It’s a “hands-off” approach to investing.
For a more experienced investor that doesn’t mind putting in the time and effort required to analyze and understand the market, trends, etc. tactical asset allocation makes more sense. Proceed with caution, however, as market timing can be very risky.
There are two key differences between strategic and tactical asset allocation. Tactical allocation requires more work, more knowledge, and more experience. Tactical allocation also requires the investor to be more disciplined and more tolerant to risk.
Additionally, tactical allocation takes more of a micro view of economics and the markets. Macroeconomists and strategists view investing from 30,000 feet. Tactical investors look at capsize (the size of a company based on shares outstanding and share price), industry, geographic location, etc. What’s performing well, what are the trends, what industry, location, etc. is likely to outperform in the near term.
Related reading:
Stock Splits, Asset Allocation, Cognitive Biases
**Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Securities America and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation. Please see the website for full disclosures: www.crgfinancialservices.com
My name is Jacob Sensiba and I am a Financial Advisor. My areas of expertise include, but are not limited to, retirement planning, budgets, and wealth management. Please feel free to contact me at: jacob@crgfinancialservices.com
How to Protect Your Assets When Merging Households
When you and another adult decide to cohabitate. A significant portion of each of your financial lives end up merging. You’ll often share or split household bill responsibilities. In some cases, your assets may become a bit entangled. If you’re worried about protecting your assets when merging households. There are things you can do to maintain the needed amount of separation. Here are some options that may work for you.
Don’t Add Anyone to Your Accounts
With joint accounts, both parties have legal access. While this may not be problematic for living expense-related bills like utilities. If the account is tied to an asset, like a bank account, retirement fund, investment account, or home equity line of credit (HELOC). It could become an issue.
Generally, you shouldn’t add another person to any of your asset-based accounts if you want to keep them protected. That way, no one else has access but you.
Create a Legal Agreement
Usually, when people think of legal agreements for protecting assets, prenuptial agreements are what spring to mind. If you go this route, it is usually wise to work with a legal professional that deals with Minnesota prenup agreements(or prenup agreements in your area). That way, the agreements can be formal and aligned with local law. It allows both parties to formally outline ownership of pre-marital assets, ensuring that, if they ultimately divorce, specific assets go back to the party who brought them into the relationship.
If you aren’t getting married, it may seem like that form of protection isn’t available. However, that isn’t necessarily the case. When you merge households, you can create contracts that operate similarly to a prenup even if you aren’t intending to marry. In these, you would essentially agree to who has legal ownership of what, allowing both parties to protect any assets that matter to them.
If you go this route, it is usually wise to work with a legal professional. That way, the agreements can be formal and aligned with local law.
Define Ownership with New Assets
If you need to acquire a new asset, you and other household members may need to define ownership in advance. This is especially true for assets that are purchased by one person but are made available to the household for use, like furniture, vehicles, or home purchases.
In some cases, you may need to craft legal agreements to protect any of your new assets. For unmarried couples, this may be especially true in states with common law marriage or other cohabitation-related legislation directed at unmarried couples that give the other household member rights to newly acquired assets.
For married couples, whether new assets acquired during the relationship can be protected may depend on local law. Community property states have rules that usually make certain (but not all) new assets jointly owned, even if only one spouse handles the acquisition. However, that doesn’t mean there aren’t options available.
Final Note on Protecting Your Assets While Merging Households
If you aren’t sure about your state’s laws, contact a legal professional. They can help you review the state’s views on the ownership of the asset and provide you with guidance about any steps you may need to take to protect it, suggesting that it is actually a possibility legally.
Do you have any other tips that helped you when protecting your assets when merging households? Share your thoughts in the comments below.
Read More:
- Appreciating vs. Depreciating Assets
- Protecting Assets from Probate
- 7 Tips to Get the Most Out of Your 401k v/s Pension
Tamila McDonald is a U.S. Army veteran with 20 years of service, including five years as a military financial advisor. After retiring from the Army, she spent eight years as an AFCPE-certified personal financial advisor for wounded warriors and their families. Now she writes about personal finance and benefits programs for numerous financial websites.
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