The Logic Behind Exchange Traded Funds (ETF)

One of our core beliefs is that everyone should have access to a financial advisor who meets them where they are. Anyone who has visited our website and viewed our two investment approaches will see how there is an appropriate strategy for them, regardless of their current assets and liabilities. These two approaches encapsulate our range of services because the first one—the Core Satellite Portfolio—has a minimum investment of $500,000. This is a significant amount of money, but that is no reason to be deterred from investing. The Model ETF Portfolio shows how different strategies can be applied to meet people’s current financial position. Those living primarily on a fixed income and with relatively low equity can still benefit from a low-risk, low-reward investment model. On the opposite side, there are higher-risk, higher-return strategies. 

Three factors play into where you land on this spectrum:

  • Tactical asset allocation
  • Strategic asset allocation
  • Dynamic asset allocation

These terms can be applied to households and discussed in a business context. Tactical assets are used primarily for day-to-day activities. Strategic assets are used for long-term planning. Dynamic assets can be used on demand for sudden needs or opportunities. For most people, tactical assets could be groceries, strategic assets can be your physical home, and your dynamic assets can be used to add an addition to your home as your family grows. Depending on the home or business, these terms will be applied differently, but that is the general concept. 

How ETFs Factor In

Though our two investment approaches differ, ETFs are common to both. These are a type of investment that is traded on stock exchanges. They are similar to individual stocks and mutual funds but also have key differences. Like a mutual fund, they track a specific index such as the S&P 500 or NASDAQ. However, it is extremely important to highlight that an ETF can be traded like an individual stock on an exchange, which is something you cannot do with a mutual fund. 

That is also why people may pursue an EFT over a mutual fund. Because EFTs can be traded, this gives them an additional layer of flexibility and is considered more of a liquid investment option when compared to a traditional mutual fund. Additionally, having lower expense ratios than mutual funds makes them a desirable investment option for various people with varying assets and liabilities. 

Choose to Work Alongside a Financial AdvisorSome people may choose a mutual fund because it is relatively hands-off. You can put money into a basic mutual fund, which can be an excellent vehicle for long-term growth. However, due to how they are traded in real-time, you can work with an investor who can take advantage of opportunities and adjust their portfolios as required. Still, they are relatively easy to use, have low costs, and are liquid assets. If you have additional questions about our investment strategies or ETFs, contact Worth Advisors, LLC, to discuss the right path for you.

Worth Is A Vital Component Of Your Team

Looking through our services, you will notice that we offer estate and elder care planning. It is essential to understand what these are, how they differ from one another, and how a financial planner fits into the equation. Regarding the last point, these are two areas of the law. Although some estate planning attorneys also practice elder law, you will likely need legal counsel to get the full range of protection. With that said, a lawyer may also advise you to seek the assistance of a financial planner who is accustomed to handling them. 

The difference between the two is relatively simple. Estate planning is an area of the law that answers what happens to the assets accumulated during your lifetime. (Estate plans generally also include durable and healthcare powers of attorney and other critical documents for incapacity planning.) Elder law centers around maintaining your quality of life as you age. 

For example, as of now, anyone over 65 has a 70% chance of requiring a nursing home. In North Carolina, a skilled nursing facility may cost upwards of $7000–$8000 a month. Some of these people spend several years in the facility, and they can’t afford it. Additionally, they have too many assets to qualify for Medicaid. The mistake many people make is that they find ways of reducing their assets to become eligible for it. Doing this requires the help of an elder law attorney and a financial planner because if you do it incorrectly, you could sell or give up your assets and still not receive Medicaid. There are ways to have both, but you must surround yourself with the right team of professionals. 

The Role of the Financial Planner

We have repeatedly stated that everyone, not just the wealthy, can benefit from financial planning. The same applies to estate planning. If an estate plan can assist you with transferring your assets to others, then it is paramount that you know what your assets are. You will likely possess tangible assets such as your home, cars, and personal property, but you also have a series of intangible ones.

  • IRAs
  • Investments
  • Bonds
  • Mutual Funds
  • % of ownership in businesses (shares)
  • Various bank accounts

Your financial planner will have a command of the assets you own and how much they are worth. Although we would be remiss not to highlight that an estate plan comes with many tax consequences, which a financial planner can assist you with. Lastly, many people embrace distributing their assets without considering how they will do so. What are the financial needs associated with the people you leave behind? Whether you have a special needs child or want to ensure your appointed guardian has the financial resources to care for the minor children you ask them to raise. 

