Categories for Blog
October 11, 2017 11:43 am
Whether it’s going away for the weekends, for a month, or for an entire season, having a second or third home can be a blessing for families that creates lasting memories. It can also come with some significant financial considerations.
Moreover, if you’ve purchased multiple properties for investment purposes, once you get into your retirement years, you’ll want to figure out how to make the most of your portfolio of property investments to generate a steady stream of income.
Here are some key issues to think about:
Plan and Manage
In this case we mean planning about your properties—not your stock investment portfolio. Who is going to be your partner in managing the properties? If your family is not interested in management, is it worth it to hire a property manager? Secondly, do you want to eventually gift your properties to members of your family? Who can walk you through the process and give you solid tax and financial advice?
We hear about many people who spend hundreds of thousands of dollars a month renting luxurious estates and apartments. That’s certainly wonderful if you are the landlord. However, you may not have the experience or time to manage all the business aspects of such a transaction. Consider hiring a knowledgeable financial advisor who can give you the full perspective of owning and managing multiple homes, and refer you to other qualified professionals to make the most of your real estate investments.
Understand Tax Planning
When you own multiple properties, you can deduct the interest on your mortgage just as you can with your primary home mortgage. According to tax law, you can write off 100% of the interest you pay up to $1 million of total debt, which includes the mortgages on homes, as well as money spent on any improvements.
Deduct Your Property Taxes
In addition to mortgage interest, you can also deduct your homes’ property taxes. The good news is that unlike the mortgage interest tax deduction, there’s no dollar limit on the amount of real estate taxes that can be deducted on the homes that you own.
Rent Out Your Homes
For many people who own multiple properties, it makes sense to rent out your empty home when you’re not there. If you rent out your home for 14 days or less during the year, that rental income is tax-free.
However, if you intend on using Airbnb, other rental sites or a real estate broker for more than 14 days after your private rental, it’s important to know that this income is taxable. You'll want to calculate the number of days you rented your home and divide that by the total number of days you or a renter used your home. This is where an advisor like JJ Burns & Company, who’s coordinating with your accountant, can help you make the most of mortgage interest, depreciation, business expenses and other home ownership issues to stay right with the IRS.
Simplify Your Investments
Rather than own residential real estate that may be inconvenient to manage, many people look to invest in commercial buildings. These properties still generate income and may have similar tax advantages, but if professionally managed, do not require the hands-on responsibilities of home or estate ownership.
Depending on your circumstances and the number of properties you have, you may want to consider selling some properties due to taxes, maintenance or the location. You should evaluate which ones generate the most income—especially if you’re retired—and how the sale may impact your taxes.
Something else to think about when selling is how a sale can impact the balance of your portfolio and income-generating investments. At JJ Burns, we can review the full picture of your investment portfolio, pensions, IRA and 401(k)s, rental income, and annuities to give you informed advice about the steps you can take to maximize your current—and future—wealth.
Seek Legal Advice
Retirement planning, real estate, and family law are complex areas that require legal counsel. Unlike working on your homes on the weekends, this is not do-it-yourself territory.
If you decide to keep your properties to generate retirement income—or want to protect your real estate investment portfolio and pass it on to your heirs without going through probate–you can create a Limited Liability Corporation (LLC) or a Family Limited Partnership. Because the laws vary throughout states, counties and cities, it is best to leave the decision to the legal professionals.
We’ve also known about families that have spent fortunes in court, only to be torn apart battling over estates. An LLC gives each family member an equal interest, which avoids future disputes over any properties. There’s also flexibility to transfer shares, consolidate individual properties into a master LLC or into a revocable trust.
Owning a number of homes can definitely enhance your life. And investing in properties is a smart way to bring in income during retirement, as well as diversify your financial portfolio. Whether you intend to manage your properties, sell it, or pass it on to your heirs, JJ Burns can help you collaborate with all aligned professionals to create a tax-efficient plan that works best for you and your family.
September 14, 2017 5:49 pm
Your financial well-being is our highest priority. In light of the recent security breach at Equifax—which potentially exposed 143 million Social Security numbers, birth dates, and other private information—we have put together some guidelines to help you respond appropriately.
Equifax has set up a website for determining if you were affected. There have been reports of past problems, but it seems to be working properly now. However, whether or not you were impacted this time, protecting yourself against future breaches is still important. We’ve laid out the best options for doing so.
