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25 Important Documents You’ll Need Before You Die

death-dossierDesign your “Death Dossier” soon or you could be setting up your heirs for frustration and financial pain:

25 Important Documents You’ll Need Before You Die
The Essentials
• Will
• Letter of instruction
• Trust documents
Proof of Ownership
• Housing, land and cemetery deeds
• Escrow mortgage accounts
• Proof of loans made and debts owed
• Vehicle titles
• Stock certificates, savings bonds and brokerage accounts
• Partnership and corporate operating agreements
• Tax returns
Bank Accounts
• List of bank accounts
• List of all user names and passwords
• List of safe-deposit boxes		 Health-Care Confidential
• Personal and family medical history
• Durable health-care power of attorney
• Authorization to release health-care information
• Living will
• Do-not-resuscitate order
Life Insurance and Retirement
• Life-insurance policies
• Individual retirement accounts
• 401(k) accounts
• Pension documents
• Annuity contracts
Marriage and Divorce
• Marriage license
• Divorce papers

Learn more in this article

Got retirement plans? Your spouse may disagree

couple

A recent survey by Fidelity shows that wives and husbands don’t share retirement-planning duties nor agree on the plan:

  • Only 41% of couples surveyed handle retirement investment decisions together.
  • Only 17% of couples say either spouse is prepared to assume sole responsibility of their retirement finances.
  • Although women are more likely to outlive their husbands, only 35% of wives say they are completely confident in their ability to take over the finances. 72% of husbands feel they can.
  • 33% of couples say they don’t agree or don’t know where they plan to retire.
  • 62% of couples nearing retirement don’t agree on the age at which to stop working
  • 47% of couples nearing retirement don’t agree on whether they will continue to work in retirement.

Here’s what you should do and know:

  • Both husbands and wives should know where critical documents are kept
  • Both need to know what to do if their spouse is no longer able to assist with financial decision-making
  • Both should have an understanding of the family’s finances, savings, and investment goals.
  • Both should become active in financial planning and meeting with the family’s financial planner and investment manager.
  • Both husbands and wives should talk about retirement and finances more often together for better agreement and mutual understanding.
Simplicity

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?

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.

Lessons of History

historyHistory provides a huge wealth of wisdom for helping us grow and protect our money.  Trader-turned-educator-turned-financial planner Tony Isola provides an awesome analysis of the application of history lessons:

How can investors act as applied historians and use this skill set to create wealth?

There are several minefields that could easily be avoided with some knowledge of the past:

  • Most market corrections don’t turn into bear markets.
  • Using leverage to boost investment returns often ends badly.
  • The president has very little control over the global economy.
  • Buying new financial products at market peaks is a poor idea.
  • Bull markets last much longer than bear markets.
  • Stocks are six times more likely to be up 20% than down the same amount.
  • Uncertainty is always present and it is not a wise choice to use it as an excuse not to invest.
  • Stocks will do the best job of protecting future purchasing power over long periods of time.
  • Investing in the fastest growing world economies will not guarantee higher investment returns.
  • Most recessions haven’t turned into depressions.
  • Investment costs, savings rates and time in the market are the biggest components in generating healthy investment returns.
  • Factor investing won’t work for most people because of their cognitive deficiencies.
  • There is a large behavior gap between total mutual fund returns and what investors actually receive.
  • The great majority of mutual fund managers will underperform low-cost index funds because of costs.
  • Diversification works, just not every year.
  • Stocks can stay massively over- and undervalued for very long periods of time.
  • Real returns after inflation are the only returns that matter.
  • Stocks are in a bull market 85% of the time.

All of the following can be proven with applied historical analysis. This is a much better strategy than relying on your gut, or believing a compelling story, when allocating money.

Source: Teachable Moment

Financial Readiness: As Critical as Fully Charged Batteries

In light of the threat of Hurricane Florence to the Southeast of the U.S. this week, we want to spotlight the following important FTC Consumer Alert:

Home is where most people feel safe and comfortable. But sometimes — say, when a hurricane, flood, tornado, wildfire, or other disaster strikes — it’s safest to pack up and go to another location.

The Federal Trade Commission (FTC), the nation’s consumer protection agency, says that when it comes to preparing for situations like weather emergencies, financial readiness is as important as a flashlight with fully charged batteries. Leaving your home can be stressful, but knowing that your financial documents are up-to-date, in one place, and portable can make a big difference at a tense time.

