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Life Insurance … Is It Time?

life insurance

Have you been putting it off?

Provided by TechGirl Financial

According to the insurance industry group LIMRA and the nonprofit Life Happens, 43% of Americans have no life insurance.1

 

Why don’t more young adults buy life insurance?

Shopping for life insurance may seem confusing, boring, or unnecessary. Yet when you have kids, get married, buy a house or live a lifestyle funded by significant salaries, the need arises.

 

 

Finding the right policy may be simpler than you think

There are two basic types of life insurance: term and cash value. Cash value (or “permanent”) life insurance policies offer death benefits and some of the characteristics of an investment – a percentage of the money you spend to fund the policy goes into a savings program. Cash value policies have correspondingly higher premiums than term policies, which give you death benefits only. At first glance, despite these higher premiums, cash value policies may appear to provide a significant advantage over term policies based on the added investment benefits, alone—but, careful analysis reveals that these benefits only begin to tip in the investor’s favor after 10 to 20 years of monetary contributions. Term may be a good choice for young adults because it is relatively inexpensive. But there is an economic downside to term life coverage: if you outlive the term of the policy, you and/or your loved ones get nothing back. Term life policies can be renewed (though many are not) and some can be converted to permanent coverage.2

The key question is: how long do you plan to keep the policy? If you don’t want to pay premiums on an insurance policy for more than 10 years, then term life stands out as the most attractive option. If you are just looking for a short-term hedge against calamity, that’s the whole reason behind term life insurance. If you’re getting into estate planning, then permanent life insurance may prove a better choice.

 

 

Confer, compare and contrast

Talk with a financial or insurance professional you trust before plunking down money for a policy. That professional can perform a term-versus-permanent analysis for you and help you weigh per-policy variables.

 

 

Citations
1 – nerdwallet.com/blog/insurance/who-needs-life-insurance/ [1/29/16]
2 – fool.com/insurancecenter/life/life05.htm [8/2/16]

What To Do When Your Vested Restricted Stocks Turn to Cash

What to Do When Your Vested Restricted Stocks Turn to Cash

What you choose to do with your vested Restricted Stocks (RSUs) can have a dramatic impact on your future lifestyle.

Will You Make Wise Decisions?

 

 
here’s what it takes:

 

1) Make Realistic Lifestyle Goals

2) Invest Cash From Your Vested RSU’s to Match Your Goals

3) Get Answers:  To all your what-if scenarios to understand the future impact of today’s spending decisions.  

4) Believe in Yourself:  With discipline and smart money choices you can achieve your goals.

 

Questions?

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bt click to contact us via email

 

Informational Videos

 

Good Retirement Savings Habits Before Age 40

saving habits before 40

Some early financial behaviors that may promote a comfortable future.

Provided by TechGirl Financial

You know you should start saving for retirement before you turn 40

What can you start doing today to make that effort more productive, to improve your chances of ending up with more retirement money, rather than less?

Structure your budget with the future in mind

Live within your means and assign a portion of what you earn to retirement savings. How much? Well, any percentage is better than nothing – but, ideally, you pour 10% or more of what you earn into your retirement fund. If that seems excessive, consider this: you are at risk of living 25-30% of your lifetime with no paycheck except for Social Security. (That is, assuming Social Security is still around when you retire.)

Saving and investing 10-15% of what you earn for retirement can really make an impact over time. For example, say you set aside $4,000 for retirement in your thirtieth year, in an investment account that earns a consistent (albeit hypothetical) 6% a year. Even if you never made a contribution to that retirement account again, that $4,000 would grow to $30,744 by age 65. If you supplant that initial $4,000 with monthly contributions of $400, that retirement fund mushrooms to $565,631 at 65.1

 

Avoid cashing out workplace retirement plan accounts

Learn from the terrible retirement saving mistake too many baby boomers and Gen Xers have made. It may be tempting to just take the cash when you leave a job, especially when the account balance is small. Resist the temptation. One recent study (conducted by behavioral finance analytics firm Boston Research Technologies) found that 53% of baby boomers who had drained a workplace retirement plan account regretted their decision. So did 46% of the Gen Xers who had cashed out.2