Third-Party Credit Monitoring Services
Third-party monitoring services (like Lifelock or Identity Guard) proactively monitor your credit and alert you to potentially fraudulent activity, for a fee. Many providers will also help you restore your credit if you do become victimized by identity theft. Some offer additional services such as black market website surveillance, address change verifications, checking and savings account application alerts, and consolidated credit bureau monitoring.
If you aren’t utilizing a third-party monitoring service, you should consider taking precautions directly with the three major credit reporting agencies—TransUnion, Equifax, and Experian. You can consult with each of them on your own for little or no cost. However, doing this will require sustained vigilance on your part. With a monitoring agency, you don’t need to constantly review your credit reports.
Credit Monitoring On Your Own
A first step to consider is placing a fraud alert with the three credit reporting companies.
What is a fraud alert? A precaution notifying lenders to contact you and verify your identity before approving any new credit application in your name.
How much does it cost? There is no charge for adding fraud alerts to your credit report.
How long does it last? An initial fraud alert lasts 90 days, but may be renewed for 90 more. If you have been an identity theft victim, you may apply for a seven-year extended fraud alert.
When you place a fraud alert with any credit reporting company, they’ll notify the others to add alerts.
The next level of protection is to request a security freeze, or credit freeze. In order for this to be effective, you must contact each of the nationwide credit reporting companies individually.
What is a credit freeze? Only those you authorize can view your credit report. You use a secure code, similar to a PIN number, to allow access. However, companies that do business with you can still access your credit report data.
How much does it cost? Equifax has agreed to waive fees for all security freezes initiated by November 21, 2017. They are also offering potential breach victims one free year of their TrustedID Premier service, which provides credit file monitoring and identity theft protection. Otherwise, charges are minimal but depend on your state of residence. Some states also charge for lifting the freeze or providing a replacement PIN.
How long does it last? In most cases, freezes are in place until you remove them. In some states, they are only in effect for seven years, with options for renewal.
When you apply for new credit, you need to request a lift in the security freeze. Loan approval may be delayed, because “thawing” can take several days.
A credit lock functions like a credit freeze, but offers additional convenience.
What is a credit lock? You control access to your data by instantly locking and unlocking your account online when you want to allow a legitimate credit inquiry.
How much does it cost? There are service fees, although Equifax is waiving all fees through November 21, 2017.
How long does it last? As long as you continue to pay the fee.
Some Final Thoughts
As data breaches become more commonplace, protecting your financial security requires careful consideration. Whether you choose to lock your credit report accounts and manage them yourself, or leave them unlocked and sign up with a third-party credit monitoring service, we strongly advise you to take precautions.
When it comes to cybersecurity, vigilance is our number one weapon. You have the power to protect yourself and your loved ones. Please share this article with friends and family.
If you have questions, or if we can be of service in any way, please contact us.
August 8, 2017 11:37 am
Summer may be a time for light beach reads, but if you’re ready for something a bit more insightful and inspirational, here are a couple books that fit the bill. Both are highly readable and engaging, but they also deliver important takeaways that will stay with you long after you turn the last page.
Consider this a follow up to last month’s blog post about how to have a financially savvy summer!
Back by Popular Demand
Business Adventures: Twelve Classic Tales from the World of Wall Street
How can you resist a read that both Bill Gates and Warren Buffet agree is the best business book ever?
Originally published in 1969, Business Adventures by New Yorker contributor John Brooks went out of print in the 1970s. But after Warren Buffet loaned it to Bill Gates—who publicly called it his favorite business book—it was reprinted in 2014 with an updated title: Business Adventures: Twelve Classic Tales from the World of Wall Street. It’s been wildly popular ever since.
What makes this book so special? Brooks provides detailed stories of 12 defining events in business history and makes them crackle with life and wit. He also reveals plenty of insider information on what went right—or terribly wrong—in each situation.
As entertaining as he is perceptive, Brooks delivers important insights we can all learn from. In fact, his tales are so enjoyable you may even find yourself turning them into educational conversations with your kids.
Although he’s writing about incidents from the 1950s and ‘60s, Brooks’ observations remain as relevant today as they were back then. As Bill Gates put it in a blog post about the book, “the rules for running a strong business and creating value haven’t changed.”
It was particularly fascinating to read about “The Fate of the Edsel,” a fresh take on Ford’s spectacular failure to listen to and communicate with their customers. It’s a cautionary tale for business leaders today, and at JJ Burns, the story’s lessons have been helping us communicate better with our own clients.
There’s also much to be learned from Brooks’ exploration of the seemingly invincible Xerox Corporation’s downfall, which was primarily due to a massive failure of vision and innovation. This story will resonate with our entrepreneur and executive clients. Continued innovation is essential to continued success.
