What Women Need to Know About Working With Financial Advisors | Tip #2

What Women Need to Know About Working With Financial Advisors | Tip #2

 

I want to acknowledge that all women are wonderfully unique individuals and therefore these tips will not be applicable to all of us equally and may be very helpful to some men and nonbinary individuals. This is written in an effort to support women, not to exclude, generalize, or stereotype any group.

 

I was recently reminded of a troubling statistic: Two-thirds of women do not trust their advisors. Having worked in the financial services industry for nearly two decades, this is unfortunately not surprising to me. But it is troubling, largely because it’s so preventable.

Whether you have a long-standing relationship with an advisor, are just starting to consider working with a financial planner, or are considering making a change, there are some simple tips all women should be aware of to improve this relationship and strengthen their financial futures.

Tip #2 – Tell Them What You Want

Studies have shown that women tend to be more goal-oriented than men. I have found it to be true that women are more likely to focus on goals like maintaining a certain lifestyle in retirement, sending children to college, or making sure the family is protected in the event of an emergency, while others may focus more on measuring investment performance.

At Merriman, we believe all investing and financial planning should be goal-oriented (hence our tagline: Invest Wisely, Live Fully), but many advisors still set goals that focus on earning a certain percentage each year. This can be especially difficult if your partner focuses on this type of measurement as well. Women (or any goal-oriented investor) can sometimes feel outnumbered or unsure of how to direct the conversation back to the bigger picture. You made 5%, but what does this mean for your financial plan? Can you still retire next year? The issue is not that you don’t understand performance or lack interest in market movements, whether or not this is true. The issue is that the conversation needs to be refocused on the things that matter to you. All of the truly excellent financial planners I have worked with have known this and do their best to help clients identify their goals, create a plan for obtaining them, and then track their progress. If you’re not experiencing this, it’s either time to look for a new advisor or to speak up and tell them what you want. Also, note that speaking up is more easily done when you work with an advisor you like (see tip #1).

There are many different considerations when hiring an advisor: Are they a fiduciary? Do they practice comprehensive planning? How are they compensated? What is their investment philosophy? They may check off all your other boxes, but if you don’t like them, you are unlikely to get all you need out of the relationship. If you’re looking for an advisor you’re compatible with, consider perusing our advisor bios.

Be sure to read our previous and upcoming blog posts for additional tips to help women get the most out of working with a financial advisor.

5 Ways You Can Rebuild Your Wealth in 2020

5 Ways You Can Rebuild Your Wealth in 2020

 

Everyone will agree that the COVID-19 pandemic has wreaked havoc on people’s budgets. Even financially disciplined individuals experienced a blow on their finances. You may have good plans and intentions for maintaining your wealth standards, but in the end there is nothing you can do when such an event happens. The catastrophe might have impacted your savings because of a decrease or loss of salary and income, or you may have had to overspend toward necessities during the pandemic when the prices of essential commodities shot up.

Sometimes low motivation and failure to hit the target can be the cause of wealth depreciation. However, as businesses reopen and people engage in their routine life activities, you might wonder what to do to regain your previous wealth status.

1. Cut on expenses

With low income due to the pandemic’s global impact, it is crucial to understand how you spend your money. Once you know where and how you spend your money, you can quickly determine what is essential spending and what is extra. You can sell or cut expenses with those things that you can survive without, like that other car, the vacation home, the RV—and even in a worst-case scenario, your home.

It might sound like an extreme tactic, but the benefits are immense. First, it will lower your necessary living expenses. Also, if one of these properties was attached to a loan, it will eliminate the debt. Lastly, when you sell—for example, that extra car or vacation home—you will have the much-needed cash to increase your savings.

What you need to understand is that selling or cutting expenses back will not happen forever. When you stabilize, it is easy to buy them back or even get better than what you sold. The aim here is to avoid going deep into financial depression by getting rid of expenses that are not essential.

2. Pay your debt in style

Be very strategic when it comes to paying off your debt, especially your credit card debt. Choose whatever model you think will work better for your situation, as no two financial cases are the same. In the first model, you can go the avalanche way. With this method, you focus on paying off the credit card with the highest interest rates first. Pay as much as you can toward that debt, but also pay at least the minimum amount toward the other accounts. This method will help you have the least interest in paying off your debt.

The snowball method, on the other hand, focuses on clearing the cards with the lowest debt first. In this method, once you clear one card, roll over to the next card with a minimal debt balance. Again, as before, as you clear the minimal debts first, pay at least the minimum amount toward the other cards, too. This will help you to have fewer loans to pay.

3. Continue saving despite the financial crisis

However hard it might be, especially when trying to pay off your debt, maintain a positive savings balance. With savings, the money can comfortably cushion you in case of an emergency. It can also help you achieve your financial freedom faster. Don’t strain too much, though; save as much as your budget allows to maintain a good saving habit.

