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The Best Gift You Can Give Your Family
What is the best gift you can give to your family? Is it college education for a grandchild? Is it a paid family vacation for your children and their families?
Gifting to family members may be an important piece of your financial legacy plan. You may desire to gift to family members during your lifetime – when the financial support is needed or when you can observe the enjoyment of the gift.
The BEST gift, as it turns out, is for you to plan ahead for yourself. Your ability to ensure that you can fund your own financial independence and any future long-term care needs can provide more of an economic (an emotional) benefit to your family than a gift now.
- According to a recent MetLife study, Americans who take time off work to care for their aging parents are losing an estimated $3 trillion dollars in wages, pensions and Social Security benefits.
- A 2010 study by Fidelity Investment Research found that a 65 year-old couple that plans to live into their 90’s spends $250,000 to cover health care expenses, including Medicare premiums, co-pays, coinsurance and some home care costs. Note: This does NOT include chronic conditions or long term care costs.
Before significant gifting is done, it is important to do a realistic assessment of your ability to fund your own retirement and long-term care needs. Make sure that the proper documents and financial tools are in place to fund your needs now and later. Take the first step now and schedule a time to meet with your financial planner to discuss long term care planning.
South Oakland Lunch Program – Another Rewarding Experience!
In support of the South Oakland Community Lunch Program, now in its 17th year, The Center volunteered to prepare and serve a warm meal for 60 to 80 eager patrons. The Center team has served this Saturday free lunch program in downtown Royal Oak at least annually for over 10 years.
The following day Tim Wyman sent all concerned an informal but hearfelt message that helped sum up the experience:
“Nice job with the South Oakland Community Lunch Program once again! The cookers prepared a great meal….and the servers….well they were spectacular. Amanda is to be congratulated on her goulash serving skills – well done! Thanks to Jen for coordinating the effort – everything was in order and really helped for a successful event. I trust that everyone involved felt a great sense of satisfaction (not the word I am looking for – but hopefully you know what I mean). For many of Saturday’s guests it was truly a treat – and a good reminder as to how lucky we all are. For me personally, having my boys with me was so much more meaningful than just telling them how fortunate we are and that they should give back. Thanks to The Center for providing the opportunity.”
Please visit the Saturday Community Lunch Program Facebook Page to learn more about the program and volunteer opportunities.
The Bucket Strategy
If you are in retirement (or close to retirement), you are most certainly concerned about the recent market volatility. You are likely wondering how your investment portfolio might be structured to provide the income you need without putting the portfolio in a vulnerable position.
The Bucket Strategy (not to be confused with the “Bucket List”) is another way to describe a cash distribution method to provide you with income from your nest egg during any kind of market cycle.
Consider that we each have 4 buckets and that every investment within your portfolio fits into one of these buckets. The idea is that this strategy can provide cash flow, even if equity markets drop or stay low for extended periods of time.
Bucket 1: The first bucket is labeled 1-year or less. This is the cash and short term securities that mature in less than one year to support the cash flow needs for the client for the first 12 months.
Bucket 2: The second bucket would start generating cash flow in the 13 month – 36th month or years 2 and 3. This contains short-term bonds and fixed income type securities that have a small amount of volatility and are primarily for preservation of capital. The holdings in this bucket do pass on interest income that flows into the first bucket.
Bucket 3: The third bucket is structured to generate cash flow needs in years 4 and 5 and primarily contains strategic income and higher yielding bonds (lower quality, longer maturing and international type bonds). However, they do pass on interest income that flows into the first bucket.
Bucket 4: The fourth bucket is made up of equities (stock investments) and other assets that have higher volatility like gold, real estate, commodities etc. Many of these assets produce dividends to help replenish the first bucket, if the dividends are set to pay in cash vs. reinvest.
The bucket strategy is designed to provide enough cash flow to get through roughly a 6- or 7-year period without needing to liquidate the stock portion of the portfolio. This should provide you with the confidence and consistent income needed to enjoy your retirement and work on your bucket list!
Talk to your financial planner to see how the bucket strategy might work for you.
Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James. Investments mentioned may not be suitable for all investors. There is an inverse relationship between interest rate movements and bond prices. Generally, when interest rates rise, bond prices fall and when interest rates fall, bond prices generally rise. High-yield (below investment grade) bonds are not suitable for all investors. When appropriate, these bonds should only comprise a modest portion of your portfolio. Please note that international investing involves special risks, including currency fluctuations, differing financial accounting standards, and possible political and economic volatility. Gold is subject to the special risks associated with investing in precious metals, including but not limited to: price may be subject to wide fluctuation; the market is relatively limited; the sources are concentrated in countries that have the potential for instability; and the market is unregulated. Be advised that investments in real estate and in REITs have various risks, including possible lack of liquidity and devaluation based on adverse economic and regulatory changes. Commodities and currencies investing are generally considered speculative because of the significant potential for investment loss. Their markets are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising. Dividends are not guaranteed and must be authorized by the company’s board of directors. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Investing involves risk and you may incur a profit or loss regardless of strategy selected. The forgoing is not a recommendation to buy or sell any individual security or any combination of securities. Be sure to contact a qualified professional regarding your particular situation before making any investment decision.
