,

Gas Prices Went Down But Where Did the Money Go?

,

Contributed by: Angela Palacios, CFP® Angela Palacios

After oil and thus gas prices sharply declined late in 2014, many were expecting consumers to run right out and spend what they’d saved.  What has surpised everyone is that isn’t happening.  The chart below shows the direct correlation between the decrease in what consumers are spending at the pump (the light blue line) and the increase in their savings account dollars (the dark blue line).  As consumers are spending less, they are saving more.

There are a number of reasons contributing to these increased savings rather than spending:

  • Most did not expect the temporary reprieve in gas prices to last

  • Prices of many other goods are perceived to be increasing

  • People are starting to recognize the importance of having a few months of living expenses set aside in the bank as a safety cushion

While all of these are probably contributing factors causing this “savings” to not be spent, I would hope the main reason for the pattern is the last bullet point -- people recognizing the importance of having some money set aside for a rainy day!

Angela Palacios, CFP® is the Portfolio Manager at Center for Financial Planning, Inc. Angela specializes in Investment and Macro economic research. She is a frequent contributor to Money Centered as well asinvestment updates at The Center.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Angela Palacios, CFP® and not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete.

,

The Art and Science of Happiness

,

Contributed by: Angela Palacios, CFP® Angela Palacios

In 1988 Bobby McFerrin inspired us to “Don’t Worry Be Happy.” As I’m sure many agree, this is far easier said than done.  During the Raymond James National Conference I had the privilege to attend a session on happiness taught by Dr. Fred Luskin from Stanford University.  This session was a very abbreviated, but no less inspiring, version of his popular course offered at Stanford University.  We can all use a little more happiness in life even if we aren’t unhappy and Dr. Luskin offers some tools to help us do so.

Manage your drive to achieve

“Happiness is wanting what you have” said Dr. Luskin.

Don’t waste all of your time pining for more or something different than you already have. You can strive for more, but take time to appreciate what you do have.

Savor moments of success and love

Too often we ruin these moments by immediately picking up our phone to check email or text messages. Stop and just enjoy the moment briefly before moving on to the next item on the list.

Take time to show gratitude

Think about what you are grateful for and share that with someone.   We don’t have to wait until it is November to post these things on Facebook or share with someone; try to do this every day.

Give your brain the opportunity to see the happiness

Mediate, take breaks and relax.  It is ok to have a lot to do. “In every life we have some trouble, When you worry you make it double.”  Train yourself to just be ok with having a lot to do and temper your drive to get it all done at once.

Dr. Luskin teaches us not to focus on what has gone wrong, but instead what makes people happy and why.  So while we all can’t attend a class at Stanford, an easy first step is try generating your own list of activities and experiences that rejuvenate you and keep it handy to help you manage your daily stress.  This small step can go a long way in increasing our mood, health, productivity and overall happiness.

Angela Palacios, CFP® is the Portfolio Manager at Center for Financial Planning, Inc. Angela specializes in Investment and Macro economic research. She is a frequent contributor to Money Centered as well asinvestment updates at The Center.

Raymond James is not affiliated with Dr. Fred Luskin

,

Where’s Waldo? Or Where’s Wyman?

,

Contributed by: Center for Financial Planning, Inc. The Center

If you have emailed Tim Wyman in the last couple of days you may have received his “out of office” reply. Tim is out for a bit on a scheduled medical leave of absence.  Fortunately we have a dedicated team that is ready to help if needed. For service items please feel free to contact Client Service Associate, Jennie Bauder, via our main telephone line (248) 948-7900 or at Jennifer.Bauder@CenterFinPlan.com. For financial planning questions please feel free to contact Certified Financial Planner™  Matthew.Trujillo@CenterFinPlan.com and for general operations/business items please contact Melissa.Joy@CenteFinPlan.com.

If you’d like to know the story behind Tim’s medical leave, click here to watch the Fox 2 News interview with the Wymans.

We are always here to help so please feel free to call or email as needed.

,

Part 5 – A Year of Lessons on Money Matters for your Children and Grandchildren Contributed by Matthew Chope

,

Contributed by: Matthew E. Chope, CFP® Matt Chope

If you know where you’re headed, then you have a better chance of getting there.  This applies in money matters and in life. To help you chart your course, try making a list of the top 100 things you want to accomplish in your life.  The idea here is that if you know what you want to accomplish and what’s important to you, it might help you start on the path that will get you there.

Finance Your Goals

Along that path, I don’t think you should be concerned about spending money, especially if it’s towards these 100 things.  This is what money was meant for.  Money is not an end, but a means to an end.  Part of your money is a temporary store of value to be used towards the goals in your life.

