Investors very often buy at high prices when the market is hot and attractive, and sell at low prices after observing periods of poor performance.
This leads average investors to severely trail both the S&P 500 index and the Barclays Aggregate Bond Index over long time periods. This is why investors are very often their own worst enemy.
CBS MoneyWatch author Larry Swedroe recommends in this article that you ask yourself if you believe that you’re best served by being your own advisor:
- Do I have the temperament and the emotional discipline needed to adhere to a plan in the face of the many crises I will almost certainly face?
- Am I confident that I have the fortitude to withstand a severe drop in the value of my portfolio without panicking?
- Will I be able to re-balance back to my target allocations (keeping my head while most others are losing theirs), buying more stocks when the light at the end of the tunnel seems to be a truck coming the other way?
Let’s face it. Buying meaningful gifts for our family and friends is really, really hard.
If you want to give something that has a larger impact long after the holiday season has passed, why not give the gift of financial education and wisdom for living a fulfilled life?
Given the academic background of our firm (“PhDs with passion”), I know the following is going to be a big shocker.
We love reading books and we love giving books as gifts!
Below you’ll find our revised & expanded 2020 NorthStar Guide to Gifts That Pay Off. It’s full of our favorite book and money-related gift recommendations for those ages 4 to 94!
So what’s the most valuable holiday gift of 2020? A fun lesson in financial literacy and living your best life!
It’s a season for giving thanks. And we wanted to thank you, our dear clients and friends, for allowing us to do what we love every day.
We’re thankful for the opportunity to work toward a mission that we truly believe in — helping families and communities articulate, underwrite, and fully embrace their great lives.
Please know that at Thanksgiving and always, we’re grateful for you.
May the good things in life be yours in abundance throughout the holiday season.
The NorthStar Team
The end of the year provides a number of financial planning opportunities and issues. These include tax planning issues, issues surrounding investment and retirement accounts, charitable giving, cash flow & savings, and insurance & estate planning issues.
We use the checklist below to proactively scan for many actionables to help serve our clients. In this checklist, we cover a number of planning issues that you need to consider prior to year-end to ensure you stay on track, including:
- Various issues surrounding your investment and retirement accounts including matching capital gains against any investment losses in taxable investment accounts and ensuring that all Required Minimum Distributions (RMDs) are taken.
- Tax planning issues including moves dependent upon your prospects for higher or lower income in the future. You will also want to review where you sit relative to your tax bracket as this is a good time to make moves to fill out your tax bracket for the current year that also might prove beneficial down the road.
- For those who are charitably inclined there are several strategies that will also help reduce your tax liability that can be considered based upon your situation.
- For those who own a business, tax reform has created some opportunities surrounding pass-through income from your business to your personal return. Accelerating or deferring business expenses presents another solid planning opportunity.
- It’s wise to review your cash flow situation as you near year-end to see if you can fund a 529 plan for children or grandchildren or to see if you can save more in an HSA or employer-sponsored retirement plan like a 401(k).
This is a comprehensive checklist of the types of year-end planning issues that you should be discussing with your financial advisor to ensure you maximize cash flow and tax opportunities in the current year and beyond.
It’s been a long journey to reach this election day and, if you’re like me, you’re plenty tired of the relentless politicking.
Case counts are rising around the country and winter is coming (34F overnight here in the Queen City of Charlotte).
A stimulus deal to help the folks who are scraping by seems stalled.
Markets are down (and up and down).
It’s hard to feel positive some days.
I’ve been noodling with a question I’d like to ask you.
When we take a look at 2020, it’s easy to see it as a long string of disasters, one after another.
And the last year has exacted a terrible cost. In lives cut short and dreams shattered.
But what if we look for the good stuff that happened as well?
Sometimes, it’s hard to remember the good things because they slip in quietly and often go unnoticed.
While the bad news announces itself loudly, instantly, and overwhelmingly.
What if we paused to ask: what good has come to my life because of this year?
I’m grateful for the additional time spent with my wife Rita and our children. It’s so easy to get caught up in the shuffle of work, school, activities, travel, and everything else. I’m glad we had the opportunity to slow down and make each other our refuge.
I developed a new appreciation for my neighbors in SouthPark. We were all thrown together during lockdown and I’m grateful for the opportunity to have gotten to know them better (especially John in the house across the street who generously introduced me to the joys of mechanized leaf removal).
I reconnected with old astronomy and physics major friends from the University of Virginia over Zoom. We’d drifted apart over the years and I’m glad we could catch up.
I think our grand experiment in remote work is going to yield big benefits to our society.
What good things came about in your life?
Will you share them with me (firstname.lastname@example.org)? I’d love to know. Hearing good news helps us all stay positive and moving forward.
|Chris Mullis, Ph.D., CDFA®
DO YOU THINK YOU’RE TOO SMART TO BE SCAMMED?
