More Options Don’t Always Lead to More Money

When it comes to managing finances, people have more choices than ever. Convenience may be at an all-time high — with financial vehicle options that fit a wide variety of needs — but this also means there are more choices that aren’t necessarily in the clients’ best interests.

The growing number of options makes it more difficult to properly analyze all of them, leading more and more Americans to take on more risk than is necessary to meet their goals. It’s become common for people to opt for a shortcut rather than taking the slow and steady route to build up their savings.

For example, credit cards have become increasingly popular since their creation in the 1960s, and it’s now become the norm to buy items now and pay later. This option gives consumers the ability to pay small monthly minimums which, when paired with high interest rates, could turn manageable debt into out-of-control debt.

The already-complicated field of finance has only gotten more complex over the past 50 years. This is all the more reason to rely on financial professionals for financial advice, as opposed to searching around online or taking guidance from a robo-advisor. It is important to regularly evaluate your financial strategy to ensure it reflects your current goals and objectives, so please keep us in mind any time you’re considering making changes to your strategy.

The average household debt, as a percentage of personal income, increased sixfold from 1946 to 2008.¹ And while the concept of debt may not be that difficult to understand, the complicated rules that surround credit scoring are hardly intuitive. For example, leaving cards with zero balances open doesn’t hurt your credit score, but closing cards without a balance doesn’t help it.²

Interestingly, while all of these financial vehicles offer people more choices, as a general rule, Americans have become more averse to change. According to a recent study, we are now less likely to change jobs, relocate to another state or open a startup business than we were 30 years ago. As a result, Financial Times reports that productivity is likely to drop in the U.S. for the first time in over 30 years.³

Even seemingly smart investment choices experience volatility. It’s important to remember that investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. However, just because a financial vehicle has downsides doesn’t mean you should eschew it if it is appropriate for your situation.

Here’s one example: 529 college savings plans have become popular among grandparents who want to help their grandchildren graduate from college without student debt. However, when 529 funds are distributed to students, the next year those assets are reported as the student’s income — which, in turn, may decrease the amount of financial aid the child  may receive by 50 percent. In dollar terms, that means if a student received $10,000 from his grandmother’s 529 plan, his student aid for the next year could be reduced by $5,000.⁴

For all practical purposes, financial choices these days are boundless. There are approximately 2,400 stocks traded on the New York Stock Exchange alone.⁵ We suggest that the best way to manage your options is to seek quality advice from a licensed financial professional and appropriate financial products for your situation. As always, we’re here to help.

¹ Center for Retirement Research at Boston College. May 26, 2016. “Array of Financial Products is Dizzying.” http://squaredawayblog.bc.edu/squared-away/array-of-financial-products-is-dizzying/. Accessed May 27, 2016.

² Barry Paperno. CreditCards.com. Feb. 25, 2016. “Credit utilization rules for managing your credit score.” http://www.creditcards.com/credit-card-news/credit-utilization-rules-managing-credit-score-1586.php. Accessed May 27, 2016.

³ Derek Thompson. The Atlantic. May 27, 2016. “How America Lost Its Mojo.” http://www.theatlantic.com/business/archive/2016/05/how-america-lost-its-mojo/484655/. Accessed May 27, 2016.

⁴ John F. Wasik. The New York Times. May 27, 2016. “The Best Way to Help a Grandchild with College.” http://www.nytimes.com/2016/05/28/your-money/the-best-way-to-help-a-grandchild-with-college.html?smid=tw-your_money&smtyp=cur&_r=0. Accessed May 27, 2016.

⁵ Heather Long. CNN Money. May 13, 2016. “How much $$$ do you need to start investing?” http://money.cnn.com/2016/05/13/investing/how-to-start-investing/index.html?sr=twmoney052816how-to-start-investing0233AMStoryLink&linkId=24774777. Accessed May 27, 2016.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the complete loss of principal.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

Investment Advisory Services offered through Global Financial Private Capital, LLC, an SEC Registered Investment Advisor.

Content prepared by Kara Stefan Communications

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Stay Plugged in to New Tech Trends

Technology hasn’t just improved over time; it’s also matured its users. Today, the average child gets his or her first cellphone at age 10.¹ In past generations, 10 was about the age when parents finally let their kids use those creepy crawly bug makers that required a heating device.

These days, one of the biggest growth trends in IT is wearable technology, such as medical and fitness devices. As much of the nation continues on its prolonged health kick, companies have adapted to consumers’ needs by rolling out wearable technology. The U.S. has accounted for the largest share of these medical and fitness devices that encourage improved health and activity.²

New products are constantly rolled out with a variety of everyday applications, such as cloud delivery services, digital entertainment/gaming, location-based services, increased digital security and big data analytics.³

The bigger and better the breakthrough, the more expensive the product sells for in stores. Just as you would do your research and shop around before buying a fitness wristband or new TV, we believe it’s important to apply the same level of scrutiny to your financial strategy. If we can help you create a retirement income strategy utilizing both investment and insurance products, please give us a call.