Do you think you could become president if you don’t intentionally set that goal? In my own life, I’ve seen how writing down my goals has helped me find the path to achieving them since I already know the end. Writing down goals will also help you invest in things that will lead them toward that end. You’ll be able to make choices differently than someone who has not considered what’s important to accomplish in life.  Feel comfortable spending money alone this path.  This is what is important to you.

Focus on What Matters

I think Oliver Wendell Holmes said it best:

“Most of us go to our grave with our music still inside us.” 

I have seen many clients get to the end of their lives with much of the music still buried within them.  Their time was spent focused on saving money to build wealth for financial independence.  Or they felt that money should not be used unless necessary.  Financial independence is very important, but so is finding a balance to pursue your interests along the way. 

If you don’t have a list of your own, maybe you’ll get inspired by mine. I started this list in my early 20s and have tweaked it over the years. Here are some of my goals:

Fun – Travel

  • Paint a beautiful picture

  • Swim with a dolphin

Generosity – Giving

  • Be someone’s mentor

  • Make it possible for my niece to go to college

 Education

  • Achieve Master’s degree

  • Give many motivational and inspiring speeches

Personal Achievement

  • Own a home in a warm sunny climate to escape the winter gray

  • Practice meditation and yoga daily

Professional Life – Career

  • Contribute to a healthy financial planning practice for 40 years

  • Help 1,000’s of people reach their financial objectives in life

Family

  • Earn the right to marry someone special.

  • Visit my grandparents and find out about their life as much as possible

Health / Fitness

  • To practice meditation and yoga daily

  • Exercise with a trainer every month to stay doing things correctly

Financial – Monetarily

  • To never be a burden to anyone else

  • To be financial independent by age 60

Maybe some of these categories or ideas will spark you to start your own list. I believe when you choose something (make a decision) you should put your full potential behind it. But remember nothing is set in stone. My list has evolved since I started it. After a good try, be open to changing your mind. 

Matthew E. Chope, CFP ® is a Partner and Financial Planner at Center for Financial Planning, Inc. Matt has been quoted in various investment professional newspapers and magazines. He is active in the community and his profession and helps local corporations and nonprofits in the areas of strategic planning and money and business management decisions.

Five Star Award is based on advisor being credentialed as an investment advisory representative (IAR), a FINRA registered representative, a CPA or a licensed attorney, including education and professional designations, actively employed in the industry for five years, favorable regulatory and complaint history review, fulfillment of firm review based on internal firm standards, accepting new clients, one- and five-year client retention rates, non-institutional discretionary and/or non-discretionary client assets administered, number of client households served.

Any opinions are those of Matthew Chope, CFP® and not necessarily those of Raymond James.

, ,

The Center Celebrates a 30-Year History

, ,

Contributed by: Center for Financial Planning, Inc. The Center

From our start in 1985 through today, Center for Financial Planning has grown and changed. We dig back into our history with founders Estelle Wade, Marilyn Gunther and Dan Boyce. Their vision of serving clients has grown over the past 3 decades and we couldn’t be prouder of all we’ve achieved. Join our founders and current partners traveling through The Center’s history … back when our offices looked much different and Tim Wyman had more hair. A lot has changed, but some things we like just the way they are.

From our start in 1985 through today, Center for Financial Planning has grown and changed. We dig back into our history with founders Estelle Wade, Marilyn Gunther and Dan Boyce. Their vision of serving clients has grown over the past 3 decades and we couldn't be prouder of all we've achieved.

, , ,

Should Ford Employees Contribute After-Tax Money to a 401k?

, , ,

Contributed by: Nick Defenthaler, CFP® Nick Defenthaler

Earlier this month, my colleague, Matt Trujillo and I hosted a webinar for Ford Motor employees to discuss the potential benefits of contributing after-tax dollars to their 401k plan.  These Ford workers are not alone. About 25% of companies offer retirement plans with after-tax contributions that are completely separate from the plan’s Traditional 401k or Roth 401k (Columbia Management). Recent IRS rulings have made contributing to the after-tax component far more attractive because, once an eligible distribution event is met, the dollars can be rolled over to a Roth IRA for tax-free growth.  Most employees aren’t even aware their plan offers after-tax contributions and, if they do, there is typically confusion around how it works and if it makes sense for them.

Do After-tax Contributions Make Sense for Me?

