Financial Quick Hits…..Quick Advice

Blog post #454

  • Consider refinancing your mortgage: Interest rates are at historic lows. If you have a mortgage with an interest rate above 3.25%-3.5%, you should be looking into refinancing. We do not always recommend shortening your mortgage, say from a 30-year to a 15-year mortgage, but that may be needed to get the lowest rates that are out there. If you are considering a 15-year mortgage, we should likely talk first. Mortgage firms are very busy, so you may need to be patient.
  • Don’t be afraid to ask. Talk to someone: Talking to someone else can be helpful, in almost all situations. We can be a resource for a wide variety of topics. If you are struggling with an issue or just can’t resolve something, reach out to us or someone else you trust and start the conversation. We help people deal with all kinds of issues, from complex matters like estate planning decisions to balancing a check book for clients. Talk to someone. It may help. It will allow you to get a new perspective, brainstorm and maybe gain some confidence.
  • Have an emergency fund and liquidity sources: The pandemic has taught us many lessons, including the importance of having funds on hand for the unexpected. Some have lost their wages or other income sources. Many have assisted others with financial challenges. It is important that you always have funds readily available, whether in your checking account, a home equity loan that you can borrow against, or as part of your fixed income allocation with our firm, that can be readily liquidated if needed.
    • One of the measures that we use for your liquidity protection is that if you are in a withdrawal mode, we strive to maintain at least 6 months of your future withdrawals in cash. This was very beneficial when the credit markets struggled in March, as we were not forced to sell positions when others were selling bonds at panic prices.
    • It is also important to remember that you should build an emergency fund before you begin to invest in the stock market. This is an important lesson for those in their 20s and 30s. Stock market money is longer term, that should not be needed for at least 5 years.
      • Hint to parents and grandparents: This is a good topic to discuss with your kids/grandchildren.  We can help, if you like.
  • Be aware of credit card bonus categories: Due to the pandemic, some credit cards have added or changed reward categories, particularly among premium credit cards. These have been changing often, so check with your specific credit cards.
  • Do some financial and physical housekeeping: 
    • Subscription services of all kinds are now part of our lives, but you should review them occasionally.
      • Are you really using all the TV or music streaming services you pay for?
      • I have an Audible subscription that I rarely use….so I should cancel it and save the extra money every month.
    • Could you donate clothes or other household goods that you no longer use? This could benefit a charity and get rid of clutter. If you itemize, keep the receipt for tax purposes and document what you donated. Even charitable organizations like Goodwill have made donating items “contactless.”
    • Are you using a password program like 1Password or LastPass yet? This will save you time and energy, and make your life more efficient. Ask any of our firm members, who all use 1Password in their business and personal lives.
  • Don’t take unnecessary risks: We recommend building a globally diversified portfolio that contains thousands of stocks. If you were to own huge positions in some stocks, this can lead to unnecessary risks.
    • As you build your portfolio, if you consider it like a bridge, we think it is better to drive in the middle (a broadly diversified portfolio) than riding the edges of the bridge with no guardrails (owning a lot of a few stocks).*
    • The less diversified you are, the closer you may get to the edge of the bridge. Sometimes, this can mean higher returns, but it also may mean greater losses. Owning huge positions in individual stocks can lead to huge losses which are unnecessary and hard to recover from. For example, if you owned $300,000 of Boeing, GE, Delta or any number of bank or energy stocks earlier this year or a few years ago, those positions are now only worth a fraction of what they used to be.
    • With a globally diversified portfolio, you will have fewer reasons to worry about poor returns from a single stock or asset class. And that will keep you in the center of your financial road.
    • For most of us, whether crossing a bridge or investing, we want to follow a safer and prudent path. Your future is too important to risk.


What we do know is that the financial world keeps changing. This is what makes our role in your life valuable, as we will continue to provide you advice that is relevant and appropriate. We take this responsibility very seriously.

Talk to us. We want to help you, and your family, deal with change, today and tomorrow.


Source:  *27 Principles Every Investor Should Know, by Steven J. Atkinson (Illustrations by Dan Roam) July 2019


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