Here are some tips from the FTC for financial readiness in case of an emergency:

  • Conduct a household inventory. Make a list of your possessions and document it with photos or a video. This could help if you are filing insurance claims. Keep one copy of your inventory in your home on a shelf in a lockable, fireproof file box; keep another in a safe deposit box or another secure location.
  • Buy a lockable, fireproof file box. Place important documents in the box; keep the box in a secure, accessible location on a shelf in your home so that you can “grab it and go” if the need arises. Among the contents:
    • your household inventory
    • a list of emergency contacts, including family members who live outside your area
    • copies of current prescriptions
    • health insurance cards or information
    • policy numbers for auto, flood, renter’s, or homeowner’s insurance, and a list of telephone numbers of your insurance companies
    • copies of other important financial and family records — or notes about where they are — including deeds, titles, wills, birth and marriage certificates, passports, and relevant employee benefit and retirement documents. Except for wills, keep originals in a safe deposit box or some other location. If you have a will, ask your attorney to keep the
      original document.
    • a list of phone numbers or email addresses of your creditors, financial institutions, landlords, and utility companies (sewer, water, gas, electric, telephone, cable)
    • a list of bank, loan, credit card, mortgage, lease, debit and ATM, and investment account numbers
    • Social Security cards
    • backups of financial data you keep on your computer
    • an extra set of keys for your house and car
    • the key to your safe deposit box
    • a small amount of cash or traveler’s checks. ATMs or financial institutions may be closed.
  • Consider renting a safe deposit box for storage of important documents.Original documents to store in a safe deposit box might include:
    • deeds, titles, and other ownership records for your home, autos, RVs, or boats
    • credit, lease, and other financial and payment agreements
    • birth certificates, naturalization papers, and Social Security cards
    • marriage license/divorce papers and child custody papers
    • passports and military papers (if you need these regularly, you could place the originals in your fireproof box and a copy in your safe deposit box)
    • appraisals of expensive jewelry and heirlooms
    • certificates for stocks, bonds, and other investments and retirement accounts
    • trust agreements
    • living wills, powers of attorney, and health care powers of attorney
    • insurance policies
    • home improvement records
    • household inventory documentation
    • a copy of your will
  • Choose an out-of-town contact. Ask an out-of-town friend or relative to be the point of contact for your family, and make sure everyone in your family has the information. After some emergencies, it can be easier to make a long distance call than a local one.
  • Update all your information. Review the contents of your household inventory, your fireproof box, safe deposit box, and the information for your out-of-town contact at least once a year.

Source: Federal Trade Commission

Happy Money: The Science of Smarter Spending

happy-moneyIf you think money can’t buy happiness, you’re not spending it right. Two rising stars in behavioral science explain how money can buy happiness—if you follow five core principles of smarter spending:

1. Buy Experiences
2. Make it a Treat
3. Buy Time
4. Pay Now, Consume Later
5. Invest in Others

 

“Buy Experiences” essentially means to spend money on memorable experiences instead of expensive toys, because you are able to relate to those experiences on an emotional level for much longer than with objects.

“Make It A Treat” focuses on the concept of over-consumption creating a weakening of the enjoyment factor. If you have something every day, even if it’s something you love, it becomes routine rather than fully enjoyable.

“Buy Time”: The idea that you make life decisions that allow you to have more free time. Suggestions include outsourcing unnecessary tasks.

“Pay Now, Consume Later” is a fascinating concept. In society today, we’re more apt to do the reverse, thanks to credit cards. Essentially, it’s sort of like half the fun of a road trip is getting there. When consummation is delayed, from something as simple as eating candy to attending an event, the enjoyment is increased. When something’s already paid for, if enough time passes, it seems “free” when it’s actually consumed.

“Invest In Others” hits on how donating or spending money on others feels better than buying things for yourself.

Happy Money (by Elizabeth Dunn and Michael Norton) offers a tour of new research on the science of spending. Most people recognize that they need professional advice on how to earn, save, and invest their money. When it comes to spending that money, most people just follow their intuitions. But scientific research shows that those intuitions are often wrong.

Happy Money explains why you can get more happiness for your money by following five principles, from choosing experiences over stuff to spending money on others. And the five principles can be used not only by individuals, but by companies seeking to create happier employees and provide “happier products” to their customers.