Technology developed specifically for the financial industry has fostered a new generation of smaller, more nimble and virtual companies. For the first time in history, smaller banks now have the opportunity to compete with large ones. Taking out loans and withdrawing and depositing money has become a do-it-yourself industry thanks to online services.⁴

In terms of investments in the technology industry, there’s a growing trend for start-ups to remain private, and they are increasingly able to generate investor money in doing so. In 2015, 146 private tech companies achieved valuations upward of $1 billion in private markets -- which is twice as many as the year before. By contrast, some technology companies that underwent initial public offerings (IPOs) over the past four years have performed poorly; since 2011 over 40 percent are flat or below their final private-market valuations.⁵ Please remember that investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

Clearly, technology is an industry that will continue to grow and adapt. Not only is it innovating for businesses and consumers -- young and old -- but even in the way it funds and sustains business operations.

What’s interesting is that the creepy crawler machine of yesteryear is coming back on the market. Mattel is reintroducing a 3-D printer version this fall that will retail for $299.⁶ The high-tech twist on this classic toy is a prime example of how technology will affect younger generations moving forward, while the price tag puts the potential cost of a 10-year-old’s cellphone in perspective.

¹ Influence Central. May 20, 2016. “Kids & Tech: The Evolution of Today’s Digital Natives.” http://influence-central.com/kids-tech-the-evolution-of-todays-digital-natives. Accessed May 20, 2016.

² FOX8live. May 17, 2016. “Global Wearable Technology Industry 2016 Market Analysis, Size, Share, Growth, Research, Forecast, Trends, Opportunities and Challenges: QyResearchReports.” http://www.fox8live.com/story/31994070/global-wearable-technology-industry-2016-market-analysis-size-share-growth-research-forecast-trends-opportunities-and-challenges-qyresearchreports#.VzwC_w5_Hkc.twitters. Accessed May 20, 2016.

³ Steve Andriole. Forbes. Dec. 15, 2015. “Technology M&A in 2016: Macro and Enabling Trends Predictors.” http://www.forbes.com/sites/steveandriole/2015/12/21/technology-ma-in-2016-macro-and-enabling-trends-predictors/#7def80b95e11. Accessed May 20, 2016.

⁴ Business Insider. April 14, 2016. “The fintech industry explained: The trends disrupting the world of financial technology.” http://www.businessinsider.com/fintech-ecosystem-financial-technology-report-and-data-2016-2. Accessed May 31. 2016.

⁵ Begum Erdogan, Rishi Kant, Allen Miller and Kara Sprague. McKinsey&Company. May 2016. “Grow fast or die slow: Why unicorns are staying private.” http://www.mckinsey.com/industries/high-tech/our-insights/grow-fast-or-die-slow-why-unicorns-are-staying-private. Accessed May 20, 2016.

⁶ Edward C. Baig. USA Today. Feb. 13, 2016. “Mattel resurrects ThingMaker as a 3D printer.” http://www.usatoday.com/story/tech/columnist/baig/2016/02/12/mattel-resurrects-thingmaker-3d-printer/80236104/. Accessed May 20, 2016.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the complete loss of principal.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

Investment Advisory Services offered through Global Financial Private Capital, LLC, an SEC Registered Investment Advisor.

Content prepared by Kara Stefan Communications

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You Can Bank on Financial Apps – to a Degree

Financial technology, also known as fintech, is a growing business model among companies looking to use software to provide financial services.

The ability to make transactions from any location, and at any hour, makes online banking and bill paying increasingly appealing. For this reason, fintech is being embraced by startups and large banks as an offshoot idea for proprietary technology.¹

However, while it’s convenient to withdraw or deposit money on a smartphone or tablet, we believe it’s still best to consult a financial professional when dealing with more complex financial decisions. As a financial professional, we’re a call away when you need a detailed assessment of your retirement assets or personalized advice that an app can’t provide.

In the meantime, banks are making strides in simplifying the basic transactions that you can complete from home. We’ve entered an era in which institutions collect “big data” to serve customers the way they prefer. Beyond “multichannel” (delivery on multiple platforms) or “omnichannel” (delivery through all channels similarly), the new “optichannel” approach will analyze a customer’s bank experiences to tailor and deliver services via his or her preferred channel.²

One of the latest fintech innovations attempts to cross the barrier between banking and investment products. Launched in January of this year, an app named Clink is designed to help investors conduct small, low-risk investments. The app links bank and investment accounts to create an automated investing plan -- either on a regular basis or every time you make a credit card purchase.