4. If possible, take a side gig

If your current source of income does not generate enough wealth to return you to your previous state, consider adding another hustle. Is it possible to take up another job? Can you invest in a part-time business? A part-time business, dog walking, or freelance working will see your income grow faster.

5. Be patient

Though you are anxious to restore your finances, understand that this might not happen overnight. You should be prepared mentally and emotionally for the effort. Set up plans and specific goals to achieve, devoting time and focusing on effort toward achieving those goals. With sound steps and strategies, your financial situation will eventually get back to normal. Just remember that it will take some time.

 

Abby Drexler is a contributing writer and media specialist on behalf of Evolve Bank & Trust. She regularly produces content for a variety of finance blogs. 

 

 

Wellness as a Financial Strategy

Wellness as a Financial Strategy

 

I work with clients to create plans for spending, saving, investment, taxes, insurance, estate, and all the other items that, if managed, can lead to financial security and peace of mind.  Often, after all the planning, I get the question: What else can I do to help my financial situation?  While a good plan can help mitigate the ups and downs of the markets and the economy, it still can lead many to feel like they have little control over their situation.  This question often stems from a sense of not feeling totally in control of your financial situation because of volatile markets, the economy—and recently, a global pandemic.

One area I have started to introduce to my clients as a financial strategy is to consider doing an evaluation and plan for their physical and mental health.  The estimated average healthcare costs for a couple in retirement is $285,000.  This figure can include Medicare supplement premiums, deductibles, drugs, co-pays, dental, vision, counseling, and other care services.  Over the past 30+ years as I have been working with clients, I have seen firsthand how these costs are becoming an increasing burden to retirees as inflation in the healthcare industry is very much outpacing increases in incomes.

For many, chronic conditions like high blood pressure, high cholesterol, diabetes, obesity, heart disease, and auto-immune diseases are a big burden physically, mentally, and financially.  My story was typical of a lot of people I see.  Busy family life, high pressure jobs, and the stresses of life slowly add up.  Late in my 40’s, I was diagnosed with high blood pressure and started taking medication.  I thought I was in pretty good shape and didn’t give it much thought as my mom had high blood pressure all her adult life, and I thought it was hereditary.  As I got into my 50’s, my cholesterol and triglycerides started steadily increasing to unhealthy levels.  Like many, I ignored the slow decay of my physical and mental health.  Denial was strong.  I would get flashes of trying to stem the aging “tide” but would eventually fall back to poor exercise and eating habits.  There were always more important things to do than focusing on my health. Between feeling the aches and pains of nearing 60 years old and waking up to the knowledge of the effect my health would have on my retirement finances, I became acutely aware that I needed to seriously focus on my health.  My motivation of wanting to feel better physically and mentally was boosted by the fact that I wanted to use my retirement savings for better things than healthcare costs.

In late 2018, I got to work.  First, I did an inventory of my state of health.  To do this, I consulted with professionals, gathered tools and health data, and did a deep dive into educating myself about nutrition and mental wellness.  I also examined my consumption of food and alcohol, my utilization of exercise, and my stress levels and other facets of improving my emotional health.  Second, I set aside feelings of ego, guilt, and pride to create a realistic road map to improving my health.  One of the main things I learned right away is that there is no quick fix.  To reverse years of poor habits and choices, it takes a long period of time.  It definitely is a marathon and not a sprint, as to do it the right way involves lifestyle changes and not diets or boot camps.  

I’m eating less with mostly plant-based meals, exercising consistently, and addressing the stresses I face on many fronts.  It has been fabulous!  My energy levels are much higher, and I have a much more positive attitude about life in general.  For many years, I felt anxious about the state of my physical and mental health and that I couldn’t get the motivation to execute a good personal healthcare plan with consistency.  I’m glad the added boost of seeing improved health as a financial strategy has motivated me to create and execute the beginnings of a sound personal health plan.

We all live with the genetic lottery, and predicting our future health is difficult, but it would be ridiculous for me not to do everything in my power to live healthily and potentially not spend my hard-earned money on healthcare.  I encourage everyone to create and execute a health and wellness plan to feel great physically and mentally.  It also is a good financial strategy.

What Women Need to Know About Working with Financial Advisors | Tip #1

What Women Need to Know About Working with Financial Advisors | Tip #1

 

I want to acknowledge that all women are wonderfully unique individuals and therefore these tips will not be applicable to all of us equally and may be very helpful to some men and nonbinary individuals. This is written in an effort to support women, not to exclude, generalize, or stereotype any group. 

 

I was recently reminded of a troubling statistic: Two-thirds of women do not trust their advisors. Having worked in the financial services industry for nearly two decades, this is unfortunately not surprising to me. But it is troubling, largely because it’s so preventable.

