#goals

#goals

Many people in your life – from your fourth-grade teacher, to your parents, to your employer – have likely touted the benefits of setting goals for your future. You may have written down you would go to medical school and be a doctor, or get married and have children or buy your first home by 25. We create life plans and vision boards that project where we would like to be at some point in our future. And then often, they collect dust. They get pushed to the bottom of a stack of junk mail on your counter and you lose motivation.

As wealth advisors, we start with your personal goals. During our discovery meetings with clients, we spend time learning what’s important to them around money. Helping clients live fully requires understanding the values behind the goals, and without that, the numbers can feel meaningless.

Whenever my husband, Greg, and I meet with our advisor, we start by restating what we want to do: Short-term goals like taking a family vacation without incurring debt, medium-term goals like sending our kids to college, and long-term goals like that elusive early retirement. These things compete for our energy, and more importantly, our dollars. You see, regardless of how much money we have or make, the number of dollars we have is finite. Our goals, followed by the values we hold dear, dictate where those dollars go, and in what order.

I know you’re probably thinking, “Aimee, how does this help me? I know I don’t have infinite dollars.” My answer: Prioritization.

As an advisor, I know that a proper cash reserve, debt reduction and risk management plan are necessary for financial success. Beyond that, goal prioritization gets more personal. Greg and I hold family time, personal accountability, education and financial freedom among our top values. These dictate our savings plan. We plan for family vacations because it’s important for us to make memories and for our kids to spend time with our far-flung relatives. We balance some college savings with our retirement goals because we want them to take responsibility for their education, but want to provide what our parents did for us. My parents sacrificed to help me with an education at a private college, but I also paid with scholarships, loans and part time work.

So how do you take this information and apply it to your specific needs?

  1. Clarify your values. What are the things that encourage you to work towards a goal? Family? Education? Adventure? Philanthropy? Something else?
  2. Get clear on your goals. Write them down. Make sure they’re specific, measurable and have a time frame.
  3. Work with a financial professional. They can help determine if your goals are reasonable and put an action plan in place.
  4. Lastly, work with an accountability partner. Stay on track with the help of a spouse, significant other, professional, etc.
  5. Readdress your values and goals. Do this at regular intervals, or when things change.

As a wealth advisor, I follow this process with my clients, and Greg and I have been using it with our advisor for years. What I’ve found is that combining our values with prioritized goals has allowed us to achieve each one along the way and feel confident in our decision making around money. Let us know if we can help you the same way!

Merriman’s Take | The Role of Bonds

Merriman’s Take | The Role of Bonds

Stocks and bonds are the basic building blocks of our portfolio. Think of stocks as the offense and bonds as the defense. Bonds are basically loans to a government entity or company that are paid back over time. Depending on how creditworthy the borrower is and how long the borrower will take to repay the loan, bonds can be relatively safe investments, or carry more risk. The two big factors that help investors classify bonds are referred to as quality and maturity. (more…)

Merriman’s Take | The Role of Stocks

Merriman’s Take | The Role of Stocks

Stocks represent ownership in a company and provide the long-term growth an investment portfolio needs. When you invest in stocks, you invest in the growth of companies and the economy.

While bonds provide investors with stability and are more predictable, stocks have outperformed them for decades. Whether you invest in large companies or small ones, history shows that stocks will outpace bonds, as the above graph shows. Note, too, the difference between short and long-term bond investments. Over the last 90+ years, short-term bonds barely kept up with inflation, meaning investors who committed to short-term bond portfolios over the long term may have actually lost money over time. In fact, without stocks driving growth in a portfolio, even keeping up with inflation can be a challenge. We know that without stocks, an investment portfolio isn’t going to help you meet your goals. (more…)

Health and Auto Insurance – What’s Covered When You’re Traveling?

Health and Auto Insurance – What’s Covered When You’re Traveling?

Before traveling, it’s a good idea to figure out what your health insurance covers in case you have to make an unplanned visit to the hospital. Also, if you rent a car while traveling, the rental agency will ask if you want to buy rental car insurance, so it’s good to know whether you need it. Understanding how and where your health and auto insurance extend when out of town is important, especially if you want to avoid being on the hook for a big bill. First things first, though – make sure you travel with your healthcare insurance card for you and your family members, and bring proof of auto coverage. (more…)

Merriman’s Take | Stocks vs Bonds

Merriman’s Take | Stocks vs Bonds


What’s the best asset mix for you? You already know that your two major options are stocks and bonds. The choice between them represents a basic tradeoff: growth vs. stability. Investing in stocks is more likely to produce higher returns than investing in bonds, but with more volatility. (more…)

Traditional or Roth 401(k)?

Traditional or Roth 401(k)?

Often employers offer the option of contributing to a traditional 401(k) or a Roth 401(k). Do you know which one is right for you?

The primary difference is in the tax treatment. The traditional 401(k) gets a tax benefit at the time of contribution, because money contributed to such an account is not taxed. Moving forward, the earnings in your traditional 401(k) are not taxed as long as the funds remain in the account. When you begin to make withdrawals in retirement, the funds withdrawn are taxed as ordinary income.

Roth 401(k)s are taxed the reverse way. In these accounts, money is taxed when the contribution is made. Earnings on investments in your Roth 401(k) account are not subject to tax, and the money is not taxed when it’s withdrawn.

If the investor’s marginal tax rate is the same at the time of contributions and withdrawals, the traditional and Roth accounts would produce the same results.

Because of these differences in tax treatment, taxpayers in the lowest tax brackets should contribute to Roth accounts, while taxpayers in higher tax brackets will want to use traditional retirement accounts. As a general strategy:

When you’re in the 12% tax rate or lower: Contributions should be made to a Roth 401(k).

When you start moving into the 22% tax bracket: 50% of contributions be made to a traditional 401(k), and 50% to a Roth 401(k).

In your peak earning years: As you move into years with marginal tax rates above 22%, most or all retirement contributions should be made into a traditional 401(k) instead of the Roth.

If you’re still not sure which option is right for you, we’re happy to help.