Protect Your Assets with Worth Advisors, LLC
Working with a financial planner gives you professional support and guidance regarding estate planning and affording long-term care, such as a nursing home. When you face these challenges, we will review and consult you regarding asset protection and risk management. Our goal is to serve you and find ways to protect you and your family from the unexpected. Contact us to schedule a consultation with one of our financial planners.

When Is It Time To Begin Investing?

In previous posts, we talked, listed, and shouted about the benefits of investing. Maybe you’ve read our blogs about why people who begin early have an extensive advantage over those who wait, or why dollar-cost averaging makes sense for the person who (adeptly) is looking toward long-term gains. However, you may have read every word, watched our videos, and walked away from our content agreeing with what we said—in theory. In other words, you may be in your thirties, and whatever money you earn goes out just as quickly. As much as you want to invest and build your financial future, you still need to pay your bills, put food on the table, and provide for your family. 

We understand. Believing that investing is for everyone is a cornerstone of Worth Advisors, LLC. If you fit the description of the person we described above, then we are just as eager to serve you. Though you may not be ready to make significant investments, you can still work toward being in that position. Knowing how much money is coming in and out of your house (cash flow) is actively building your future. With this in mind, we want to explain your financial position before you begin investing because we want to encourage you to take a step toward a better financial future. 

Where It Begins

Your first step is ensuring you have a positive cash flow plan, which you must keep. This includes streaming services, eating out (or paying the additional costs associated with things like DoorDash), and anything else that is a fundamental necessity. Don’t look at it as cutting out the things you enjoy; think of it as paying yourself before you pay others. If you have to choose between buying a new coat or saving money, select the latter, especially if you already have a coat. This requires discipline, but if you choose the coat, you may do so to your detriment. 

Putting money into savings is a step forward, but it isn’t the end result—not yet, anyway. So how much money do you need to have in your savings account? The money in your savings account is your emergency reserve. You need to have enough money to last you twelve months. However, that doesn’t mean all that money should be in your bank. If your income was suddenly shut down, how much money would you need to survive for three months? That is what goes into the bank. That is your goal, and then you can begin saving the rest in a brokerage portfolio. When you work with our financial advisors, we will select a conservative portfolio because we understand that even though you invest this money, it is still part of your emergency reserve. The money is doing some work for you, but it is improbable that you will lose it. 

When you have twelve months of an emergency reserve split between a savings account and a conservative brokerage portfolio, you and your financial advisor will likely begin investing more aggressively. 

Worth Advisors, LLC, Exists to Serve You
We will meet you where you are. If you are the type of person described in the first section, we can guide you toward a better financial future. Investing is for everyone. This is more than a slogan or tagline; it is who we are. Our advisors can assist you with cash flow planning and will create a customized investment plan based on your needs and objectives. Contact Worth Advisors, LLC, and set up a consultation with us today.

The Advantage Of Starting Your Retirement Planning Early

People in their early twenties are quick to dismiss planning for the future because they have ample time to do so in the future. Typically, this can be witnessed by their lack of estate and retirement planning. However, when someone gets older and realizes the importance of having both, they may contact an estate planning attorney and a financial advisor. After they have created an estate plan, they may have a will, a trust, or both. When these documents are in place, they are covered in the event of incapacity or death. Though they waited to establish their estate plan, they still reap the benefits of their efforts. 

The same cannot be said for retirement planning. Anyone with experience with it will explain that young people have the massive advantage of time. Financial planners and your friends and family will tell you to make your money work for you and use compound interest to your advantage. Our purpose today is to explain these expressions and how accurate they are. 

The Importance of Compounding Interest 

Before we show you how vital compound interest is, we will address one of the most common reasons why many young people avoid creating a retirement plan: They don’t have enough money. There are too many bills, and any money that comes in goes out just as quickly. As a young person, you are less likely to have a family and a mortgage. You won’t have many liabilities besides your student loans and car payments. Although we understand that the pressure of paying your bills and building your assets is essential, don’t overlook the gift of time. 

Whatever you do have, put it toward your retirement. To show you how feasible this is, we will use the following numbers:

  • $500
  • $50
  • 5%

The first number ($500) is your initial investment. It’s likely slightly higher than your car payment (hopefully). Our point still stands even if you can’t afford to invest $500 right now. The next number ($50) is your monthly contribution. You can get an extra $50 simply by eating out one less time a month. When you see what this $50 can do for you, you will quickly see that the benefits significantly outweigh your sacrifices. The last number (5%) is your annual interest rate. (A typical 401(k) usually has a 5-8% return.) If you put in $500 initially and contribute only $50 a month at a rate of 5%, how much money will you have in 45 years? $100,312.60. (At 8%, the amount jumps to $247,863.60!)