Instead, arrange a rollover of that money to an IRA, or to your new employer’s retirement plan if that employer allows. That way, the money can stay invested and retain the opportunity for growth. If the money loses that opportunity, you will pay an opportunity cost when it comes to retirement savings. As an example, say you cash out a $5,000 balance in a retirement plan when you are 25. If that $5,000 stays invested and yields 5% interest a year, it becomes $35,200 some 40 years later. So today’s $5,000 retirement account drawdown could amount to robbing yourself of $35,000 (or more) for retirement.3

 

Save enough to get a match

Some employers will match your retirement contributions to some degree. You may have to work at least 2-3 years for an employer for this to apply, but the match may be offered to you sooner than that. The match is often 50 cents for every dollar the employee puts into the account, up to 6% of his or her salary. With the exception of an inheritance, an employer match is the closest thing to free money you will ever see as you save for the future. That is why you should strive to save at a level to get it, if at all possible.4

Saving enough to get the match in your workplace retirement plan may make your overall retirement savings effort a bit easier. Say your goal is to save 10% of your income for retirement. If the employer match is 50 cents to the dollar and you direct 6% of your income into that savings plan, your employer contributes the equivalent of 3% of your income. You are almost to that 10% goal right there.4

Think about going Roth

The younger you are, the more attractive Roth retirement accounts (such as Roth IRAs) may look. The downside of a Roth account? Contributions are not tax-deductible. On the other hand, there is plenty of upside. You get tax-deferred growth of the invested assets, you may withdraw account contributions tax-free, and you get to withdraw account earnings tax-free once you are 59½ or older and have owned the account for at least five years. Having a tax-free retirement fund is pretty nice.4

To have a Roth IRA in 2016, your modified adjusted gross income must be less than $132,000 (single taxpayer) or $194,000 (married and filing taxes jointly).4

 

Set it & forget it

Saving consistently becomes easier when you have an automated direct deposit or salary deferral arrangement set up for you. You can gradually increase the monthly amount that goes into your accounts with time, as you earn more.

Invest for growth

Much wealth has been built through long-term investment in equities. Wall Street has good years and bad years, but the good years have outnumbered the bad. Early investment in equities may assist your retirement savings effort more than any other factor, except time.

 

Time is of the essence

Start saving and investing for retirement today, and you may find yourself way ahead of your peers financially by the time you reach 40 or 50.

 

Citations
1 – investor.gov/tools/calculators/compound-interest-calculator [7/7/16]
2 – marketwatch.com/story/millennials-can-save-more-for-retirement-by-learning-from-baby-boomers-mistakes-2016-06-30 [6/30/16]
3 – thefiscaltimes.com/2015/11/20/7-Ways-Millennials-Are-Getting-Retirement-Saving-Wrong [11/20/15]
4 – kiplinger.com/article/retirement/T001-C006-S001-retire-rich-saving-for-retirement-in-your-20s-30s.html [2/4/16]

Why the Brexit Should Not Rattle Investors

Brexit01

Wall Street has rebounded so many times, so quickly.

Provided by TechGirl Financial

Uncertainty is the hobgoblin of financial markets. Right now, investors are contending with it daily as the European Union contends with the United Kingdom’s apparent exit.  Globally, many institutional investors have responded to this uncertainty by selling. Should American retirement savers follow their lead?  They may just want to wait out the turbulence.

The Brexit vote was a disruption for Wall Street, not a new normal

Yes, it could mean a “new normal” for the European Union – but the European Union is not Wall Street. Stateside, investors respond to domestic economic and geopolitical indicators as much as foreign ones, perhaps more.

As Wells Fargo (WFC) Investment Institute head global market strategist Paul Christopher remarked to FOX Business on June 24, “We’re getting used to the shock of the vote and [the] surprise. But does it change anything fundamentally about the market? No.”1

Central banks may respond to make the Brexit more bearable

They are certainly interested in restoring confidence and equilibrium in financial markets.

Post-Brexit, there is no compelling reason for the Federal Reserve to raise interest rates this summer, or during the rest of 2017. You may see the European Central Bank take rates further into negative territory and further expand its asset-purchase program. The Bank of England could respond to the Brexit challenge with quantitative easing of its own, and interest rate cuts.