Similar to how some checking accounts allocate money to a separate savings account, a portion of your charge is routed to your Clink account and then invested in a portfolio of exchange-traded funds.³ Please remember that investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

We believe there are benefits to the simplicity of this technology, but again, you also don’t want to invest your retirement savings on a whim. Before tinkering too much with apps like Clink, it’s best to talk it over with someone who will help you create a retirement strategy that you can feel confident about.

¹Paul Schaus. Bank Innovation. Jan. 5, 2016. “4 Fintech Predictions for 2016.” http://bankinnovation.net/2016/01/4-fintech-predictions-for-2016/. Accessed May 31, 2016.

² Jim Marous. BAI. Jan. 15, 2016. “Top 10 Banking Trends for 2016.” https://www.bai.org/banking-strategies/article-detail/top-10-banking-trends-for-2016. Accessed May 31, 2016.]

³Bill Peters. Investor’s Business Daily. April 29, 2016. “How Your Apple iPhone Could Become Your New Bank.” http://www.investors.com/news/why-your-local-bank-is-moving-into-your-iphone/?_cldee=a2FyYWNvbUBlYXJ0aGxpbmsubmV0&urlid=14. Accessed May 31, 2016.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the complete loss of principal.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

Investment Advisory Services offered through Global Financial Private Capital, LLC, an SEC Registered Investment Advisor.

Content prepared by Kara Stefan Communications

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FDR’s Influence in Challenging Times Still Resonates

When President Franklin D. Roosevelt was sworn into office in 1933, the United States was mired in the worst financial period of its history.

FDR’s election came in the middle of The Great Depression, when unemployment reached 25 percent overall, and as high as 50 percent in some cities and industries. More than 9,000 banks closed in a four-year period, representing $2.5 billion in lost deposits.¹

Yet, in his first presidential inaugural address, Roosevelt counseled Americans with his now-iconic statement that “the only thing we have to fear is fear itself -- nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.”

The newly elected president’s words inspired confidence, but some of his first actions as president were just as impactful. FDR deployed two quick, decisive measures within his first week as president: (1) He declared an immediate weeklong bank holiday, and (2) he addressed the nation with a “fireside chat” radio speech to explain the banking problem.

In doing so, he calmed the populace’s fears, restored rational thought and demonstrated his ability to lead with courage and confidence. When the banks reopened, lines formed once again -- this time for citizens to deposit the money they had withdrawn.

We believe how we cope with financial concerns can help determine our long-term success, both as a nation and in our own personal lives. Despite an economy that is significantly better than it was in the 1930s, having enough money in retirement is still a common concern.

According to government research, the two primary expenses in the average 75+ retiree’s household budget are housing (36.5 percent) and health care (15.6 percent), despite the fact that this demographic frequently has Medicare and a paid-off mortgage.²

It’s interesting to look back and analyze how FDR helped mitigate our nation’s greatest financial crisis, using decisive action, transparency and communication. His wife, Eleanor Roosevelt, once said of him, “I have never known a man who gave one a greater sense of security.”

Perhaps by considering the challenges President Roosevelt faced when he first took office, each of us can gain the courage to help face our retirement income concerns with confidence. Few people in U.S. history have had the calming effects FDR displayed in his nationally broadcasted speeches, but if there’s anything we can do to address your long-term financial goals, please give us a call.

Want to read more? Here are some articles that may be of interest to you:

 [CLICK HERE to read the transcript, “Franklin D. Roosevelt: First Inaugural Address,” from Bartleby.com.]

 [CLICK HERE to read the article, “Don’t Let Your Emotions and Fear Influence Your Investments” from Philadelphia Magazine, March 9, 2016.]

 [CLICK HERE to read the article, “The Secret Shame of Middle-Class Americans” from The Atlantic, May 2016.]

 [CLICK HERE to read the article, “What FDR Knew about Managing Fear in Times of Change” at Harvard Business Review; May 4, 2016.]

¹HistoryMatters.com. “‘More Important Than Gold’: FDR’s First Fireside Chat.” http://historymatters.gmu.edu/d/5199/. Accessed May 25, 2016.

²Center for Retirement Research at Boston College. May 3, 2016. “Housing, Health Are ½ of Elderly’s Costs.” http://squaredawayblog.bc.edu/squared-away/housing-health-are-12-of-elderlys-costs/. Accessed May 25, 2016.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the complete loss of principal.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

Investment Advisory Services offered through Global Financial Private Capital, LLC, an SEC Registered Investment Advisor.

Content prepared by Kara Stefan Communications.

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