You’d think such high-profile failures would never happen again. And yet, only recently, Kodak followed a very similar downward trajectory, going from undisputed industry leader to bankruptcy court—mainly because of misguided innovation and strategic management failures.
They say whoever is ignorant of the past is doomed to repeat it. In addition to being a delightful piece of writing, this book helps inoculate you against that ignorance.
Enjoy it like a vintage wine.
From Searing Pain to Soaring Purpose
Option B: Facing Adversity, Building Resilience, and Finding Joy
Before reading any further, stop. Write down the three things you are most grateful for in your life.
If you’re like most of us, your answers will be drawn from the following: health, family, relationships, and the fortunate circumstances life has afforded you. We often take these things for granted as we go about living our everyday lives.
But for Facebook’s COO Sheryl Sandberg, the ability to take such things for granted came to a crashing halt with her husband’s sudden and untimely death during a family vacation.
Her answer to this devastating loss was to write about it with help from her friend, psychologist and top-rated Wharton professor Adam Grant. The resulting book, Option B: Facing Adversity, Building Resilience, and Finding Joy, continues to climb bestseller lists around the country.
And for good reason. Both hopeful and heartbreaking, Sandberg’s book is a generous treasure trove of wisdom and inspiration. Her personal grief and isolation in the aftermath of losing her beloved husband is interwoven with many other stories of people triumphing over adversity. It’s a moving testament to the human spirit, as well as a practical guide to building resilience and recovering from life’s inevitable difficulties.
Sandberg rose above her own experience to bring about workplace change. She recently helped enact a new policy at Facebook that gives employees 20 days of paid bereavement leave—which is two times more than the previous amount.
Using a devastating setback as a springboard to societal change may be out of reach for most of us, but this book will certainly inspire you to a deeper appreciation of all that you have. And it is a book you may find yourself returning to the next time life sweeps away your Option A and leaves you to make the most of Option B.
Navigating Difficult Times
As financial advisors, we’re frequently called upon when clients are going through major life crises, many of which are as devastating as losing a loved one or a business. It’s our privilege to serve in these situations. Our concern goes way beyond simply answering the question, “do I have enough money or resources to get through this?”
While we can’t ease the emotional pain of loss, we can ensure that no additional suffering occurs because of insufficient planning. Making sure you’re prepared for the unexpected is one of the most important things we do.
It’s also one reason we’re very proud of our vocation. We have the opportunity every day to make a difference, to help ease life’s burdens, to provide a safety net when life’s inevitable tragedies occur—and just as importantly, to help families like yours live life to the fullest in the good times.
We consider you, our clients, to be part of the JJ Burns family. We’re here to help with whatever you need.
July 13, 2017 8:31 am
As a kid, you waited all year for summer. It was the time in which getting up early, going to school, doing homework and taking tests, ceased to exist.
Of course, now that we are adults, we don’t get the summer off—nor do our finances.
Cash flow and tax planning play a part in our financial plans for the year. However, with the summer vacation months, those plans can sometimes fall off track.
Keep reading to find out how you can avoid a sharp summer’s hit to your finances, and still maintain a work/life balance that can help you further enjoy the mid-year vacation months.
Know Your Cash Flow
Within reason, your finances shouldn’t get in the way of your enjoyment of the summer vacation months.
Even if you have mortgage and car payment obligations in addition to adhering to your year-long financial plan, this doesn’t mean you can’t have some fun in the summer sun.
Check out your cash flow to see what you can afford to do with your family this summer. Make sure what you plan to spend does not affect your emergency fund (which should be six months’ worth of your yearly salary).
Plan Your Taxes
Next, see if your taxes are in order. For instance, are all your taxes paid? If you’re self-employed, have you made the correct estimated tax payments? Look into what you might owe federally or to the state where you live. Make it a point to also verify your property tax is paid.
Plan ahead for your deductions and credits before the tax year ends. You can maximize your deductions by making charitable donations, contributions to qualifying retirement accounts, or deposits to your health savings account (HSA). Consult your wealth manager for the maximum amounts you can contribute to avoid a tax penalty. Also, be sure to keep good records to make the tax filing process easier.
Introduce Your Kids to Finance
It’s never too early to teach your kids about finance, and summer can be your perfect opportunity to teach them financial value and responsibility.
For instance, for your younger ones, consider giving them a set amount of money for the summer, and then teach them how to budget to make the most of their money until the start of school. Suggest that they perform small odd jobs around the house, such as cleaning the yard or washing the family cars to make money that can further supplement their summer savings.
