Tuesday, 10 March 2020
Yesterday – March 9 – was the tenth anniversary of the crescendo of global panic that marked the bottom of the bear market of 2007-09.
It is, to me, ironic that the world has elected to celebrate this anniversary with – you guessed it – another epic global panic attack.
At this morning’s opening level of 2,764, the S&P 500 is down over 18% from its all-time high, recorded on February 19. Declines of that magnitude are fairly common occurrences – indeed the average annual drawdown from a peak to a trough since 1980 is close to 14%.* But such a decline in barely a month is noteworthy, not for its depth but for its suddenness.
As we all know by now, the precipitants of this decline appears to have been (a) the outbreak of a new strain of virus, the extent of which can’t be predicted, (b) the economic impact of that outbreak, which is equally unknown, and (c) most recently, the onset of a price war in oil. (That last one is surely a problem for everyone involved in the production of oil, but it’s a boon to those of us who consume it.)
Monday, 24 February 2020
When asked “What does retirement mean to you?” the self-employed, see it as meaning retiring on their own terms, focusing on themselves, and even continuing to work.
After surveying nearly six thousand American workers, in July 2019 the Transamerica Center for Retirement Studies (TCRS)[1] published a report - Self-Employed: Defying and Redefining Retirement (Select Findings from the 19th Annual Transamerica Retirement Survey of American Workers.)[2] I have many clients that are self-employed who have a different view of retirement compared to the traditional retirement strategy - stop work at 65. The TCRS report describes the self-employed view of retirement as follows:
“Self-employment brings both unique opportunities and challenges for saving, planning, and preparing for retirement. The self-employed often lack a steady paycheck with a regular stream of income. Without retirement benefits offered by an employer, the self-employed typically must take a do-it-yourself approach to retirement savings. At the same time, self-employment also brings greater freedom, the freedom to work -- and retire -- on one’s own terms. “[3]
In this article, I highlight three key topics of the report - What is retirement? Some of the key findings of the report, and the report’s 10 recommendations for the self-employed to help them navigate and take advantage of opportunities available to them.
Monday, 17 February 2020
Saving, Investing, Betting
Saving is simply setting money aside in a safe place for a later date when you will need it, sometime in the distant future. Before we invest, we usually need to save money first. Investing is a means to building wealth over the long term--not a one or two-year period, but five, ten years or longer. If you want to build real wealth (returns significantly greater than inflation) in the short-term, or very short-term, your “investing” is high risk and more akin to making a bet. Even though one can make very educated bets, investing is best when it is done with the long view in mind. In order to save or invest, you need some patience; not so with betting.
Monday, 03 February 2020
People often come to me with concerns about investing in the financial markets, such as, “How can I invest and not be stressed out?” “How can I trust that I won’t be ripped off?” “All these investment jargons make everything so confusing,” and “I don’t want to risk losing everything.” Maybe you grapple with the same investment questions. So why do people invest? Is it really a good idea? In the next few articles, I want to help you understand how to invest your hard-earned money with confidence and have it work for you, even when the investment road gets bumpy (because it will).
Friday, 24 January 2020
This report provides a good overview of the risks being faced by women as they plan and approach retirement. We will all be taking the retirement route someday, remember, it’s never too late to make a plan for your retirement. At Boerum Hill Financial Advisors we want you to be able to retire with the confidence that you will have enough income to maintain your dignity and independence in retirement.
Thursday, 02 January 2020
Ah, January 1st -- a time when gym memberships skyrocket, people start a new diet or a cleanse, and we can even “cleanse” our budget with the help of books such as “The 21-Day Budget Cleanse[1]” (full disclosure: I’ve not read this book). A new year brings new hope, and this time it’s more than just a new year--it’s a new decade, the 2020’s! However, even in the midst of the anticipation and excitement, some of you may be overwhelmed with challenges such as getting rid of credit card debts and the feeling that you should do something different about your finances in the new year. While I do not have a “2020 quick fix” for finances, a good way to start is taking a look back on 2019.
Thursday, 26 December 2019
Retirement SMH
Getting to retirement is a long, eventful and exciting road, and it may progress like this for some people:
WIDOWHOOD
RETIREMENT
GRANDPARENTHOOD
REMARRIAGE
DIVORCE
EMPTY NESTING
CAREGIVER
CHILDREN
MARRIAGE
SINGLEHOOD
CAREER
The environment for retirees and those approaching retirement is changing significantly. Life expectancy is up 30 years since the last century. The U.S. 65-year-old population, currently 53 million, is expected to grow by 50% to 79 million in 2050[1], and the 85+-year-old’s is the fastest-growing demographic in the country. The average number of years we spend in retirement in the 1960s was about five, in 2010 it had grown to 30. All this has led to some retirement financial fears for people, such as - the rising cost of healthcare, the chance of outliving your money, will all my social security benefits be there? Along with this, will there be another market crisis, and how much will inflation eat into savings.
These are real retirement concerns people face for themselves and others.
Friday, 06 December 2019
Being scammed can take the shine out of your holiday season or any season for that matter
I thought it would be valuable to you if I listed some strategies to keep your finances safer during the holidays and into 2020. With the help of the Bank of America, I have listed some areas for you to be aware of – forewarned is forearmed!