In most cases, the after-tax portion is the best fit for someone who is currently maximizing their pre-tax/Traditional 401k but who still has the capacity to save more for retirement.  As mentioned before, the after-tax contribution is a separate contribution type and is above and beyond the normal 401k limits ($18,000 in 2015, $24,000 if over the age of 50 however, subject to the overall $53,000 plan limit).  It is really all about making “excess savings” as efficient as possible.  Tax-free accounts are about as efficient as they come and can potentially save an individual or family hundreds of thousands of dollars in retirement.  For more information, this blog by Tim Wyman goes into greater detail on contributing after-tax dollars into your plan.

Every 401k plan is different and they all have their nuances.  This is why we’ll be hosting company-specific webinars in the coming months to review how the after-tax component works in specific plans and to go over the pros and cons. This kind of information can help you decide if an after-tax plan makes sense for you.  Keep your eyes open for e-mails, blogs, and more on our Facebook, Twitter, and LinkedIn pages for updates on webinars we will be hosting in the near future!

As always, if you have specific questions relating to your company retirement plan, never hesitate to reach out to us. We are here to help! 

Unless certain criteria are met, employees must be 59½ or older and must have satisfied the five-year period that starts with the year the employee makes his or her first Roth contribution to the 401k plan before tax-free withdrawals are permitted.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Nick Defenthaler, CFP® and not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. You should discuss any tax or legal matters with the appropriate professional. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing involves risk and investors may incur a profit or a loss. Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person's situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters.  

Nick Defenthaler, CFP® is a CERTIFIED FINANCIAL PLANNER™ at Center for Financial Planning, Inc. Nick is a member of The Center’s financial planning department and also works closely with Center clients. In addition, Nick is a frequent contributor to the firm’s blogs.

, ,

Does Investing Feel Overwhelming? You’re Not Alone.

, ,

This article is contributed by guest blogger Laura Garfield, a social media and marketing contractor for The Center and the author of The NeXt  Revolution, a business book researching the generational behavior of women in the workplace.

No matter your tax bracket or the credentials you have tacked on to the end your name, many women agree on at least this one thing:

Decisions on Investing can feel Overwhelming

I recently sat in on a session about Women and Investing at the Raymond James National Conference. The point was hammered home by Kristin Gibson, the Senior Director of Sales & Strategic Partnerships at Russell Investments. She said in a survey of high net worth women, most described investing as:

 “Overwhelming”

 “Complicated”

“Boring”

“Latin”

 These may not be your adjectives of choice. In fact, you may buck the trend and love every nuance of the investing process (I certainly know a few of these women … but can’t claim to be among them). But in general, women want to find a way to make investing not feel like scaling a steep climbing wall in heels and a pencil skirt. Some way to make investing approachable.

Using Your Natural Advantage

Women are naturally strong investors. It’s not a stereotype. Research backs this up. “When it comes to making investment decisions, gender plays a larger role than many people realize,” reports USAToday. Factors like risk aversion, ability to ask for advice, and taking your time … these are all traits that fall on the female side of the gender divide. Research indicates that women investors have these natural advantages:

  • Are not over confident

  • Are realistic and risk averse

  • Research more and ask questions

When it comes to behavioral economics, the Washington Post interviewed Terry Odean, a University of California professor who has studied stock picking by gender for more than two decades. In a seven-year study, Odean found single female investors outperformed single men by 2.3 percent while female investment groups outperformed male counterparts by 4.6 percent. Odean told the Washington Post, “In our research, male investors traded 45 percent more than female investors. Men are just making a lot more bad decisions than women. More trading leads to lower performance.”

Finding the Right Ear

So back to the Overwhelming/Complicated/Boring/Latin part of the investing equation, if you’re going to flip those adjectives with a boost from your feminine advantage, you may need some help. A key to that is picking the right investment advisor. Research shows that women and men gather information about investing differently.

  • Women want better communication, the chance to say what they mean

  • Women build trust by collaborating & sharing information

In Kristin Gibson’s session at the conference, she summed up what most women are looking for in a financial advisor like this:

“I want someone who understands my situation.”

Whether that’s a man or a woman shouldn’t matter. What does matter is how well the advisor can listen, communicate and understand your needs. You may be looking for “straightforward” or you might want someone who is “motivational”. Whatever your word, when you find the best fit, that advisor will help you translate “investing” from Latin into English. If they can turn “boring” into “captivating” then you’ve really found a keeper.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Laura Garfield and those cited/quoted and not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Raymond James is not affiliated with and does not endorse the services of Laura Garfield, Kristin Gibson or Russell Investments. Investing involves risk and investors may incur a profit or a loss regardless of strategy selected. Past performance is not a guarantee of future results.

Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members.

