It Will Not End Well

My journey examining Europe began with Greece which seems wholly appropriate given its historical precedence. It started simply enough with the addition of their real assets and their real liabilities. It ended simply enough with the realization that the numbers did not add up. There was no prejudice then and there is none now. The numbers just don’t work; not for Greece and not for Europe and so a moment of disembarkation is coming because it has too and it is as simple as that.  – From Mark Grant, author of Out of the Box

I wholly agree with Mr. Grant.  I have been saying the same basic thing for several years now.  It really is not that complicated when one simply focuses on the issue and removes all the noise.  “There isn’t enough money.”  Please stop with the “we can print our way out of this” nonsense.  No you can’t.  It will not work and anyone who takes the time to do some simple arithmetic knows this.  Taking the pain of eliminating the bad debt through write downs, sales and in some cases default will be the medicine that actually fixes the problem.  This will not come without significant costs and pain, however, it is the only real solution to the sickness that ails us all on a global basis.

Doug Hendee, CFP^®

(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp.  The author’s opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).

Guess?

It wasn’t long ago that I was in my backyard yelling at my smoking lawnmower that had just stopped working.  After calming down, I did some research and tried to fix it myself.  After tinkering with the carburetor (making it worse) and unscrewing the motor (felt like a man, didn’t help), I had fixed nothing.  This is what happens when I guess at things.  Luckily, our local repairman knows his craft and the mower was repaired and my lawn cut in no time.

It’s not all that different than retirement and answering the question, “how much do I need to retire comfortably?”  Many have taken to answering that very question with a time-tested solution called “guessing.”  That’s right, guessing.  A recent study showed that 34% of the participants either “guessed” or “made up” an estimate of how much they would need to retire.

Guessing is fine if you’re trying to win a stuffed animal at Darien Lake by letting the fellow with the microphone guess your age, give or take a few years.  Would you pay him a dollar to guess how much you should be saving in order to retire?

Instead of guessing, speak with an advisor you trust.  We have a powerful tool that allows our clients to not only define their retirement goals, but to design a plan tailored to their specific needs to get there.  Along the way, when life events and changes happen, we account for them.  And at any given time, our clients always know the answer to the question, “how am I doing?”

It’s called Envision, and we’d be happy to put a plan together for you.  One that provides specific answers and recommendations that fit your life goals – instead of a guess.

Chuck Wade

(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp.  The author’s opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).

Jargon, Big Words, and Wasting Your Time

“We are going to allocate your portfolio in such a way to minimize your downside risk while still maintaining strong cash inflows with the potential for capital appreciation.”

Did you get all of that?  I’m the one who wrote it, and I’m still not convinced!

Now, let’s try again.

“Our goal is to give you a plan to provide you with income and growth, while trying to minimize the risk that comes along with any investment.”

Better?

It is very easy for financial advisors to fall back on jargon and big words that we think make us sound smarter in front of our clients.  Truth is it does nothing except confuse and even intimidate.

When I worked at 13WHAM, my goal was to always “say it simple.”  Instead of talking about the Buffalo Bills lack of an edge rusher and lack of size in a 3-4 defensive front, isn’t it easier to just say the Bills defense can’t sack the quarterback enough?  Wit and wisdom are wonderful things, but when nobody understands what you’re saying, their time was just wasted.

The goal is the same as a Financial Advisor.  Whether you are planning for retirement, your child’s education, or starting a new life with your husband or wife.  To help you understand how to best achieve your goals in order to give you peace of mind and confidence that you’re on the right track.  That way, when we walk out the door, you’re excited to get started, not scratching your head wondering, “what did he just say?”

Chuck Wade

(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp.  The author’s opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).

Ground Rule #3: Money in Your Pocket

The first thing you do when signing up for your employer’s 401(k) or 403(b)  is decide how much to put in out of every paycheck.  You don’t need my advice for that, of course; it’s a function of how much you can afford.  But once you decide on the amount, on how much you’re willing to save toward your future, that’s where this bit of advice comes in.

You already know there is a tax savings from contributing to your plan. Here’s how that works: every dollar you contribute is subtracted from your pay before Federal & State withholding taxes are calculated.  Since your contribution escapes income tax, the amount of tax withheld from your pay is less, thus your net pay rises a bit. Put another way, for every dollar you put in your plan, your take-home pay will only drop by 75 or 80 cents.   It really means that you’re putting money in your plan that otherwise would have gone to taxes, but it also means that you need to do a little simple math to grow your savings faster than the average person. 