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Matt Chope and Angela Palacios Sharpening the Saw in Seattle
Matt Chope and Angela Palacios recently attended a three-day user conference in Seattle for Tamarac, our portfolio rebalancing software provider. The meetings were held September 14–16.
They were joined by 220 advisors, thought-leaders, and product experts from around the country. Together they collaborated on ways to leverage our current software, learned operational best practices, and gained insights into new technology opportunities. This collaboration is a result of The Center's ongoing commitment to utilize technology to better serve our clients.
Matt commented: “To remain competitive, the best financial planning firms need to obtain a better return on information. We are encouraged by our technology partner's work in this area. They are forging on, working tirelessly toward better integration of information systems. These systems will allow for smoother functioning of client information, with the goal of enhancing better decision making. They are also designing a platform to develop better workflows for our staff and provide better service and overall client experience.”
Sandy Adams Champions the 2011 FPA Michigan Annual Symposium
Sandy Adams October 6th and 7th marked the 2011 Annual Symposium of the Financial Planning Association® of Michigan. Over 100 members from across the state of Michigan gathered for networking and high-level financial planning continuing education during the 2-day event.
Sandy Adams, CFP® presided over this year’s planning committee, which assembled a team of nationally-recognized speakers and numerous education sessions, covering a wide range of financial planning topics. Center planners Tim Wyman, CFP® and Troy Wyman, CFP® attended as well.
The Financial Planning Association® (FPA®) is the leadership and advocacy organization connecting those who provide, support and benefit from professional financial planning. FPA demonstrates and supports a professional commitment to education and a client-centered financial planning process.
History Lessons in the Fourth Quarter
Many investors were ready to say goodbye to the 2011’s third quarter with extreme volatility demanding attention and negative returns for many types of investments. Indeed, when you review the chart below, the fate of most investors was grim from June 30th to September 30, 2011.
*Source: JPMorgan Asset Managment
News from the Europe has been dismal. Questions linger about the growth prospects for US and global markets. Whether we’re experiencing a new or double-dip recession or just very slow growth, the economic picture does not feel rosy.
While emphasizing that past performance does not predict future returns, the fourth quarter has historically been the best return environment for stocks. While the third quarter has been the worst performing quarter for the S&P 500 on average (going back to 1928), the fourth quarter has been the best. Interestingly, this trend has been even more distinct over the last 20 years.
*Source: Bespoke Investment Group
Many people will be watching third quarter earnings as they are announced as an important gauge of trends in our economy. Greece and the Eurozone’s issues are far from resolved. Don’t get too distracted by these headlines to lose the lessons of the history of returns.
[1] All indexes are unmanaged. MSCI EME represents emerging market equities. Russell 2000 is an index of 2,000 smaller U.S. companies. MSCI EAFE is an index of large companies in developed countries outside the US. REITS is composed of the NAREIT Equity REIT index composed of US Real Estate Investment Trust equities. The S&P 500 is an index of 500 widely held stocks that’s generally considered representative of the U.S. stock market. DJ UBS Cmdty is compiled by Dow Jones and represents the price of a basket of commodities. Market Neutral is CS/Tremont Equity Market Neutral index with long and short exposure to stocks. Barclay’s Agg is an index of US bonds representing a variety of investment grade bond assets and weighted by outstanding composition. Inclusion of these indexes is for illustrative purposes only. Individuals cannot invest directly in any index, and individual results will vary.
The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. Any opinions are those of Melissa Joy and not necessarily those of RJFS or Raymond James. Expressions of opinion are as of October 14, 2011 and are subject to change without notice.
Jaclyn Jackson Accepted into an Emerging Leaders Program
Jaclyn JacksonJaclyn Jackson, Investment Research Associate and Registered Representative, has been recently accepted into the NextUp: Inforum’s Emerging Leaders Program. NextUp is a specialized leadership development program designed to help young professionals attain long-term success in their careers. The curriculum involves a series of workshops and coaching lessons that train participants to channel their talents towards goals that contribute to a cohesive work environment and opportunity advancement.
When asked about her acceptance, Jaclyn said, “I’m excited to be a part of such an amazing program and I hope to gain skills that help me contribute to the Center’s success.”
Medicare Open Enrollment Starts October 15th
As if Medicare and all of the changes in plans and formularies aren’t enough, you know have to make your choices sooner! Beginning October 15, 2011, and ending December 7, 2011, you can make changes to your enrollments for:
- Medicare Part D plans
- Medicare Advantage *
- Medigap Plans
*Medicare Advantage plans can also be changed from January 1 to February 12, 2012.
Making the wrong Medicare choices can cost you hundreds of dollars per month. It is important that during this limited period of time you carefully evaluate your needs and the available plans to make sure that you are in the most cost-effective plan for your situation. You can do your own analysis by using the online tools provided by Medicare or look for the help provided by local senior organizations or independent Medicare consultants.
Taking the time to find the right plan for you can be financially life changing. Contact your financial planner for resources in your area.