By the end of this book, readers will ask themselves one simple question whenever they reach for their wallets: Am I getting the biggest happiness bang for my buck?

What You Should Focus On

What-you-should-focus-on-1200x914We all want to live a great life.  The path to achieve that life relies, in part, on knowing what to focus on and what to ignore.  Focusing on the things you can’t control is a waste: a waste of time, energy, and often, money.  Here’s a list of things that matter, things you can control, and the things you should focus on.

Things that matter:

  • Health
  • Human progress
  • Long-term market returns

Things that you can control:

  • How you treat people
  • Feeling good about yourself
  • Making smart financial decisions

What you should focus on:

  • Living a happy, productive life
  • Surrounding yourself with good people
  • Not letting a long-term plan be derailed by the current market environment

 

Source: Carl Richards, Michael Batick

Two Deadly Assumptions

false-assumptionWe live in a world that is replete with financial scams. Here are two classic and deadly assumptions that can rapidly separate you from your money.

Deadly Assumption #1 — The guy belongs to my church / temple / country club / ethnic group, of course he’ll look out for me. 

Maybe he will, but is affinity a good enough reason to trust a financial advisor? Quarterback Mark Sanchez found out the hard way that this sort of thinking can easily lead one into the arms of a predator…

From ThinkAdvisor:

Former New York Jets quarterback Mark Sanchez and other professional athletes said they were cheated out of millions of dollars in a Ponzi-like scheme orchestrated by an investment advisor who appealed to their Christian faith.

Sanchez and Major League Baseball pitchers Jake Peavy and Roy Oswalt were defrauded out of about $30 million, according to a recently unsealed U.S. Securities and Exchange Commission lawsuit in Dallas federal court. The athletes all used the same broker, Ash Narayan, formerly of RGT Capital Management. The advisor gained their trust through religion and their interest in charitable works, the SEC said.

Deadly Assumption #2 — This advisor works for a big, prestigious firm and the product is very sophisticated, I deserve this special access. 

Structured products are a minefield for the wirehouse wealth management client because the firms’ “producers” are highly incentivized to sell them. Anything being pushed on the brokerage sales force by the home office is, by definition, perilous for the client. Because if it were so good, then no commission would be necessary – the product would be found by savvy investors and there would be no need for extra compensation. But structured products are unnecessary for most investors, although profitable for the firms that create them, hence the degree to which they’re sold to people.

As proof of this, you almost never hear of a fiduciary advisor recommending this stuff. It’s not even in the lexicon for a client-centric practice or an unconflicted advisor.

Source: TRB

 

The Best Advisors Will Tell You “NO”

As a fiduciary we’re obligated to put our clients’ interests first. This essential mandate can on occasion run into direct conflict with what a client wants.  There are circumstances where an advisor knows that what the client is requesting defies common sense and is at odds with his or her long-term interest.

What kind of things are we talking about? Here’s a short list courtesy Barry Ritholtz:

• Taking on more risk than is prudent.

• Buying the hot new thing.

• Participating in an expensive, underperforming private investment (e.g., hedge funds, venture capital).

• Using excess leverage.

• Following the advice of pundits or talking heads.

• Overtrading.

• Pursuing the latest media fixation.

• Speculating in commodities.

• Allowing emotions to steer investments.

• Buying low-quality, high-yield “junk” fixed income paper.

• Buying non-liquid investments (private equity, gated private investments).

• Market timing.

• Buying IPOs.

• Cherry-picking portfolio allocations.

Our gently communicated but firm response to all of these is “NO.”  All the academic research in the world suggests these are a bad bet.  As Barry says, “if you want to make an expensive gamble, enjoy a lovely vacation to Monte Carlo, but please leave your retirement plans out of it.”

That’s our stance on this issue and we take it from a position of deep care and protection for our clients.  But what’s your opinion?  Should advisors do what a client wants, even when the advisor knows it is not in the client’s best interests?

P.S.  In case you’re wondering…here’s what a big “YES” is in our book:
We invest through a broadly diversified set of indexes via a robust asset allocation model. It is global, inexpensive and primarily passive. It is statistically what is most likely to generate the highest returns for the least amount of risk over the long-term.

Nothing on this website constitutes either the provision of investment advice or solicitation to provide investment advice. Investment advice can only be provided through a formal investment advisory relationship. Copyright © 2019 NorthStar Capital Advisors - Charlotte, NC. All Rights Reserved.