To keep the math at its simplest do this: settle on how much you can afford to contribute and divide it by .8 to arrive at a slightly larger amount, which is what you should contribute.  If you decide that $25 is what you can afford, dividing that by .8 gives you $31.25.  The effect is to allow you to contribute the $31.25 but see your net pay reduced by only about $25.  The extra six bucks is what would otherwise go for taxes – you are legally keeping the Fed & State share and investing it!  That’s money in your pocket.

The numbers in this example are approximate, always consult your advisor or sharpen your pencil to get a result specific to your circumstances.

GTC

(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp.  The author’s opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).

FACEBOOK

Well there certainly seems to be an awful lot of chatter about the pending IPO (initial public offering) of Facebook’s stock.  First and foremost please know that as of the writing of this post the IPO has not even occurred.  The IPO is scheduled for the week of May 14^th.

 Currently the offering price talk is $28- $35 per share.  It has been reported to be “over-subscribed” which simply means there are plenty of folks, institutions and individuals,  who would love to buy the stock at the offering price.  Trust me everyone who wants to buy it at the offering price will not get it.  I suspect that if you are one of the lucky folks to get it at the offering price you stand a better than average chance of turning a profit.  For everyone else here is my advice:

 Just wait and see how this company and its stock do after it starts trading for a few days or weeks.  Based on its current earnings estimates the offering price is about 99 times its earnings.  Which in financial jargon means it has a P/E ratio (price to earnings) of 99x.  Historically not cheap.  Apparently from the analysis that I have read Facebook’s profit growth is slowing not accelerating, not good for a company with a 99x multiple.  I am not bashing Facebook here, many companies have shown the ability to adapt their business model and Facebook may well be able to do just that. 

 My approach here is to remain cautiously optimistic and if the stock presents an agreeable entry point then perhaps an investment can be made, but it strikes me that at this offering price you are not getting a great bargain and if the stock does rise after the offering it’s even less of a bargain.  I just do not see the need to rush in and buy anything, ever, Facebook included.

Doug Hendee, CFP^®

(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp.  The author’s opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).

Ground Rule #8: Better Than a Crystal Ball

I don’t have a crystal ball.  And if I did I’m not sure I would know how to use it.  It seems like having a crystal ball would come in handy to figure out what investments to choose in your 401(k) or 403(b).  You look at a list of funds or go online and see a bunch of choices, maybe read about a few, look at the numbers, make your choice.  Some folks ask for advice in choosing and we are always happy to consult. I frequently meet with clients seeking my advice and find that their account balance is invested like this: 5% This Fund, 20% That Fund, 15% Other Fund, 40% Big Fund, 20% Obscure Fund.  Many investment gurus will use their crystal ball to tell you what percent to put in any given fund.  Unless no one really has a crystal ball. How then do the gurus come up with their percentages?  Beats me.  Since there is no way to know which fund will do best, why fuss over 11% here and 23% there? 

Think about this: when you get your statement what’s the main thing you want to know? It’s this: How am I doing? That’s what everyone wants to know.  When your assets are split into many odd pieces, how can you figure it out? And do you really want to spend the time trying?  My advice: keep it simple. When investing in your retirement plan choose just 4 funds and put 25% in each.  Then whenever you get a statement you will know how you’re doing. You’ll know which of your funds is the best, which is the worst, and by how much. Decision making will be much easier – no calculator needed, no guessing whether you should have 17% in this or 42% in that. You can rebalance once a year, getting the 25% each back in line.  Meanwhile, if you can get a crystal ball, go ahead and use it.  But for my money, a fixed percentage is better than a crystal ball.

GTC

(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp.  The author’s opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).

Ground Rule #9: Ignore This

Sometimes in personal finance – as in the rest of life – you get false clues, things that seem important but lead you astray.  Here’s how you can spot a false clue and ignore it.  Let’s assume you are already participating in your employer’s retirement plan or are about to start.  You have to decide how much to contribute and how to invest within the plan.  Many employers offer a matching contribution, and employees typically calculate how much to put in to get the maximum match. Seems like a good idea, but it’s a bad idea to limit yourself.  Let’s say your employer matches your contribution dollar-for-dollar up to 4% of your salary.  Sounds like a good deal, and it is.  You put in 4% and get 4% – double your money if you don’t earn a dime on investments.  What’s bad about that? It’s bad if you just stop at the 4%.  You will fail to get a tax deduction today for dollars contributed, and fail to get the benefit of years of tax-deferred growth on the much larger pile of cash that will accrue to you from putting in more. And let’s face it – if you’re reading this I’ll bet your goal is that larger pile of cash.

