Contact

Interest Rates, Inflation, and Investment Strategy Part 2: Understanding Inflation

Has rising inflation got you down? In our last piece, “Understanding Interest Rates” we explored how rising and falling interest rates can impact a healthy economy. Today, let’s add inflation to the conversation.

 

How Do We Measure Inflation?

Inflation is the rate at which money loses its purchasing power over time. As you might guess, there are many ways to measure such a squishy figure. There are various economic sectors, such as energy, food, housing, and healthcare, which can complicate the equation by exhibiting wildly different inflation rates at different times. There is ongoing debate over which figures are most relevant under what conditions.

 

There also is today’s inflation rate, versus the rate at which inflation has changed or is expected to change over time. For example:

 

While that’s a wide range of numbers for seemingly the same figure, they all share one point in common: By nearly any measure, inflation is higher than it’s been in quite a while. One need only visit the $1.25 Dollar Tree (or nearly anywhere else these days), to realize that $1 doesn’t buy what it used to.

 

But what should we make of that information? As usual, it helps to consider current events in historical context to discover informative insights.

 

Inflationary Times: Past and Present

Unless you’re at least in your 60s, you’ve probably never experienced steep inflation in your lifetime—at least not in the U.S., where the last time inflation was as high (and higher) was in the early 1980s. After years of high inflation that began in the late 1960s and peaked at a feverish 14.8% in 1980, Americans were literally marching in the streets over the price of groceries, waving protest signs such as, “50¢ worth of chuck shouldn’t cost us a buck.”

 

During his 1979–1987 tenure, Federal Reserve chair Paul Volcker is credited with routing the runaway inflation by ratcheting up the Federal target funds rate to a peak of 20% by 1980. (Compare that to the recent increase to 0.05% as discussed in our last piece.) Aimed at reducing the feverish spending and lending that had become the status quo, Volcker’s strategies apparently effected a cure, or at least contributed to one. By 1983, inflation had dropped considerably closer to its cooler target rate of 2%, around which it has mostly hovered ever since. Until now.

 

The Inflationary Past Is Not Always Prelude

Why not just ratchet up the Fed’s target rates as Volcker did? Unfortunately, it’s not that simple.

 

First, as described in this commentary, “Should We Be Scared of Inflation?” there are several broad categories—such as supply and demand, rising labor and production costs, and a nation’s monetary policies—each of which can contribute to inflation individually or in combination. This means each inflationary period is borne of unique circumstances. So, even if a “treatment” seems relatively reliable, you never know for sure how each “patient,” or economy, will respond.

 

Second, even if an inflation-busting action does work, it’s not unlike treating cancer through aggressive chemotherapy. Left unchecked, the side-effects can be worse than the disease.

 

Volcker’s actions are a case in point. The higher target rates not only tamed inflation, they weakened the economy significantly, leading to an early 1980s “double dip” recession and high unemployment. Overall unemployment hovered above 7% for several years, with some sectors such as the construction and automotive industries experiencing double-digit figures. Even if the outcome was worth the pain involved, it’s not a course one embraces with enthusiasm.

 

“If/Then” Stage Two Thinking

Are we doomed to reach double-digit levels of inflation this time, face another painful recession, or both? As always, time will tell. However, in the face of today’s challenges, we choose judicious optimism over paralyzing fear. This is not because we’re naïve or blind to the facts, but because we are guided by an economic principle known as stage two thinking.

 

Economist Thomas Sowell has described staged thinking in his pivotal book, “Applied Economics: Thinking Beyond Stage One.” Basically, before acting on any event’s initial impact, it’s best to engage in stage two thinking, by repeatedly asking a very simple question:

 

“And then what will happen?”

 

By applying stage two thinking to inflation, we can accept that, yes, inflation has become uncomfortably high. Labor costs, supply constraints, low interest rates, and high spending have all likely contributed to inflated costs, which can then twirl around and further aggravate these same influencers. In the resulting tango, inflation could spin out of control.

