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Just for Women – Follow Up – Cybersecurity

By | 2017, Money Moxie | No Comments

The recent outbreak of the “WannaCry” ransomware confirms the responsibility each of us has to protect our personal information. In today’s world we use technology for photos, communication, transactions, and learning. Unfortunately, criminals are getting more sophisticated in their efforts to defraud us.

Stephen Olsen, FBI Special Agent, warned us to be vigilant in the use of electronic devices and gave us many tips to follow:

• Back up your data regularly on another drive. Then unplug the drive. If your backup drive is plugged in then it will be compromised along with your computer.

• Opening an email should be safe. However, links and attachments may not be. Its links may lead you to a nefarious site. Instead of clicking the link, go directly to the correct company website in your internet browser.

• If you were not expecting an email from a friend or associate, contact the sender to verify before opening any links or attachments. This may seem like overkill, but criminals are very adept at enticing unsuspecting victims to open links and attachments. One click could give them access to all your personal information. When in doubt, delete the email.

• Be diligent in creating and changing your passwords. They should be a minimum of eight characters. Use combinations of upper and lower case letters, numbers, and symbols. Use different passwords for your accounts. If you store the passwords on your computer, consider using a password management program instead.

• If you become the victim of a ransomware attack, do not pay the ransom. Criminals often don’t release your computer files after they receive your money and there is little recourse to get your money back.

Protect your personal information by keeping your computer software, including security software, current. Apply updates, upgrades, and patches when they are made available by the software vendor. Please call us with any questions.

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Just for Women – Follow Up – Don’t Be Afraid

By | 2017, Money Moxie | No Comments

Mary Crafts-Homer was our keynote speaker this year. Mary started Culinary Crafts in 1984 and has been a 13-time “Best of State” winner for catering in Utah. Her message was all about choosing to make decisions based on love and trust instead of making decisions based on fear.

She explained that most of the choices and decisions she made in her younger days were based on fear and how one day she decided to no longer let fear define her life. Her daily mantra is, “What would I do today if I were no longer afraid?” She ended with saying, “If you let go of fear you get to fly and soar.” A lesson for all of us to choose to live life instead of letting life happen to us.

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Just for Women – Follow Up – Estate Planning

By | 2017, Money Moxie | No Comments

Jaelynn Jenkins, Attorney at Law with Fetzer Simonsen Booth Jenkins, gave us a step-by-step guide on how to make an estate plan and how to apply it throughout the various stages of life. Jaelynn demonstrated the importance of all aspects of estate planning that includes wills, trusts, and power of attorney to name a few.

She also explained when an estate plan needs to be updated:
• Change in marital status
• Birth adoption of a child
• Significant change in financial status
• Significant change in tax laws
• Owning property in more than one state
• The death of a beneficiary
• Your incapacity or the incapacity of a dependant or loved one
• Desire to add or change beneficiary
For more information, see Jaelynn’s website at utahestateplanninglaw.com.

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After 35 Years, the 401(k) Dominates Retirement Savings

By | 2017, Money Moxie | No Comments

The people who helped start the 401(k) revolution in 1981 lament what has become of it. At the time, the hope was just to help supplement a traditional pension program. The reality is that 401(k)s have replaced pension plans as the main retirement savings vehicle.

Herbert Whitehouse, a Human Resources executive for Johnson & Johnson, was one of the first to recommend his executives use a 401(k) as a tax-free way to defer compensation. “We weren’t social visionaries,” he says. They were looking for ways to cut expenses and retain top workers. However, because many companies have jumped on the bandwagon, pensions are becoming a thing of the past.

Traditional pension plans do have their weaknesses: bankruptcies could weaken or wipe out the plan, and it is difficult for employees to transfer the plan to a new company.

Enter the 401(k) with the promise that an employee could have enough savings for retirement. Teresa Ghilarducci, who directed the Schwartz Center for Economic Policy Analysis offered assurances to Union Boards and even to Congress that 3 percent savings would be enough. She now admits the first calculations were a little “too rosy.”

There were other issues policy makers didn’t take into account, such as workers yanking the money out of the 401(k) or choosing investments unsuitable for their ages.

Only 61 percent of eligible workers are currently saving. A whopping 52 percent of households are at risk of running low on money during retirement.4 These are scary numbers. It is no wonder people fear running out of money more than they fear death.5

The nation’s policy makers and some states have made proposals or started initiatives to help change the behaviors of savers and companies. One proposal would mandate retirement savings and the system would be run by the Social Security Administration. However, we are a ways off from having a solution to a societal problem that could be compounded by the Social Security trust fund running dry by 2034.6

The onus is on each one of us to save for retirement and implore our parents, children, friends, and even neighbors to help patch the holes in a sinking ship by saving for retirement.

