Blog - Page 19 of 71 - NorthStar Capital Advisors

Location, location, location!

As we head into the spring real estate season, many of our clients are busily buying and selling properties. As the old adage goes, location, location, location. The fascinating visualization above underscores the importance of geography in median housing prices and land valuations.

Blue dots represent the value of an acre of land, and the red circles indicate the median value of a home. The bigger the blue dot and the larger the red circle, the more expensive it is to become a property owner. Small circles and dots likewise indicate a very low cost of purchasing property.

A couple of things stand out:

An acre of land is much more valuable in the Northeast compared to any other part of the country
Median home prices generally high in the Northeast as well
There’s a noticeable decline of both land and housing prices in southern and midwestern states

Source: howmuch

How to be a 401(k) Millionaire

Fidelity Investments, one of the largest retirement account administrators in the U.S., published a study that analyzed the characteristics of their 401(k) account holders who have amassed more than $1 million but make less than $150,000.

Here are 5 key lessons:

#1 — Start saving early
Beyond the obvious fact that the longer you save, the more you’ll potentially accumulate, contributing steadily over 30 to 40 years is especially beneficial in a tax-advantaged workplace retirement savings plan.

#2 — Contribute a minimum of 10% to 15%
Contributing 10% to 15% might sound like a lot, but that amount is meant to include contributions from your employer—such as your company match or profit sharing.

#3 — Meet your employer match
You’ve probably heard it many times, but it bears repeating that failing to contribute up to the full amount of a company match is like turning down “free” money.

#4 — Consider mutual funds that invest in stocks
Historical data suggests that a diversified portfolio of stocks can deliver higher returns than bonds or other fixed income investments over time.

#5 — Don’t cash out when changing jobs
Taking a distribution from your 401(k) account when you change jobs is hardly ever a good idea. It could trigger significant tax liability and early withdrawal penalties. When you take money out of your 401(k), you lose the opportunity for it to grow.

Source: Fidelity

The Biggest Threat To Your Portfolio

How do you react to when the stock market is down or it gets bumpy? Do any of these sound familiar?

Fleeing into the arms of a charlatan who purports to having predicted it
Buying into Black Swan funds and protective products that cap all future upside and cost a fortune
Obsessing over hedges after the fact
Selling out with big (permanent) losses and sitting in cash
Freezing 401(k) contributions or having retirement cash allocated to money market funds
Excessive trading
Planting a flag and being unwilling to publicly change our minds in the face of new evidence
Throwing money at bizarre alternatives like coins, bars, bricks and bullion which have no proven ability to fund a retirement
Conflating political views with investment expectations

Every one of these things is extremely detrimental to our financial health.

Nothing kills the long-term returns of a portfolio like throwing away the playbook in the heat of a market crisis.

Source: TRB

What You Control

“If owning stocks is a long-term project for you, following their changes constantly is a very, very bad idea. It’s the worst possible thing you can do, because people are so sensitive to short-term losses. If you count your money every day, you’ll be miserable.” — Dr. Daniel Kahneman (psychologist and Nobel Laureate)

Source: Safalniveshak

6 Core Values a [Good] Financial Planner Provides

A good financial planner is client-centric and focused on improving your “Return on Life”. At NorthStar Capital Advisors, we focus on six key value propositions in this dimension:

Organization. We will help bring order to your financial life, by assisting you in getting your financial house in order (at both the “macro” level of investments, insurance, estate, taxes, etc., and also the “micro” level of household cash flow).

Accountability. We will help you follow through on financial commitments, by working with you to prioritize your goals, show you the steps you need to take, and regularly review your progress towards achieving them.

Objectivity. We bring insight from the outside to help you avoid emotionally driven decisions in important money matters, by being available to consult with you at key moments of decision-making, doing the research necessary to ensure you have all the information, and managing and disclosing any of our own potential conflicts of interest.

Proactivity. We work with you to anticipate your life transitions and to be financially prepared for them, by regularly assessing any potential life transitions that might be coming, and creating the action plan necessary to address and manage them ahead of time.

Education. We will explore what specific knowledge will be needed to succeed in your situation, by first thoroughly understanding your situation, then providing the necessary resources to facilitate your decisions, and explaining the options and risks associated with each choice.

Partnership. We attempt to help you achieve the best life possible but will work in concert with you, not just for you, to make this possible, by taking the time to clearly understand your background, philosophy, needs and objectives, work collaboratively with you and on your behalf (with your permission), and offer transparency around our own costs and compensation.

The real value we want to bring to you is to know what really matters to you and to be a part of that.