“There is no sense of a financial crisis developing,” U.S. Treasury Secretary Jack Lew told CNBC on June 27. Lew called the global market reaction “orderly,” albeit pronounced.2

The market may rebound more quickly than many investors assume

Ben Carlson, director of Institutional Asset Management at Ritholtz Wealth Management, reminded market participants of that fact on June 24. He put up a chart on Twitter from S&P Capital IQ showing the time it took the S&P 500 to recover from a few key market shocks. (Sam Stovall, U.S. equity strategist at S&P Global Market Intelligence, shared the same chart with MarketWatch three days later.)3,4

The statistics are encouraging

After 9/11, the market took just 19 days to recover from its correction (an 11.6% loss). The comeback from the “flash crash” of 2010 took only four days.

Even the four prolonged market recoveries noted on the chart all took less than ten months: the S&P gained back all of its losses within 257 days of the attack on Pearl Harbor, within 143 days of Richard Nixon’s resignation, within 223 days of the 1987 Black Monday crash, and within 285 days after Lehman Brothers announced its bankruptcy. The median recovery time for the 14 market shocks shown on the chart? Fourteen days.3,5

The S&P sank 3.5% on June 24 following the news of the Brexit vote – but that still left it 11% higher than it had been in February.5

The Brexit is a political event first, a financial event second

Political issues, not economic ones, largely drove the Leave campaign to its triumph. As Credit Suisse analysts Ric Deverell and Neville Hill wrote in a note to clients this week, “This is not a shock on the scale of Lehman Brothers’ bankruptcy in 2008 or, if it had happened, a disruptive Greek exit from the euro, in our view. Those types of events deliver an immediate devastating shock to the global financial architecture that, in turn, have a powerfully negative impact on economic activity.” Aside from the political drama of the U.K. exiting the E.U., in their opinion “nothing else has changed.”4

The Brexit certainly came as a shock, but equilibrium should return

Back in 1963, the admired financial analyst Benjamin Graham made a statement that still applies in 2016: “In my nearly fifty years of experience in Wall Street, I’ve found that I know less and less about what the stock market is going to do, but I know more and more about what investors ought to do.”6

Graham was making the point that investors ought to stick to their plans through periods of volatility, even episodes of extreme market turbulence. These disruptions do become history, and buying opportunities do emerge. Wall Street has seen so few corrections of late that we have almost forgotten how eventful a place it can be. The Brexit is an event, one of many such news items that may unnerve Wall Street during your lifetime. Eventually, equilibrium will be restored, and, as the historical examples above illustrate, that can often happen quickly.

Citations
1 – foxbusiness.com/markets/2016/06/24/after-brexit-carnage-should-rejigger-your-investment-portfolio.html [6/24/16]
2 – time.com/4383915/brexit-treasury-secretary-jack-lew-financial-crisis/ [6/26/16]
3 – tinyurl.com/jx2brl3 [6/24/16]
4 – marketwatch.com/story/brexit-vote-more-a-political-than-a-financial-one-and-thats-important-2016-06-27 [6/27/16]
5 – equities.com/news/what-does-brexit-mean-for-individual-investors [6/27/16]
6 – blogs.wsj.com/moneybeat/2016/06/24/the-more-it-hurts-the-more-you-make-investing-after-brexit/ [6/24/16]

The Brexit Shakes Global Markets

Brexit02

A worldwide selloff occurs after the United Kingdom votes to leave the European Union.

Provided by TechGirl Financial

A wave of anxiety hit Wall Street Friday morning

Thursday night, the United Kingdom elected to become the first nation state to leave the European Union. The “Brexit” can potentially be finalized as soon as the summer of 2018.1

Voters in England, Scotland, Wales, and Northern Ireland were posed a simple question: “Should the United Kingdom remain a member of the European Union or leave the European Union?” Seventy-two percent of the U.K. electorate went to the polls to answer the question, and in the final tally, Leave beat Remain 51.9% to 48.1%.2,3

The vote shocked investors worldwide

The threat of a Brexit was supposed to have decreased. As late as Thursday, key opinion surveys showed the Remain camp ahead of the Leave camp – but at 10:40pm EST Thursday, the BBC called the outcome and projected Leave would win.4

Why did Leave triumph?