The bright spots are the people that have benefited from the 401(k). For example, Robert Reynolds could retire comfortably at age 64 after saving for 3 decades. He says the formula is very simple, “If you save at 10 percent plus a year and participate in your plan, you will have more than 100 percent of your annual income for retirement.”7

Like it or not, we live in a world where 401(k) accounts have nearly eliminated pensions. Your financial future is your responsibility. So, make a personal commitment to save for your future.

 

1. The Champions of the 401(k) Lament the Revolution They Started, Wall Street Journal, Jan 2, 2017
2. The Champions of the 401(k) Lament the Revolution They Started, Wall Street Journal, Jan 2, 2017
3. The Champions of the 401(k) Lament the Revolution They Started, Wall Street Journal, Jan 2, 2017
4. The Champions of the 401(k) Lament the Revolution They Started, Wall Street Journal, Jan 2, 2017
5. http://www.marketwatch.com/story/older-people-fear-this-more-than-death-2016-07-18
6. http://money.cnn.com/2016/06/22/pf/social-security-medicare/
7. The Champions of the 401(k) Lament the Revolution They Started, Wall Street Journal, Jan 2, 2017

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Women in Transition

By | 2017, Money Moxie | No Comments

For women, it’s sometimes hard to balance the nurturing desire to take care of someone else when in reality, we may need to take care of ourselves. This is often true when facing life transitions. It’s at these times when we have to put ourselves first, at least, until we become comfortable with the change.

Throughout life, we face events that result in transition. Some are planned and some are unexpected. How we prepare for these events can help reduce some of the financial and emotional stress.

Over the next few Money Moxie® issues, we will discuss some important life transitions and provide guidance to help smooth out the bumps. In this issue, we will focus on women who have left the workforce and are now ready to jump back in.

Reentering the workforce
Women often follow a different path than men when it comes to a career. Many get a degree or special training and begin a career only to leave the workforce to raise a family or because their income is not necessary to the family’s financial situation.

While you have been off the career path, things have changed. Yes, remember that old fax machine? Well, for most companies it’s in the corner collecting dust. The business world has been moving forward at a breakneck pace; even those of us living in it day-to-day have a difficult time keeping up.

Software and websites you may have used just a few years ago have been updated and changed. Passwords are your new best (or worst) friend–and you need a separate one for each site. These should be changed every 90 days.

In order for you to reach your marketable potential, you are going to need to brush up on your skills. Find out what programs are in demand for the position you are seeking and learn more about them. Webinars and online tools make this relatively easy.

Getting paid what you are worth
Don’t sell yourself short. Make sure you are getting paid what you are worth. Check out websites that show average salary ranges or pay scales in your geographical location for your occupation. Know before you enter an interview how much you can expect to be compensated. Maybe it’s time to hone your negotiation skills.

Sing your own praises. Be prepared to articulate your strengths and specific achievements. Express the unique skills and qualities you bring to the table. Avoid the temptation to accept the first salary or pay offered–be prepared to counteroffer.

Be sure to consider other tangible and intangible benefits such as: bonuses, career opportunities, flexible schedule, and supportive culture.

Maximize your benefits
As a woman who has been out of the workforce, you may have some catching up to do when it comes to retirement savings. Employees are often told to get the maximum company match, which is good. Think bigger!

While the match is a great benefit, that alone may not be enough for you to reach your financial goals and live comfortably in your retirement years. Seek professional advice regarding your future retirement picture and invest with purpose and an achievable goal.

Talk to one of our wealth advisors; we can provide guidance regarding your personal situation and the options available to you.

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What Tech Employees NEED from Financial Advisors

By | 2017 | No Comments

I recently surveyed tech employees to find out how financial advisors can better address their biggest concerns. Here’s what they had to say.

Make me believe that my company is a unicorn, but help me save as if it isn’t.
Even with the tech boom, only 15 to 20 new companies per year will eventually reach the mark of $100 million in revenue. The good news for Silicon Slopes companies is that the majority of those companies are coming from outside the San Francisco area.i The new 2017 list shows that Utah is home to 4 Unicorns: DOMO, Qualtrics, Pluralsight, and InsideSales.com.ii

Are you working for a unicorn? Many tech employees sink all of their excess cash into stock options. This can create a huge windfall or a major money pit. Britt Hawley from InsideSales.com says that tech employees need financial advisors to, “help them understand, manage, and factor (stock options) into their financial planning.” A good financial advisor can help you create a holistic plan that still optimizes your stock option purchases while giving you some balance through your 401k, insurance planning, and other investment planning. Dan Preece from HealthEquity found this to be true when the company he works for went through an IPO; “One of the biggest things for me was having help navigating through stock options, IPOs.”

