Great Opportunity to Use a DAF

What is a DAF you ask?

Donor Advised Funds, or DAFs, have been around for a while. The first ones were set up in the 1930s and Congress gave them formal standing in 1969. And they may be one of the most advantageous tax strategies you’ve never heard of.

The structure is pretty simple. You set up an account with a qualified record-keeper and you fund the account with cash or securities. Like regular donations to charity, you get to take a tax deduction for the amount contributed. Then, once the account is funded, you make disbursements over time out of the fund to federally recognized charities. You can research which charities spend their money wisely on Charity Navigator.

And it's that ability, the ability to disburse funds over time and spontaneously, that really differentiate DAFs from other forms of giving.

This has been a difficult hurricane season. Add in the recent earthquakes and other global calamities and there is a great need for donations both here in the U.S. and internationally. This is exactly the situation where DAFs can play a critical role in getting help to those who need it.

Imagine you got a big bonus two years ago and wanted to donate a large sum of money to those in need. You could have made one big gift to an organization like the Red Cross two years ago, but if you had a DAF you could make that one big gift into a DAF and then over time, give proportionally out of your fund as the need arises. You could have given a portion to an organization helping Harvey victims, then another portion to organization helping with the aftermath of hurricanes Irma, Marie and Jose and then another portion to the victims of the earthquake in Mexico, and then maybe some to your local church. You decide how and when to give.

Here's an simple example of how a DAF can work and be beneficial both from a tax and giving perspective:

Say you bought 400 shares of a tech stock for $10 a share and it ends up going way up in value to $50 a share and you determine that it’s time to sell. Guess who’s coming for capital gains taxes? You know who. So one option is to gift some or all of the appreciated shares directly into the DAF. When you do that, you completely avoid the capital gains tax and you now have the ability to invest the money in a diversified portfolio, allow it to grow and disburse it over time. In this case let’s say you sold ½ for $10,000 and gave the other $10,000 to the DAF. Great, now you’ve got your next several years of giving all lined up and you only paid $1,600 in capital gains taxes vs. $3,200.

Everyone has a unique financial and charitable giving strategy and these accounts aren’t for everyone. Furthermore, there are state tax laws and restrictions that may make them inappropriate for your situation, so best to discuss your specific tax situation with your tax advisor or accountant, but if you would like to learn more about DAF accounts or the investment aspects of the DAF account, we’d be happy to help. 603-438-1874 or Schedule a time to chat that's convenient.

PLEASE REMEMBER:

- INVESTING AND INVESTMENT MANAGEMENT INVOLVES RISK, INCLUDING THE LOSS OF YOUR INITIAL INVESTMENT OR ANY INVESTMENT GAINS.

- PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

- THIS GENERIC INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION FOR ANY INDIVIDUAL TO TAKE A SPECIFIC ACTION.

- PLEASE INVEST PRUDENTLY AND SEEK PROFESSIONAL HELP FROM A FINANCIAL ADVISOR, INVESTMENT MANAGER, ACCOUNTANT, LAWYER OR OTHER PROFESSIONAL ON MATTERS THAT YOU ARE UNSURE OF OR THAT ARE UNIQUE TO YOUR PERSONAL CIRCUMSTANCES.

- FINANCIAL PLANNING AND INVESTMENT MANAGEMENT SERVICES PROVIDED BY J. BRADFORD INVESTMENT MANAGEMENT, NASHUA NH.

Confused by the “Covfefe” Tweet? Try understanding the Fiduciary Rule.

Maybe it was spell check gone wrong, maybe he was just too quick to hit send or maybe it was just another idea on how to stoke the flames of the buzz machine. Whatever the reason, yet another POTUS Tweet has captured the attention of the nonstop media and news cycle. It almost certainly won’t be the last.

We may never know what he intended, but there are actually many things coming out of Washington that do merit some paying attention to.

One such item worthy of a few brain cells is the Fiduciary Rule, which is now scheduled to go into effect on June 9th, 2017. It’s quite possible that there may be twists and turns along the way, but holding financial advisors to the fiduciary standard is likely a long term trend that is here to stay.

Most simply, someone acting to the fiduciary standard must give advice and take action solely in your best interest. Practically speaking that means that I cannot recommend products and services to you so that I can draw a high commission, win a sales contest, meet a corporate profit directive or enjoy a lavish perk. Fiduciary advice has to be in your best interest.

It is surprising to many people to learn that the person giving them advice or selling them a product does not necessarily need to meet the fiduciary standard. Which to many, seems crazy. Why shouldn’t the person who you have entrusted with your life savings, do everything in your best interest? They should right?

And many in our Federal Government regulatory agencies also believe that financial advisors should act and be held to the Fiduciary standard. So on June 9th, a set of rules and guidelines will go into place for advisors helping individuals with retirement accounts, such as 401(k)s , ROTHs and IRAs. Those areas will have some amount of fiduciary protection.

Over time, many believe that all financial advice will eventually need to be given at, and held to, the fiduciary standard. In the meantime, you can ask your advisor if some or all of their business operates to the fiduciary standard, and if not, why not. You may be satisfied with the answer, you may not.

As you may have guessed, J. Bradford Investment Management embraces and operates to the fiduciary standard. We are a fee only practice and we do not sell any products on commission. Our recommendations are an unbiased view of our professional judgment.

If you would like help unpacking the meaning of “Covfefe”, try Buzzfeed. If you would like help unpacking the commissions, hidden fees and other potential pitfalls in your portfolio, please schedule time with us, we would be happy to conduct a free portfolio review.

PLEASE REMEMBER:

- INVESTING AND INVESTMENT MANAGEMENT INVOLVES RISK, INCLUDING THE LOSS OF YOUR INITIAL INVESTMENT OR ANY INVESTMENT GAINS.

- PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

- THIS GENERIC INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION FOR ANY INDIVIDUAL TO TAKE A SPECIFIC ACTION.

- PLEASE INVEST PRUDENTLY AND SEEK PROFESSIONAL HELP FROM A FINANCIAL ADVISOR, INVESTMENT MANAGER, ACCOUNTANT, LAWYER OR OTHER PROFESSIONAL ON MATTERS THAT YOU ARE UNSURE OF OR THAT ARE UNIQUE TO YOUR PERSONAL CIRCUMSTANCES.

- FINANCIAL PLANNING AND INVESTMENT MANAGEMENT SERVICES PROVIDED BY J. BRADFORD INVESTMENT MANAGEMENT, NASHUA NH.

Make Your IRA Contribution or Get Forcibly Dragged Out of Our Office!

Pretty outrageous right?

By just about any measure, the United handling of their displaced crew and a seated passenger was an unmitigated disaster. I was torqued off enough about the situation to write letters to my senators asking for a better airline passenger bill of rights. What's in place now barely qualifies as “rights” in any respect, but I'll leave it to the airline travel warriors to blog about those changes. I have three observations that we can all learn from.

It’s true that businesses generally run well with predictable, structured routines with clear rules for every employee to follow. But every business should occasionally take a big step back and look at the path that they are on and what they are doing and how they are operating.

Businesses should ask, “Why are we operating this way” and “does it really makes sense for us to continue to operate this way”? Just because you have been displacing passengers for decades to accommodate your operations and just because you have a very clear corporate policy on how to do it and just because there are federal rules that support what you are doing, doesn't mean that you should. It's amazing how far away from normal, reasonable even humane treatment businesses can stray. Business can avoid that problem by periodically doing a strategic review and having more junior associates, or even better, customers, give the feedback and assessment.

Many companies in the financial services industry are adopting the fiduciary standard for their business even though they might not be required to do so. I suspect many of those companies that are did just what I described above. They took a big step back and said something like – you know what, people are trusting us with their hard earned money and we have a genuine interest to help them – why wouldn't we want to embrace a standard that says we need to put our clients' best interest above ours? It is so clear and so simple, yet the current routines and enabling regulations can obscure even the most common sense approaches.

Next, a truly customer centric company would never have a problem even remotely close to the United disaster. If you truly have your customers at the center of all that you do, they will guide you to successful business strategies.

A genuine engagement with your customers will help prevent a company from going so far off the rails, as happened here. An activity as simple as listening more can be very enlightening. Have you ever read an airline contract of carriage? Imagine a focus group of customers gathering to discuss your equivalent of a contract of carriage?  Are they going to be delighted and amazed at how fairly and reasonably they are being treated? Customer centric organizations would embrace that feedback and make substantive change.

And you know what else they would do? Rather than give passengers some standard peace offering of a free flight or refund, they would ask each passenger individually what they could do to regain their trust and compensate them for their inconvenience. And then do it.

Lastly, organizations that don’t empower their lowest level employees to stop a disaster like this should expect more disasters. What is your equivalent of the red cord on the assembly line that any employee can pull and stop the whole assembly line process?

Constantly managing with top down directives and fostering a culture of “shut up and row” is great for the military, and terrible for just about every customer facing business. 

I’m not sure what’s worse -- that poor doctor getting pulled off that flight in such a disturbing manner OR that no one involved in the incident said to themselves, wait a minute, this is crazy, let’s pause for a second and work this out. It appears that they did a phenomenal job at following orders from above and following established procedures. Which of those two axes does your organization excel at?

In addition to being great business lessons, these are great personal lessons too. We should all take a big step back from what we are doing and ask ourselves in our personal or family life, if what we are doing feels right and makes sense. We should all listen more and we should all give up just a bit of the command and control life we’ve built and see what happens when we empower those around us.

At J. Bradford Investment Management we take investments and financial planning very seriously, but we also strive to learn about our customers as people. We want to know what drives you. We want to understand your values. We want to help you get your money working as hard for you as you work to earn it. Let’s collaborate and I promise I won’t have you dragged out of our office if you don't make your IRA contribution this year.

PLEASE REMEMBER:

- INVESTING AND INVESTMENT MANAGEMENT INVOLVES RISK, INCLUDING THE LOSS OF YOUR INITIAL INVESTMENT OR ANY INVESTMENT GAINS.

- PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

- THIS GENERIC INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION FOR ANY INDIVIDUAL TO TAKE A SPECIFIC ACTION.

- PLEASE INVEST PRUDENTLY AND SEEK PROFESSIONAL HELP FROM A FINANCIAL ADVISOR, INVESTMENT MANAGER, ACCOUNTANT, LAWYER OR OTHER PROFESSIONAL ON MATTERS THAT YOU ARE UNSURE OF OR THAT ARE UNIQUE TO YOUR PERSONAL CIRCUMSTANCES.

- FINANCIAL PLANNING AND INVESTMENT MANAGEMENT SERVICES PROVIDED BY J. BRADFORD INVESTMENT MANAGEMENT, NASHUA NH.

This is Probably Why You Shouldn’t Ask Your Friend for 401(k) Advice.

Most of us have great friends and co-workers who we rely on for help, advice and insight.

Elle Mills recently asked her tattoo artist friend Tavian to give her a great first tattoo. He ended up giving her a tattoo of a heart with his Twitter handle?!?

Rather unfortunate. 10 minutes of fame can’t be worth that price.