The leaders of the Leave campaign hammered home that E.U. membership was a drag on the U.K. economy. They criticized E.U. regulations that impeded business growth. They felt that the U.K. should no longer contribute billions of pounds per year to the E.U. budget. They had concerns over E.U. immigration laws, which permit free movement of people among E.U. nations without visas.1

Financial markets were immediately impacted

The pound fell almost 11% Thursday night to a 31-year low, and the benchmark U.K. equities exchange, the FTSE 100, slipped 5% after initially diving about 8%. Germany’s DAX exchange and France’s CAC-40 exchange respectively incurred losses of 7% and 9%. In Tokyo, the Nikkei 225 closed nearly 8% lower, taking its largest one-day slide since 2008.5

Stateside, S&P 500 and Nasdaq Composite futures declined more than 5% overnight; that triggered the Chicago Mercantile Exchange’s circuit breaker, briefly interrupting trading. The Chicago Board Options Exchange Volatility Index, or CBOE VIX, approached 24 after midnight. The price of WTI crude fell more than $2 in the pre-dawn hours.5,6

At the opening bell Friday, the Dow Jones Industrial Average was down 408 points

The Nasdaq shed 186 points at the open; the S&P, 37 points.7

Fortunately, the first trading day after the Brexit referendum was a Friday, giving Wall Street a pause to absorb the news further over the weekend.

How could the Brexit impact investors & markets going forward?

Consider its near-term ripple effect, which could be substantial.

The Brexit could deal a devastating blow to both the United Kingdom and the European Union. Depending on which measurements you use, the E.U. collectively represents either the first or third largest economy in the world. In terms of international trade, its import and export activity surpasses that of China (and that of the United States).2

An analysis by the U.K.’s Treasury argued that the country would be left “permanently poorer” by the Brexit, with less tax revenue and lower per-capita GDP and productivity. The Brexit certainly hurt the U.K.’s major trading partners, which include China, India, Japan, and the United States. Some Chinese and American companies have established operations in the U.K. specifically to take advantage of its E.U. membership and the free trade corridors it opens. With the U.K. exiting the E.U., the profits of those firms may be reduced – and the U.K. will have to quickly negotiate new trade deals with other nations. The most recently available European Commission data shows that in 2014, U.S. direct investment in the E.U. topped €1.8 trillion (roughly $2 trillion), with a slightly greater amount flowing back to the U.S.2

You could also see a sustained flight to the franc, the yen, and the dollar in the coming weeks. The stronger the dollar becomes, the weaker the demand for American exports.

 

Investors should hang on through the turbulence

The Brexit is a historic and unsettling moment, but losses on Wall Street should be less severe than those happening overseas. Retirement savers should not mistake this disruption of market equilibrium for the state of the market going forward. A year, a month, or even a week from now, Wall Street may gain back all that was lost in the Brexit vote’s aftermath. It has recovered from many events more dramatic than this.

Citations
1 – bbc.com/news/uk-politics-32810887 [6/23/16]
2 – cnbc.com/2016/06/21/uk-brexit-what-you-need-to-need-to-know.html [6/24/16]
3 – bbc.com/news/politics/E.U._referendum/results [6/23/16]
4 – bbc.com/news/live/uk-politics-36570120 [6/23/16]
5 ­- nytimes.com/aponline/2016/06/24/world/asia/ap-financial-markets.html [6/24/16]
6 – rE.U.ters.com/article/us-usa-stocks-idUSKCN0Z918E [6/24/16]
7 – marketwatch.com/story/us-stocks-open-sharply-lower-joining-global-post-brexit-selloff-2016-06-24 [6/24/16]

How Women Have Assumed a Larger Role in Family Finance

Asian Woman

The change has been gradual but notable & carries over to retirement planning.

Provided by TechGirl Financial

More women have become the primary wage earners in their households

Generations ago, life and financial roles were cut and dried according to gender. Man: breadwinner. Woman: homemaker. Those stereotypes have, thankfully, shattered. According to the Bureau of Labor Statistics, 38% of women in heterosexual marriages now earn more than their husbands. Thirty years ago, less than one-quarter did.1

 

The Great Recession of 2007-09 may have contributed to this shift

In June 2010, Department of Labor data showed that nearly 22% of American men aged 25-65 were unemployed. In addition, 16.6% of all Americans were in the “underemployed” population, either jobless or working less than 40 hours per week; it is reasonable to assume that men made up roughly half of that demographic.2

So, in mid-2010, perhaps a quarter of American men aged 25-65 had no full-time job, and, in millions more American households, the woman of the house had become the primary wage earner.