Part of a holistic plan is creating a way for you to reach your goals even if your company doesn’t get bought out or go public. There is a lot of value in diversification and multiple income streams. You should still be contributing 10-15% of your salary into your 401(k). If your 401(k) ends up being the smallest piece, then it is still icing on the cake. If your 401(k) is your main retirement, then you will be grateful you chose to save. You don’t want to have to delay retirement because you are still hoping that your company will go public.

Help me without taking all of my money
Too many times tech employees seek out good advice only to find a sales person, masquerading as a financial advisor, pushing the “hottest thing since sliced bread.” Kayden Holt from Pluralsight put it this way, “Employees need people to help them without taking all of their money.” Unfortunately there are a few rotten “advisors” that taint the whole bunch. Be wary if an investment planner is only playing on a one string guitar or sells you something that is too good to be true.

Seek out a holistic advisor, typically a Certified Financial Planner®, that will look at all of your goals and will devise a plan to help you get there. Also make sure the fees they charge are in line with the service provided and that they can prove the value they are providing. Tech employees “like to know in a tangible way how they are benefitting from a financial advisor,” stated Mr. Hawley. Good advice does not have to be expensive, but bad advice always costs you dearly, no matter how little you pay for it.iii

Educate me about how to invest.
Tech employees are more savvy than most. “They like to understand the why” behind an advisors investment actions, said Mr. Hawley. Good investment advisors will be able to explain the details of their investing process with its pros and cons. They can explain in concrete ways what they can do for you that you can’t do for yourself. If you want to do your own investing, they can help you do it. If you want to have someone else manage your money, they can do that too. Most importantly they will be a teacher. “Just as much as we needed grade school to learn how to read and write,” said Mr. Holt, “we need financial advice to learn, grow, and earn.”

Give me different ways to access advice.
The world of advice is changing. The old stockbroker model of paying commissions for stock trades is dying. In its place you can find different models: Do it yourself, monthly retainer, or assets managed for a fee.

Technology is changing the landscape and making better advice and trading platforms available to the masses. Many do-it-yourselfers are drinking in the information and trading their own account.

Paying a monthly retainer, like $100 a month, is a newer model. It allows you to call up and ask questions anytime you want. It also helps people start out on the right foot even if they don’t have a lot of investable assets. It begs to reason that if you are willing to invest $100 in a phone every month, you should be willing to invest $100 in your financial security.

If you don’t enjoy researching investment ideas, you don’t have the time, or you’re afraid of not knowing what you don’t know, then seek out a holistic fee based firm that will also give you advice as part of that fee. The fee based model makes sure the advisor’s interests are aligned with yours.

Shield me from taxes
Tech employees tend to excel and have some great financial rewards. You may also be working for a unicorn and end up with a windfall. In either case you are probably getting killed by taxes, figuratively of course. Mr. Preece stated that reducing tax liability is extremely important because “I’ve worked hard to earn what I’ve got (often putting in late hours) and I want to ensure that I can enjoy as much of what I’ve earned as I can.” The best financial advisors will work in concert with CPAs specializing in stock transactions to make sure you can shield yourself from as much tax as legally possible.

Tech employees have some unique needs. The right financial advisor can help address those needs and make sure your future is all that you expect it to be. As Mr. Holt said, an “advisor is one of the only ways to balance your money and invest in yourself.”


i https://www.strictlyvc.com/2014/12/01/many-tech-companies-break-year/
ii https://www.cbinsights.com/research-unicorn-companies
iii http://www.cbsnews.com/news/quest-for-alpha-the-final-10-rules-for-being-a-successful-investor/

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Confidence is up, but will it lift the economy higher?

By | 2017, Money Moxie | No Comments

Looking at performance of the stock market over the last 12 months, one might assume that the economy is exploding upward. The rise has been driven mostly by a boost in consumer sentiment, which has taken off since the U.S. elections in November.

In 2017, consumer sentiment hit its highest level in more than 10 years!

Consumers represent 70 percent of the U.S. economy. Their confidence is crucial to future growth. Business spending is much smaller, but it is also much more volatile. So, when businesses are increasing their spending, the economy really has potential to move up. The good news is that optimism is also up for business executives.

