I’ve Been Laid Off — What Now?

I’ve Been Laid Off — What Now?

by | Feb 13, 2023 | 401k, Advisors, Ask Merriman, Chris Waclawik, Emergency Savings, Frank McLaughlin, Lowell Parker, Risk & Reward, Sarah Kordon, Sierra Butler, Tech Focus, Wealth Protection

 

News headlines everywhere are talking about widespread layoffs, particularly in the technology industry. Thousands of people have lost their jobs with still many more losses predicted in Q1 of 2023. With so many heavy hitters right here in the Pacific Northwest—Microsoft, Google, and Amazon, just to name a few—it’s likely these tech world layoffs affect you or someone you know.  Many of our own clients have expressed concern over their own job security, understandably anxious and full of questions.

 

Of course, the primary concern when facing a layoff is finding a new job, but that can take time. Here are a few things to think about as you adjust to your new normal. Perhaps most importantly, DON’T PANIC!

 

Here are the things that should be first on your list:

  • Give us a call! Your Wealth Advisor is here to help put your financial picture into perspective and to assist with planning to protect your investments. We can help you wade through the pros and cons of everything in this article—decisions regarding your 401(k), insurance, benefits, cash flow, taxes, retirement concerns, and more.
  • Start networking! Reach out to alumni groups, job boards, professional organizations, former colleagues, recruiters, etc.
  • Understand your rights under state law.
  • Review company documents and your severance agreement. There may be some terms of the layoff you can negotiate, like extending healthcare or retaining some company perks.
  • Apply for unemployment benefits.
  • Once you know the details of your severance agreement and unemployment benefits, plan out how to fill the income gap. See below for the pros and cons with some of the different options available.
  • Look at your options for any vested and unvested stock options or RSUs.
  • Review healthcare options. Should you sign up for Cobra, get coverage via a Marketplace plan, or join your spouse’s coverage? A layoff is a triggering event, so these options are all available to you, but there are pros and cons to each that depend on your situation.
  • Review your expenses and cut back if needed.
  • Consider your 401(k) options.

 

 

What are your options for filling the income gap?

 

Spending down your assets – Sarah Kordon, CFP®, CRPS®, Wealth Advisor

Ideally, you have an emergency savings account specifically appointed for a situation like this. If so, this should be the first asset you begin to use to supplement your income. Keep in mind that you will want to rebuild your emergency savings account after you are settled in a new job, so don’t spend frivolously. Revisit your monthly budget and look for ways to cut costs so you can stretch these savings for a longer period and rebuild them quickly when your new income stream picks up.

Spending down assets may also affect your larger financial goals, so before you dip into your savings and investments too heavily, be sure to consider the ramifications. Hopefully shorter-term goals, such as buying a new home or taking a grand vacation, can simply be postponed. Longer-term goals, such as retirement at a certain age, can also be adjusted if needed, but hopefully your emergency cushion is large enough to keep that from being necessary.

If you need to take distributions from investments, we can help you evaluate the tax consequences and understand the impact of such actions on your goals, which may make some tough decisions a little easier and provide you peace of mind.

 

Taking a 401(k) loan or withdrawal – Sierra Butler, CFP®, CSRIC™

When you’ve stopped getting a paycheck, using some of your 401(k) assets through a loan or withdrawal might seem like an attractive choice, but here are some reasons why it should be your last resort.

Most 401(k) plans do not allow new loans after an employee has left the company. If you already have a 401(k) loan, the plan may demand an immediate repayment or a shorter repayment plan. The loan must be repaid before rolling over the balance into a new 401(k) or IRA, which would prevent you from consolidating your accounts and potentially taking advantage of superior investments in a different account.

If you instead take a withdrawal from your 401(k), or if the loan is not repaid, it will be treated as a taxable withdrawal and is subject to ordinary income tax. Additionally, you will incur an early withdrawal penalty of 10% if you are younger than age 55.

One of the biggest risks of a 401(k) loan or withdrawal is missing out on market gains should the investments do well after you take the withdrawal. I caution folks from viewing their retirement accounts as piggy banks for current spending as it can be a quick way to deplete their retirement nest egg.