As the economy improved, households with women breadwinners were in good shape

A 2013 Pew Research Center study of Census Bureau data found that, by 2011, the median total family income of such households was $80,000, compared to the national median of $57,100 for all families with children. Furthermore, the PRC analysis determined that 40% of households with children younger than age 18 were headed by women breadwinners in 2013, an all-time high. That compared to 10% in 1960.3,4

Wives who earn more than husbands often control family money

Author Farnoosh Torabi (When She Makes More: 10 Rules for Breadwinning Women) conducted her own study on heterosexual households with women breadwinners in 2015, interviewing more than 1,000 women in the process. The key finding? When a woman is the top earner in a household, she is more likely to handle financial tasks and decision making.4

Women who made more than their husbands were 62% likely to pay the bills and 56% likely to initiate family or spousal conversations about money. Respectively, that compares to 43% and 43% when the woman makes less than the man.4

Significantly, 44% of breadwinning women Torabi interviewed made investment decisions for their households (compared to just 27% when the man earned more). On top of that, 54% of breadwinning women took on the task of retirement planning for their households, as opposed to 31% when the male was the breadwinner. These findings are very encouraging, as so many financial professionals urge women to take an active role in saving and investing for retirement.4

One study suggests more women are focusing on retirement planning

Financial Finesse, a provider of financial education for large employers, puts out an annual survey called The Gender Gap in Financial Literacy. The 2015 edition (released last fall) showed a 4.2% rise from 2012 in the percentage of women who said their retirement planning was on course. The percentage of women who had an asset allocation plan for their investment portfolios also rose 4.2% in that interval.5

If you ask some financial professionals, they will tell you that they find women more open to financial education, with fewer entrenched beliefs and presumptions. Women are often quick to realize how much they don’t know, how much they can learn, and how much needs to be done. Coming to the realization that you need to do more for retirement is a good thing. Many pre-retiree households could do much more: according to a BlackRock survey, the average “leading edge” baby boomer (age 55-65) has $136,200 in a retirement savings account, which would produce retirement income of roughly $9,100 a year.6

With retirement accounts and retirement dreams at stake, it isn’t surprising that high-earning women are taking the lead for millions of families – and asking for all the financial education they can get.

Citations
1 – fivethirtyeight.com/datalab/how-many-women-earn-more-than-their-husbands/ [2/5/15]
2 – marketwatch.com/story/the-three-biggest-lies-about-the-us-economy-2010-06-29 [6/29/10]
3 – businessinsider.com/women-continue-rising-as-breadwinners-2013-5 [5/29/13]
4 – businessinsider.com/breadwinning-women-control-family-money-2015-3 [3/16/15]
5 – nextavenue.org/the-unexpected-news-about-women-men-and-retirement/ [9/16/15]
6 – seattletimes.com/business/workers-need-more-help-making-retirement-cushion/ [5/28/16]

What Are Catch-Up Contributions Really Worth?

Retired Woman

What degree of difference could they make for you in retirement?

Provided by TechGirl Financial

At a certain age, you are allowed to boost your yearly retirement account contributions

For example, you can direct an extra $1,000 per year into a Roth or traditional IRA starting in the year you turn 50.1

Your initial reaction to that may be: “So what? What will an extra $1,000 a year in retirement savings really do for me?”
That reaction is understandable, but consider also that you can contribute an extra $6,000 a year to many workplace retirement plans starting at age 50. As you likely have both types of accounts, the opportunity to save and invest up to $7,000 a year more toward your retirement savings effort may elicit more enthusiasm.1,2

 

What could regular catch-up contributions from age 50-65 potentially do for you?

They could result in an extra $1,000 a month in retirement income, according to the calculations of retirement plan giant Fidelity. To be specific, Fidelity says that an employee who contributes $24,000 instead of $18,000 annually to the typical employer-sponsored plan could see that kind of positive impact.2

To put it another way, how would you like an extra $50,000 or $100,000 in retirement savings? Making regular catch-up contributions might help you bolster your retirement funds by that much – or more. Plugging in some numbers provides a nice (albeit hypothetical) illustration.3

Even if you simply make $1,000 additional yearly contributions to a Roth or traditional IRA starting in the year you turn 50, those accumulated catch-ups will grow and compound to about $22,000 when you are 65 if the IRA yields just 4% annually. At an 8% annual return, you will be looking at about $30,000 extra for retirement. (Besides all this, a $1,000 catch-up contribution to a traditional IRA can also reduce your income tax bill by $1,000 for that year.)3