Confidence data is nothing more than opinion polls. This is why they are referred to as soft data. Hard data represents real action. Typically, these go hand-in-hand: A change in one leads to a corresponding change in the other.

After inflation, consumer spending is up, but just by 2.8 percent.
The trend in the hard data does not match that of the soft data. The Federal Reserve does not seem concerned.

The Fed raised rates last December and March. Expectations are nearly 100 percent that it will raise them again in June–despite first quarter economic growth of 0.7 percent.

How does one reconcile the gap between opinion polls and actual improvement? What is likely to happen?

The U.S. economy is still improving. Unemployment is down to 4.4 percent. Corporate profits are up. Energy prices are down. Finally, global growth appears to be entering its first synchronized period of growth in two decades. According to BlackRock, European earnings are up nearly 20 percent in the last year.

Add to this good news the potential for positive surprises and it becomes more clear why a glass-is-half-full perspective is better.

  • Soft data could finally lift hard data
  • Increased global trade will help U.S. companies
  • Wages should rise with tight labor market
  • Deregulation could create more opportunities
  • Corporate tax reform may boost profits
  • Infrastructure spending could boost productivity

Any one of these surprises could help convert optimism into action. The timing is the greatest uncertainty, but that is no reason to be overly concerned. With so many positive economic changes occurring in the world right now, we believe there are plenty of opportunities
in 2017.

 

*Data from the Federal Reserve Bank of St. Louis. The S&P 500 index often represents the U.S. stock market. One cannot invest directly in an index. Investing involves risk, including potential loss of principal. The opinions and forecasts expressed are those of the author and may not actually come to pass. This information is subject to change at any time, based on market and other conditions, and should not be construed as a recommendation of any specific security or investment plan. SFS is not affiliated with any companies mentioned in this commentary.

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Forge a New & Powerful Financial Paradigm

By | 2017, Executive Message, Money Moxie | No Comments

Dear Friends and Financial Partners!

How can you improve your savings and investing before and during your retirement? Here are some nifty (some might say awesome) tips to immediately change your personal money paradigm.

Change Your Money Mind-set: Chris Reining, who lives in Madison, Wisconsin, became a millionaire at age 35 by doing one thing differently. Chris started working to save and invest, rather than working to spend. By going through a self-imposed paradigm shift, your life can also transform from a working-to-spend environment to a savings-and-investing world. The outcome speaks for itself. This is one powerful idea.

Get Professional Financial Help: Ours, of course. When you are accumulating assets in your 401(k) or 403(b), you are in an automatic investment mode. If you don’t know what the sequence-of-returns risk is or how dollar-cost averaging works against you during your withdrawal years, you are already behind and need our help. Social Security has over 2,700 rules and hundreds of exceptions to these rules. Medicare is filled with land mines. Distributing assets during the decumulation phase is exponentially more complex than adding assets.

Take Charge of Your Emotions: Don’t let your emotions take charge and dictate your actions. Specifically, when the stock market is dropping or has dropped, don’t lock in your losses! Remember: Stock market drops are temporary. Locking in losses is permanent. Locking in losses by selling at or near the bottom of a market may be a mistake you and your loved ones will pay for the rest of your lives.

Ignore the Media: Call us. We know your specific financial goals. We manage money and segment your accounts by time to avoid the sequence-of-returns risk. Even when the media is all doom and gloom, there’s a good chance your accounts will be doing just fine with respect to your own financial goals. “The Sky is Falling” mentality illustrated by Henny Penny, more commonly known in the U.S. as Chicken Little, may cause you to want to lock in your losses. Don’t do it. Even well-meaning friends and family members can push you away from financial goals.

Remember: Contrary to many, investing is not about beating the market. Financial planning and investment management are about meeting your goals, including having a sustainable income stream during retirement. At Smedley we strive to help you forge a powerful, yet personal financial paradigm. As always, we are on your side.

Bullish Best Wishes,

Roger M. Smedley, CFP®
CEO

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Gambling – with Your Retirement?

By | 2017, Money Moxie, Viewpoint | No Comments

To encourage better investment behavior, the Nasdaq stock exchange plans to reward investors willing to commit. In 2016, the exchange introduced plans for an “Extended Life Order.” In today’s fast-paced world, how long a commitment does the Nasdaq want for an extended life trade? One second!

Information travels fast in 2017 and the stock market seems to hit highs every week. Nevertheless, I believe it is the patient, long-term investors that should benefit the most.