 

But then what will happen? In reality, next-step responses are already taking place. The Fed has raised interest rates once, and hopes to continue raising them throughout 2022. Likewise, businesses are revisiting their growth plans, and consumers are thinking twice about their purchases, especially in markets where inflation is having its greatest impact.

 

It probably won’t happen overnight, but these next steps should chip away at inflation. True, this could lead to a recession … or not. We hope not. Either way, then what will happen? Once again, governments, businesses, and individuals will likely adjust their behaviors and expectations in response. And so on.

 

Investing in Inflationary Times

Even if odds are heavily stacked in favor of our taming inflation over time, this is not to suggest it will be easy. And even if we “win” in the end, it’s unlikely it will be obvious until we are able to look back at the events in hindsight. As such, as we press forward, you may repeatedly question what these influences mean today to you and your investments. We’ll describe our take on that in the final, part 3 installment of this series.

5 Financial Goals to Have in Your 50s

Throughout your life, situations will change. Priorities will fluctuate and you adjust your plans. While your 30s and 40s were focused on building wealth and saving for your future, your 50s are a time to evaluate your savings and investments and plan for your impending retirement. To gauge your financial situation in your 50s, here are five goals to consider.

Revisit your estate plan

Having an estate plan is important to protect your assets and your personal property. An estate plan is a collection of documents that explains how you want your assets to be passed down and who will protect your wishes in your absence. An estate plan typically includes a will, a power of attorney, a medical power of attorney, a living will, and a trust. Your 50s is a great time to review your estate plan and make any necessary changes. 

Retirement income planning

While you hopefully have been saving for your retirement for several decades, your 50s is a time to sit down and analyze how much you’ve saved. Look at your expenses and determine how much income you will generate in retirement. If there’s a projected deficit, it’s time to restructure your retirement plan. This means cutting expenses, or increasing your savings. Review your investment allocation and determine if there are any additional retirement income sources such as a deferred income annuity.

Live on less than you earn

You don’t want to reach retirement living beyond your means. By the time you reach your 50s, you should be able to know if you can live on less than you earn. It’s a good rule of thumb to live on at least 15% less than your income. This gives you a nice cushion for unexpected expenses that could pop up. 

Diversify and rebalance your portfolio

No matter your age, it’s important to diversify and rebalance your portfolio as your goals, risk tolerance, and time horizon change. Additionally, because the market is always changing, rebalancing your portfolio allows you to maximize your returns while minimizing your risk. In your 50s, it’s important to pay attention to how the market is performing. You can keep investing aggressively, but begin to shift toward an asset allocation of 60/40 split of equities to bonds. As you move into your late 50s and early 60s, you’ll want a higher percentage of short-term bonds instead of stock, as you will have less time to recover from big dips in the market.

Long-term care planning

While no one really wants to think long-term care is part of their future, it’s important to plan for the possibility that at some point in your life, you will need extra care. Long-term care insurance and funding strategies are best purchased and reviewed in your 50s. Once you reach your 60s, qualifying for long-term care coverage can be harder. Research your options and decide what makes sense for you.

If you’re at the stage in your life where you need to evaluate your investments and how well you are tracking toward your retirement goals, we can help you evaluate your options. Get in touch with us to learn how we can partner with you to help you reach your financial goals.

Cryptocurrency Makes a Mainstream Move — Here’s What to Know

If you caught any part of Super Bowl LVI, you may have noticed a futuristic edge to the commercials. From electric cars to cryptocurrency, these future novels became more of a reality for the masses.

Advertisers took advantage of the country’s biggest stage to promote crypto companies such as EToro, Crypto.com, and FTX. The decision to advertise during perhaps the biggest American sports event of the year moves cryptocurrency from its dark, mysterious corner in the tech world to the main stage of investment opportunities. 

If the commercials caught your attention and have you thinking about crypto investments, here’s what to know before you go all in.

Cryptocurrency defined

A cryptocurrency is a digital asset created with computer networking software that enables secure trading and ownership. 

The technology behind Bitcoin and most other cryptocurrencies is known as the blockchain, which maintains a tamper-resistant record of transactions and keeps track of who owns what. One of the main features of cryptocurrency is that it is decentralized, meaning it operates without a central authority such as a government or bank.