If you direct $24,000 a year rather than $18,000 a year into one of the common workplace retirement plans starting at age 50, the math works out like this: you end up with about $131,000 in 15 years at a 4% annual return, and $182,000 by age 65 at an 8% annual return.3

If your financial situation allows you to max out catch-up contributions for both types of accounts, the effect may be profound indeed. Fifteen years of regular, maximum catch-up contributions to both an IRA and a workplace retirement plan would generate $153,000 by age 65 at a 4% annual yield, and $212,000 at an 8% annual yield.3

The more you earn, the greater your capacity to “catch up”

This may not be fair, but it is true.

Fidelity says its overall catch-up contribution participation rate is just 8%. The average account balance of employees 50 and older making catch-ups was $417,000, compared to $157,000 for employees who refrained. Vanguard, another major provider of employer-sponsored retirement plans, finds that 42% of workers aged 50 and older who earn more than $100,000 per year make catch-up contributions to its plans, compared with 16% of workers on the whole within that demographic.2

Even if you are hard-pressed to make or max out the catch-up each year, you may have a spouse who is able to make catch-ups. Perhaps one of you can make a full catch-up contribution when the other cannot, or perhaps you can make partial catch-ups together. In either case, you are still taking advantage of the catch-up rules.

Catch-up contributions should not be dismissed

They can be crucial if you are just starting to save for retirement in middle age or need to rebuild retirement savings at mid-life. Consider making them; they may make a significant difference for your savings effort.

Citations
1 – nasdaq.com/article/retirement-savings-basics-sign-up-for-ira-roth-or-401k-cm627195 [11/30/15]
2 – time.com/money/4175048/401k-catch-up-contributions/ [1/11/16]
3 – marketwatch.com/story/you-can-make-a-lot-of-money-with-retirement-account-catch-up-contributions-2016-03-21 [3/21/16]

How Millennials Can Get Off to a Good Financial Start

Split Road

Doing the right things at the right time may leave you wealthier later.

Provided by TechGirl Financial

What can you do to start building wealth before age 35?

You know time is your friend and that the earlier you begin saving and investing for the future, the better your financial prospects may become. So what steps should you take?

 

Reduce your debt

You probably have some student loan debt to pay off. According to the Institute for College Access and Success, which tracks college costs, the average education debt owed by a college graduate is now $28,950. Hopefully, yours is not that high and you are paying off whatever education debt remains via an automatic monthly deduction from your checking account. If you are struggling to pay your student loan off, take a look at some of the income-driven repayment plans offered to federal student loan borrowers, and options for refinancing your loan into a lower-rate one (which could potentially save you thousands).1

You cannot build wealth simply by wiping out debt, but freeing yourself of major consumer debts frees you to build wealth like nothing else. The good news is that saving, investing, and reducing your debt are not mutually exclusive. As financially arduous as it may sound, you should strive to do all three at once. If you do, you may be surprised five or ten years from now at the transformation of your personal finances.

 

Save for retirement

If you are working full-time for a decently-sized employer, chances are a retirement plan is available to you. If you are not automatically enrolled in the plan, go ahead and sign up for it. You can contribute a little of each paycheck. Even if you start by contributing only $50 or $100 per pay period, you will start far ahead of many of your peers.1

Away from the workplace, traditional IRAs offer you the same perks. Roth IRAs and Roth workplace retirement plans are the exceptions – when you “go Roth,” your contributions are not tax-deductible, but you can eventually withdraw the earnings tax-free after age 59½ as long as you abide by IRS rules.1,2

Workplace retirement plans are not panaceas – they can charge administrative fees exceeding 1% and their investment choices can sometimes seem limited. Consumer pressure is driving these administrative fees down, however; in 2015, they were lower than they had been in a decade and they are expected to lessen further.3

 

Keep an eye on your credit score

Paying off your student loans and getting started saving for retirement are a great start, but what about your immediate future? You’re entitled to three free credit reports per year from TransUnion, Experian, and Equifax. Take advantage of them and watch for unfamiliar charges and other suspicious entries. Be sure to get in touch with the company that issued your credit report if you find anything that shouldn’t be there. Maintaining good credit can mean a great deal to your long-term financial goals, so monitoring your credit reports is a good habit to get into.1