In any event, just as it was a marginal decision for Elle to turn over the entire process of her first tattoo to her friend, it would be just as bad of an idea to ask Tavian how she should invest her 401(k). And not just because he probably shouldn’t be trusted.

If you are picking your 401(k) or 403(b) investment choices by asking your friends and co-workers, you’re not alone. It is a very common strategy and clients report to me all the time that they simply “asked an older person in the office”.

Here are three reasons why that isn’t a great approach:

1)    Even though it may seem like many aspects of your situation are the same – you both work in the same department and for the same employer, you are both saving for retirement and you both don’t pay a ton of attention to the stock market, your situations are probably more different than you think. Understanding your unique circumstances and risk tolerance is a critical step in understanding how you should invest your 401(k) or any assets.

2)    It’s hard to measure, validate and substantiate any claims that “my portfolio has done pretty awesome”. It very well may have had a great one or two year run, but that could actually have been due to luck. We also have to consider “great” compared to what. A great bond fund will look very different than a great international equity fund. And just because a fund has done great in the past, doesn’t mean it will be great in the future.

Making choices where you don’t end up with a diversified portfolio aligned to your level of risk will generally mean poorer long-term outcomes.

3)    Many of us are influenced by the forces of behavioral economics:

> We like to have the comfort of knowing that we are doing what others are doing – a group mentality.

> We have the illusion of spreading risk by deciding to invest 10% in each of the 10 fund choices available.

> Being overconfident in our company stock.

> Just procrastinating and leaving all our investments in cash.

> Knowing you shouldn’t ask your friends, but picking your funds the way you pick your NCAA basketball bracket.

All of these forces, and many others, conspire against us and our attempts at making good financial decisions. You really have to have a thoughtful and disciplined plan to achieve the best long-term outcomes.

We have some step-by-step tips in our 5 Ways to pick your 401(k) or 403(b) differently than your basketball bracket, or, if you would like professional management of your 401(k) or 403(b), please schedule a free consultation or give us a call.

PLEASE REMEMBER:

- INVESTING AND INVESTMENT MANAGEMENT INVOLVES RISK, INCLUDING THE LOSS OF YOUR INITIAL INVESTMENT OR ANY INVESTMENT GAINS.

- PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

- THIS GENERIC INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION FOR ANY INDIVIDUAL TO TAKE A SPECIFIC ACTION.

- PLEASE INVEST PRUDENTLY AND SEEK PROFESSIONAL HELP FROM A FINANCIAL ADVISOR, INVESTMENT MANAGER, ACCOUNTANT, LAWYER OR OTHER PROFESSIONAL ON MATTERS THAT YOU ARE UNSURE OF OR THAT ARE UNIQUE TO YOUR PERSONAL CIRCUMSTANCES.

- FINANCIAL PLANNING AND INVESTMENT MANAGEMENT SERVICES PROVIDED BY J. BRADFORD INVESTMENT MANAGEMENT, NASHUA NH.

Look At All Those People Protesting High Fees!

It’s great to see so many protesters in Washington D.C. protesting the high fees charged in the financial services industry!

Or, I suppose they may be there protesting something else...

And sure, protesting high fees in your 401(k) or with your advisor is probably pretty low on the list of lamentations under protest these days, but, it’s actually worth paying some serious attention to.

There is a great calculator on the Vanguard website where you can model how big of an impact fees can have on your return, particularly over long periods of time. You can access a link to that calculator and other great tools and calculators from 3rd party providers on our External Tools Page.

Here’s the bottom line. If you model a pretty typical managed account and you have average fund fees of say 1%, and then a 1% wrap fee on top of that, you’re looking at a 2% total fee. If you model that fee over 25 years at an average return of 6%, you can see the net accumulated lost returns is 43%! It’s actually pretty shocking.

That’s a lot of your pie that you’ve turned over to your investment manager. Now, if they were able to earn above average, market exceeding returns over time, and also provide other unique or value added services that are needed and reasonable to pay for, then you may assess that it was worth it.

However, many studies have shown that consistent, market-beating performance over time is very difficult to achieve and for most, many common financial planning and analysis services can be obtained through lower cost or fixed rate mechanisms.

OK, so low fees are important. Anything else? Yes, plenty, but it can be hard to keep all of the advice, tips, tricks and recommendations straight.

We’ve got a nice chart that summarizes seven of them, but at all of our workshops and seminars, we typically stress two key points:

·      Ask if the person giving you advice is a fiduciary, and if not, why not.

·      Ask how they are paid and how they keep fees low for core services.

The answers to those questions will either give you some pause or give you some comfort that your advisor is on your side.

There’s also an excellent and humorous tirade by John Oliver on 401(k) fees that’s worth watching. You can find the link to that video on our Video Series Page.

If you would like an assessment of your portfolio and the fees you are paying, we can provide a free consultation to give you the insight and transparency that can be hard to determine on your own. We can also provide no obligation alternatives.

PLEASE REMEMBER:

- INVESTING AND INVESTMENT MANAGEMENT INVOLVES RISK, INCLUDING THE LOSS OF YOUR INITIAL INVESTMENT OR ANY INVESTMENT GAINS.

- PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

- THIS GENERIC INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION FOR ANY INDIVIDUAL TO TAKE A SPECIFIC ACTION.

- PLEASE INVEST PRUDENTLY AND SEEK PROFESSIONAL HELP FROM A FINANCIAL ADVISOR, INVESTMENT MANAGER, ACCOUNTANT, LAWYER OR OTHER PROFESSIONAL ON MATTERS THAT YOU ARE UNSURE OF OR THAT ARE UNIQUE TO YOUR PERSONAL CIRCUMSTANCES.