 

Should I take on gig or contract work? – Frank McLaughlin, CFP®, CSRIC™

This question depends entirely on your financial situation and tradeoff preferences. Assess these by asking yourself questions like:

  • Have I saved up enough cash to weather this period between jobs?
  • Am I able to cut back on certain expenses to allow me to search for a new job without taking on a gig? Is cutting back on expenses worth it, or do I prioritize maintaining a certain lifestyle?

Note: Don’t forget to consider new potential expenses, such as healthcare costs.

  • Do I have another source of income, such as a working spouse who could temporarily pick up the additional burden for a while? Would my significant other be okay with that arrangement?

If you find yourself answering no to more than one of the assessment questions above, taking on a side gig or contract work may be a great option to explore.

 

 

Could there be a silver lining?

 

Consider retiring early, staying home with the kids, or taking a sabbatical – Lowell Parker, CFP®

After a layoff, the most common course of action is to work toward finding a new job. But that isn’t the only path available to you. Burnout is real! Maybe this is your sign to take a break if you can afford to. Can you take this opportunity to retire early or stay home with the kids for a few years? Or perhaps take advantage of the temporary break from work and go on that long trip you’ve been dreaming about, or use the time off to work on a home remodel?

The obvious and large warning for any of these options is that your financial plan must support it. Do you know what these choices would mean for your future lifestyle? This is a major decision to make, and there are many factors to consider. What retirement lifestyle are you dreaming of? Are the assets you have saved enough if you won’t continue to have an income stream from a job? It’s important to revisit your financial plan and make sure you have saved enough to make work optional, whether temporarily or permanently, throughout a variety of potential future market scenarios. If this is something you’re considering, reach out to your Wealth Advisor to see if you can make it happen.

 

Make it work to your advantage at tax time – Chris Waclawik, AFC®, CFP®

After you’ve reviewed your income sources following a layoff and you have an estimate of the tax impact of using these sources for income, you may be able to create a plan to take advantage of the situation.

The “good” news is that a layoff, especially one that happens early in the year, can potentially place you in a lower tax bracket for the year, which opens up some planning opportunities. Here are a few to consider:

First, your health insurance choice may come with tax perks. When being laid off, many employees have the choice of COBRA, to extend current health insurance, or health insurance through the Marketplace. Purchasing coverage through the Marketplace can have subsidies (provided through your tax return) that can reduce the cost of coverage by over $1,000 per month depending on age, income, and the number of family members to cover.

Second, it may be possible to realize long-term capital gains at a 0% rate. This is a great opportunity to diversify out of a concentrated position without incurring a huge tax burden.

Third, finding yourself temporarily in a lower tax bracket can be a good opportunity for Roth conversions. By intentionally moving some investments from an IRA to a Roth account, you may be able to reduce taxes over your lifetime.

While I think everyone agrees layoffs aren’t fun to experience, at least we may be able to take advantage of them to reduce our tax burden for that year and potentially well into the future.

 

If you are experiencing a layoff yourself, remember: Your first step should be to contact your Wealth Advisor. If you’re not already working with one, schedule a meeting today. We can take some of the stress of these decisions off your plate and help you find the silver lining.

 

 

 

 

Disclosure: All opinions expressed in this article are for general informational purposes and constitute the judgment of the author(s) as of the date of the report. These opinions are subject to change without notice and are not intended to provide specific advice or recommendations for any individual or on any specific security. The material has been gathered from sources believed to be reliable, however Merriman cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source.  Merriman does not provide tax, legal or accounting advice, and nothing contained in these materials should be taken as such.

Guilt-Free Spending

Guilt-Free Spending

by | Sep 20, 2022 | Advisors, After you retire, Preparing for Retirement, Risk & Reward, Sarah Kordon, Tech Focus, Wealth Enhancement

 

Just the thought of setting a budget can be enough to send us running for the hills. The other day, I had lunch with a friend who is a fellow career mom. We often swap stories about our busy lives and commiserate about how hard it can sometimes be to balance work and motherhood. Her career has taken off over the last year, but she looked more relaxed than ever. She shared that she and her partner had decided to outsource many of the household responsibilities they had historically struggled to keep on top of and often bickered over. After telling me what an amazing gamechanger this had been for her mental health and her family, her expression quickly changed to one of guilt as she admitted that the services were costing them quite a bit. Despite her increase in income, she felt embarrassed and irresponsible about how they much they were spending on services some would consider unnecessary. To her it sometimes felt as if they had traded their weekly arguments over household tasks with monthly disagreements over money.

