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Basket of Financial Deplorables

  • September 29, 2016/
  • Posted By : admin/
  • 0 comments /
  • Under : Uncategorised

basketIt’s hard to not to riff on something political in the same week of that presidential candidates Hilary Clinton and Donald Trump squared off for their first debate.  That’s exactly what Tony Isola did when he offered up his “financial products” version of Hilary Clinton’s uncomplimentary description of her opponent’s supporters (“basket of deplorables”).

Here is Tony’s list of products that are toxic to the retirement savings of our people and institutions:

  1. Equity-Indexed Annuities – How about an investment with limited upside but large potential for a substantial loss? Throw in a 10% sales charge and no dividend participation (50% of historic market returns) and we have the ingredients for a deplorable retirement scenario.
  2. Funds with 12b-1 Fees – Fund size and investment returns are negatively correlated. Investors are paying a fee to brokers designed to increase assets and reduce returns. Kind of like paying a restaurant to give you food poisoning!
  3. Proprietary Mutual Funds – This is cross selling at its most heinous. Never buy a mutual fund created by a broker’s employer- this is the ultimate perverse incentive.
  4. Non-Traded REITs – A false promise of safety combined with 10% upfront commissions, this is a true sucker’s bet. Just because something is not traded doesn’t mean it cannot go down in value. By the way, their publicly traded cousins have vastly outperformed this group over time, because of greater transparency and lower fees.
  5. Commodity Funds – High risk combined with low returns rarely ends well. These products specialize in something called ”Contango.” Investor translation: Nearer dated futures’ prices are lower than the longer dated ones, or more commonly known as buy high and sell low, rinse and repeat.
  6. Variable Annuities – These are often sold on the pretense of guaranteed income and tax-deferred growth. In reality, very few investors need this product fraught with complexity and egregious fees. These are often placed inappropriately in tax-sheltered accounts; investors do not need both a belt and suspenders.
  7. Front-Loaded Mutual Funds – Investors pay a premium of 5.75%, and an additional 1% a year in fund fees to purchase an investment that is almost guaranteed to underperform an unmanaged index fund costing .05%, annually. There is NEVER a reason to pay this fee.
  8. Over-Niched ETFs – Healthcare Shares Dermatology and Wound Care ETF and Pure Drone Economy Strategy funds are all that needs to be said. The prosecution rests its case.
  9. Hedge Funds – 2% annual fees combined with 20% of yearly profit makes it pretty hard for investors to bring home any type of meaningful positive returns. While there is a small minority of hedge funds that are worth the steep price, they are either closed or have account minimums that rule out everyone except for the Bill Gates’ crowd.
  10. Market Linked C.D.s – The ultimate vanilla investment has been hijacked by Wall Street. Unless you enjoy paying a 3% commission and having the possibility of losing principal due to early withdrawal, run away from anyone who approaches you with this nonsense. Purchasing a complicated structure that will underperform your Credit Union’s basic offering is a deplorable choice.

Vote for transparency, low fees, and an investment advisor who will look out for your best interests!

source: Tony Isola


Six College Loan Mistakes

  • September 22, 2016/
  • Posted By : admin/
  • 0 comments /
  • Under : Personal Finance

private-student-loansManaging college loan debt smartly has never been more important than it is now.  Total college debt in the U.S. is five times higher than 20 years ago.  As with many things financial, good results come by simply avoiding the common mistakes.  The best golfers aren’t the ones that make the most killer shots – they’re the ones that make the fewest bad shots.  With that in mind, here are six common college loan mistakes to avoid:

MISTAKE NO. 1: Failing to consider income-driven repayment plans
Federal student loans have many payments options (check out the infographic below).  Don’t just assume the default payment plan is best for you.

MISTAKE NO. 2: Failing to understand the loans
There are two basic types of student loans: federal and private.  They come with different interest rates and different repayment options.  It pays to know the differences and options to make the best choice for your needs.

MISTAKE NO. 3: Failing to research student-loan forgiveness programs
Borrowers with federal loans are eligible for debt relief under the Public Service program for a range of careers including teachers, law enforcement, doctors, lawyers and others.  Some employers even help pay employee student loans including the U.S. military, PWC, and Fidelity.