- FINANCIAL PLANNING AND INVESTMENT MANAGEMENT SERVICES PROVIDED BY J. BRADFORD INVESTMENT MANAGEMENT, NASHUA NH.

Job Hunting Today?

Job Hunting Today?

A guest blog by Rachael Bohac

It’s been reported the first Wednesday in January is the biggest job hunting day of the year.  We can all understand why:  We just had several great days or weeks off for the holidays and now it’s back to the grind.  The terrible boss, the long days, the thankless projects, the menial raise.  The glimmer of hope that somewhere out there on the world-wide-web is a new position that will be the glass slipper your LinkedIn profile has been crafted for, is all the motivation you need to hit up Indeed and Monster.  Heck, maybe even the local newspaper. 

So, once you’ve properly caffeinated and answered the critical emails, you sneak a peek to see if the grass might be greener.  The day-dreaming about that big raise is brimming with enough optimism to get you through the dark, dreary January hangover of Christmas.

After the requisite resume submissions to the corporate black hole, a couple of phone screens and finally a face to face interview, you land that gig.  Sweet.  Now what to do with that the bursting bank account?  If you’re fortunate enough to have your credit in order, investing in a home is historically a move that leads to long term wealth.  Furthermore, there are several additional factors developing in 2017 that may increase the probability of that being true, not only for wealth creation, but your internal rate of return (IRR) for that cash during the period of time in which you own the property.  In plain English, the IRR is the return you get from using your new, hard earned, direct deposited, salary to cover your mortgage payments, taxes and insurance instead of rent paid to a landlord. This flow can create a significant return on your investment, especially when you sprinkle in the appreciation rate and tax deductions.

Yay! Sounds good, so let’s buy a house or two since mortgage interest rates are still historically low and home prices have modulated since the bubble burst in 2008. But you heard interest rates “are going up”.  Yes, that is true on a micro-level, but the buying power of the low interest rates is still undeniably strong.  For example, if people were getting 4% last year, but today you’d have to stomach the atrocity of a 4.5% fixed rate for 30 gridlocked years, that is a difference of $30 whole American dollars per month for a $100,000 of the loan. (Wait! Don’t fret, because you still have the ellusive IRR on your side).

Now chances are if you are looking to trade up your job, you might also be looking to trade up a home you already live in.  If you purchased a home a few years ago, you can likely roll that equity into the new place when you sell that home in the spring market.  The stress of selling your first house can be overwhelming, but 2017 has your back, because there are shockingly low inventory levels of homes for sale on the market, making every new listing get that much more attention and sell that much quicker. 

Next, you’ll tell me you’ve got no equity, but you still want that bigger house because your new job helps you afford it.  Seriously, no problem.  Despite stricter mortgage lending practices since the great recession, there remains several high loan-to-value (LTV) mortgage programs ranging from 97 – 103% of the purchase price to help you into your dream home.  

2017 is the perfect storm of good news for those dreaming of the first place to hang their hat or the place they can install their Griswold-Christmas-Bonus-Inground-Pool.  Now get out there and get those resume’s flying because it all starts by ditching that terrible boss.

Cheers to a prosperous 2017.

About Rachael Bohac

Rachael Bohac is a licensed Realtor with Keller Williams Realty Metropolitan out of Bedford, NH.  She’s been licensed since 2005 in the residential market and has additional specialties in multi-family, investment properties and financing solutions. With a M.S. in Marketing she brings an intense and comprehensive level of marketing to her listing clients.

www.RachNH.com

PLEASE REMEMBER:

- INVESTING AND INVESTMENT MANAGEMENT INVOLVES RISK, INCLUDING THE LOSS OF YOUR INITIAL INVESTMENT OR ANY INVESTMENT GAINS.

- PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

- THIS GENERIC INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION FOR ANY INDIVIDUAL TO TAKE A SPECIFIC ACTION.

- PLEASE INVEST PRUDENTLY AND SEEK PROFESSIONAL HELP FROM A FINANCIAL ADVISOR, INVESTMENT MANAGER, ACCOUNTANT, LAWYER OR OTHER PROFESSIONAL ON MATTERS THAT YOU ARE UNSURE OF OR THAT ARE UNIQUE TO YOUR PERSONAL CIRCUMSTANCES.

- FINANCIAL PLANNING AND INVESTMENT MANAGEMENT SERVICES PROVIDED BY J. BRADFORD INVESTMENT MANAGEMENT, NASHUA NH.

Jiminy Crickets! Is Anything NOT Stressful Anymore?

It seems everywhere we turn these days, something causes stress...

We’ve got holiday and family stress

We've got stress at work

We've got screen time and technology stress

We've got kids' activity transportation stress

And let's not forget about preparing and paying taxes stress!

And there are many more. In fact, the American Institute of Stress has a whole web page of stresses to explore...

And of course, we’ve got the biggie, financial stress. Ugggh, don’t remind me, right?

The good news is that most of the time, with a modest amount of planning, financial stress can be greatly reduced. Why is that?

It’s because good financial planning can help reduce and potentially even eliminate the fears and misunderstandings we may have about our finances. You probably have a general sense of whether you are ahead or behind with your retirement planning or college planning, but:

• Do you know how far ahead or behind you are?
• Do you how you are doing compared to your peers?
• Do you know what will happen to your portfolio if there is a correction in the market?
• How exposed or protected are you?
• Is your money really going to last or is there a risk you will run out?

All of those questions can be answered and addressed through financial planning.

Most people are stressed because they don’t really know the answers to their financial worries and many people don’t want to ask because they don’t really want to hear the answer. OK. But in many cases, the answers and results may be better than you thought and you may be doing better than you think.