About 4 out of 5 people say yes.1 Most also believe they’re better than others at spotting scams.2 Yet, scams work—and they’re more prevalent and profitable than ever before.3 In fact, every 15 seconds, someone’s getting scammed.4
Each year, that’s billions lost. Seniors alone lose at least $2.9 billion a year to con artists.5 And they aren’t even the most vulnerable marks. Millennials are.6
So, why are financial scams more rampant and lucrative than ever before? Technology and the internet have been key. They’ve given scammers a better smokescreen and a global reach. They’ve also made it easier to perpetrate mass fraud schemes.7
Beyond having better tools, scammers also have better prey these days. The uncertainties of the day have made it easier to manipulate and con people.8 After all, we’re naturally averse to uncertainty.9 It scares us.10 It makes us desperate for stability and impulsive when a golden opportunity seems to arise.11
That’s an ideal combination for scammers. And it’s why financial fraud spiked during the pandemic, just like it did during the Great Recession of 2008.12
That paints a dark picture, but it’s not all bad news. If you know what modern cons look like, you can easily spot and avoid them.
What Multi-Billion Dollar SCAMS Look Like
1. IMPOSTER SCAMS
Imposter scams involve someone posing as a person you trust as a way to steal from you. They might pretend to be from the government or tech support, or a family member having an emergency. In 2019, they drained bank accounts of more than $667 million, with the average victim losing about $700.3
To spot an imposter scam, always be suspicious of out-of-the-blue callers or new online “friends” requesting wire transfers, payments by gift cards, or access to your computer. Ask for a number to call them back, then contact the agency directly to confirm what the caller told you.
2. IDENTITY THEFT
Identity thieves steal and use personal information for financial gain. About 1 in 3 Americans have been, or will be, the victims of identity theft. About 1 in 5 will be victimized more than once. Credit card fraud is the most common type of identity theft, followed by loan fraud and bank fraud.3 In 2019, child identity theft alone resulted in more than $540 million in losses.9
You can protect yourself against identity theft by safeguarding your personal information and records. Shred sensitive documents, regularly change your passwords, and monitor your credit report routinely. Address any suspicious charges or new accounts as soon as possible.
3. SHOPPING SCAMS
Online shopping scams offer great deals on luxury items or something for free if you pay for shipping. While some just want to steal your cash, others try to get you to click on an ad that’ll download a virus or malware to steal your information.10 In 2019, more than $136 million was lost to shopping scams.3
Avoid shopping scams by always checking out return/refund policies before making a purchase. Pay by credit card, keep receipts for online purchases, and carefully review your credit card charges each month for any suspicious activity.
4. JOB OPPORTUNITY SCAMS
These scams promise opportunities to work from home, start your own business, become a mystery shopper, and more. No matter what income opportunity is presented, they all ask for money up front.11 In 2019, these scams raked in about $85 million, with the average victim losing about $1,300.3
If you’re considering a new business opportunity, avoid a scam by doing your homework. Research opportunities before giving up cash or personal info. Check for any complaints against the company presenting the offer, and always get details up front, in writing.
5. PRIZE SCAMS
You’ve just won! But you have to pay some fee or share some personal information to collect your prize. That’s how lottery and sweepstakes scams work. They try to manipulate you once you’re excited and get you to act quickly.12 It’s how they stole more than $121 million from Americans in 2019.3
Remember, legitimate sweepstakes and lotteries never require payment for prizes you’ve already won. If you need to pay to collect a prize, it’s a scam. If someone claims to be from a legitimate company, like Publishers Clearing House, look up the company’s phone number and call for confirmation.
How to Turn the Tables on SCAMMERS & Protect Your Finances
You never know when or how you may be targeted by a scam.
Con artists can bait you at any time, and their schemes are becoming increasingly sophisticated and organized.
Some con artists are even joining respected organizations to appear more trustworthy and put a legitimate face on their schemes. Bernie Madoff is a prime example. It’s how he was able to run one of the largest Ponzi schemes in history.13
Yet, as tricky as financial fraudsters can be, they aren’t rocket scientists. Remember, no matter how fancy a con artist’s tricks or disguises may be, they ALL rely on the same tactics.
They stress urgency and exclusivity, emphasizing how special you are to have been selected for some opportunity or offer. They play on emotions, like fear and excitement, and they may even present themselves as experts. Above all, they always demand money or information up front before you get anything.14
Of course, some of these features aren’t exclusive to money scams. Some legitimate opportunities will be time-sensitive or require something up front.
With financial fraud, however, you can usually expect at least one big red flag—like wildly poor grammar, an out-of-the-blue notice of a winning or penalty, or a request to wire money via Western Union or MoneyGram.15
All that can be easy to overlook when you’re dazzled by an offer for the first time. These details are easier to see as red flags, though, when you take a second or third look.
So, always take your time when you’re considering any new financial offer or investment opportunity.
Ask questions, be skeptical, and seek out feedback from someone you trust.
As advisers, we’ve seen how easy it is for people to get swept up and swindled by financial scams, especially when economic turbulence hits. We’ve also helped my clients weigh their options, consider fresh angles, and make strategic decisions that better support their financial goals.
If you’re considering a new investment or you’re thinking of ways to scam-proof your finances, let’s talk. Call us at the number below. We’d love to hear about the opportunities or strategies you’re considering and share some helpful advice.
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