It’s hard to define long-term perfectly, but it is a lot more than one second–possibly somewhere above 315 million seconds, which is around ten years.

With this in mind, I think it is a good time to consider what kind of investor we want to be and what attributes we need to be successful.

Speculator/Gambler
Investing is different than gambling in many fundamental ways. However, it is still possible for investors to speculate with their savings. A speculator trades often based on short-term events hoping that a price will continue to rise or fall—anticipating a quick exit in a couple months, weeks, days, or less.

Investor
An investor purchases ownership in a company to help it raise money for profitable projects. As an owner, investors may even receive dividends.

Attributes for Success
To help determine what kind of investor you are, ask yourself, “How much would you accept in a year instead of $1,000 right now?”

Let’s hope your answer isn’t too far off one thousand dollars. The greater your number, the less financial patience you have—and patience is crucial to gaining wealth. It impacts spending, savings, and investing.

Combine patience with a little courage and then an investor truly has a chance at participating in the long-term opportunities that the markets have to offer.

Warren Buffett is one of the wealthiest individuals in the world. He built his fortune by being greedy when others were fearful and fearful when others were greedy. He purchased stocks in some of the most frightening times like during the Great Recession of 2008-2009.

Is Buffett a speculator or an investor? He certainly has patience and courage. When asked about his ideal time frame for holding an investment, Warren Buffett replied: “Forever!” Now that is an “extended life” commitment!

 

Sources: “Enhancing Long-Term Liquidity-Nasdaq Introduces the Extended Life Order” Nelson Griggs, Nasdaq.com, August 18, 2016
“Investor or Speculator: Which One Are You?” Jason Zweig, WSJ, December 10, 2016

Research by SFS. The Dow Jones index is often considered to represent the U.S. stock markets. One cannot invest directly in an index. Diversification does not guarantee positive results. Past performance does not guarantee future results. The opinions and forecasts expressed are those of the author and may not actually come to pass. This information is subject to change at any time, based upon changing conditions. This is not a recommendation to purchase any type of investment.

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Ransomware Gets Personal

By | 2017, Money Moxie, Newsletter | No Comments

It was an ordinary Tuesday late afternoon for John Doe; catching up with friends and family on Facebook and sifting through his email before dinner. As he was scrolling, he noticed an email from an old acquaintance he hadn’t heard from in a while. Normally, John is hesitant to click on an email that is unfamiliar as he knows it typically is junk, but he hadn’t heard from this person in ages and was curious what the email was about. John clicked on the attachment and that is when the problems began.

When opened, the attachment appeared empty and didn’t include any information. John responded to his friend. While waiting for a reply, he noticed his computer was really slow and then a large pop window appeared on the screen with an ugly picture of a clown and the words, “Your computer files have been encrypted…you must pay the ransom or your files will be deleted.”

What just happened? John was hacked with a malicious file by cybercriminals under the guise that it came from someone he knew. He subsequently paid the ransom to the hackers to get his files back.

Does this happen often? Alarmingly, YES! Cybercriminals are no longer just going after companies, but individuals like you and me, and they are doing it at an alarming rate. These online scams infect your computer in different ways including opening email attachments, clicking on links in emails, or sometimes even visiting a valid website that has been compromised by cybercriminals.

So what can we do to protect ourselves from these attacks?

Backup all of your files religiously. Use an online backup that does it automatically for you like Backblaze, Crashplan, or Carbonite.

Ensure that you are doing updates on your computer for both Mac/Windows operating systems and the various software programs that you have installed including Java, Adobe Reader, Flash, etc. This will ensure that any vulnerabilities that have been discovered and pose a threat are eliminated.

Handle email with caution. Cybercriminals are getting better at disguising their phishing emails.

No matter how authentic the email looks, don’t open attachments or click on links inside unsolicited emails from friends, businesses, the IRS, or your bank. If it seems strange, call that person and verify they really sent you the file or link. Is it inconvenient? Yes, but it’s better than paying money or losing all of your files. It’ll be worth the extra precaution in the long run.

If you have been hit by ransomware, you have some difficult decisions to make. If your files are not backed up, you can either pay the cybercriminals for an encryption key to unlock them, or lose all the files and start over.

If your files are backed up with an online company, you can have someone help you wipe the hard drive and download your backup files. All of this takes time and is extremely inconvenient. It’s better to be cautious and verify the sender before clicking on attachments or links. If you are a victim of an attack, the FBI asks that you file a complaint through their IC3 site at IC3.gov.

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