Begin Planning Alongside Worth Advisors, LLC
Get started today. Our financial advisors will meet you where you are because we believe that our services are for everyone, regardless of your assets and liabilities. Tomorrow can be better than today, and we want to help guide you. Use the time to your advantage and begin for the future. Contact our office to schedule a meeting with one of the experienced and compassionate financial advisors committed to serving you.

What Is Stopping You From Investing?

After spending time with our firm or our advisors, you will discover that we believe investing is for everyone. You may have even looked through our website and watched our videos. Though you may agree with our message and advice regarding long-term investments, you may be quick to point out that you don’t have the money to do so. You’re juggling a mortgage, student loans, and even the dreaded credit card debt. After you factor in utilities, car payments, and cell phone bills, there’s nothing left for retirement. 

You Can Still Make Progress

One of the things Glen Wright, our CEO, advocates is that you should pay yourself first. The idea behind this is that you should never spend all your money. Whatever item you want, it’s not more important than having twelve months of living expenses. Two of those twelve can be in the bank, and the rest should be invested. 

What if you don’t even have that? Can you still invest? Yes, and you can do so by having multiple goals. For instance, you work on paying your debts, building your emergency savings, and putting money aside for retirement. Is it going to be a lot? No, but it is better than what you are doing right now. Secondly, not all debts are created equal, and you need to tackle the ones with the highest interest rates, i.e., your credit cards. 

Remember the rule of 72. If the interest rate on your credit card is 20%, divide it by 72. If you do that, you will come up with 3.6. That’s how many years it will take for your credit card debt to double. Get your credit card debt down to zero while making small but incremental deposits to your retirement and savings accounts. 

The Benefits of Debt Stacking

Let’s pretend that you put $100 toward your credit card bill, retirement account, and savings ($300 in total). If you are disciplined enough to avoid using your card, you will eventually pay it off. When you do, you now have an extra $100. Instead of treating this as additional spending money, pay yourself first! Now, you can put more money into your retirement and savings. After you have 12 months of living expenses, that money can be parlayed into retirement. 

Remember that paying off your debts is critical, but it should not eliminate your need to invest for your retirement and future. Compounding interest benefits those who start investing at a young age. Even though you may feel like you are doing the right thing by focusing entirely on your debts, you may be doing yourself and your future self a disservice. 
Regardless of your financial position or concerns, everyone can benefit from investing. You aren’t in this alone, and our qualified team of financial advisors is here to support you and your financial goals. If you’re ready to get started, then we are too. Contact Worth Advisors, LLC, to schedule a time to meet us.

The Fundamentals Of Dollar-Cost Averaging

Whether you work with us or follow our blog, you may hear us reiterate specific themes. For instance, the professionals at Worth Advisors, LLC believe that financial management is for everyone regardless of their economic position or perceived status. Another one of our core messages is that you should stop trying to time the market. Recall movies such as The Wolf of Wall Street or just Wall Street. People unfamiliar with investments or investment strategies may need help understanding what financial advisors do. 

Specifically, we are referring to “timing the market.” Hypothetically, this is when you invest in something when it is low and before it suddenly increases in value. Then you sell your shares for a significant profit. Anyone who thinks this is what investing is may dismiss it outright. If they don’t understand the market and cannot foresee a trend, they assume investing is for those who do. This is unequivocally false, and we are about to explain why. 

Let Success Come to You 

Timing the market is difficult even for experienced investors! Instead of trying to predict the market, accept that it will fluctuate and irregular intervals. Dollar-cost averaging embraces this concept and can deliver long-term financial success despite fluctuations. The basic premise of dollar-cost averaging is that you invest at regular intervals regardless of the purchase price. To give you an easy example, imagine that you have $1200 to invest. Rather than spending your $1200 on one stock and hoping the market works in your favor, i.e., timing the market, invest $100 a month in a mutual or index fund. 

When the market is up, and prices are high, your $100 will yield fewer shares. When the market is down and prices are low, that same $100 investment will enable you to purchase more shares. People who invest this way shift their focus to the long-term. Why? Because over several years, you will likely see that your cost per share, on average, is lower than if you had invested the money all at once. 

Experience a Shift in Mindset

When you understand how basic dollar-cost averaging is—and how well it works—you will embrace the fact that investing is for anyone willing to do it. It comes down to discipline instead of studying and watching the market round-the-clock in hopes of gambling a sum of money on the market. Allow yourself the freedom to invest despite what the market is doing, and have confidence that you will succeed over the long term. 