Types of cryptocurrencies

Not all cryptocurrencies are the same. More than 17,000 different cryptocurrencies are traded publicly, according to CoinMarketCap.com. Here are some of the more common types:

 

If the various cryptocurrencies weren’t enough to navigate, there are millions of NFTs — or nonfungible tokens — which are based on similar technology and offer ownership of content such as pictures and videos.

Investing in crypto

No matter how mainstream cryptocurrency may become, it’s a risky investment nonetheless. A general rule of thumb is that high-risk investments should make up a small portion of your portfolio – one common guideline is no more than 10%. Consider first securing your retirement savings, paying down debt, or investing in less volatile funds.

Most importantly, do your homework before investing in cryptocurrency. Find a financial advisor who is familiar with cryptocurrency and can drill down into the nuances of digital investments.

If you’re looking to diversify your portfolio to help you reach your financial goals, connect with us to get started.  

Portfolio Rebalancing and Target-Date Funds

Portfolio rebalancing comes with the territory. Rebalancing your investment portfolio on a regular basis allows you to manage risk and realign your investments to stay on track toward your goals. 

Investing in target-date funds is an alternative for investors who do not wish to do their own rebalancing but are interested in a broadly diversified portfolio for retirement savings. The glide path of a target-date fund will automatically rebalance the fund over time. This is what makes the fund so appealing.

How target-date funds work

A glide path shows how the asset mix of a specific target-date fund will change over time as an investor approaches retirement. An investor’s portfolio evolves over time from heavily weighted stocks to a mix that is predominantly bonds and eventually short-term reserves.

Risk is inherent in all investments. Investments in target-date funds are subject to the risks of their underlying funds. The year in the fund name refers to the approximate year (the target date) when an investor in the fund would retire and leave the workforce. As the fund approaches its target date, it will shift from more aggressive to more conservative investments. 

But nothing is ever quite as simple as it seems. A target-date fund investment cannot be guaranteed, even after the target date. Investments in bond funds are subject to interest rate, credit, and inflation risk. Diversification does not ensure a profit or protect against a loss in a declining market.

Let’s walk through the pros and cons of target-date funds.

Advantages of target-date funds

You can choose between two types of target-date funds: target date and target risk.

Ease of choice

Target-date funds use an asset allocation formula that assumes you will retire in a certain year and adjusts the asset allocation model as the date gets closer to retirement. The target year is identified in the name of the fund. 

With target-risk funds, you generally have three groups to choose from. Each group is based on your risk tolerance: conservative, moderate, or aggressive. If you later decide that your risk tolerance has or needs to change as you get closer to retirement, you have the option of switching to a different risk level.

Diverse options

Target retirement funds offer a variety of investment options. There are funds that provide active management, passive management, exposure to a variety of markets, as well as a selection of asset allocation options. Investors who are willing to do some research will likely find a fund that works for them.

Disadvantages of target-date funds

There are downsides of target-date funds to consider before investing. It’s not simply a “set it and forget it” solution. Finding a fund with the right date is just the beginning of the decision process.

Not all funds are the same

Contents of the funds with the same target date can vary greatly, and proportions can vary even more over time. Additionally, target-date funds don’t automatically adjust to changes in your life. If a major life event impacts your finances or alters your retirement date, you may need to move your money to a fund with a new target date or change your asset mix to one that’s more aggressive to make up for money you might withdraw early.

Funds can also differ in terms of investment style. For example, you can find a fund that is made up entirely of index funds. Based on algorithms, such a fund is likely to have lower fees. But investors who prefer active management would need to choose a different type of fund. 

Expenses

Target date funds may charge management fees that are above average compared to other mutual funds. They are generally more expensive than index funds.

All mutual funds charge expense ratios — the fees that compensate the fund managers and pay other expenses. As funds of funds, each target date fund buys many other funds, meaning you are charged expense ratios for the target date fund and each of the funds it purchases.