I could relate to her experience on both a personal level and a professional one. After assuring her this was a common struggle, I shared tips with her that have helped many of my clients over the years. The traditional guidance for people grappling with feelings of guilt, self-reproach, or insecurity over their finances is to create a strict budget and stick to it. Some people enjoy a disciplined approach to things, but for many of us, avoiding the need for strict budgets can be a primary driver for saving and working hard. Tracking every small expense, feeling guilty about how much you spent last month, questioning partners on their expenditures, and generally feeling restricted—what’s to like? It’s right up there with counting calories, so I understand why people avoid it altogether.

If you’re like many high-income earners and people who have saved well, you might feel that avoiding the need to budget is a right you have earned. After all, you’ve worked hard so you don’t have to count every penny, right? The trouble is that it puts you at risk for not meeting larger goals such as a comfortable retirement, paying down debt, college funding, or making a large purchase; and it can also leave you feeling out of control and dissatisfied. Whether you are a busy professional struggling to figure out why you don’t have more money at the end of every month or you are already retired and unsure how to balance your personal spending with other goals, there is a strategy that can help you feel more in control of your money without having to budget.

 

Pre-Retirement Reverse Budgeting Process:

By taking these steps, you ensure your savings goals are met first, and anything that remains can be spent on whatever you desire, without guilt!

  1. Identify your goals.
  2. Determine how much you need to save on a periodic basis to meet these goals—the easiest way to do this is to work with your financial advisor to create a financial plan.
  3. Set up an automatic savings plan with a combination of payroll deductions and automatic monthly transfers.
  4. Enjoy the freedom to spend what is left as you choose and the peace of mind that comes with knowing you are able to meet your goals!

To make this process work for you, it’s important to start with a cushion in your checking account and to review your checking account at least monthly and before making large purchases to ensure you are maintaining a sufficient balance. If you find yourself running short, you can pull back slightly on small discretionary purchases and build that cushion back up so you aren’t forced to dip into your savings for something other than the goals you have set. We all tend to spend more when we are feeling flush, so checking your bank balance periodically should allow you to reign in non-essential expenses for short periods and return to guilt-free spending in no time. If you find a significant gap, you may need to examine recurring expenses for areas to cut back or reassess your savings goals.

 

Retirement Goal Funding Process:

You worked hard, you saved, and now you are living the retirement dream, but that doesn’t mean you’ve accomplished all your financial goals. Many people in retirement want to leave a certain amount to charity, help their children buy a home or start a business, help their grandkids with college, save for a large purchase such as a second home, or plan ahead for long-term care expenses. When you have a set amount of assets that need to provide for a lifetime of expenses and several other large goals, it can be hard to determine whether you have enough and what you can afford.

It’s also common for retired people to struggle with the transition from saving to spending. If you have been a disciplined saver and enjoyed watching your nest egg grow, the idea of diminishing it can be incredibly stressful. This process has helped many of my clients discover a new sense of financial comfort and freedom.

  1. Identify your goals. What do you anticipate for recurring annual spending? Do you have any legacy goals, plans for long-term care, or larger purchases, gifts, and donations to consider?
  2. Work with your financial advisor to run financial projections that account for investment returns, market volatility, inflation, taxes, etc.
  3. If the projections show you are not able to attain every goal, work through prioritizing and adjusting your goals until your projections show results you are confident in.
  4. The end result should provide you with an annual amount you can confidently spend while giving you peace of mind that you are able to meet your other goals as well!

