Financial Symmetry News & Views

Archive for July, 2009

Warren Buffett is lending his voice to a new cartoon series that aims to teach valuable financial lessons to kids through entertainment.  He recently spoke to CNBC about the project and his investment philosophy.  To watch his interview and the premiere of “Secret Millionaire’s Club,” click here: Secret Millionaire’s Club.

Article published on FiLife.com by Financial Symmetry’s Allison Berger, CFP ®.

Finding the motivation to save can be just as difficult as motivating yourself to diet and exercise. In both cases you know the outcome will be worthwhile — financial security and better health. However, taking the steps to get there is easier said than done.

If you have ever watched the show “The Biggest Loser,” you have probably heard the trainers say that being fit is not about dieting, but about making lifestyle changes that you can stick with over time. As the contestants participate in the challenge, their health gradually improves and their motivation to continue a healthy lifestyle typically increases. The hardest part is usually getting started.

The same is true with saving. While difficult at first, adopting a scheduled savings strategy and making budgeting part of your routine will increase your odds of achieving your financial goals. Identifying those goals is the first step to finding that motivation, so spend some time thinking about what you want your money to do for you. Maybe you are saving for a family vacation, your children’s education, retirement, or all of the above. Make a list prioritizing each goal and put time frames on them.

Next, work on identifying those triggers that keep you from saving money. Just as having chips and cookies in the house can derail your healthy lifestyle, so can mail order catalogs on your coffee table or even a clear view of your neighbor’s new BMW. Toss those catalogues in the recycle bin, put a limit on your Amazon or eBay habit, and start planning a savings strategy.

One of the best ways to stick to your financially fit goals is to make savings automatic. Hopefully you are already deferring money from every paycheck to your 401k. Think about increasing your deferral to put more toward your retirement goal. Then find other savings you can make automatic. Maybe you can set up a monthly transfer into your savings account, Roth IRA, or your child’s 529 plan. This strategy takes some of the work out of saving and automatically curbs spending, as your checking account appears less flush each month.

Lastly, remember that you are not alone. You probably have friends and neighbors who are also trying to stick to a financially fit lifestyle. Work together on finding low cost activities to do, and exchange tips and tricks along the way. You may also want to consider using a professional. A financial planner can help you develop a strategy specific to your needs in the same way a personal trainer can recommend the best exercises for your health and fitness goals. You can seek out a fee-only financial planner at napfa.org.

On July 27^th, people in the market for a new car can qualify for the “Cash for Clunkers” program otherwise known as the Car Allowance Rebate System (CARS).  This is an effort from the federal government designed in theory, to improve your vehicle fuel efficiency by giving out rebates of up to $4500 for your old “clunker” which can be put towards the purchase of a new car.  Naturally, there are multiple stipulations for you to qualify for this program.

1. Your trade-in vehicle must average 18 miles per gallon or less
2. The trade-in vehicle must be less than 25 years old
3. You must purchase a new vehicle that is $45,000 or less
4. There must be a 10 mpg improvement to receive the full $4500 credit otherwise you receive $3500
5. The trade-in must be drivable and have been owned and insured for one year

Although the program has received a lot of press, a limited amount of new purchases will qualify for the rebate.  SUV or truck owners looking to purchase a new car will be the group most likely to benefit.  That’s bad news to all the car owners who were thinking this deal would sweeten their upcoming vehicle purchase, even if their intent was to dump a 20 mpg car for a similar, much more fuel efficient 35 mpg car.  You can check your car’s average mpg at http://www.fueleconomy.gov/feg/findacar.htm.

Before agreeing to participate in this program, you’ll want to check your car’s trade-in value to verify that it will not be higher than the CARS program can offer you.  Participating in the clunker program means you forfeit any amount over the $4500 as the car is required to be scrapped.  You can go to ww.kbb.com to get an idea of your car’s current trade-in value.

Despite the restrictions, there’s no doubt the program has generated a healthy buzz about new car sales, which should help an industry that took a punch in the gut during the latest recession.  The government rebate also motivates car companies to add extra incentives. Chrysler has already jumped the gun by offering to match the CARS rebate towards the purchase of a new Chrysler, Dodge or Jeep vehicle.

Be aware that you’ll need to make a decision fairly quickly as the program will end on November 1, 2009 or when the $1 billion budget allotted to the program runs out.

For more info:  http://www.cars.gov/

“The NAPFA Webinar Series is a great resource to learn more about the basics behind financial planning from independent, knowledgeable, objective people in our industry.  And best of all, they’re FREE!”  – Chad Smith, CFP®, Financial Symmetry, Inc.

NAPFA has launched a new Consumer Webinar Series aimed at educating consumers on financial planning topics.  This free program is designed to inform the public on money basics while also covering more in-depth personal finance topics.  The year-long  series will consist of monthly, 1-hour live sessions that are available through the NAPFA website.  Past sessions will also be archived for later viewing.  To register for an upcoming session and to learn more about the program, go to NAPFA Webinar Session RSVP.