Your older kids can also learn financial life-long lessons this summer by becoming more independent. For instance, let them grocery shop or cook for themselves as well as their friends instead of going out to a potentially expensive lunch or dinner.
If your son or daughter drive to a job or paid internship this summer, encourage them to pay their fuel expenses, and of course auto insurance. Doing so will help them understand the importance of keeping up with not just their financial responsibilities, but also their real-world responsibilities.
Give your older kids other ideas to help build their financial independence. If your son or daughter has plans to attend music festivals or take summer weekend trips with friends, encourage them to work, save toward their goals. Paying for their own recreation or time away from home can have a monumental financial impression on them that could last a lifetime.
Vacation Within Reason
Okay, so maybe this summer you don’t feel like spending thousands of dollars on that villa in Tuscany. That doesn’t mean you can’t enjoy the summer months while being a bit closer to home.
If the beach or the mountains are near, spend a couple weekends this summer playing in the waves or staring at the majestic high-altitude views. Doing so will be much more cost effective than going on an expensive vacation, especially abroad.
Also, for the fun of it, check out your local paper’s real estate section to find out if any timeshare resorts near you might be offering free weekend stays. If all you have to do in return is attend a seminar for potential timeshare buyers, the cost might be worth it.
Celebrate Smart, Particularly with Summer Weddings
All of us know weddings are expensive, particularly with some nuptials rising into the tens of thousands of dollars.
If someone in your household is getting married this summer, try to be fiscally responsible in spite of the fact that this is a special once-in-a-lifetime event for you, your son or daughter.
For instance, with weddings, budget experts suggest the event not be held on Saturday, but instead on a Sunday, or any other day of the week. Many hotels and resorts charge more for Saturday weddings as opposed to other days of the week.
Try to get married at the end of the season. You can save a good amount if yours’ or your son or daughter’s wedding is held in late August or September, as opposed to June or July.
Budget experts and wedding savers also suggest that you find a venue that doesn’t require you to use “in-house” vendors. Try to find a marriage and/or reception location where you can bring your own catering.
Additional savings can also be realized if the wedding and reception are held in the same location.
A Better Work/Life Balance
Summer is when we recharge ourselves, start new, and strengthen up for the remaining six months of the year.
In order to make the most of your summer, it's important to have a written plan of what you want to accomplish. Keep track of your finances, your taxes as well as any additional expenses this summer, such as a wedding or travel, and you’ll have a better chance to enjoy some quality down time without breaking the bank.
If anything, your work/life balance deserves it.
March 23, 2017 11:40 am
Whether you have been married for a year, or several years or longer, getting divorced can be difficult—certainly emotionally, but also financially.
With the right mindset and planning, divorce doesn’t have to drain your financial assets. Instead, there can be negotiations that benefit both parties.
For most, divorce is not always easy. There may be property, children, businesses, and debts that need to be addressed. Before the papers are signed, people should know what they want to accomplish when they dissolve a marriage. Is it wealth preservation, child custody, asset protection?
Few people want to think of marriage in business terms. It’s not romantic at all. And when you get married, you hope that it will last forever. For some, relationships can run their course.
Your State of Residence Matters
According to lawyers, the simplest divorces are the ones where it’s simply dividing up property. Nine states are community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. This means that whatever you earn, or property that you acquire during the marriage, is subject to a 50-50 split when you divorce.
In all other states, it’s a bit more complicated. Take the hypothetical case of Katie who was married for 16 years, has two kids, and helped build her husband’s dentistry business by introducing him to key people in the community.
Legally, she is entitled to part of the value she put into the business, as well as some of what the couple both earned and saved during their marriage, and a portion of the house and other assets. This all takes time to sort out.
A Formula for Support
Family courts have a formula to determine an amount of support. In New York, if you have one child, you will receive 17 percent of the salary from the non-custodial parent, two children may receive 25 percent, and three children may receive 29 percent of salary.
Even so, if you’ve been a stay-at-home mom like Katie who has put her career on hold to raise kids who attend private school, suddenly getting a high-paying job to support your family can be a bit unrealistic. How is she going to continue her—and the kids’— lifestyles?
It all comes down to a valuation of Katie’s participation in her former husband’s business and family responsibilities, and then strategic negotiation to give her a desirable result.