 

One final, crucial step in the financial planning process is to meet with your advisor periodically to make sure you stay on track to meet your goals and discuss how goals may change for you over time. A great advisor will review your entire financial picture to make your money work its hardest for you and not only maximize your potential for meeting those goals but also encourage you to reach for the stars and live fully along the way. If you’re not already working with an advisor or are looking for someone who can provide this type of comprehensive support, we’re happy to help—schedule a consultation now!

 

 

 

 

Disclosure: All opinions expressed in this article are for general informational purposes and constitute the judgment of the author(s) as of the date of the report. These opinions are subject to change without notice and are not intended to provide specific advice or recommendations for any individual or on any specific security. The material has been gathered from sources believed to be reliable, however Merriman cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source.  Merriman does not provide tax, legal or accounting advice, and nothing contained in these materials should be taken as such.

Do Luxury Cars Need an Active Warranty?

Do Luxury Cars Need an Active Warranty?

by | Aug 9, 2022 | Goal Planning, Risk & Reward, Wealth Preservation

 

If you own a luxury car, do you need to have an active warranty on it? That’s a question that has been on many minds lately, particularly those who own or are looking to purchase a high-end vehicle. Here we’ll take a look at what an active warranty is, the pros and cons of having one for your luxury car, and who might benefit from purchasing one. So whether you’re in the market for an exotic sports car or are simply curious about this topic, read on.

 

The Benefits of an Active Warranty

When you invest in a Rolls-Royce Phantom, you’re not just buying a car—you’re making a statement. This is a vehicle that exudes luxury, and its price tag reflects that. But what many people don’t realize is that a Rolls-Royce is also a complex machine, with hundreds of moving parts. That’s why it’s so important to have an active warranty.

An aftermarket warranty can help cover the cost of repairs and services, and it gives you peace of mind knowing that you’re covered in case of any unforeseen problems. So if you’re thinking about buying a luxury car, make sure you factor in the cost of an active warranty. It could end up being the best investment you ever make. Take a look at the different warranty providers; for example, see how CarShield warranty costs differ from other providers.

1. Luxury cars are often expensive and have high maintenance costs

Anyone who has ever owned a luxury car knows that they come with a high price tag. Not only are the initial costs higher than for a standard car, but luxury cars also have much higher maintenance costs. Warranty coverage is generally much more expensive for luxury cars, and repairs can also be quite costly.

In addition, luxury cars often require premium gasoline and may need to be serviced more frequently than standard cars, adding yet more to the overall cost. However, for many people, the high cost is worth it for the prestige and status that comes with owning a luxury car.

2. Warranties can help you protect your investment

Warranties are a great way to protect your wealth. When you purchase a vehicle, you want to be sure it will last for years to come. A warranty can help you do just that. By ensuring that your vehicle is protected against defects and damage, you can rest assured that it will continue to run smoothly for years to come. What’s more, a warranty can also help you avoid costly repairs. In the event that something does go wrong with your vehicle, a warranty can help to cover the cost of the repairs. As such, warranties are an excellent way to protect your wealth and ensure that your vehicle remains in good condition for years to come.

3. There are a variety of warranties to choose from

As you approach retirement, it’s important to start thinking about how you’ll protect your assets. One way to do this is to purchase an aftermarket car warranty for your vehicle. There are a variety of options available, so you can find a plan that fits your needs and budget. It’s important to compare plans and prices before you make a decision, but an aftermarket warranty can be a great way to protect your investment and provide peace of mind.

4. They can help you save money over the life of your car

If you’re like most people, you probably don’t give much thought to car warranties. However, if you’re the owner of a Porsche Panamera, an aftermarket car warranty can be a lifesaver. Porsche is known for its luxury cars, and the Panamera is no exception. With a starting price of $85,000, it’s one of the most expensive cars on the market. And because it’s a Porsche, you can expect to pay more for repairs and maintenance than you would for a less luxurious car.

An aftermarket warranty can help to offset some of these costs. In addition, it can give you confidence knowing that your car is covered in the event of an unexpected breakdown. Whether you’re looking to save money or to protect your investment, an aftermarket car warranty is worth considering.