Whether you have a long-standing relationship with an advisor, are just starting to consider working with a financial planner, or are considering making a change, there are some simple tips all women should be aware of to improve this relationship and strengthen their financial futures.

 

Tip #1 – Work with an Advisor You Like

You may think this is obvious or that this shouldn’t matter. Unfortunately, it isn’t obvious to many people, and I would argue that it may be the most important factor. If you don’t like someone, you are unlikely to trust them; and if you don’t trust them, you are unlikely to take their advice, even when it’s advice you should be taking. You’re also more likely to cut your meetings short or avoid them altogether. Chatting with my clients is one of my favorite parts of my job, and it’s also when I usually find out about the important changes in their life that they might not even realize impact their financial plan. It’s an advisor’s job to identify the financial impacts of your life changes, and your advisor can’t help if they are not aware of the changes. The better your relationship with your advisor, the more likely you will keep them updated—and the more likely they can help you make smart financial decisions.

Take some time to consider what’s most important to you when building a trusting relationship, and don’t be afraid to ask an advisor about their personality traits or communication style. You may need someone who is approachable and compassionate, or it may be more important to you that they are straightforward and detailed. I’ve worked with enough advisors to know we come in every shape and size you can imagine, so don’t settle for someone who isn’t a good fit.

This chart can be an extremely helpful tool for identifying your preferred communication style(s). Once you’ve identified your preferred style, you should be able to easily tell whether your advisor is communicating effectively according to your personality. If they aren’t, send them the chart! Strong communication skills are essential in financial planning, so they should be able to adapt to fit your preferences.

Aside from communication style, it may be important to you that you work with an advisor who shares certain values that you hold dear. I recently met with some new clients who I could tell were not completely at ease even though I thought we had hit it off. They were squirming in their seats when they finally got up the courage to ask me about my political leanings. When they learned that we felt the same way, they were visibly relieved. It was important enough to them that I don’t think they could have had a trusting relationship without this information. If you feel this strongly about anything, ask about it when interviewing advisors.

If you find you are having a hard time getting to know your advisor, ask to go to lunch. Once you get away from the office and their financial charts, it will likely be easier to build a connection. You may even get a free lunch out of it!

There are many different considerations when hiring an advisor: Are they a fiduciary? Do they practice comprehensive planning? How are they compensated? What is their investment philosophy? They may check off all your other boxes, but if you don’t like them, you are unlikely to get all you need out of the relationship. If you’re looking for an advisor you’re compatible with, consider perusing our advisor bios.

Be sure to read our upcoming blog posts for additional tips women need to know in order to get the most out of working with a financial advisor. You’ll notice that all of the other tips are much easier to follow when you work with an advisor you like!

Top Financial Tips for Property Investors

Top Financial Tips for Property Investors

 

For people who are just starting as property investors, investing in real estate can feel like a maze. They know where to enter as well as their desired exit point, but everything else is a puzzle.

Newbie investors can see that there is a lot of money to be made by investing in properties. They also know that all they need to get started as a property investor is to go out and buy an investment property. But as Windermere Management warns, the problem lies between buying the property and making it profitable.

Are there secrets to profitable real estate investing that new investors need to know? Yes, there are, and this post will help you get started on some of the most important ones. Here are the top tips for property investors.

 

1. Clarify your investment goal

Before you set out to look for a property to invest in, you should ask yourself what you want from the property. There are many options for what your investment goal for a property can be, and the particular goal you choose will define the best real estate investment strategy to pursue.

Your goal can be to save money on rent by investing in a property that you can live in and rent out at the same time. It can be a regular income and long-term value appreciation. It could also be that you want to make small to medium profits in a very short period. Clarifying your goal is the first step to defining your investment strategy.

 

2. Define your investment strategy and niche

There are several real estate investment strategies, and each one has its pros and cons. The best strategy for you depends on your particular circumstances and needs. Examples of real estate strategies include buy-and-hold, fix-and-flip, long-term rental property or vacation rental, and long-term rental property.

Apart from choosing your strategy, you should also decide your niche. This is the specific property type to which you want to apply your strategy. Examples of property niches include single-family houses, small apartment buildings, commercial retail, etc.

 

3. Understand what makes a location good

What factors make an area good or bad as a potential location for your investment properties? These are referred to as the area’s fundamentals. They include population demographics (age, income, education, etc.), good neighborhoods, a surplus of local shops and entertainment centers, good road networks and multiple modes of transportation, schools, hospitals, amenities, security, and employment opportunities. Gaining an understanding of the fundamentals will help you make a good decision about the best locations for your investments.