What it also means is for her to take herself out of the emotional equation of the divorce, and assemble a team of financial specialists, lawyers, and mediators who can work with her best interests in mind. It also gives Katie the resources to communicate “individually” with each team member, “checking and balancing” the advice given to minimize or eliminate conflicts of interest, so she gets the results she desires.
It’s a smart move for both sides. Depending on the situation, a collaborative team can cost much less than a litigious divorce lawyer.
Getting Wise Counsel
Most of us take out insurance to protect ourselves in case something happens. A review with a financial professional in the case of a divorce is the same thing—protection. To learn more, download our divorce toolkit "Suddenly Single: What to Do When You’re On Your Own Financially" and get the proper guidance on how to protect your assets and financial future.
March 9, 2017 10:29 am
What is the “Fiduciary Rule”?
You might have heard in the news about the new “fiduciary rule.” Although it might seem confusing, basically, the Department of Labor created a new retirement investing rule that’s supposed to go in to effect on April 10, 2017.
“Fiduciary” is defined as the relationship between a trustee and the person or body for whom the trustee acts. In other words, it’s an individual who holds a legal or ethical relationship of trust, and has an obligation to act in the best interest of the beneficiary.
The rule was created after a government report determined that U.S. retirees lose a total of $17 billion each year because of conflicts of interest. Since the Department of Labor oversees regulations for 401(k)s, they decided in step in.
The rule is designed to help average investors save more money for retirement and spend less on commissions and fees.
Using Celebrities as Examples
What about the not-so-average investor? Their stories are fascinating because of the person’s fame.
We can all learn from the high-profile mistakes of a celebrity, such as the recent case of Johnny Depp. He is out of money. Now the courts will decide if it was his fault for living a lavish lifestyle, or if it might have been the fault of those giving him financial advice.
Despite tales of large monthly wine budgets, and purchases of a village in France and islands in the Bahamas, this is yet another celebrity example for everyone. The bottom line: the lesson to learn here is whether your financial advisor is serving your needs or not.
Fiduciaries and You
What does this mean? Right now, although many financial advisors give sound advice, some may recommend investments because of the commission they will get—not what will make the wisest choice for the client.
The new fiduciary rule applies only to 401(k) and retirement investment vehicles. The Department of Labor does not have jurisdiction over other types of investments.
Some of the larger firms have been scrambling to make changes and determine how they can adjust their practices to serve their clients under the new regulation. Plans may be changing. Accounts may be restructured. Clients are being called in for meetings to explain what this means to them.
Fee structures and investment offerings are now being scrutinized and retooled. Portfolios are being rearranged.
Obligation or Choice?
Many people assume their advisor is behaving as a “loyal fiduciary and prudent steward,” as Johnny Depp’s lawsuit describes. Until the Department of Labor started placing the spotlight on “fiduciary,” many clients did not realize the extent of possible conflict of interest.
Celebrities can hire expensive advisors of all kinds to help them understand the myriad of legal disclosures and fine print. But what about ordinary people? No matter who you are and how much money you have, you hire people to help you make decisions and manage your affairs in a beneficial way.
How do you know if your financial advisor is a fiduciary? Ask. Take a look at your statements. Know what you are paying for. You should feel comfortable with the answers you receive.
Who Has Responsibility?
You might be able to do your own taxes, but you hire an accountant to do it for you to save time and leverage their expertise. You even hire someone to take care of your yard, not because you don’t know how to mow the lawn, but because it allows you to do other things.
There is a battle waging over the Fiduciary Rule. One camp says investors should understand where they are putting their money and not blindly take advice from their financial advisors. The other side believes clients don’t always know the full picture. They hire an expert for advice to help save for retirement, not to invest in funds with the highest commissions.
In the movies, everything usually works out. In real life, it’s not always so simple. For the busy professional, and even the seasoned investor, the best path can be terribly confusing. Your advisor should be able to help.
The Future of Fiduciary
The Obama administration began the Fiduciary Rule implementation, but it was very complicated and many details were not ironed out. The Trump administration has voiced opposition to the regulation, ordering a six-month delay in the rule’s implementation.
Despite uncertainty among politicians and firms, JJ Burns & Company has always and will continue to act as a fiduciary for clients. It is one of the reasons our clients trust us. It is one of the qualities setting us apart from other advisors.
We are here to talk with you anytime.
Your Whole Picture
The new rule applies only to retirement investments and 401(k)s, but we feel that your financial advisor should treat your entire portfolio as a fiduciary would. Why should they serve your best interests for retirement accounts, but not your other investments?