 

When You Don’t Need an Active Warranty

Anyone who’s ever driven a luxury car knows that they’re a different breed altogether. They’re smoother, sleeker, and generally just better all around. But one of the best things about them is that despite their higher price tag, they don’t require an active warranty. That’s right—you can buy a luxury car and not have to worry about forking over extra money every month for a warranty. And why is that? Because luxury cars are built to last. They’re made with higher quality materials and designed to withstand whatever life throws their way. So go ahead and treat yourself to a luxurious ride. You deserve it!

1. You can afford to pay for repairs yourself

If you don’t mind spending the money and can afford to pay for repairs yourself, you don’t need an aftermarket warranty. For example, if you have an Audi A8, the cost of repairs and maintenance will be much higher than the average car. However, if you have the money for it, you won’t have to worry about paying for repairs down the road. Aftermarket warranties often have a lot of fine print that can exclude certain types of repairs. So, if you can afford to pay for repairs yourself, it’s probably the best option.

2. It’s not worth the extra money

Aftermarket warranties are often not worth the extra money for a number of reasons. First, they tend to be much more expensive than the manufacturer’s warranty. Second, they often have a lot of exclusions and restrictions that make it difficult to actually use the coverage. Finally, many people find that they never actually need to use the coverage. For these reasons, aftermarket warranties are not always worth the extra money.

Financial freedom is important, and there are better ways to spend your money than on an aftermarket warranty. Financial freedom gives you the ability to live your life the way you want to live it, and it is something that everyone should strive for. There are numerous things you can do to achieve financial freedom, and buying an overpriced warranty is not one of them.

3. Luxury cars are built to last

Luxury cars are built with the highest quality materials and components so they can withstand the rigors of daily driving for many years. That’s why luxury car owners don’t need to buy an extended car warranty. The factory warranty will cover any repairs that are needed during the first few years of ownership. After that, the car will continue to run reliably for many more years, with only routine maintenance required to keep it in top condition. So if you’re thinking of buying a luxury car, rest assured that it will provide years of trouble-free driving enjoyment.

4. The claims process is complicated

The extended car warranty claims process is complicated. If you bought a car with an extended warranty, you’re likely to find that the process for filing a claim is much more complicated than you anticipated. In order to get your claim processed, you’ll need to provide a lot of documentation, including proof of purchase and a detailed description of the problem. You’ll also need to be prepared to negotiate with the warranty company, as they will likely try to lowball you on the repairs. However, if you’re persistent, you can get the full value of your extended warranty. Just be prepared for a long and complicated process.

When it comes to luxury cars, there are many things to consider. You need to think about the cost of repairs and maintenance, whether you can afford them, and whether an aftermarket warranty is worth the money. Ultimately, it’s up to you to decide if you need an extended warranty for your Genesis G90. If you’re comfortable with the costs and don’t mind dealing with the complicated claims process, then go ahead and buy a warranty. But if you’re not sure that an aftermarket warranty is right for you, don’t feel pressured into buying one. There are plenty of other ways to protect your investment in a luxury car.

 

 

Written exclusively for Merriman.com by: Georgia Henry. 
Georgia Henry is originally from South Orange, New Jersey. After studying marketing in college and minoring in finance, she discovered her true passion: writing. Georgia loves to ski and has been on many amazing vacations, but her favorite was when she visited the petrified forests. She also enjoys painting and watching Olympic wrestling. In her spare time, she likes to hang out with her cat named Tom Petty.

 

 

Disclosure: All opinions expressed in this article are for general informational purposes and constitute the judgment of the author(s) as of the date of the report. These opinions are subject to change without notice and are not intended to provide specific advice or recommendations for any individual or on any specific security. The material has been gathered from sources believed to be reliable, however Merriman cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source.  Merriman does not provide tax, legal or accounting advice, and nothing contained in these materials should be taken as such.

The Building Blocks of Portfolio Risk Management

The Building Blocks of Portfolio Risk Management

by | Jul 12, 2022 | Advisors, Goal Planning, Lowell Parker, Psychology of Investing, Risk & Reward, Tech Focus, Wealth Preservation

 

When markets are rising, risk management seems easy—invest, sit back, and watch your investments grow. Things get a bit trickier when the markets experience volatility and decline. These are the times when you need to understand the amount of risk your investments are subject to and how that risk relates to your financial plan.

 

The first and least tangible measure of risk is qualitative in nature: how much risk are you willing to take? How would you feel, for example, if the markets declined more than 20%? What if the markets fell by more than 40%? Generally, what is the level of decline that you are comfortable with that will encourage you to stay invested and allow for your plan to thrive? Take some time to think about it. While it is easy to come up with a threshold or a hypothetical number, it is different in real time (consider the financial crisis or the markets’ initial response to the COVID outbreak, for example).

 

Once we have a handle on your subjective feelings around risk, there are a variety of tools we use here at Merriman Wealth Management to help our clients manage the quantitative measures of risk.

 

First and most important is answering this question: what is the amount of risk my portfolio can take within the context of my financial plan? This is a super important question. Too often, folks will bifurcate their investment and financial plans. This does not typically lead to successful outcomes. We manage this for clients by calculating statistically valid risk and return measures for our clients’ portfolios—i.e., we expect an all-equity portfolio to return 9.52% net of fees per year with a standard deviation of 20.49. A more moderate 60% equity portfolio would return at 7.95% and 13.06, respectively. Understanding these figures within the context of your accumulation and distribution plans is what matters. The typical recipe is for folks in their early years to take on more risk, as they have time for the markets to recover from declines. In contrast, folks later in life have less time to recover, and a more moderate portfolio is conducive to their plan.

 

The next risk management tool to understand centers around the sequence of returns. While one can craft statistically valid long-term expectations for portfolio risk and return, it is extremely difficult to predict returns in any given year. Consider 2020: who would have thought the markets would have rebounded so swiftly?

 

One thing to keep in mind with respect to sequence risk is what we call “bad timing.” What happens if you retire (switch from accumulating to decumulating) and the markets have two successive bad years? This is a good stress test for your portfolio. Pass this test, and your plan is likely in good shape.

 

The next measure to consider is the longer-term variability of returns. We measure this by running 1,000 different return trials for our clients (Monte Carlo analysis), effectively looking at everything from years of sustained above-average performance to years of sustained below-average performance and everything in between. The results are considered a success if greater than approximately 80% of the trials result in money remaining at the “end” of your plan. 

 

In conclusion, consider the list of questions below as you evaluate the risk metrics of your plan:

  • What are the risk dynamics of my current portfolio, and how do these relate to my financial plan?
  • What is the outcome of my financial plan if I retire and the markets have two successive bad years?
  • How am I accounting for the sequence of returns? What is my plan’s probability of success—will I have money left at the end of my plan?

 

Here at Merriman Wealth Management, we live by our tagline of “Invest Wisely. Live Fully.” If you are a Merriman client, we’ve got you covered. If you are not a Merriman client and would like a holistic review of your financial plan and corresponding risk metrics, let us know, and we would be happy to take you through our complimentary Discovery process.

 

 

Disclosure: The material is presented solely for information purposes and has been gathered from sources believed to be reliable, however Merriman cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. Merriman does not provide tax, legal or accounting advice, and nothing contained in these materials should be relied upon as such. Nothing in this presentation in intended to serve as personalized investment, tax, or insurance advice, as such advice depends on your individual facts and circumstances. Past performance is no guarantee of future results.  Advisory services are only offered to clients or prospective clients where Merriman and its representatives are properly licensed or exempt from licensure. No advice may be rendered by Merriman unless a client service agreement is in place.

Home Repairs: DIY vs Hired Work

Home Repairs: DIY vs Hired Work

by | Jun 14, 2022 | Real Estate, Risk & Reward, Wealth Enhancement

 

It’s a tricky decision: hire someone to make home repairs for you or do it yourself.  Some are inclined to tackle their home improvement projects themselves to save money. It can even be satisfying to use your own hands to do a job. However, some home renovation projects are better handled by professional contractors.

Whether you plan on making significant structural changes to your house or just looking to make some upgrades, it would be a wise idea to determine which projects work best as DIY and which ones you need a professional for.

Read on to learn the benefits of DIY home improvement versus hiring a professional for the job. Moreover, you will learn how to decide between the two approaches for specific tasks.

