Financing Your Future – Excerpt From The Financial Shepherd

While investing can be pivotal in accumulating long-term wealth, the linchpin of financial success often rests on meticulous planning. Without a well-structured blueprint, there is a heightened risk of making suboptimal investment choices that can jeopardize your financial health over time. The driving force behind these statements is encouraging you to shift perspective—primarily if you have never worked with a financial advisor. Those unfamiliar with us may assume that investing is at the heart of what we do. 

Consider This

Investing is a piece of what we do; if there are layers of financial planning, planning is at the top. It is the intangible element that ties everything together. To explain why, consider the following illustrative scenario. A recent college graduate is 25 years old and is just beginning her career. To build wealth, she delves into the stock market. Because she knows the market, she makes the mistake of allocating all her capital into a single stock. She experiences a downturn when the value drops. 

Though the example was simple by design, several things are at play here. Had there been a pre-established financial strategy, she would have had the added advantage of being equipped with insights regarding risk appetite and investment objectives. Whereas this foundational understanding would have deterred hasty decisions, was this even the right option for her? In all likelihood, no. There’s nothing wrong with taking on more risk when you are younger, but several other ways to build long-term wealth don’t involve personally picking stocks. 

Find Your Plan 

A financial plan is a navigational tool that defines someone’s trajectory. Was the girl in the example a good fit for investing? Impossible to say. It depends on several factors, such as her current fiscal situation, objectives, risk tolerance, and having a blueprint that speaks to her savings, investments, and expenditures. Furthermore, there are no universal plans or strategies. Financial advisors should tailor their advice based on individual requisites.

However, there are several different questions that people should be able to answer before a financial advisor can begin formulating a plan.

– What sort of milestones are you looking to achieve? For example, are you focused on saving for a house, putting money aside for education, or want to build your retirement savings?

–  Although your age will factor into this decision, what is your comfort level with risk? Each type of investment comes with a different level of risk, and your financial position, age, and goals get factored into this decision. 

– Regarding your financial position, consider your savings, liabilities, and monthly budget. 

– Allow a financial planner to craft a road map that outlines how to allocate your money effectively. This must align with your goals.

Worth Advisors, LLC 

Worth Advisors, LLC serves our clients. To do so, we advocate planning over sheer investing. We are committed to curating a financial plan that works with your specific circumstances and long-term goals. Collaborating with us means genuine conversations about your aspirations, risk threshold, and current budget. Never underestimate the value of a budget, either. Although it doesn’t have the allure that investing does, it is a key component of the planning process. Allow us to build a plan for you because it is the heart of our financial services. Contact our office today to schedule a consultation. 

Disclaimer: Always consult a financial, tax, or legal professional familiar with your unique circumstances before making any financial decisions. This material is intended for educational purposes only. Nothing in this material constitutes a solicitation for the sale or purchase of any securities. Any rates of return are historical or hypothetical in nature and are not a guarantee of future returns, which may be lower or higher. Investments involve risk. Investment values will fluctuate with market conditions and security positions, when sold, may be worth less or more than their original cost.”

There’s a danger in perpetuating the worn-out cliche about death and taxes being the only certainties in life. The concern is that people accept that taxes are inevitable and are powerless to do anything about it. Ironically, many of these same people will discuss how the 1% find loopholes to avoid their tax obligations. Here’s the secret: There is no secret. The strategies employed by others, regardless of how wealthy they are, are at your disposal. Use them. The difference between them and you is that they refused to take a passive stance when limiting their most significant liability, i.e., their taxes. 

Worth Advisors, LLC empowers our clients by effectively delivering knowledge and strategies to reduce their tax liability. Like before, the only difference between them and you is that they decided to work with us. We will work with anyone because our beliefs are built around how everyone deserves a financial advisor. Are you living paycheck to paycheck and can’t afford to invest? Great. We’ll help you build a budget. Are you a professional coach with uncertainty about when and where your next job will be? We’ll help you plan for that too. 

How to Save Money on Your Taxes

Let’s start with something basic: Make pre-tax contributions to your retirement accounts. This is one of the most straightforward ways to lessen your taxable income. Contributions to your 401(k) or IRAs get deducted from your taxable income, resulting in significant tax savings. We like to tell our clients to pay themselves first. It doesn’t matter how much you make; it’s how much you save. This allows you to plan for your retirement while reducing your tax liability. 

One of the reasons that taxpayers miss out on potential deductions and credits is that they are unaware of them. We are. You must have a financial advisor who will learn about you and your goals while exploring and researching the possible tax breaks available to you. This includes deductions for medical expenses, student loan interest, and credits that can be used toward education or child care. You can maximize your tax savings by diligently claiming what you qualify for. 

Supporting charitable causes supports and nurtures your community and allows you to reduce your taxable income by donating to qualifying charitable organizations. To go even deeper, people must look at tax-advantaged investments like municipal bonds offering tax-exempt income. They deliver steady returns while also reducing your tax liability. 

Do You Accept That Taxes Are Your Biggest Liability?

They are, and taxes play a significant role in shaping your financial landscape. They reduce the amount of money available for savings, investments, and personal expenses, leaving you with fewer resources to achieve your financial goals. In addition, these tax considerations influence your financial planning decisions. This applies to retirement savings, funding your child’s education, or making significant purchases. Each one of these actions has tax implications. 

Go back to the old phrase of death and taxes. Though taxes may be unavoidable, you have several ways to limit your burden. Don’t be a passive bystander. 
One of the things you may be saying is that the 1% are using more strategies than we addressed in this blog. They are, and the things we have discussed here are the basics. The more we learn about you and your financial goals, the better position we will be in to help you manage your assets and accumulate wealth. If you are uncomfortable with the tax system, contact our team of experienced professionals who deliver personalized assistance. They will develop tax-saving strategies tailored to your specific situation. Contact Worth Advisors, LLC, to schedule a consultation. Take charge of your financial future.

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.

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.