JJ Burns has always felt that taking the role of a fiduciary—someone who serves the best interest of the client—is important. We are happy to sit down with our clients to review investments, portfolios and personal financial plans. We always want you to understand where your money is and why it is there.
January 25, 2017 8:27 am
[Update: For those who couldn't attend, you can watch the webinar video here.]
What key themes will shape global markets in 2017?
After a rollercoaster year of geopolitical surprises, the outlook for the global economy remains uncertain with the prospect of fiscal stimulus, trade protectionism, and accelerated interest rates in 2017. How will these risks and opportunities affect your portfolio and business?
Join JJ Burns & Company on Thursday, February 2nd at 1:00 pm EST for a webinar to discuss the Q1 2017 Economic & Market Outlook. During this live presentation, CEO JJ Burns, Managing Director Anthony LaGiglia, and Chief Investment Officer Steven Mula will review our outlook for the coming year.
Bonus: All registrants will receive a link to the on-demand version of the webinar following its completion.
In this 30-minute webinar we'll talk about:
The resiliency of 2016 markets to Brexit, China’s transition, and the U.S. presidential election
Near-term expectations of growth and inflation
Key themes & economic trends to watch for in 2017
Plus we’ll also answer questions from attendees.
Don't miss this informative event! Reserve your spot today.
January 10, 2017 9:29 am
New year. New you. As we go into 2017, we’re all fired up to make improvements: diet, exercise, relationships, finances.
What do you want to accomplish this year—and in the future? It all depends…on your goals. Ever wonder why most new year’s resolutions fail? It’s because most people don’t go through the goal engineering process. (Yes, there is a science behind that.)
X person from the evening news suggests you should do this, you read Y in The New York Times, you heard Z on a popular podcast, and who knows what’s going to happen with the incoming administration.
The only thing to do is to take charge of your situation. Again, it’s about what you want to accomplish. It could be spending more time with family, getting up at 5 a.m. to exercise with a buddy or a trainer, learning a new language...or also figuring out what you want to achieve financially this year. Perhaps just pick one to start with.
There’s no time like the present to tackle whatever it is you want to do. Just like you have other advisors to help you in certain areas, begin the new year by taking charge of your finances. Base your future on what is important to you, not by a popular article you read or what you heard from an arbitrary commentator.
Instead, knowledgeable wealth advisors suggest that you take the following steps:
Envision your goals and write them down. It helps you and your financial advisor to have a tangible document of where you want to go this month, the next six months, a year, and going forward. Some people jot things down on a legal pad, others prefer creating an Excel spreadsheet, while others are more visual and like to include pictures of their goals—such as a trip, a new home or their ideal retirement—into their yearly financial plans. It doesn’t matter what your method, only that you take it out of your head and put it on paper, Pinterest, or your iPad.
Anticipate the obstacles. Any worthy goal has obstacles. Fleshing out the obstacles in advance and writing out how you will move through them will eliminate the excuse of not being able to achieve it. Think about potential roadblocks, like “impulse purchases” or expenses that you could have anticipated, which will derail a long-term savings plan.
Enact your written plan. Whether it’s saving a certain amount a month for a vacation, putting money away for retirement, making sure school tuition is paid for, taking care of aging family…it all takes consistent action. Once you’ve envisioned your goals, how are you going to get there?
Take control of your habits. Your habit to regularly save, your habit to maximize your tax advantages, and your habits to invest greatly influence your ability to make your financial plans successful. And, of course, have a habit to direct funds to what makes you happy—whether it’s giving to charity, helping a family member with college tuition, expanding your wine collection, or creating memorable experiences. Great investing and savings strategies are not temporary things you do at the beginning of the year like all those other resolutions. Simple things such as automatic deductions to your designated accounts can help you easily reach your goals without even thinking about them.
Don’t try to time the market. Instead, think about what you want your future to look like. Then go beyond wishing and take action on your future plan. Over the years, financial advisors have found that using consistent asset allocation in your plan may help you to meet or surpass your financial goals.
Create realistic expectations. No matter how thoroughly you plan your financial portfolio, even experienced investors have down years along with profitable years. In some years, you may need to make up for losses in certain investment or 401(k) accounts—and in others you may be experiencing significant growth. By talking with a financial advisor, you can make appropriate adjustments to help meet expectations.
Monitor your goals. Few people have static financial situations. Which is why a quarterly review with your financial advisor can help keep you on track or give you informed guidance to fine-tune your plan.
Be flexible to change. For some people, this is more easily said than done. However, we can’t control everything. Circumstances can alter, goals can adjust, markets can change. Working with a trusted advisor, you can work through uncertainties to keep working toward your goals.