Also, if you are responsible for someone, such as an elderly relative or friend, I suggest you warn them about scams, giving them a copy of this blog may not be the best idea, I suggest you tell them about some scam scenarios that you think are relevant to them and to contact you before you do anything. As a general rule a scammer will want someone to act immediately, so “do nothing” can be a good strategy. AARP has a free helpline if you think you or loved one has been scammed – 877-908-3360.
Wednesday, 30 October 2019
Small business is vital to the U.S. economy, it employs half of the private-sector workers and creates two-thirds of net new jobs, according to federal data. As of 2018, there are 30.2 million small businesses in the U.S (99.9% of United States businesses):
- Small businesses employ 57 million people in the U.S.
- 66% of small businesses will outsource services to other small businesses
- 53% of small business owners rank their happiness level at 9 or above (scale of 1 to 10)
The biggest challenges of running a small business, according to small business owners - Economic uncertainty, the cost of health insurance benefits, and a decline in customer spending, with regulatory burdens almost tying for that third-place spot.
Wednesday, 30 October 2019
Getting close to December 31
Federal state and local taxes are up there with your biggest bills, about one-third of all you earn in your lifetime is going to be paid in taxes, so it makes sense to plan ahead and make sure your tax bill is as low as possible. Being a business owner or self-employed provides greater opportunity for tax-planning when compared to the salary and wage earner. Your goal is to minimize your tax bill (cash outflow) or defer your tax bill to a future period. Yes, tax planning can seem complicated, it involves planning for your retirement, tax installment payments, keeping up-to-date and accurate records and managing a key component of your cash flow. Tax planning also comes with the temptation to underreport earnings, what I refer to as “crossing the line”, but there is no need to put skeletons in your closet, you’ll sleep better, and your life will be less complicated. A former boss and President of a public company gave me some very sage advice early in my career:
“If you can see the line you are too close.”
Wednesday, 30 October 2019
During National Financial Planning Month, send your future self an email
How do you encourage yourself to do something that you swear today you’re going to do? Easy: Send yourself an email today for delivery to you in the future.
Think about how amazing it would be to get a surprise from the past. From yourself. “Send your future self some words of inspiration or comfort. Or maybe a swift kick in the pants” reads the introduction on futureme.org, where you write and store emails to yourself for eventual, scheduled delivery.
Wednesday, 16 October 2019
Doing What You Want to Do
Your life of a performing artist is far from routine, it is not the typical 9 to 5 workweek, there are no employee benefits, annual leave, or a need to climb the corporate ladder, however, you are working in an extremely competitive industry, and especially in New York City. Accordingly, your life needs to be on-the-ready, searching for that next performance opportunity, the next audition, and doing your best to create your own luck. To operate like this you do what is needed to pay your bills, you are a freelancer, waiting for your 1099, that always seems to arrive late, living and loving the “gig-life”.
Wednesday, 04 September 2019
You have to be special to be a performing artist, and unlike many others, you are going to earn a living from your passion. The question is, how is this going to be possible?
“Artists are the gatekeepers of truth. We are civilization’s radical voice.” – Paul Robeson
It is easy for us “civilians” to underestimate the tenacity, drive, persistence, and energy of the performing artist, and that they only know to give 110%. They are entrepreneurs, idealists, and they understand that job security is not there for them and, as a result, they hustle to generate several sources of income to pay your way. A study in 2016 [1] estimates alternative work arrangements comprise 16% of the workforce in 2015, up from 10% in 2005. This work life is often referred to as the “gig life” (e.g., freelancer, independent contractor, on-demand or temporary worker, and excludes those who rent an asset (e.g. Airbnb) or sells goods they produce (e.g. Etsy)). You are the original members of a fast-growing group in the workforce.
Wednesday, 04 September 2019
How do you roll? Have you discovered that if you want to help someone to do something new or differently, you had better know something about how they “roll”?
Each of us has preferences, boundaries, biases, experiences, and beliefs about money that all play a role in the daily decisions we make. Let us call our beliefs about money “money scripts”. These money scripts are hard-wired belief systems, our automatic pilot settings that make for quick decisions. Here are some money scripts[1] examples that may be familiar to you:
- “It is/is not important to save for a rainy day.”
- “It is okay to keep secrets from your partner around money.”
- “If you are good, your financial needs will be taken care of.”
- “It takes money to make money.”
- “I will never be able to afford the things I really want in life.”
These scripts (belief systems) play an important role in determining our behavior when it comes to money. Some of these behaviors can be destructive when it comes to money management and achieving our financial goals...
Monday, 12 August 2019
SO MUCH OF THE FINANCIAL ADVICE AND RESOURCES OUT THERE IS FOCUSED ON MARRIED COUPLES.
I received a lot of positive feedback from the “Single and Loving It” article. “I really loved that blog”, “I never see anything written for me...Finally!”, “can you write another one?”, “I’m never really sure if I’m doing the right thing with my money, retirement, savings”, “There’s a lot of us out there that needs this!”
Single and Loving It: Part II
Startups
Many single adults are employed by startups, which often do not provide workplace 401k or 403b. So, what should a startup employee do? In 2019, an employee can contribute $19,000 per year to an employer 401k or 403b, however, if these are not provided by your employer an individual can only contribute $6,000 pa to a Traditional Individual Retirement Account (IRA). That’s a big difference, $19,000 vs $6,000, and all the more reason for starting your retirement savings early. I often give this example to highlight the value of starting early:
