The Secret to Successful Investment Strategy

The Secret to Successful Investment Strategy

What’s the secret? It’s simple really, have a written investment strategy. By my estimates, more than 95% of individual investors don’t have a written investment strategy and even some 85% of financial advisors don’t use them.

This strategy should reflect your principles, values and philosophies about your finances. You’ll rarely refer to this document during a bull market when your investments are increasing in value. On the other hand, when the market is going down and the value of your portfolio is less than you anticipated, the document will become invaluable. During uncertain times, otherwise very rational people tend to make very irrational decisions because their emotions overwhelm their reasoning. That’s why—whether you’re managing your money on your own or you use an advisor—you need to have a written investment strategy in place to remind you of your goals and your plan. As you craft your strategy, don’t be bullied into including any approach that doesn’t match your values or beliefs. This is your investment philosophy, not someone else’s.

See how our investment system actually performs and what we are telling our clients about the financial markets in our Quarterly Market Review. Request your copy today.

Determining the Right Trustee for Your Trust

Determining the Right Trustee for Your Trust

Designating trustees depends on how the assets of your estate will be distributed. The trustee’s job is simply to determine and inventory all the assets and distribute them according to the terms of your trust and/or will. The trustee could delegate this responsibility, which I highly recommend, to your attorney, financial advisor and perhaps accountant. Their involvement would then be primarily signing off on necessary paperwork.

If you’re comfortable with your children and other heirs receiving their inheritance in a lump sum, free of any restrictions, knowing they’ll exhibit a certain level of common sense and good judgment, then the best trustee would be a friend or family member.

If, on the other hand, you find it necessary to leave money in a trust where it would then be distributed over a period of years or perhaps the lifetime of a potential beneficiary (a minor child, someone with special needs, or drug/alcohol issues), you don’t want a friend or relative as the trustee, as the family relationship is likely to become strained. In these cases, we recommend you find an independent corporate trustee, not someone from a bank trust department or brokerage firm owned trust company. You and your family deserve an independent corporate trustee whose primary role is to provide the legal, accounting and administrative functions of a trustee.

Determining the right trustee can help your family members avoid unnecessary conflict later on. Knowing your options will help you prepare for what’s best.

Need assistance with your trustee designation? Contact us today and we’ll point you in the right direction!

Understanding Tax Preparation

Understanding Tax Preparation

You’ve all heard that old saying that you can’t avoid death and taxes. Unfortunately, this adage is true. Since I believe you should spend as much of your time as possible doing only what brings you immense joy and satisfaction, I doubt that filling out your tax return is one of these activities! That’s why I urge you to use a tax professional to prepare your taxes.

Here’s some guidance on who you should go to for tax preparation, from the tax expert we recommend to all of our clients:

The single biggest mistake most people make when they prepare their own tax return is inverting their numbers. This includes copying down a wrong number or putting a number in the wrong box on the tax return. And I should know since for the last twenty years, I’ve prepared over 1,200 individual tax returns annually! So, if it’s not you, who qualifies as an expert in tax preparation? There are three categories of professionals who prepare income taxes:

  1. Accountants: An accountant may have an education or background in accounting and may also take some tax courses. Accountants are generally experienced at accounting and business tax returns. They can do individual tax returns but their primary focus is on tax issues for businesses.
  1. Enrolled Agents: Enrolled Agents are focused on tax return preparation, not accounting. They can also represent you if the IRS audits you.
  1. Certified Public Accountants (CPAs): CPAs can prepare personal tax returns but their primary interest is working with larger businesses, which have ongoing year round accounting and tax issues, including payroll, financial statements, etc.

For personal and small business tax returns, I recommend you use either an Enrolled Agent or a CPA.

For more advice from experts in areas of financial planning, check out Brian Fricke’s book, Worry Free Retirement.