Now, to be fair, the answers could also be worse that you expected, which probably isn’t going to decrease your stress, BUT formulating and executing an action plan to get back on track, might help reduce your stress. Many people are relieved just knowing that very few people have lived their financial lives perfectly.

For most people, the certainty of knowing the situation they are in and having an action plan to address it is enough to reduce and minimize their stress.

Balancing living now, with saving for college, saving for retirement and saving for other life priorities and wanting to be responsible with your spending isn’t easy. There are many different strategies and approaches individuals can use for their specific situation and a little financial planning can help uncover them.

So hit those holiday parties, enjoy the season and post those pictures on Facebook, but at some point spend some time with your advisor doing some deeper financial planning or get started yourself with some on-line tools. Some financial stress relief may be closer than you think.

PLEASE REMEMBER:

- INVESTING AND INVESTMENT MANAGEMENT INVOLVES RISK, INCLUDING THE LOSS OF YOUR INITIAL INVESTMENT OR ANY INVESTMENT GAINS.

- PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

- THIS GENERIC INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION FOR ANY INDIVIDUAL TO TAKE A SPECIFIC ACTION.

- PLEASE INVEST PRUDENTLY AND SEEK PROFESSIONAL HELP FROM A FINANCIAL ADVISOR, INVESTMENT MANAGER, ACCOUNTANT, LAWYER OR OTHER PROFESSIONAL ON MATTERS THAT YOU ARE UNSURE OF OR THAT ARE UNIQUE TO YOUR PERSONAL CIRCUMSTANCES.

- FINANCIAL PLANNING AND INVESTMENT MANAGEMENT SERVICES PROVIDED BY J. BRADFORD INVESTMENT MANAGEMENT, NASHUA NH.

On This, We Can Actually Agree

There wasn't much agreement between or even within the political parties leading up to the election and I suspect that the deep disagreements will continue well past the election. I'll let the political pundits blog and pontificate on that.

Likewise, there is much disagreement in Financial Services and Investment Management, but there are also some broadly accepted principles and strategies.

One in particular.

J. Bradford Investment Management thinks it's a good idea

Forbes thinks it's a good idea

Morningstar thinks it's a good idea

NASDAQ thinks it's a good idea

CNBC thinks it's a good idea

In fact, just about every major financial institution and publication will espouse the virtues of this fundamental investment activity – rebalancing.

There aren't many universal truths in the investment management industry, and even rebalancing has some detractors, but the importance of periodically rebalancing your portfolio is probably one of the few things that the investment community is largely in agreement with. Sometimes you'll hear it referred to as a “free lunch”.

There has been a significant amount of institutional and academic research on the topic and generally speaking, over time, investment outcomes improve through periodic rebalancing. You'll find different opinions on how often to rebalance, the tax considerations of rebalancing and how wide to cast your asset allocation net, but there is broad and general consensus on the need to diversify and rebalance.

If you are working with an investment manger or financial planner, it is likely that rebalancing is one of the specific tasks that they are working on for you. They'll determine what is the right mix of asset classes and how often should they be rebalanced.

If you own a target date mutual fund or are part of a robo-advisor platform, there too, one of the key tasks of the portfolio manager undertakes is to ensure that the portfolio assets are closely aligned with the fund's objective and periodically rebalanced. That task is covered by the management fee you pay.

But what if you are in “do-it-yourself” financial planning mode? What are the steps to rebalancing?

Very generically the steps would be:

1) Determine an appropriate level of risk and your individual risk tolerance – your willingness and ability to take risk. This on-line tool from Vanguard can help you get started.

2) Build an asset allocation model that aligns with your level of risk – this on-line tool from investor junkie can help you work through some of the individual considerations

3) You can also inform your asset allocation by understanding how institutional managers allocate their portfolios and why.

4) Determine what your existing asset allocation is. Sometimes you can find this information on-
line or on a recent statement, but sometimes you'll have to ask the company you are doing business with for this info.

5) Then you can compare your existing asset allocation with your desired asset allocation, given your level of risk, and determine the magnitude of the gaps. The bigger the gaps, the more important it is to consider rebalancing. One strategy is to establish "bands" and when one asset class moves outside an established band, it triggers a rebalance.

This whole process can be confusing and overwhelming, so    J. Bradford Investment Management does offer very targeted services for investors who want an assessment of their portfolio positions and detailed insights that may help them bring their portfolios back into their desired alignment.

You can use the link below to schedule a free consultation.

PLEASE REMEMBER:

- Investing and investment management involves risk, including the loss of your initial investment or any investment gains.

- Past performance is no guarantee of future results.

- This generic information is provided for educational purposes only and should not be construed as a recommendation for any individual to take a specific action.

- Please invest prudently and seek professional help from a financial advisor, investment manager, accountant, lawyer or other professional on matters that you are unsure of or that are unique to your personal circumstances.

- Financial Planning and Investment Management Services provided by J. Bradford Investment Management, Nashua NH.

What do you mean they don't have to have to act in my best interests?!?!

Many people who I talk to about finances are surprised to learn that the person giving you financial advice does not necessarily have to act in your best interest when giving you that financial advice or performing investment management services. That is, they are only held to a “suitable” or “legal” standard and not the fiduciary standard. 

You might be thinking, "OK, I can read that Investopedia link you just provided, but what exactly does fiduciary mean?"

Well, two recent high profile stories help illustrate the point:

The first example relates to a sales contest run by Morgan Stanley where the advisors were allegedly pressuring their clients to buy a product and service that they didn't necessarily need. Sales contests and account opening pressure (like the recent Wells Fargo case) can be common in non fiduciary environments and customers can end up getting put in high commission products with better alternatives.