Don’t get discouraged. If one of your goals has been to lose weight, perhaps you’ve reached a plateau at some point; if you’ve ever remodeled or built a house, you’ve definitely run into unexpected delays. The same holds true for investing. There are bound to be highs and lows along the way. We live in a world of immediate gratification so it’s natural to want to give up the minute something doesn’t turn out as anticipated. But sage advice is like a good wine—it works over time and only gets better with age. Working with an experienced advisor can help you navigate your financial and life changes. Your plan is the glue that binds you to your future goals, and it will keep you on track and in a positive frame of mind.
The start of a new year is an excellent time to take stock of what you want to accomplish in 2017, and a big part of that includes financial planning. At JJ Burns & Company, we’re here to help you achieve your goals this year—and for the future. We hope you make 2017 your best year yet.
December 30, 2016 9:41 am
This time of year is one of reflection. We go in and out visiting the ghosts of the past, present and future. Just as in the classic story, A Christmas Carol, we all face the decisions we’ve made—but even better, we also have the opportunity to reflect on how to improve ourselves and others.
As the end of the year nears, there’s no better time to take stock of what we want to do now—and what is in store for the future. It’s also a time to recognize the many “angels” we have around us. As much I would like to believe in fairy godmothers, or plump, pink cherubs who fly about on their gossamer, feathered wings granting wishes, there are real angels who live, work and love right here among us.
These angels include Mary*, a JJ Burns client, and her long-time caretaker Sophia*. Mary will be 100 years old in 2017. We have worked with Mary to set up and oversee her life and wealth management plan for almost 20 years.
Mary worked for many years as a college professor in psychology and had a successful private practice. She never married and had no children. Early on she shared with me that she needed a financial partner to help her make choices to give her a life that she can enjoy.
As a philanthropic person, Mary always looked to help others before herself. Whenever she could give and still be able to afford a comfortable life, she did so. She contributed to children’s education programs, religious causes and medical care in less fortunate countries. I’ll always remember when 9-11 occurred, she made a contribution to the local firehouse and they came to her home to acknowledge the gift. It was uncomfortable for her and she felt it was unnecessary. Nonetheless, the fireman showed up at her door and it was they who were honored. Mary taught me that no matter how much or little you have, you should try to help others because every bit makes a difference. She shared many life experiences with me over the years I have known her and I walked out of every meeting with her reflecting on how much I learned.
We mapped out a financial plan that detailed how Mary would enjoy her life, and when she needed care, what her treatment would look like. As time progressed and her health began to deteriorate, Mary needed more care. What became a few hours per week, eventually progressed to a full-time aide. We evaluated each aide together with written expectations of what we wanted them to do.
When we hired Sophia there was a magical connection that occurred. To see her in action and the love she has for Mary is something I have rarely witnessed. Sophia cares for Mary in every way. She shops at natural food stores so Mary can maintain a healthy diet. Her meals are home cooked and made with large doses of love for another human being. If Mary is sick, Sophia researches herbal remedies that have brought her better health.
Over the last couple of years as Mary’s mental and physical health declined, Sophia has been with her every step of the way. She arranges for a yoga instructor, physical therapy and for friends to come by and visit. Getting her hair and nails done, having lunch, going shopping or simply looking at the holiday windows are all part of their weekly activities. Mary has continued to travel to Florida and the west coast to visit family members with Sophia by her side.
I have witnessed how Sophia cares about Mary in every way. And Mary recognized early on what a special person Sophia is. Together we developed a part of Sophia’s compensation that is based on Mary living… not dying. Additionally, without Sophia knowing, Mary established an educational trust for her so that when the day does come of Mary’s passing, Sophia can live her dream of becoming a registered nurse.
As I reflect on the stories of these “angels” I recognize that setting goals and planning were the key to Mary’s success. She knew she wanted to age comfortably at home while having a trusted caretaker help do her shopping, chores, and cooking, while continuing to travel and be the adventurer she always was. Living life on her terms was vital to her.
Of course, everyone’s financial situation is different and you probably have individual goals for how you want to distribute your finances. Investing and minimizing taxes were the original contributors to Mary’s personal and financial success. Sure, she had the past—some well-earned funds to invest. She has the present—the one she enjoys with her caretaker “angel” Sophia. And now she also has a future of income security thanks to good financial planning, which allows Mary to live her life as a centurion to the fullest.