 

Do not fear Wall Street

 We all remember the Great Recession and the wild ride investments took. The stock market plunged, but then it recovered – in fact, the S&P 500 index, the benchmark that is synonymous in investing shorthand for “the market,” gained back all the loss from that plunge in a little over four years. Two years later, it reached new record peaks, and it is only a short distance from those peaks today.4

Equity investments – the kind Wall Street is built on – offer you the potential for double-digit returns in a good year. As interest rates are still near historic lows, many fixed-income investments are yielding very little right now, and cash just sits there. If you want to make your money grow faster than inflation – and you certainly do – then equity investing is the way to go. To avoid it is to risk falling behind and coming up short of retirement money, unless you accumulate it through other means. Some workplace retirement plans even feature investments that will direct a sizable portion of your periodic contribution into equities, then adjust it so that you are investing more conservatively as you age.

 

Invest regularly; stay invested

When you keep putting money toward your retirement effort and that money is invested, there can often be a snowball effect. In fact, if you invest $5,000 at age 25 and just watch it sit there for 35 years as it grows 6% a year, the math says you will have $38,430 with annual compounding at age 60. In contrast, if you invest $5,000 each year under the same conditions, with annual compounding you are looking at $596,050 at age 60. That is a great argument for saving and investing consistently through the years.5

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations
1 – gobankingrates.com/personal-finance/money-steps-need-after-graduating/ [5/20/16]
2 – usatoday.com/story/money/personalfinance/2015/07/03/money-tips-gen-y-adviceiq/29624039/ [7/3/15]
3 – tinyurl.com/hgzgsw4 [12/2/15]
4 – marketwatch.com/story/bear-markets-can-be-shorter-than-you-think-2016-03-21 [3/21/16]
5 – investor.gov/tools/calculators/compound-interest-calculator [5/26/16]

Advancing Toward Your Career Goals

advancing towards your career goals

Should you change jobs in pursuit of them? Or position yourself in a new way at work?

Provided by TechGirl Financial

Is your career unfolding as it should?

If not, maybe it is time for a change; either a change of jobs, or a change in your role at your workplace.

 

Pay attention to the signals of a stalled career

If the status quo at your office bothers you, or if you feel apathetic or nonchalant about your work, you have company. A recent Aon Hewitt poll found that only 63% of employees felt sufficiently engaged on the job. According to a Gallup poll, even fewer Americans truly like what they do for a living: just 32% of employees are “involved in, enthusiastic about and committed to their work and workplace.”1

If you find yourself dreaming of an escape and doing just enough to avoid getting fired, you have three basic avenues. One, go into business for yourself (a move that is impractical and terribly risky for most people). Two, change jobs. Three, see if you can make yourself more valuable and more engaged where you are.

Should you leave or stay?

If your job amounts to a dead end, then leaving is probably your only option. If your workday simply bores you or you have issues with your pay or your role, leaving is also an option; you also may want to talk with your supervisor or boss to see how things can change where you are.

 

If you consider another job, look beyond the offer

A company may woo you with a terrific compensation package, a better title, and a nicer place to work; you should see these as short-term pluses. Does this new job really represent a long-term career move, or just a change of scenery? What kind of vision do they have for you? Do you get the sense that your vision matters to them? What kind of culture does this company have? Think ahead. Three to six months from now, do you think you will be happy at the new job? Two or three years from now, do you think your career will be progressing as it should thanks to this job change?

If you stay, make the right moves to assert your goals and your value

What position do you want at work, as opposed to the one you have now? What is a reasonable next step? If you work for a larger employer, you might find several opportunities in multiple locations (think about if you want to relocate as a consequence of a promotion).

Schedule a meeting with your boss. Prior to having that conversation, think about the perception you want to create in your boss’s mind. During the conversation, promote it.

Tell your boss that you want to discuss your personal development, how your career can progress and evolve with the company. Share your reasons for bringing all this up; your aspirations, not your complaints. Mention the specific career move you would like to make, and the kind of contribution you could make in that new role. Tell your boss that, as much as you appreciate your current role, your heart tells you that it is time for a new role or a new challenge. (You might mention that you will be happy to train another employee to take over your old duties.)

This conversation should last at least 15 minutes. In the process, you may learn what kind of expectations your boss has for you, and see how they correspond with yours. (If you do not get a glimpse into that, it is worth bringing up.)