Dollar-cost averaging is one way to survive the inherent corrections of the market. At Worth Advisors, LLC, we believe in a diversified approach by investing in stocks, mutual funds, ETFs, bonds, and closed-end funds. Although we incorporate principles that we firmly believe in, our approach to each client is customized to their needs and financial goals. When we design a portfolio for you, we will ensure it is tax-friendly. Why? Because taxes are your most significant liability. (You may have heard us say this before!)

Regardless, contact us today and discover why investing is for you. It’s your future, but we want to ensure you are financially prepared.

Midterm Elections, Change, & Common Concerns

Although the title of this blog contains the words “midterm elections,” it doesn’t have anything to do with politics or who you should vote for. Our goal has been—and will always be—to serve our clients while giving them the tools and advice they need for long-term financial success. Nothing will disrupt our commitment and loyalty to those who trust us to support them. We aren’t discussing politics because political views are not our concern. Many people we speak to are concerned about the changes that may occur because of the midterm elections.

How often have you heard people discussing the stock market, inflation, or an impending recession? These are at the forefront of people’s concerns and are directly tied to the midterm elections. Depending on your personal stances, you may have opinions on how these issues may improve because of them. 

Key Points to Put You at Ease

Many people want to know when the right time to invest is. We must reiterate the inherent dangers behind believing you can time the market. When Warren Buffet said that his favorite holding period was forever, he did so because you work the market over the long term. Look at the basic principles involved with dollar-cost averaging. By investing at regular intervals over a wide range of stocks, you can survive and thrive despite economic fluctuations. 

Secondly, when Worth Advisors, LLC, offers you financial advice, we always consider a wide range of factors. We want to know your age, your goals, and the type of investment you are making. We assess many factors because our goal is to protect your assets. This is why we wouldn’t tell someone in their nineties to invest in a start-up or advise a 20-year-old to only invest in Certificates of Deposit at the bank.

Will My Investments Plummet?

To give you a better idea of what we mean by focusing on the long term, we should put forth some interesting statistics released by Vanguard. They went back to 1860 and showed that historically, investments had performed the same in an election and non-election year. Additionally, take a closer look at this: 

  • The annual compound return with a Republican president: 8.3%
  • The annual compound return with a Democrat president: 8.4%

Ironically, long-term investments won’t get derailed by short-term fluctuations and changes. If you still have concerns, schedule a consultation with the trusted financial professionals at Worth Advisors, LLC. Our goal is to serve you, and we will do that despite what is happening worldwide. For more information about how we can achieve that, reach out and schedule a consultation.

We Want To Be Part Of The Solution

Today, we are discussing how and why it is important to close the financial literacy gap between men and women. The poorly-conceived stereotypes connected to gender and money are inaccurate as they are harmful. For example, there are surveys that show that millennial men are almost three times more likely to marry someone who can pay off their debts. Although we are not here to dispel every misconception regarding gender and money, it is essential to discuss why it is so fundamental. 

People live longer—and women, on average, tend to live five years longer than men. It is paramount to have the ability to accumulate long-term wealth. Financial literacy is a prerequisite thereof. What’s particularly staggering is that women have made tremendous progress. They are well represented in higher education and the workplace. The Stanford Center on Longevity says, “… the gender gap in financial literacy persists regardless of age, education level, and marital status.” 

The Root of the Issue

Although what we are about to discuss may seem abstract, it is based on the findings of a survey conducted by the Stanford Center for Longevity. Their survey was taken by people ranging from 20-94. The questions were meant to determine two things: confidence and their level of involvement in financial decision-making, 

The results concluded that women were less confident than men when making financial decisions. However, that conclusion did not apply to all financial decisions. In terms of the types of financial decisions we encounter on a daily basis, men and women were equally able to navigate them. Regarding major decisions (the kinds involved in long-term financial planning), women had lower scores. The survey asserted that this wasn’t due to a lack of knowledge but a lack of confidence. 

We Are Working to Be Part of the Solution

One of our core beliefs at Worth Advisors, LLC, is that financial planning is for everyone. Regardless of your financial situation or gender, you deserve to reap the benefits of having a sound financial future. Another component that makes us uniquely qualified to assist you is that we have a licensed mental health counselor (LMHC) on our staff. In addition to being the Chief Operating Officer, he helps a wide range of people working through difficult times or struggling to make decisions—some of which we have already discussed in this article. 
Wherever you are in life, regardless of your circumstances, you can come into Worth Advisors knowing that we offer a holistic approach to financial planning. Our role is to support and empower you to make the types of decisions that will positively impact your future. Give us and call, so we can learn more about how we can serve you.

How Identity Theft Affects Your Finances

This topic hits close to home for reasons we will not get into at the moment. For anyone who has been a victim of identity theft, we empathize and understand what you are experiencing. For those who have not, it’s unnerving. People may open their mail and discover that goods or services have been purchased in their name. Others learn that money has been withdrawn from their account without their knowledge.