Choosing a target-date fund is one thing, but correctly implementing your retirement savings strategy is another thing altogether. If you need guidance on determining the right investment strategy for you, give us a call today.

Practical Tips for Portfolio Rebalancing

*Portfolio rebalancing may result in tax consequences, and you should consult with a tax professional for advice specific to your investments.

It’s not uncommon to find that people usually fall into one of two camps when it comes to what they believe investing looks like: there are people who think investing involves a lot of buying and selling stock, and those who think you invest and just stay hands off while your money grows. The truth is, neither strategy is the best approach to growing your wealth. 

To maximize your investment, it’s important to review your portfolio at least once a year to ensure it hasn’t gotten off balance. What does this mean? Rebalancing involves buying and selling positions in your portfolio in order to get back to your original asset allocation. Portfolios drift from their start investment mix when one asset class outperforms another. If you don’t periodically rebalance, you may be exposed to more risk than you realize.

When rebalancing your portfolio, it’s important to remember your investment goals and the role of each investment vehicle in your portfolio. For example, bonds provide stability and income, and shouldn’t regularly outperform equities.

For simplification, let’s assume that you start out with an asset allocation of 60% stocks and 40% bonds. Over time, the market value of your stocks grows but your bonds don’t, and you end up with 70% of your portfolio value in stocks and only 30% in bonds. To rebalance, you would sell some of the stocks and buy more bonds to bring the percentages back to 60/40.

When to rebalance

There are two approaches to when you should rebalance your portfolio:

Tips for portfolio rebalancing

Taking a Look at Generational Differences Among Women Investors

Each generation has different spending and investing habits. People of the Baby Boomer generation (born 1946-1964) tend to be less confident in their investments than younger generations and want to invest at the lowest cost possible.

GenXers (born 1965-1980) are most concerned about retiring early and not missing out on investment opportunities, according to data by Raconteur. Millennials (born 1981-1996) have the highest agreement with passing along their wealth to their heirs and are willing to pay the most for the best investment advice, according to the same study. 

While this research highlights differences between age groups, how does this apply to women? What are the differences between female generations? Let’s take a look.

  1. Baby Boomer women had less access to wealth management when they were younger
    • The reality is that older women had to self-educate when it came to finances and wealth management. Prior to 1975, married women couldn’t get their own credit cards without permission from their husbands, which meant their husbands often controlled the household finances. Therefore, these women didn’t learn financial literacy from their families, but rather sought advice from specialists. 
  2. Younger women embrace technology
    • It really isn’t surprising that younger generations of women are more open to technology than older generations. Women under 35 are using apps, listening to money-related podcasts, and watching money-related TV shows at a higher rate than women 35 and older.
  3. Millennials are the most interested in socially-responsible investing
    • Younger women are the most concerned of the generations with investing in companies that align with their values.
  4. Generation X are most likely to use a financial advisor
    • GenX women expect clear, to-the-point answers and tend to be more conservative in their investments than Baby Boomers.
  5. Baby Boomers have the most patience
    • Their life experience has shown them the ups and downs of the market, leading them to have a long-term approach to investing. They are comfortable with buying and holding onto investments with their future goals in mind.

Overall, women have different life experiences than men that require different approaches to investing and wealth management. We are devoted to helping women plan and invest in their financial futures. If you’d like to learn more about who we are and our approach to investing, contact us today.

Answering Questions about Required Minimum Distributions

Retirement distribution rules can be complex. We always recommend working with a trusted tax professional to help understand tax rules, but here are some answers to questions about RMDs.

For more detailed information about RMDs, check out this IRS webpage.

What are required minimum distributions (RMDs)?

RMDs are minimum amounts that you must withdraw annually from certain retirement savings plans once you’ve reached the mandatory age for making withdrawals.

The mandatory age at which you must begin taking RMDs from your traditional IRA depends on when you were born. The Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 raised the age for RMDs from 70 ½ to 72 for individuals who turned 70 ½ after December 31, 2019. As a result:

For each subsequent year after you begin taking RMDs, you must withdraw your RMD by December 31. The amounts you withdraw typically count as taxable income unless you already paid taxes on your contributions.