You don’t need to be 100 like Mary to appreciate a generous life. No matter what your age, you also have some “angels” in your midst. At JJ Burns, it’s always been a privilege to help our clients create the lives they wanted for themselves, for their families, for charities and for those closest to their hearts. This is what it really means to be an advisor—to be of service in the best way we know how. In this year and the upcoming ones, take some time to plan the life you want and if you have already, check in for a progress report.
From all of us at JJ Burns, we wish you a Happy and Healthy New Year!
*Not their real names.
November 4, 2016 7:11 am
Everyone is afraid of something. It’s true. The visceral reaction to threats, real and imagined, has driven human behavior for millions of years. As time has passed, our species has evolved from fearing simple threats from predators and harsh climates to fearing more sophisticated threats. We have mostly conquered our ‘lizard brain.’ The lizard brain (so called because it is believed that reptiles survive almost solely on its impulses) is the amygdala, which controls emotions such as fear, our survival instincts, and memory. Controlling fear is how our ancestors emerged from the cave and conquered predators and darkness. Now, millennia later, what are we most afraid of? According to Chapman University’s 2016 ‘Survey of American Fears,’ Americans are most afraid of government corruption than any other of the additional 79 topics in the survey. That’s right: we are more afraid of our own government than we are of death, disease, loneliness, war, climate change, going bankrupt, snakes and public speaking. This year, it appears, we are also afraid of our future.
Some of our recent discussions with clients have surfaced their biggest fear: the outcome of our national elections on November 8. As we might expect, investors are worried about the future because of heightened dislike for many of the candidates and an uncertain future for the economy, the markets, and their portfolios. Their collective lizard brain says sell stocks and hide, much like our primitive ancestors, and emerge when the perceived threat has passed. As we often say, we understand this reaction. We know that the markets, like people, hate uncertainty. We also know that managing our emotions – especially conquering fear – in trying times is the key to success in any endeavor. So it is today.
Remember that the market has weathered many crises since 1900: two world wars, the Roaring ‘20s, the Great Depression, the first big market crash in 1929, oil shocks, wars in Korea, Vietnam and the Middle East, the 1987 flash crash, the Tech Bubble, high inflation, low inflation, terrorist attacks on U.S. soil, the Financial Crisis, a government debt downgrade, landing a man on the moon, the Ebola and Zika scares, ISIS, the beginnings of climate change, banking crises, the rise of the internet, the rise—and fall—of communism, and so on. Through all these events, capitalism has survived and adapted and moved forward. We believe it will again regardless of Tuesday’s election results.
Here’s our brief summary of the main issues to consider when thinking about the election and the post-election markets:
The U.S. economy is chugging along in a low-growth/low-inflation environment. A recession is not on the IMMEDIATE horizon, interest-rate hikes are expected to be modest and drawn out, and the job and housing markets are stable. Preliminary Q3 GDP came in at +2.9%. As we write this, October’s payrolls number was good and included prior-month positive revisions, unemployment dropped to 4.9% and wages showed their highest year-over-year increase since 2009 (ending at +2.8%). Even market news is good: S&P 500 earnings results thus far for the third quarter of 2016 are showing improvement over the past six quarters. These data show expected improvement for the current quarter and into 2017.
The Fed is expected to use the calm after the election storm to raise short-term rates by 0.25% in December, with two additional +0.25% hikes expected next year.
The markets, and a narrow majority of the electorate, appear to favor the Democrat candidate. Mrs. Clinton has proffered a platform of change, but nothing that we see as too radical. We expect that, should she win and the U.S. Senate change control, that modest incremental legislation will be enacted to (among other things) change the tax code, work on regulatory and immigration reform and review U.S. trade pacts. The markets have, and should continue to, respond modestly.
Many of our clients have stocks and bonds in their portfolios. The stocks are expected to provide long-term growth to keep ahead of inflation; the bonds provide income and act as ballast when markets are especially volatile and investors seek safety. Adjusting this mix by using rebalancing opportunities is our best tool to keep our strategic focus and avoid costly tactical mistakes. This is what we do.
Investors need to battle their lizard brains and keep their focus on the future, not the short term. The initial fear trade is to sell and go to cash; a tried and true short-term palliative, selling stocks and sitting in cash is good for short-term peace of mind but not a long-term planning strategy. Our clients know that we believe in globally diversified portfolios, that we focus on the long-term, and consider strategy over tactics to ensure that portfolios are built to stand the weather of time rather than simply avoid today’s storm.
As always, we appreciate your confidence and would be happy to discuss any of the issues raised here or answer any questions you may have.