Imagine discovering that a loan has been taken out using your personal information. What’s worse is that the person who defrauded you never intended to pay back the money. Now, you are being targeted by collection agencies. Many of which will not likely stop calling when you tell them you were a victim of identity theft. It’s a powerless and frustrating experience that no one deserves to go through. 

The Financial Ramifications of Identity Theft

Credit scores take years to build and seconds to destroy. The financial implications of identity theft can (potentially) last for years. These aren’t the types of cases where you notice that someone put a charge on your credit card that you hadn’t authorized. With these scenarios, your credit card company will investigate the charge and issue you a new card. You caught it early. 

Others aren’t as fortunate. They could have been victims for years without knowing it. A hacker can access a business or organization that has a record of your Social Security Number (SSN). They can then use your number to take out loans or purchase under your name illegally. If they defaulted on a loan while using your SSN, you might discover you have a lien on your property. Sometimes, people may not realize this until they go to sell their home and a title search discovers the lien—which could possibly halt the sale. Due to how powerful an SSN can be, victims of this magnitude may be able to receive a new SSN. However, your previous number still exists and is on record. 

Another typical example is the person who files their taxes and learns that someone else has already done so in their name. In all likelihood, the hacker did this because they wanted the tax return. The IRS uses a specific form (IRS Form 14039) for people in this situation. Not only has someone taken your return, but this issue has to be resolved for you to file your tax return and receive your refund successfully. 

Speak With a Professional & Compassionate Financial Advisor 
Everyone who works at Worth Advisors, LLC embodies the belief that we exist to serve you. Never assume that you cannot benefit from speaking with a financial advisor who will work with you regardless of your challenges—including identity theft. Make the decision to take command of your finances and your future by speaking with a financial advisor who wants to help. Contact us to schedule an appointment.

The Unique Financial Planning Considerations For Professional Coaches

Great leaders understand that success belongs to the team and failures land on the coach. When the team isn’t winning—regardless of the reasons why—the coach is the person who has to answer for those losses. Typically, this equates to the coach being forced to resign or asked to leave. Fans of sports such as NCAA basketball may quickly offer the adage that coaches are hired to be fired. As true as that is, it is too easy to overlook that coaches are people with families, mortgages, and plans for the future. The stress and pressure of being a professional coach, especially someone who has been successful enough to earn a chance to run a Division 1 team, is overwhelming. Losing affects more than the fans; it impacts a coach’s family and their ability to provide for them. 

The Challenges of Being a Coach

At Worth Advisors, LLC, we have been fortunate enough to work with several Division 1 college coaches, primarily those who work with men’s and women’s basketball teams. From a financial perspective, coaches have some very unique considerations. The NCAA is a competitive business, and if you look at the 2021-2022 season as an example, you will see at least five basketball coaches within the infamous SEC have been fired for their team’s performances. 

No one gets to that level without being in the top percentile of their field, despite your opinions of the coach’s effectiveness. Even coaches with winning records and relative success in the NCAA Tournament can lose their job if the program wants a new voice in the locker room or someone with a different approach to the Xs and Os of the game. 

Coaching From a Financial Planning Perspective

Although we hope that each of our clients has the storied career of Coach K (apologies if you are a UNC fan), it would be an understatement to say that level of longevity is atypical. Although a Division 1 basketball coach earns three to five million dollars a year, there is no guarantee that they will have another job that pays on that level when they leave the organization. Coaches have to save aggressively. We advise our clients never to have less than 12 months of living expenses. Two of those twelve months should be in the bank, and the rest should be invested. 

Even coaches who haven’t risen to the level of Division 1 college athletics have even more significant challenges. In addition to taking on the financial risks of being a coach, they are also not earning the income that a Division 1 coach does. Because that is where most hope to go, they may have to take less money to get there. Consider the coach who has to choose between being a head coach at a smaller, less-paying school and becoming an assistant coach at a larger program. 

Coaches earn their future jobs by proving their abilities at the lower levels. In the example we just provided, that coach may opt for less money now for the opportunity to be a head coach—which they may try to parlay into a head coaching role that pays more in the future. That same coach needs to be in the proper financial position to make that move.

Worth Advisors, LLC

As both fans of the sport and as professional financial planners, we are blessed enough to have been able to work with several NCAA basketball coaches. We understand the demands of being a coach and are in the best position to advise you on how to mitigate the risks associated with your job from a financial perspective. For more information about how we can serve you, contact Worth Advisors, LLC, and schedule an appointment. We look forward to meeting you.

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