What if I don’t take any distributions, or if the distributions I take don’t meet the RMD amount?

You will be subject to pay a 50 percent excise tax on the amount not distributed.

What accounts utilize RMDs?

The RMD rules apply to all employer sponsored retirement plans, including:

The RMD rules also apply to traditional IRAs and IRA-based plans such as:

RMD rules apply to Roth 401(k) accounts. However, the RMD rules do not apply to Roth IRAs while the owner is alive. Roth IRAs do not require RMD withdrawals until after the death of the owner. If you have a Roth account in an employer-sponsored plan, the IRS recommends that you contact your plan sponsor or plan administrator regarding RMD information.

How is the amount of the required minimum distribution calculated?

Generally, a RMD is calculated for each account by dividing the prior December 31 balance of that IRA or retirement plan account by a life expectancy factor that IRS publishes in Tables in Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs). 

When it comes to your retirement planning, it’s important to make investments that will help you reach your retirement goals. If you have questions about your retirement plans, we’d be happy to talk with you. Contact us about what you can do today to plan for your future. 

Currency in the Digital Age: Understanding Cryptocurrency & Bitcoin

We live in an age of vast technology and data. While many advancements can be exciting, a lot of uncertainty comes with it. Over the past several years, you may have heard the terms “bitcoin” and “crypto currency” and wondered what it is and if you should know more about it. Because there’s been a rise in crypto currency and we don’t expect it to go away anytime soon, it’s important to have an understanding of the basics.

What is cryptocurrency? 

Cryptocurrency is a form of payment that can be exchanged online for goods and services. You can think of cryptocurrency as you would arcade tokens or casino chips. You’ll need to exchange real currency for the cryptocurrency to access a good or service.

More than 10,000 different cryptocurrencies are traded publicly, according to CoinMarketCap.com, a market research website. And cryptocurrencies continue to proliferate, raising money through initial coin offerings, or ICOs. The total value of all cryptocurrencies on Aug. 18, 2021, was more than $1.9 trillion — down from the April high of $2.2 trillion, according to CoinMarketCap. The total value of all bitcoins, the most popular digital currency, was pegged at about $849 billion, regaining some ground from recent price lows. Still, the market value of bitcoin is down from the April high of $1.2 trillion.

What is bitcoin?

Bitcoin is a digital currency that operates free of any central control or the oversight of banks or governments. Instead it relies on peer-to-peer software and cryptography.

Bitcoin transactions are recorded on a public ledger and copies are held on servers around the world. Anyone with a computer can set up one of these servers, referred to as a “node.” Every transaction is then publicly broadcast across the network and shared from one node to another.

Every few minutes, bitcoin transactions are collected by miners into a group called a block and added to the blockchain — the account book of bitcoin. Virtual currencies such as bitcoin are held in digital wallets and can be accessed from client software or online or hardware tools. A private key is used to prove ownership of the funds when making a transaction. In reality, there is no such thing as a bitcoin or a wallet, just agreement among the network about ownership of a coin.

Bitcoin was created to provide an alternative payment system over the internet that would operate free of central control, but used just like other currencies. 

Is bitcoin safe?

For those who don’t understand bitcoin and crypto currencies, there’s a wave of mystery and controversy that surrounds it. Their biggest concern is whether or not it is safe. 

The cryptography behind bitcoin is based on the SHA-256 algorithm designed by the US National Security Agency. Cracking this is, for all intents and purposes, impossible as there are more possible private keys that would have to be tested (2256) than there are atoms in the universe (estimated to be somewhere between 1078 to 1082).

In reality, the biggest problem with bitcoin is that it operates without a central authority. If there is an error in a bitcoin transaction, such as sending bitcoin to the wrong person or losing your passkey, there is no one to help you. 

Final thoughts

Cryptocurrency is an incredibly speculative and volatile buy. Stock trading of established companies is generally less risky than investing in cryptocurrencies such as bitcoin.