But isn’t a 401(k)/403(b)/457 only good if there is an employer match?  Nonsense.  Some advisors say that with no match you should do other things with your money; paying down debt, for example.  I disagree.  By all means eliminate debt, but always keep a sense of perspective: building savings (such as a 401(k)) and reducing debt are equally important.  You should work both angles: contribute what you can spare each month to your retirement plan and pay down debt ahead of schedule.

Remember – building a sizeable retirement account is about securing your future. It’s not about whether there is a matching contribution or how much it is.  Ignore the match and put in all you can.

GTC

(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp.  The author’s opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).

Ground Rule #10: Start

Today I’ll start the countdown of my Ten Ground Rules for 401(k)/403(b) Success. These are common sense guidelines I have refined from nearly three decades of talking with clients and observing their results within employer-sponsored retirement plans.

The first rule seems so simple and obvious as to be unnecessary: Start.  Get started. Enroll in whatever plan your employer makes available.  It’s surprising how many people delay their participation in retirement plans. There are always reasons: you’re new on the job and not familiar with the plan, or you feel you can’t afford to, or you mean to get involved but just hadn’t gotten around to it.  Would you fail to sign up for your employer’s health insurance benefit? Would you not take any vacation because you hadn’t gotten around to understanding the time-off rules? Of course not.  Building your personal net worth is just as important, it’s just not as immediate.  So focus on your employer’s plan, ask for guidance if you need it, and enroll.

Some people get frustrated by articles stuffed with numbers showing how much money you need to save to retire.  That frustration can cause them to avoid participating altogether and make the goal even harder to reach.  Don’t worry about goals, not yet.  Just get in your plan and start contributing. Without a start, the rest of my rules won’t do you any good.

GTC

(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp.  The author’s opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).

Understanding Apple

When Apple started selling the first iPhone in June 2007,  you could buy Apple stock for about $100 per share. Two weeks ago, You’d pay $644 for that same share. During that same time, $100 invested in an S&P 500 mutual fund would be worth about $95.

Yet Apple naysayers abound, calling the stock overpriced; saying the iPhone is threatened by Droids, or the iPad by cheaper competitors. How does Apple answer? With last night’s earnings report, to wit:

Sales up 50%.
Profits nearly doubled.
iPhone sales up 88%.
iPad sales up more than 100%.

Investors have sent Apple stock up $50/share (9%) this morning on that news.

It took me a while to understand Apple and its products, despite buying the first iPhone and nearly every subsequent model, and becoming inseparable from them.  I really looked at iPhones as a great phone that could do some other things – and that’s where I was wrong. The iPhone and iPad are devices that provide such a range of function that it can hardly be imagined that any two people use them the same way. That coupled with high quality and reliability suggest that continued strong sales are likely for Apple.

The next wave: when iPads start to surpass big-box televisions for TV viewing. It may be coming.

GTC

(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp.  The author’s opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).

Women Need Financial Planning

Time for some startling statistics…

According to research by Wells Fargo, affluent women are significantly less confident about retirement than men. The least confident of all are single women, and the most confident are married men.

About 700,000 women will lose their husbands this year.  The median age when a woman is widowed is 59.

So…women are less confident than men, they are often widowed at a young age, they live on average longer than men and they control more and more of our nation’s wealth. 

What to do?  Women must take charge of their own financial lives.  This means-

1. Selecting a competent Financial Advisor who is willing to take the time to explain investing and insurance concepts and options to you, with patience and in terms that you can understand.  They should also be able to concisely explain to you the ways in which they are compensated by fees and / or commissions.
2. Doing a budget and understanding your spending and cash flow needs.
3. Where possible, spending less and saving more.  You really cannot save enough money for retirement.  Social Security might not be around in its current format for younger people, most of us no longer have pensions, we have to worry about historical inflation of 3-4%/year, we are living longer / being kept alive longer and the costs of college, healthcare and long term care are all skyrocketing. 
4. Defining your important financial goals, both short and long-term.
5. Gathering up your financial account statements and making folders or a binder for them, so you have records of all of your accounts and know where to find them.
6. Taking the time to work with your trusted advisor to develop a living, comprehensive financial plan that (minimally) addresses retirement, survivor and estate planning.

If you would like assistance with determining what your important financial goals are and how to achieve them, please feel free to contact me at (585) 340-2229.  Thank you.

Susie L. Light
Financial Advisor

(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp.  The author’s opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).