Hopefully, it will give you better insights for your next project.

How to Decide Which Improvement Route to Take?

Deciding whether to take up a home renovation project yourself or seek the help of professional general contractors can be a confusing process. Let’s look at it in two parts.

First, let’s explore when it makes sense to tackle a DIY project to save money and when it is best to hire a professional to do the job. Then we’ll go over the pros and cons of each option.

 

 

When to Take the DIY Approach

You may pursue the DIY approach whenever any of the following conditions are true:

The project is not complicated and is easy to learn.

DIY jobs are not meant for complex projects that require specialized knowledge and fine-tuning. You should leave all of that to a professional. However, if the project is not complicated and you are willing to take the time to learn the basics of the job, you can take the DIY approach for that particular task.

You are not looking for perfection.

There’s a big chance that your remodeling project might not be as good as you anticipated it to be if you do it yourself. Are you okay with that? If yes, you can treat the project as a DIY job and enjoy saving money.

You like working on simple home improvement projects.

If you really enjoy DIY projects, then that will make your decision easy. Do you treat it as more of a hobby than a job? If yes, you should try the DIY route for specific home projects.

 

 

When to Hire Professional Help

Consider hiring a professional whenever one or more of the following conditions are true:

The project requires a building permit.

Numerous jurisdictions require a permit to facilitate electrical work or other structural changes. The ideal process would be to contact your city planner and find out your area’s licensing requirements. Such jobs often require special skills, so hiring a licensed contractor to perform them may be required.

A mistake could have serious consequences.

Some home improvements require a combination of a careful balancing act and expert supervision to ensure that nothing goes wrong. Even if you can find ways to burglar-proof your home, mistakes can keep your house vulnerable and weak.

Therefore, it is best to hire a professional, who often provides insurance for their job, if something goes wrong.

You plan on selling the house.

If you have a clear vision of selling your house in the future, you should seek professional help for most of your home repair work. Why? Because amateur DIY work can often turn off potential buyers and even reduce the value of your home.

If you are interested in learning the craft, you can work as a general contractor under a professional for larger projects like bathroom remodeling or plumbing.

 

 

Pros and Cons of Hired Work

Suppose you have decided to hire a pro after analyzing all the factors. In that case, you must check the professional license of your contractor and then think about the following pros and cons.

Pros

  • High-quality results
  • Keeps you out of any physical danger
  • Keeps the house value intact
  • Ideal for major work

Cons

  • Costs more money
  • Binds you to a strict project schedule

 

 

Pros and Cons of DIY

If you have considered all the essential factors and have decided to go for a DIY approach, keep in mind these pros and cons:

Pros

  • Ideal for smaller jobs
  • Saves money
  • Helps you learn a new skill

Cons

  • Compromised work quality as compared to reputable contractors
  • Can cause physical injuries
  • Not possible for building projects that require permits

 

 

Final Words

Your home is your safe haven. It is necessary to weigh all the pros and cons of both approaches when determining whether to go for a DIY job or hire a professional for your home renovations.

On the one hand, a DIY job is ideal for small projects and can help you potentially save a significant amount of money and raise your skill level.

On the other hand, a licensed professional should always handle complex home repair jobs related to cabinet hardware, hardwood floors, plumbing, and electrical work. It might cost you more money, but it guarantees quality results.

Moreover, it keeps you and your family safe from any physical injuries and keeps the value of your house intact. So, take note of the above approaches before you start on your home improvement projects.

 

 

 

Written exclusively for Merriman.com by: Ben. 

Ben is a Web Operations Executive at InfoTracer who takes a wide view from the whole system. He authors guides on entire security posture, both physical and cyber.

 

 

 

Disclosure: All opinions expressed in this article are for general informational purposes and constitute the judgment of the author(s) as of the date of the report. Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Merriman. The material has been gathered from sources believed to be reliable, however Merriman cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source.  Merriman does not provide tax, legal or accounting advice, and nothing contained in these materials should be taken as such.