“Massachusetts charged the wirehouse with conducting an unethical, high-pressure sales contest among its financial advisers to encourage clients to borrow money against their brokerage accounts. The contest was run despite an internal Morgan Stanley prohibition on such initiatives.”

A simple internet search of sales contests in financial services or unfair commissions in financial services will bring up a long list of violations and abuses by the financial services industry. And we're not talking about Bernie Madoff type of stuff, we're talking about the kinds of brokers and advisors many ordinary people are using.

The second example relates to Fidelity Investments and the potential conflicts that arise when both the Johnson family and Fidelity fund managers both see a private equity investment that they believe is a good investment. According to Reuters:

“The company’s tradition of putting clients’ interests 'before our own is a big part of what makes Fidelity special,' the fund firm says in its mission statement. In at least one lucrative field, however, the Johnson family’s interests come first. A private venture capital arm run on behalf of the Johnsons, F-Prime Capital Partners, competes directly with the stable of Fidelity mutual funds in which the public invests. It’s an arrangement that securities lawyers say poses an unusual conflict of interest.”

So while it is absolutely possible to get great financial services from advisors and companies that are not fiduciaries, the investment lines of “suitable” advice are often gray and potential conflicts can arise even in well-intentioned firms. You should ask your advisor or firm about any potential conflicts they have and be sure you are satisfied with their answer.

But why not work with someone who is bound to work exclusively for your best interests? Helping you holistically with your dreams and goals? You probably should. Whether it is with J. Bradford or another fiduciary, I absolutely recommend that everyone looking for financial advice ask if the person they are working with is a fiduciary and if not, why not. Maybe you'll be satisfied with the answer, maybe you won't.

Some clients and prospects do occasionally ask about the fiduciary standard and if we operate to the fiduciary standard when giving investment and financial advice. I love answering that question. The answer is unequivocally yes and it is part of the reason why I founded J. Bradford Investment Management as an independent RIA (Registered Investment Advisory) firm. We put our clients first and you get our unbiased, conflict free advice about all your financial matters.

If you'd like to have a contest, let's raise some money for charity.

PLEASE REMEMBER:

- Investing and investment management involves risk, including the loss of your initial investment or any investment gains.

- Past performance is no guarantee of future results.

- This generic information is provided for educational purposes only and should not be construed as a recommendation for any individual to take a specific action.

- Please invest prudently and seek professional help from a financial advisor, investment manager, accountant, lawyer or other professional on matters that you are unsure of or that are unique to your personal circumstances.

- Financial Planning and Investment Management Services provided by J. Bradford Investment Management, Nashua NH.

Investing 101 Class -- now with emojis!!

I'm excited to be partnering with the Coalition for a Better Acre to deliver my revamped Investing 101 workshop on Tuesday, October 18th in Lowell, MA.

Now with emojis!!

I’ll be presenting in the 1st floor community room at 517 Moody Street from 6:30pm – 8:00pm.

The workshop is free, dinner will be served and you’ll have a chance to win a $25 Target gift card! Plus you’ll get 90 minutes of Jason unplugged.

I’ll answer questions and try to give practical, actionable advice in a pressure and judgment free zone. I hope you can join us.

You can check out the presentation slides, catch up on my blog posts or explore other educational videos that might help you formulate questions for the session.

Hope to see you there!

It's a $400 million problem, but it's really the same problem...

If TMZ is to be believed, Brad and Angelina are heading for splittsville. It's obviously sad on many levels and I'm sure the prospect of sorting it all out in the public eye is both daunting and depressing for both of them.

They're rich, they're Hollywood and most of us probably aren't too worried about their finances. But how great would it be to see Angelina coming out of Walmart with a 48 pack of Ramen Noodles?

Most are probably intrigued by the drama and family dynamics of the situation, figuring that the financial aspects of their divorce will just sort themselves out. After all, in May, Celebrity Net Worth estimated that Pitt’s net worth is $240 million, and Jolie's is an estimated $160 million. That's $400 million worth of stuff to sort into two piles.

They will undoubtedly each enlist an army of lawyers and other professionals to review the prenuptial agreements and then discuss and negotiate the details of how to split those assets.

And while $400 million, however split, is plenty to live on very, very comfortably, they are both going to face many of the same challenges, problems, obstacles and changes to their lifestyle that all couples face once they split.

The houses are bigger and in exclusive locations, but just like other couples, housing expenses and availability that was shared, will now have to be split and the housing options that they do have will be reduced for each.

Just like other couples, everything that they have one of today, they'll now need two of. With kids, maybe even more. And other expenses that they shared, like transportation, will be fully on each of them to pay for. Total expenses will go way up, but their assets are fixed. Just like other couples.

I suspect they'll split the money equitably and move on with life, but at the end of the day, the math is the same for everyone -- they are going to each have roughly 50% less than they had as a couple. That's a huge adjustment to make. Don't get me wrong, plus or minus $200 million is still a lot of money, but even with that nest egg, it is going to require some serious financial planning and budgeting to align their new financial reality with their new personal reality, just as any couple that's going through a divorce needs to do.

Divorces are almost always messy and celebrity divorces are messy in the public eye. Brad and Angelina will have a lot to sort through and just like everyone else that goes through a divorce, they'll need a good financial plan that reflects their hopes, dreams and goals and then balances those with their financial reality, even if it is a $200 million reality.

PLEASE REMEMBER:

- Investing and investment management involves risk, including the loss of your initial investment or any investment gains.

- Past performance is no guarantee of future results.

- This generic information is provided for educational purposes only and should not be construed as a recommendation for any individual to take a specific action.

- Please invest prudently and seek professional help from a financial advisor, investment manager, accountant, lawyer or other professional on matters that you are unsure of or that are unique to your personal circumstances.