Keep in mind that being really good at your job may not warrant a promotion by itself. Even if you are fully engaged at work, you may be passed over if you fail to fully engage with the people with whom you work. Likeability is a big factor in promotion and career advancement, and networking is not just something you do to land another job, it is also a great idea at your current job.

 

Financially, a move to another employer might be the best move

Rightly or wrongly, changing jobs is perceived as a path to continually higher pay. In fact, one of the big criticisms of staying put is that your employer may only compensate you more if you insist.

Last year, the core Consumer Price Index advanced 2.1%. Meanwhile, real average hourly wages rose 1.8% according to the Bureau of Labor Statistics. Moving on to a new employer may help you cope with this kind of economic weakness. Payroll processor ADP, whose research arm tracks such data, notes that the average full-time employee changing jobs in 2015 received 4.5% greater compensation as a result of the move.2,3

Citations
1 – washingtonpost.com/news/wonk/wp/2016/01/11/feeling-stuck-in-your-job-blame-management-consulting/ [1/11/16]
2 – tinyurl.com/zv64ge4 [5/2/16]
3 – theatlantic.com/business/archive/2016/02/job-switchers-raise/460044/ [2/8/16]

Breaking the Surface

breaking the surface tips to recover

Four tips for recovering from unemployment.

Provided by TechGirl Financial

Any period of unemployment is fraught with stress – both personal and financial

While landing that formerly-elusive new job can be a relief, it is only the first step on the road to recovery from unemployment. This transition time is akin to breaking the surface after being underwater for several minutes. It’s a relief to be breathing again and feel the sun on your face, but it’s no time to relax. You must start swimming right away to get back to a healthy financial shore.

Here are four steps you can take to help make sure your recent unemployment doesn’t cast a long shadow across your future financial health.

Continue to live lean

More likely than not, you weren’t buying $4 coffees while unemployed. Five star restaurants were out too. Hamburger may have replaced steak. You may want to continue to follow that pattern. We tend to grow into our incomes, our budgets bloating along with our salaries. Fighting that urge will help with the rest of the steps to unemployment recovery.

Protect yourself ASAP

The longer your unemployment lasts the more important basic survival becomes. Someone who is unemployed may let life insurance, disability insurance or health insurance policies lapse as they try to keep current on the mortgage, pay utilities and put groceries in the pantry. Sometime during the first few days of your employment you should enroll in whatever benefits you need that your company offers. If the new firm does not offer the coverage you need, make an appointment with an insurance professional and use part of your first paycheck to protect you and your family. Remember, the income from your new job won’t benefit anyone if a catastrophic illness, disability or death suddenly takes it away.

 

Develop a plan to pay down your debts

When you have a job, debts are a nuisance. When you don’t have a job, they may become a threat to your future financial well-being. While it’s normal to hope that you never have to go through unemployment again, you must start preparing for the possibility.

If you are behind on your mortgage, call your lender to let them know of your new job and to work with them on a plan to catch up on your payments. If they are unwilling to work with you, consider using a Federal resource such as those offered by the U.S. Housing and Urban Development Administration.

While there are fewer similar programs for car loans, calling your lender and trying to develop a plan for a loan you’re behind on should be your first step.

All too often during unemployment, credit cards may be used to get by when cash is low. While your interest rates may have been low when you initially signed up for the card, new legislation has caused a spike in credit card rates.1 Rates of 20% – 30% are not uncommon as banks react to new rules. Paying down these balances should also be a primary goal.

Remember to start paying yourself

Whether you call it a rainy day fund, a nest egg or emergency cash, slowly, paycheck by paycheck, begin paying yourself a fraction of your salary. Some experts will argue that a family should keep six months to one year’s worth of expenses in the bank for unexpected events such as a blown car engine, the roof caving in, or another round of unemployment.1 For many families, that may feel like an insurmountable sum. But as the old joke goes “How do you eat an elephant?” The answer: “One bite at a time”. Paying yourself has to be done paycheck-to-paycheck, little by little.

 

Citations
1 –http://www.marketwatch.com/story/credit-cards-gouge-consumers-ahead-of-new-law-2009-11-06 [11/10/09]

Lean In To Retirement

Check out TechGirl Financial's Article Series on how to "Lean In To Retirement".

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