Consider the sentiment of legendary investor Warren Buffett when sharing his thoughts on cryptocurrency: “It’s a very effective way of transmitting money and you can do it anonymously and all that. A check is a way of transmitting money too. Are checks worth a whole lot of money? Just because they can transmit money?”

The reality is that currency needs stability and cryptocurrency is anything but that. While some may believe it’s the currency of the future, it’s current volatility makes it a risky investment.

If you’re interested in investing and want to build a solid portfolio to help meet your goals, we’d love to help. Call us today to discuss your objectives. 

How to Help Aging Parents Plan for Their Care

While people may be living longer than in generations past, the end of life will come for everyone. And while it may be difficult to think about, estate planning isn’t about death — it’s about carrying out your wishes after you’ve gone and through your final years. 

As adult children, it can be hard to watch your parents age from their young, vibrant selves you remember as a child. But one of the best things you can do for your parent is to have the conversation of preparing for their end of life care. 

Here are some questions to discuss with your aging parents to ensure their wishes are respected and a plan is in place. 

What are your parents’ wishes for their advance care?

There will likely come a time in your parent’s life when it is no longer safe for them to completely care for themselves. Discuss with them how they’d like to be cared for when this point comes. Are they open to retirement-home or assisted living? Would they like to age at home and should look into in-home care? Or maybe you’ve opted to take on this responsibility and will care for them in your own home. Go over these options, tour facilities, and research costs associated with each. 

Do they have long-term care insurance?

Medicare is available to everyone once they turn 65. However, it doesn’t cover the costs of long-term care such as assisted living and home care. Long-term care insurance is available to cover these costs. However, it can be expensive and not everyone will qualify for it. Medicaid covers retirement-home stays, but any retirement income your parent is receiving will be used first before Medicaid kicks in.

What expenses does their health insurance cover?

Familiarize yourself with your parent’s healthcare coverage, whether that is through Medicare or a former employer plan. This can help you determine what financial assistance they may need for medications or care if you’ve decided to take on that responsibility.

Have they saved enough to cover medical and care expenses in retirement?

You can never start saving for retirement early enough. That investment will be used one way or another. When saving for retirement, it’s important to take into consideration your possible end-of-life care. Depending on how much your parent has saved for retirement, can help you determine which care plan is realistic and give you an idea of what you should be putting toward your own retirement. 

While everyone can agree that having estate planning and other conversations about the wishes someone would like at the end of their life is important, so many find it hard to discuss it. If you find yourself uncomfortable in the conversation or your parent keeps putting it off, it’s normal. But keep nudging for the both of you. In the end, it can save you both from frustration and heartache down the road. If you’d like help ensuring you are saving enough for your own retirement, we’d love to talk with you and build a portfolio to meet your goals. 

What to Inventory For Estate Planning

Estate planning is an important process for anyone who owns any assets, no matter their size or value. Planning your estate means designating who will receive your assets upon your death or if you are unable to make those decisions due to incapacitation. Deciding who will handle the responsibilities of your estate helps ensure your wishes are followed. When considering who will receive your assets, it’s important to identify those assets and estimate their value. We list what tangible and intangible assets to consider when planning your estate.

Tangible assets

Tangible assets are physical possessions that you own. These include:

Intangible assets

Intangible assets are not physical items but are assets such as financial accounts. These may include:

Estimating asset value

Once you’ve identified your assets, you need to estimate their value. Recent appraisals of your real estate and financial statements of your accounts can be beneficial outside valuations to help with estate planning. For items without these valuations, do your best to estimate their value or how your heirs will value them so that you know how to divide your assets. 

Debts and judgments

When planning your estate, also keep track of any uncollected debts or judgments that you may have. If you’ve loaned someone money or won a court case, your estate has the right to collect repayment on the loan or the proceeds of the judgment. 

Final thoughts

If you’re planning your financial future, we’d love to help you reach your goals. Whether you’re planning for your ideal retirement or wanting to build wealth for future generations, we can help focus your financial efforts toward your goals. Contact us today for an introductory consultation. 