- Financial Planning and Investment Management Services provided by J. Bradford Investment Management, Nashua NH.

Chin-up All You Parents Saving For College - Here are 3 Quick Tips

Back to school time is hectic. New routines, new teachers, new friends and trying to figure out how to get everyone were they need to be when they need to be there, without hiring a fleet of UBER drivers. I for one will be typing my blog posts from my daughter’s ballet studio for the foreseeable future...

We eventually settle in to a routine and then for many, the reality sets in – the kiddos are one year closer to college and those over-sized payments for tuition, room and board are one year closer too. Panic. Denial. Procrastination. How about we plan our next family vacation instead?!?!?

After some mindless web surfing to distract us, some article, blog post or research report snaps us back to reality. How on earth are we going to afford to pay for college?

It's a question I hear often and it's a real problem for almost every family in America.

It's estimated that only 50% of families are even saving for college and of those that are, the average balance is roughly $10,000.  And unfortunately, that won't go very far.

Tuition, room and board costs will vary wildly, but for an in-state school, tuition, room and board and basic expenses are likely to run $35,000 - $40,000 per year. It will be more for out of state and private schools, less for community college. So let's say it's $160,000 all in for four years.

It's going to be very hard to fully save that much. If you start saving the day your child is born, and can somehow figure out how to squeeze an extra $500 out of the monthly budget and put it towards college and then assume a 4.5% annual return, you have a realistic chance of saving enough for college. Have two kids? That'll be $1,000 per month. Decide to make it a 4-pack? $2000 per month. And if you don't start until they are 9? Then you'll need to save $1,200 per month to get comfortably close. That's just not realistic for most.

 So what do you do? Three simple things:

1) First, I recommend ignoring the big, ugly numbers from tools, calculators and blog posts like this until your kids get much closer to college. You don't have a money tree, so the most important thing you can do is start saving now (or save even more) and save in a low cost, tax advantaged 529 plan. Even if you only get 25% or 50% of the way there, it can make a big difference. Don't be discouraged by the fact that you won't fully make it. There are lots of options and things change. A financial advisor, financial planner or investment advisor can help you evaluate your specific and unique circumstances, but 529 plans make sense for many. Bonus Tip: If you choose a Fidelity Investments Plan, you can goose your savings with a 2% cash back credit card.

2) Next, spend some time with your kids on PayScale.com. Have a discussion. Evaluate the salary ranges for the degree they are thinking about and potentially more important, the skills those graduates will be expected to have. Do they have or are they willing to acquire those skills? Do they realistically need a graduate degree to get a job? They might not be as interested in a particular degree if it isn't a match for their personality or if they need to move to a different city for the best opportunities.

3) Finally, start researching and applying for scholarships. Many are available to High School students and even grade school students. It will help prepare them for college, help them feel invested in the process and maybe inspire them in a particular direction.

Then as you get to the college precipice, consider working with a college specialist, such as my colleague Jack Wang, who can help those that are closing in on college deadlines navigate the FAFSA form submission process and overall funding process. For some, financial aid may be available and for many, different types of student loans are available. It can be hard to sort out, and someone like Jack can help make a difference.

There are no easy answers to college funding, or other difficult conversations about the right approach to college and making choices in college that pay off in the long run.  We can help provide a strategy and a plan as a first step.

PLEASE REMEMBER:

- Investing and investment management involves risk, including the loss of your initial investment or any investment gains.

- Past performance is no guarantee of future results.

- This generic information is provided for educational purposes only and should not be construed as a recommendation for any individual to take a specific action.

- Please invest prudently and seek professional help from a financial advisor, investment manager, accountant, lawyer or other professional on matters that you are unsure of or that are unique to your personal circumstances.

- Financial Planning and Investment Management Services provided by J. Bradford Investment Management, Nashua NH.

If You've Been Procrastinating All Summer, CLICK HERE

Labor Day weekend is upon us. It’s the unofficial end of summer and a great time to fire up the BBQ one last time, have one more gathering with the crew and squeeze in those final items from the summer to-do list. We crossed off surfing last weekend, which was the last item on our family list, so we’re good!

Other signs that summer is over will be all too evident. The kids will be back in school if they aren’t already. When we drive into work on Tuesday the roads will be jam-packed as if everyone is suddenly working again and life will return to its normal, hectic pace.

The "it’s summer, I'm relaxing, I'll get to it in September" excuse ends this weekend. We've all been procrastinating something, but now is the time for all of us to get on it!

Investment Managers and Financial Planners typically see a spike in the fall as all those life tasks that are so easy to put off for a few weeks during the summer finally come back to the forefront. And for good reason. The fall is an excellent time to engage with your financial planner and investment manager because:

•   There’s still time in the year to make beneficial tax moves in your investment accounts and make tax saving contributions to your IRAs.
•   There’s still time to make beneficial moves in your 401(k) or 403(b) to ensure you maximize your benefits and have made investment choices appropriate for your level of risk.
•   If you have kids in college or nearing college, this is a great time to revisit, enhance, update or even make a college funding plan. It’s expensive.
•   A good investment manager and financial advisor can help you significantly reduce your investment expenses so you have more money for other priorities.

No one knows for sure where the stock market is headed or what the next interest rate move will be or how some international crisis will impact the markets, but things are relatively calm right now and it’s always better to have an investment strategy BEFORE any market turmoil starts to unfold, rather than being reactive once it starts.

Navigating you through uncertain and tumultuous times is one of the most important roles an investment manager can play for you.

So if you’ve been procrastinating, this is the week to get after it. Everyone deserves a great financial plan and taking the time to work through a holistic and comprehensive financial plan can help address issues across all of those dimensions, plus any other unique or individual circumstances you may face.