Common Investor Mistakes During Market Corrections

Common Investor Mistakes During Market Corrections

by | May 17, 2022 | 401k, Andy Bloom, Investing 101, Psychology of Investing, Risk & Reward, Tech Focus

 

When it comes to investing, market corrections are inevitable. Since 1950, there have been 37 declines in the S&P 500 of 10% or more—or approximately one every two years. Enduring these corrections is the price we pay as long-term investors striving to meet our financial goals. How we act during these time periods is what separates the rookies from the professionals and can dramatically alter how successful we are in achieving those goals.

We all tend to have a higher risk tolerance when markets are performing well. During a review with our financial advisor in the comforts of a home or office, we can easily imagine a world where stocks might be 10% to 20% cheaper on paper and how that may impact our financial goals. However, when we think about future risks in the markets, we tend to underestimate how we will feel in the moment. We lose sight of what else is happening in the world that is causing the markets to decline and how that might impact us personally. This year is no different, and the laundry list of reasons is long:

  • The war in Ukraine is costly
  • Inflation is the highest in 40 years
  • The Federal Reserve is tightening monetary policy
  • The supply chain is a mess
  • Mortgage rates are rising at the same time housing prices are at all-time highs
  • The pandemic is not over
  • Market valuations are too expensive, and we are overdue for a reset

The bottom line is, there is always a reason for why we experience market volatility, and how that impacts us personally can create stress, fear, and anxiety. When we let our emotions take over, we naturally have an urge to do something about it. These emotional reactions can lead to mistakes that can reduce the probability of meeting our finance and investment goals. Below are common mistakes investors make during market corrections and steps we can take to help mitigate costly errors.

 

Mistake #1: Looking at the market daily

When headlines are scary, the daily moves in the stock market are volatile and unpredictable. Checking the market or your portfolio frequently will only heighten any fear and anxiety and may result in poor investing decisions. During difficult markets, it is important to remember that you have an entire team working for you at Merriman. We have designed your portfolio using decades of academic research to weather all types of market environments so you can have peace of mind. We are also here to take on any blame for when things do not go as planned. You should take advantage of the resources at Merriman and schedule a time with your advisor to help refocus on your long-term plan.

 

Mistake #2: Deviating from an investment plan or not having a plan at all

Another reason you have an advisor at Merriman is to create an investment plan that aligns with your goals, return expectations, and risk profile. The plan is a customized, long-term strategy meant to withstand multiple market cycles. If you have the urge to change your plan during a market correction, then have a conversation with your advisor and ask the following questions: Have my long-term goals changed? Am I still on track to meet those goals? If I deviate from my investment plan, how will that impact the probability of successfully meeting my goals? These questions will help reduce any reactionary emotions and shift your mindset back to the big picture.

 

Mistake #3: Trading more frequently or trying to time the bottom

Day trading and market timing strategies are automated systems that utilize algorithms and programmed rules designed to execute trades in milliseconds. This places the human day trader at a significant disadvantage. While the data supports that day trading or attempts to time the market are not additive to long-term returns, market corrections can be an excellent time to be a buyer.
However, it is vital to have an investment plan in place so you are prepared to execute in the moment. As an example, a rebalancing strategy is one method that is highly effective for long-term results. This removes emotions from the equation and allows for a disciplined plan of attack during market downturns.

 

While your feelings play a vital role in determining the right long-term strategy for you, we cannot let emotions dictate our investing decisions, particularly during market corrections. This can lead to short-term mistakes that, left unchecked, can have negative impacts on your retirement goals. A disciplined investing approach based on facts, not emotions, is the winning formula.

 

 

 

Disclosure: All opinions expressed in this article are for general informational purposes and constitute the judgment of the author(s) as of the date of the report. These opinions are subject to change without notice and are not intended to provide specific advice or recommendations for any individual or on any specific security. The material has been gathered from sources believed to be reliable, however Merriman cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source.  Merriman does not provide tax, legal or accounting advice, and nothing contained in these materials should be taken as such. To determine which investments may be appropriate for you, consult your financial advisor prior to investing. As always please remember investing involves risk and possible loss of principal capital and past performance does not guarantee future returns; please seek advice from a licensed professional.