Source: Mitch Anthony, “Moving from ROI to ROL”

Medicare 101: “The What’s”

Medicare is the federal health insurance program for people who are 65 or older, certain younger people with disabilities and medical conditions. The different parts of Medicare help cover specific services:

Medicare Part A (Hospital Insurance)
- Inpatient care in hospitals
- Skilled nursing facility care
- Hospice care
- Home healthcare
Medicare Part B (Medical Insurance)
- Services from doctors and other health care providers
- Outpatient care
- Home health care
- Durable medical equipment
- Many preventative services
Medicare Part C (Medicare Advantage)
- Includes all benefits and services covered under Part A and Part B
- Usually includes Medicare prescription drug coverage (Part D) as part
  of the plan
- Run by Medicare-approved private insurance companies that follow
  rules set by Medicare
- Plans have a yearly limit on your out-of-pocket costs for medical
  services
- May include extra benefits and services that aren’t covered by Original
  Medicare, sometimes for an extra cost
Medicare Part D (Prescription Drug Coverage)
- Helps cover the cost of prescription drugs
- Run by Medicare-approved drug plans that follow rules set by Medicare
- May help lower your prescription drug costs and help protect against
  higher costs in the future

We’ll cover the when’s and how’s of enrolling in forthcoming articles.

Source: medicare.gov

What Assets Make Up Wealth?

This is the time of year where our office is busily updating our clients’ net worth statements. Net worth is the best measure of both your current financial health and the financial progress you’re making over time. Remember that your net worth, simply put, is the sum of all the financial assets you own minus all of the debts that you owe. Almost every good financial decision you can make serves to either grow or protect your net worth. For example, saving and investing increase your the financial assets you own, while paying off debt decreases the amount you owe.

The Visual Capitalist recently published the fascinating chart below that examines how the composition of assets varies by net worth.

It’s readily apparent that the asset mix changes greatly between lower and higher net worths:

Primary Residence:
This is by far the most important asset class for all net worth tiers up to $1 million.

Vehicle:
For the $10k net worth tier, the value of a vehicle is more than investments such as pensions, IRAs, mutual funds, stocks, etc.

Stocks:
The proportion of directly-held stock increases up the tiers, and billionaires hold a significant portion of wealth in stocks.

Business Interests:
Most multi-millionaires or billionaires are not liquid, and have most of their wealth in business interests.

Smart Questions Clients Ask

How much will your financial advisory services cost me, all-in?
What will the additional trading costs be, if any, to implement your strategy?
What are the internal expenses of the funds you use, if any?
What might the taxes on gains or income look like, on average?
Are there costs associated with our transactions that I may not see but will have an effect on my net returns?

These are the questions we get asked by the savviest people who inquire at our firm. Not everyone knows to ask these but we make sure to answer them anyway. Offering transparency around costs is important. If your financial advisor is not able to give you clear answers to these smart questions, you need to reconsider if your advisor has your best interests in mind.

Behind the Curtain: Pro vs. Amateur Advisors

For most people, it is very difficult to discern a truly good advisor from a lackluster hack — a professional versus an amateur. To help you recognize the difference, we want to highlight a deeply insightful article penned by Josh Brown, aka The Reformed Broker. Here is Josh’s wisdom reformatted and mildly edited for easy consumption:

Professionals take this opportunity to manage client expectations, pointing out that 2017’s returns were above average (by about triple) and unlikely to represent an average annual return going forward.	Amateurs use the returns of last year to raise more money. “I made you 18% in 2017, let’s talk about the assets you’re still holding away from me. And maybe some referrals.”
Professionals maintain allocations through the start of January, with perhaps some rebalancing.	Amateurs turn over positions, incurring commissions and possibly taxes, and start to talk about the “playbook” for the New Year.
Professionals point to the holdings that didn’t keep up with US and global stocks as a teachable moment and a reminder that for diversification to work, not everything can be going up at the same time.	Amateurs look for replacements for the holdings that are “disappointing” the clients, switch out managers based on last year’s performance and cut down exposure to asset classes that aren’t “working.”
Professionals review client financial plans and have uncomfortable but essential conversations with households that are falling short of their stated goals.	Amateurs traffic in “Five Hot Stocks for 2018” and send out three-year return charts for funds they want to add to portfolios.
Professionals talk to clients who are far outpacing their goals about enjoying life more now.	Amateurs talk to clients about adding new hedging strategies and more alternatives.
Professionals admit they don’t know what the new year will bring, and focus instead on the durability of what they’re doing.	Amateurs have year-end price targets and can’t-miss sector bets.
Professionals will keep clients focused on the important stuff and get the job done in 2018, come what may.	Amateurs will direct client attention to all the wrong metrics and inevitably fall short, which means more prospecting come 2019 to replace disenchanted and under-served clients.

Donate Wisely

Whether you’re contemplating a last-minute donation for 2017 or planning a major move to define 2018, we advise you to donate wisely. The awesome decision tree below from Bloomberg assembles the advice from philanthropic advisers, nonprofits, and volunteer experts to help narrow down the best method of giving for you. Download a PDF if you’re having trouble reading it below.

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