Enjoy this Labor Day weekend with family and friends and remember that if your don’t have a great plan for what you want your hard earned money to do for you, it very well may do something else...

Get over your procrastination and book a free consultation now (after Labor Day weekend of course)

Or at the very least, bookmark this page :-)

PLEASE REMEMBER:

- Investing and investment management involves risk, including the loss of your initial investment or any investment gains.

- Past performance is no guarantee of future results.

- This generic information is provided for educational purposes only and should not be construed as a recommendation for any individual to take a specific action.

- Please invest prudently and seek professional help from a financial advisor, investment manager, accountant, lawyer or other professional on matters that you are unsure of or that are unique to your personal circumstances.

- Financial Planning and Investment Management Services provided by J. Bradford Investment Management, Nashua NH.

Why Michael Phelps' Underwater Turn was so Brilliant

In business and in life, it’s often the things that people do that we don’t see that make a huge difference in a particular success or outcome. Success usually doesn’t come without them and such was the case during the men’s 4 X 100m swimming relay on Sunday in Rio.

Just a few meters under the surface on the 2nd leg, Michael Phelps executed an underwater turn that his coach, former head of the University of Michigan men’s swimming program, Bob Bowman, categorized as “the greatest of his career”. Then he added “[That’s] probably the best turn that’s ever been done underwater. That was a serious turn.”

It’s certainly the turn that gave the U.S. the lead and helped propel the men’s U.S. Olympic relay team to gold.

Now, every unseen or little thing we do can’t be an underwater turn of a lifetime, but those things that people might not see or that aren’t obvious to most, can make a big difference in both individual and team success.

Many people may be modest about some of the unsaid or unseen things that they do, but consider asking about them. Maybe ask a contractor or business you are working with, what are some of the behind-the scenes-things they do or things that I might not see that you do and why do you do them?

Many times, when the activities go unseen, it's because they can be pretty boring. Take investment management for example. We spend quite a bit of time thinking about portfolio diversification and risk. We work behind the scenes to build asset allocation models.  We study correlation tables and some of us operate our business to the fiduciary standard. And if we can help you save early and often, the results can really add up. Not exactly You Tube material...but those are the activities that really make a difference.

Many teams know that success isn’t the accumulation of all the outward things that we do. It’s those things that you may even wonder how they got done, that taken together, made all the difference in the world.

So, a hearty congratulations to Michael Phelps and Team USA. Thank you for all the lessons on teamwork, perseverance and showing up when it matters most, but most especially for the insight on unseen actions and deeds -- actions that can matter so tremendously in our culture of needing to be seen.

PLEASE REMEMBER:

- Investing and investment management involves risk, including the loss of your initial investment or any investment gains.

- Past performance is no guarantee of future results.

- This generic information is provided for educational purposes only and should not be construed as a recommendation for any individual to take a specific action.

- Please invest prudently and seek professional help from a financial advisor, investment manager, accountant, lawyer or other professional on matters that you are unsure of or that are unique to your personal circumstances.

- Financial Planning and Investment Management Services provided by J. Bradford Investment Management, Nashua NH.

Sneak These 5 Things Into Your Summer Family Vacation

With the 4th of July celebrations in the books, family vacation season is in full swing! School is out and well, most kids are in no mood to learn. So here are 5 simple ways to sneak some learning and skill building into the family summer vacation.

1-- Put the kids in charge of navigation with an old school Rand McNally paper map. Yes, phones, GPS and digital maps are pretty much ubiquitous, but map reading and navigation is a skill that helps with a general sense of direction, decision making, attention to detail and inevitability, recovering from a mistake. You're on vacation, so taking the long way probably isn't that big of a deal. They may also discover features and landmarks of the surrounding area that they might not know existed and may want to explore further.

2-- Put the kids in charge of the ice cream budget. Sure, there's something special about going to the ice cream shoppe and the smell of fresh waffle cones, but if you're in a rental unit or a suite with a freezer, they may be surprised to learn how many ½ gallons they could buy for the equivalent budget of a trip or two to the ice cream shoppe.

Maybe let them keep the leftover budget? Doing so would help reinforce budgeting techniques, spending trade-offs and prioritization, skills we all need whether we are on vacation or not.

3-- Put the kids in charge of one evening of family activity that doesn't involve electronics or screen time. If you go in with a plan for at least one night for a family activity with no electronics or screen time, you may find that you get some excitement heading into the activity rather than the inevitable “do we have to” attitude. Having to negotiate, plan and then participate in the activity may also lead it to becoming a regular activity rather than a one off.

4-- Turn the trip to the museum into a scavenger hunt with a trip to the gift shop as a reward. Kids eyes typically roll at even the slightest mention of museum-going. But if you do little bit of advanced scouting and identify 8 or 10 items or spots that the kids need to find or questions that they need to find the answer to, they are much more likely to be engaged as they traverse the museum. And since a trip to the gift shop is all but certain, make it the reward for having completed the scavenger hunt.

5-- Have the kids navigate the airport. If you've got a plane change layover, have the kids read the monitors and figure out where to go. For all but the seasoned travel warriors, airport navigation can be tricky.

If they make a mistake, like reading the arrival screen instead of the departure screen and you have time to work through the mistake, do it. The experience will help with problem solving, navigation and getting comfortable getting around the airport. Then when you land, put them in charge of finding where the bags come out as well as getting out of the airport or to the car rental, both of which can be non-trivial matters in most airports.

Family summer vacations create all kinds of memories and with just a little bit of effort, we can sneak some skill building in there as well.

Read other J. Bradford blog posts here.

Ask us a question or set up an appointment here.