Hiley Hunt Hot Take: Paying Off Student Loan Debt vs. Investing

For a lot of people, graduating from college with at least some debt is inevitable. With the high costs of education and all that entails, nearly 43 million Americans carry student loan debt, accumulating to about $1.59 trillion. 

As we all know, debt can negatively impact a person’s life if they don’t have a plan. One of the biggest concerns people have in their 20s and 30s is whether they should work to pay off student loan debt as soon as possible, or put that money toward investing for their future. In this article, we weigh the options of each.

Climbing out of student debt

With the average American student graduating from college with about $30k in student loan debt, people are eager to want to pay it off. After all, interest payments could add another several thousand dollars to the principal amount. 

However, many people find that their first job out of college isn’t typically the highest paying, and with additional living expenses such as rent, utilities, groceries, and car payments, they can find their paycheck wiped out quicker than they expected. 

The first thing to do when attempting to pay off debt is to create a budget. List your monthly expenses and allocate the appropriate amount towards them. After listing all the necessities, if you find yourself with some leftover cash, decide how you want to spend it. If you can put an additional hundred dollars or so toward your student loan payment every month, you will be able to pay it off sooner and cut down on the interest. 

But is it worth it? If you decide to tackle student loans, start with those with the highest interest rates — anything 6% or greater. You should also remember that it’s wise to have an emergency fund of about 3-6 months worth of your salary. This should be in place before any extra payments are made to your student loans. The sooner you start investing, the greater your return will be in the future. 

What about investing?

If you decide to pay down on your student loans, you can certainly save money in the long run. However, it doesn’t earn you money. 

Remember compound interest? With the right investments, you can still come out on top even if you decide not to pay off your student loans early. Investing in mutual funds and your employer’s 401(k) plan can set you on a solid path for your financial future. 

Contributing to your employer’s contribution matching 401(k) is an excellent way to earn basically “free money.” Contribute as much as you can to reap the benefits of the employer matching program. 

Final thoughts

Everyone’s circumstances are different, and if you’re struggling to make ends meet, it’s helpful to meet with a financial advisor and look into refinancing your student loans or applying for a student loan repayment plan. We always recommend investing as early as you can, but we understand that life happens and goals and needs can change. If you’re interested in learning more about investing while carrying student loan debt, contact us for a consultation.

What to Expect: the Hiley Hunt Client Experience

Everyone likes to know what to expect when they enter into a new partnership. When you contact us at Hiley Hunt Wealth Management, our first step is to sit down with you for a discovery meeting. Where are you financially, where do you want to go, and what roadblocks are impeding your progress?

We want to help you reach your financial goals, so we take the time to understand you and your needs in the present, and where you’d like to be in the future. If we all feel like we are the right fit, we move forward to the next step, which is determining your investment tolerance risk and outlining a financial plan for you.

Each year, you can expect to go through the following process with us, as we check in to make sure your investments and goals are aligned.

Goal Setting

Everyone’s goals change. Some change more frequently than others. We sit down with our clients at least once per year to identify specific goals you’d like to focus on for the year. Maybe you’d like to buy a new house within the next few years, or you’re planning to change jobs, or you’d like to retire earlier. All of these goals affect your financial plan, so understanding what your goals are will help determine the right investment strategy for you to reach your goals.

Investment Review

How are the investments we selected working? Do we need to make changes? We encourage reviewing your investment portfolio at least once a year to see if your investments are still tracking toward your goals. If we’ve identified new goals or a change in your life that affects your financial goals, we can make those necessary adjustments in your investments. It’s a great time to re-analyze your risk tolerance as well.

Advanced Planning

Do we need to make changes to your estate plan? What about insurance policies? Is there an opportunity to take advantage of tax strategies? Advanced planning allows you to determine how to distribute your wealth after your death and help your loved ones by having your affairs in order.

Final Thoughts

While meeting with our clients annually to go through the steps above, we’re always available for questions or issues that may come up in your life throughout the year. We’re here to guide you and create a solid plan for your financial future. If you’re ready for a more personalized and meaningful client experience, we’d love to talk with you.