MISTAKE NO. 4: Prioritizing student loans at the expense of retirement savings
Prioritizing debt payment ahead of retirement savings is a mistake.  For example, if your employer provides a matching contribution to your 401(k), that’s free money that you need to capture.

MISTAKE NO. 5: Automatically refinancing or consolidating
Consolidate carefully!  You can capture a lower overall interest rate.  However, you may be giving up flexible payment options and other opportunities.

MISTAKE NO. 6: Failing to automate payments
Make it easy and automatic.  You don’t want to accidentally miss a payment and blow up your credit score or compromise your eligibility for loan forgiveness.

 

loan-payment-optionsSource: WSJ


Simplicity

  • September 15, 2016/
  • Posted By : admin/
  • 0 comments /
  • Under : Best Practices

simplicity-006

Although we live in a complex world, this doesn’t mean we have to accept nor invite complications. In fact, very often a simple solution is the best solution.  So what are some possible non-complex approaches to complicated finances?

Advisor Tony Isola, CFP, has a few ideas for you to consider:

  • Automate your retirement contributions and eliminate the default status of doing nothing;
  • Try to stay married (divorce is a great destroyer of wealth);
  • Buy experiences and not things, and de-clutter your life while increasing happiness;
  • Do not spend $250K for a four-year private college education for your children;
  • Exercise and eat right; this will save you a boatload of cash on health care in the long run;
  • Bank at a credit union;
  • Do not invest a dime on an investment “tip;”
  • Don’t be cheap when finding an accountant;
  • Check your investment portfolio annually, not every day;
  • Don’t cheat people because karma is a bi*ch; and
  • Get disability insurance.

Sir Isaac Newton chimed in on the subject as well: “Nature is pleased with simplicity and nature is no dummy.”

Source: ATM


Pundit or Professional?

  • September 1, 2016/
  • Posted By : admin/
  • 0 comments /
  • Under : Seeking Prudent Advice

pundit

What’s the best source of financial advice?  A pundit or a professional?  Charlie Bilello, the Director of Research at Pension Partners, provides this perspective-building comparison so you can make the right choice:

Pundit (noun): A supposed expert in a particular field who is frequently called on to give opinions to the public. See also Dennis Gartman.

Professional (noun): A person competent or skilled in a particular activity. See also John Bogle.

***

The Pundit spends their days making subjective predictions.

The Professional spends their days making objective assessments.

***

The Pundit seeks self-promotion.

The Professional seeks self-improvement.

***

The Pundit exudes hubris.

The Professional exudes humility.

***

The Pundit is forever calling for the next big melt-up or crash.

The Professional is forever focused on avoiding the next big mistake.

***

The Pundit seeks out only opinions that confirm their views.

The Professional seeks out all evidence, even if it runs contrary to their views.

***

The Pundit believes they know everything.

The Professional knows they know nothing.

***

The Pundit makes a living selling fear and greed.

The Professional makes a living helping to control these emotions.

***

The Pundit has a sense of entitlement.

The Professional has a sense of gratitude.

***

The Pundit seeks to inform.

The Professional seeks to educate.

***

The Pundit makes extreme forecasts to gain attention.

The Professional forecasts wide ranges of possible outcomes to gain respect.

***

The Pundit thinks in terms of long or short, this market or that market.

The Professional thinks in terms of asset allocation and the entire portfolio.

***

The Pundit believes in certainty, conviction, and precision.

The Professional believes in uncertainty, reservation, and probabilities.

***

The Pundit reads the news and listens to financial TV.

The Professional reads books and listens to podcasts.

***

The Pundit sees everything in markets as black or white.

The Professional understands there is often a gray area.

***

The Pundit makes the simple sound complex.

The Professional makes the complex sound simple.

***

The Pundit has a prophecy.

The Professional has a plan.

***

The Pundit has an answer for every question.

The Professional is often saying “I don’t know.”

***

The Pundit is an entertainer.

The Professional is an educator.

***

The Pundit gives recommendations.

The Professional offers guidance.

***

The Pundit provides a reason for every wiggle in the market.

The Professional provides evidence of randomness and noise.

***

The Pundit believes their success is a result of their exceptional talent.

The Professional understands their success is a result of hard work and luck.

***

The Pundit lectures.

The Professional listens.

***

The Pundit is thinking about the next day.

The Professional is planning for the next decade.

***

Pundit or Professional? The choice is yours.


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