Nick Boguth: From Summer Intern to our Newest Hire

Contributed by: Center for Financial Planning, Inc. The Center

He’s back!!! Or rather, we never let him leave! Please welcome Nick Boguth as The Center’s newest full time employee!  He first came to us in May of 2014 as our summer intern and quickly turned into family.  Nick will closely interact with the Investment Department and also learn Client Service Associate duties. 

His degree in Economics and Statistics from the University of Michigan made him an ideal fit for our Investment Department.  In addition to his internship here, Nick also spent a number of years in a role helping a local business, Hamilton Chevrolet, conduct client satisfaction reviews on inbound sales and service calls.   Though he’s fresh out of college, his experience makes him uniquely prepared to assist our clients.  But enough from us, here’s what Nick has to say about his new role:

How were we fortunate enough to welcome him into our ranks?

“I wanted to come work for The Center after the internship because of how much I was able to learn with the help of the everyone at the office. And I knew that would carry into the future. Also, how much everyone else seemed to enjoy working here was a great sign from the beginning.”

What are your goals for the first year of working at The Center?

“I want to make an impact and take on as many responsibilities as I can in my first year here, while learning as much as possible about investing and financial planning.”

He also plans to pursue the Chartered Financial Analyst® (CFA®) Certification as soon as possible.  When not working hard, Nick enjoys a variety of sports. He’s often playing golf, exercising, reading, watching movies and spending time with friends and family.  Welcome Nick!!!

Why You Should Consider a Community College Education

Contributed by: Nick Defenthaler, CFP® Nick Defenthaler

The cost of college, as we all know, has done nothing but skyrocket over the past 20 years.  According to data by the U.S. Labor Department, the price index for college tuition grew nearly 80% between August 2003 and August 2013 as reported by US News & World Report. Just look at the chart below from that report comparing costs like housing, medical care and college tuition.

In recent years, however, tuition has slowed a tad, but is still rising faster than wages.  The thought of funding college for one child -- let alone multiple children -- is enough to give any parent an ulcer.  But what if there was a more cost effective option that still yielded the same degree?  Community college is something more and more students are considering and for good reason when you take into consideration a college education at a Michigan public university will run close to $100,000 (or more) when you account for room and board!

The Community College Reputation

Our society has done a good job of making community college into almost a four-letter word. These are a few reasons community college is a hard sell for some families. You might:

  • Have parents or family who are all alumni from one school

  • Look at college as a socioeconomic “status symbol”

  • View it as an option for kids who didn’t excel as much in high school

While these are all understandable, I encourage clients to be open to it as an option.  The vast majority of classes students take in the first two years of college are very basic and aren’t very different than those you pay $80/credit vs. $250/credit.

The Community College Advantage

I was raised by a single mother who worked tirelessly and sacrificed to do whatever she could to provide for us. She was not in a position to fully fund a four-year tuition bill at an MSU or U of M.  In my senior year of high school, I decided to attend Livonia’s Schoolcraft College for the first two years of my studies and then transfer to Eastern Michigan University.  I was able to transfer just over 80 credit hours to EMU which allowed me to graduate with my bachelor degree in finance with EMU’s name on my diploma. And my total tuition bill was about $15,000.   Granted this was back in 2008, so the equivalent in today’s dollars would probably be closer to $20,000. But that’s still far less than I would have spent if I went away to school for the full four years.  Looking back, attending community college for the first two years was one of the best decisions I’ve ever personally made.  It kept me far more focused on my studies. It allowed me to begin working part-time at my first financial planning gig. I was still able to visit friends on the weekend who were away at school to get plenty of the fun college times in. And I saved a TON of money.  Not having a large student loan burden was the only reason I was able to purchase my first house two years after graduating -- which has since been sold and went towards the home my wife and I just built for our growing family. 

As an expectant father, I can already clearly see why parents want to provide nothing but the best for their children.  There comes a point, however, where we need to take a step back and look at what’s realistic and what’s not.  We never want to see clients abandon their retirement savings to fully fund college for children. Loans can be taken out for education but unfortunately they don’t exist for retirement.  The earlier you can start saving for your child’s education the better, even if it’s small.  Education planning is something we do for hundreds of our clients, don’t ever hesitate to contact us and let us know how we can help!    

Nick Defenthaler, CFP® is a CERTIFIED FINANCIAL PLANNER™ at Center for Financial Planning, Inc. Nick is a member of The Center’s financial planning department and also works closely with Center clients. In addition, Nick is a frequent contributor to the firm’s blog.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Nick Defenthaler, CFP® and not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete.

Live YOUR Plan™