The first Webinar will broadcast on August 7th, 2009, from 1:00 pm – 2:00 pm ET.
Here’s a preview of the session from NAPFA, “Money 101: Knowing the Basics.”

“Instructor John Henry McDonald, CFP®, CLU, ChFC®, NAPFA-Registered Financial Advisor, and “The Finance Guy” on News Channel 8 in Austin, TX

What is money and what do you need to do right now to ensure you are saving some of it while reducing your debt? John Henry will provide some insights on understanding money basics while giving you a head start on managing the money you do have better.”

Check back often for more upcoming webinar sessions and for our advisors’ feedback on past sessions.  Please feel free to contact our NAPFA members, Chad Smith, CFP® and Allison Berger, CFP® for more information or to schedule a complimentary 45-minute consultation.

“This is one of the many great services NAPFA provides.  Not only are they on the forefront of consumer advocacy for financial education, but they also provide great resources for learning more about the financial planning industry.” – Allison Berger, CFP®, Financial Symmetry, Inc.

Natalie Choate, a respected resource on retirement plans/IRA rules and writer for MorningstarAdvisor.com, recently addressed some financial planning issues that Same-Sex couples face.  Natalie is a lawyer in Boston, MA who speaks regularly across the country on the specifics of many estate planning and retirement plan issues.  We were lucky enough to see her speak here in Raleigh during the FPA of the Triangle Symposium in September 2007.

Natalie breaks down the specific estate distribution of a 401k and a pension plan for a hypothetical same-sex couple.  Her findings are a reminder of how important it is to keep retirement plan beneficiary designations current!

Question: “John,” age 54, and “Jim,” age 58, were married to each other under Massachusetts law. Their marriage is not recognized under federal law. Jim died, leaving a 401(k) plan and a money purchase pension plan, both maintained by his employer, Acme Widget Co. Jim had named John as designated beneficiary of the pension plan, but Jim never filed any beneficiary designation form for the 401(k) plan. The 401(k) plan provides that, if no beneficiary is named, the benefits shall be paid to the employee’s “surviving spouse, if any, otherwise to the employee’s estate.” Elsewhere, the plan provides that the interpretation and administration of the plan shall be governed by Massachusetts law “to the extent not pre-empted by ERISA.” I assume this means the 401(k) benefits must be paid to Jim’s estate, since under federal laws such as ERISA same-sex marriage is not recognized. John is the sole beneficiary of the estate, under Jim’s will, which has been admitted to probate in Massachusetts. What are John’s rights with respect to the pension plan? The 401(k) plan?

See Natalie’s answer on MorningstarAdvisor.com.

Tired of paper statements? While we cannot eliminate all paper statements regarding your investment accounts, Pershing LLC, the custodian of our clients’ brokerage accounts, has a new electronic statement program ready for new enrollment.

Make the switch from paper statements to electronic statements at Pershing, and Pershing will donate $1.00 to the Arbor Day National Foundation of Nebraska City, Nebraska. Between July 1^st and December 31^st, 2009, each $1.00 donation from new electronic statement requests will go toward the purchase and planting of new trees in our national parks. Pershing has pledged a total of $275,000 toward the tree project, which will plant 275,000 trees across our national parks, focusing on parks recently damaged by wild fires.

If you are interested in taking advantage of this great cause, log on to NetXInvestor.com to update your preferences. Please feel free to contact us with any questions or if you need assistance.

Investment News recently featured Pershing’s effort to reduce their environmental impact in their June 12^th issue. Click here to view the article, Pershing Plants Trees by Evan Cooper.

Bill Ramsay, CFP®, was recently quoted on BankInvestmentConsultant.com.   Bill was contacted by Donna Mitchell regarding current pending home sales and affordability.

Here is Bill’s response:

“The housing market is not going to be the engine leading us out of the recession, but clearly it is going to be less of a drag than it has been or should be.”

Click here to view the original article entitled  Pending Home Sales and Affordability Numbers Jump Higher.

Bill Ramsay, CFP®, was recently quoted on Financial-Planning.com.  Bill was contacted by Donna Mitchell regarding the topic of a new partnership between Fidelity Investments and Kohlberg, Kravis, Roberts & Co.

“Too many of them do not do well, and the frenzy that exists when the IPO market is hot makes the problem worse as the average investor tends to significantly overpay when their gambling switch is turned on.”

“Exclusive access also denotes an understanding that Fidelity markets KKR’s IPOs sufficiently, regardless of whether they have an opinion about whether it is likely to be a good investment.”

Click here to view the original article, Fidelity, KKR in Partnership to Sell IPOs to Retail Clients