 

4. Find a mortgage broker who specializes in investment properties

Most mortgage brokers are familiar with residential mortgages, but the process for obtaining a buy-to-let mortgage is completely different from that of a residential mortgage. Using a broker who is familiar with investment property mortgages will help you get the best terms from lenders.

Who your broker is can mean the difference between an application that is rejected and one that is approved. And when buying houses below market value, the speed with which mortgage processes are completed can make or break a deal. This will depend on the experience and connections of your broker.

 

5. Use interest-only mortgage

When getting a mortgage for an investment property, you usually have a choice between interest-only payments or paying both the principal and interest. Choosing a mortgage that allows you to pay interest only is better.

It allows you to maximize cash flow and equity growth on the property while saving thousands in the mortgage payment. The money saved can be redirected into paying off the mortgage principal on your primary residence. Using interest-only mortgage also lets you take advantage of tax deductions for the interest payments on the investment property.

 

6. Avoid cross-securitization

This is when your investment loan is secured using more than one property. A common example is when an investor uses their home and the investment property as security for the investment loan.

The problem with this kind of loan structure is that it gives the bank control over properties that should normally not be connected to the investment loan. In the event that you default on the loan, the bank can sell your home. The better way to structure your loans is to split them up by using different banks for your investment property and your home. It costs more, but it is safer.

 

7. Understand the relevant tax laws

Getting a handle on the various tax laws as they relate to investment properties can be very difficult. Unless you are an accountant, it is highly unlikely that you will know all the small loopholes you can exploit to cut down on your tax expenses.

This is why you should not view the money spent on a good accountant as an expense. It is an investment that can help you make more money from your real estate business.

 

Written for Merriman.com by:
Tom Flanigan who is the owner of Windermere Property Management in Spokane, WA.
They manage rental properties in Spokane, Airway Heights, Liberty Valley, and Spokane Valley areas.

 

 

How Early is Too Early to Buy a House?

How Early is Too Early to Buy a House?

Home ownership is a goal for many Americans. After all, there’s nothing quite like going home to a place you know is truly yours. But when it comes to buying a house, the right time differs for everyone.

The problem is that buying a home can often feel like an uphill battle. Statistics from the US Census Bureau show that home ownership remains highest among those aged 65 years or older, which means that it remains a pipe dream for many others.

To be sure, there is some wisdom behind waiting until you’re financially secure before buying a house. If home ownership is part of your plan down the line, it’s best to work backwards in order to plan out just how you’ll get there.

Consider the types of houses available

Do you want to buy a house as soon as possible, or would you rather wait it out in order to get a larger property? As our post ‘Do I Need to Buy a Home to Be Successful?’ details how thinking ahead and considering your career path can help you determine whether you’d like to settle in a smaller or bigger space. It will also determine how much you are willing to spend.

In addition, you should also consider whether or not you’re planning to move any time soon. The Miami Herald found that millennial mobility is currently low, which can be beneficial when it comes to finding a home due to less competition. Millennials are also gravitating towards apartments and co-ops as this allows them peace of mind if they plan on moving; this leaves the market open for those who want to delve into houses. Therefore, knowing whether or not you’ll be settling down somewhere can help kickstart the home ownership process.

Check your mortgage

The Washington Post’s survey on financial care experts shows that there’s a lot of anxiety surrounding all the factors that go into buying a house. People get so caught up with the promise of owning a house that they forget the practical considerations that dictate what kind of property they can afford. You’ll also need to plan out your short and long-term financial goals in order to see how buying a home fits into these plans, which is where professional help comes in. A financial planner can take stock of your current finances as well as your goals in order to come up with the best housing loan for you. Research from Maryville University shows that financial experts now complement market knowledge with insights on investment strategies, which is why getting a consultation early on is hugely beneficial. The kind of mortgage you can take out depends on your financial standing, how much debt you owe, and your monthly income — all of which can be analyzed by a professional to make sure you get the best deal.

Spend time to find the best lender

On the subject of professional help, cultivating relationships with financial experts can help you own a home sooner rather than later. Real estate writer Julia Dellitt suggests seeing mortgage lending as akin to speed dating, where you get to know a handful of lenders before committing to one. Dellitt emphasizes that a difference in 0.5% interest may look small on paper, but it makes a huge difference in the total amount of interest paid over the lifetime of the loan. Giving the lender a full account of your finances allows you to narrow your search down to the best options.

Keeping your financial records in order also goes a long way in proving to lenders that you’re trustworthy. These steps will allow you to get pre-approved for a loan, which is an important requirement for many sellers.

The real estate market tends to be relatively stable, which means you shouldn’t consider jumping the gun once you see a dip in mortgage rates — especially if you aren’t ready. Since home ownership is a lengthy process, it’s worth asking early on whether or not it’s a journey you’re prepared to embark on soon.

 

Exclusively written for merriman.com

By Juliet Baesler