Financing Your Future – Excerpt From The Financial Shepherd

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 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.