How is wealth created?

As a Certified Financial Planner, I’m often asked by women how investments work, and why they should invest outside of a savings account.  Without a clear understanding of why you should invest in a company in business in an attempt to make a profit rather than putting money in a savings vehicle like a CD, it may be easier to take the path of least resistance.  Let me explain.  The bank or credit union pays you one quarter of a percent (or less) on your deposit, which is in essence a loan to the bank, and they loan money out to others at 4% to 5%. You may get a bit more on a CD, but that, my friend is capitalism.  A savings deposit pays one quarter of a percent (.25%) to the loaner (you); and 4.75% to the owner (the bank). In order to accumulate meaningful savings, it is often necessary to take on some investment risk. So that leads to the question:

How is wealth created? 

There are four things required in order for wealth to be created.

1.         Financial capital or money.  Money is necessary to be invested in order for a company to manufacture a product or provide a service for a profit.

2.         Natural resources.  Oil, gas, land and gold and other commodities are assets that can be used in creating products.

3.         Intellectual capital.  A great idea or a new way of delivering a product or service is an example of intellectual capital.  Think Apple i-Phone or the Google search engine.

4.         Skilled labor.

When all four of these things come together, wealth is created.  If we provide capital to a company through investment of our money, that entitles us to a piece of the wealth created.  Investing, in its simplest form, is saving a part of what you earn, having an investment philosophy or discipline and a roadmap, and paying attention to the cost of the investment.  If you’re not sure how to proceed, engage a Certified Financial Planner and they will help you make a plan.  Don’t wait for your husband or your father or some other man in your life to do this for you.  You are capable and qualified to do this on your own.

The best advice needs no more than a 4 by 6 index card (Continued).

The best advice needs no more than a 4 by 6 index card (Continued).

 

If you missed my last blog, please go back and read it first, as this is a continuation of the advice given by University of Chicago Professor Harold Pollack and my commentary on how to put the advice to use (my advice is in parenthesis unless otherwise noted).

6. Maximize tax advantaged savings like Roth, SEP and 529 accounts. (If this sounds like financial mumbo jumbo, don’t despair.  A good basic investment class, book or advisor can explain how all these work in layman’s terms and help you understand how they can help you meeting your long term goals).

7. Pay attention to fees, avoid actively managed funds. (Fees matter in mutual funds and it is important to know how to evaluate these fees. Actively managed funds can beat an index fund but it is highly unpredictable and only realized in hindsight. Less than .001% of 5-star top performing actively managed funds are still at the top 5 years later.

8. Make financial advisor commit to a fiduciary standard (i.e. Puts your interests as a client ahead of their own, disclosing any conflicts of interest and providing independent advice).

9. Promote social insurance programs to help people when things go wrong. (Many people can afford to plan for the things that can go wrong by purchasing life insurance to pay debt and provide income for family. They can buy long term care insurance to protect their assets for spouse and possibly children as well as save part of their money for the future so social security isn’t the only source of income. Participate in retirement plans. The list goes on and on. If you think partnering with an advisor will help keep you on track, go for it. The fee you pay to do the right things for your family could prove to be “priceless”.)

 

The Best Advice Needs no more than an Index Card.

My Blog, A Man is Not a Plan, started as a way to provide financial advice and information to women. I know a lot of men that read and share my blog with spouses, daughters and friends. One reason I wanted to gear this blog toward women is that many women either control or have a better grasp of the family finances but due to a lack of confidence or lack of knowledge or education subjugate the task and authority of financial investment and saving decisions to their spouse.

I’d like state a few reasons I think a couple should seek the advice of a financial advisor and preferably a CFP® (CERTIFIED FINANCIAL PLANNER ™). I recommend that you work with an advisor who commits to a fiduciary standard, putting your best interests ahead of their own.

Recently, the University of Chicago Professor Harold Pollack claims the best financial advice needs no more than an index card size piece of paper. This “simple” advice is great, just not easy to implement due to human nature. I share this advice with you today. I agree with his advice, but what he doesn’t take into consideration is human psychology, risk aversion, greed and fear. That is where a good financial advisor can help you put these ideas into play. The words in parenthesis are my opinions of his advice and tips on how to implement.

1.      Max your 401(k) or equivalent – (if you are asking yourself what a 401k is, you could probably benefit from consulting an advisor to help educate you on the why and how.)

2.      Buy inexpensive, well diversified mutual funds. (If you are unsure how to evaluate and discover or uncover “hidden costs,” seek out a CFP® to explain).

3.      Never buy or sell individual securities, the person on the other side of the table knows more than you do. (Good advice on its own, no further comment from me)

4.      Save 20% of your money. (If that seems impossible, go to an advisor and map out a plan to make this happen over time by setting goals and a making a serious commitment to your financial future).

5.      Pay your credit card balance in full every month. (Best advice so far,  in my opinion. If you don’t spend more than you earn, you will be able to address 1-4 above).

I’m going to leave you with the first five to ponder and discuss with your spouse or significant other or someone you trust with money matters.

Sometimes the simple solutions are the most difficult to implement because they force you to look at and evaluate your current situation and create a new paradigm for the financial future you’ve always wanted.

 

“The Secret of Getting Ahead is Getting Started”

Agatha Christie, Mystery Writer

 

The hardest part of financial planning is getting started.  As a planner of almost 25 years, I have heard almost every excuse under the sun.  Following is a sample of a few examples.  Have you ever made any of these statements?

 

20’s – I’m too young to have to worry about it.  I’m just getting started.  I need to buy a TV, stereo, car, etc. and other “stuff.”  There’s plenty of time. I can make it up later. I’ll just save more once I start saving.

 

30’s – I’m starting a family.  The kid’s school is expensive.  We have a house to pay for.  When the kids get older it will cost less. (Seasoned parents out there know that’s not true).

 

40’s – We want to have fun.  There is plenty of time to save.  Our kids will go to college on a scholarship.  We deserve to live it up!

 

50’s – We’re empty nesters.  It’s time to have fun, travel, buy that luxury car.  Our parents’ inheritance will take care of our retirement.  (Another future shock – your parents may not care about securing your future).

 

60’s – I should have started saving when I was 20.  I’ll never be able to retire.  Where were you when I was young?

 

You can procrastinate throughout your entire life and miss the boat, or you can quit making excuses. 

Start right now.  There is no time like the present.

 

What’s your plan for the future?

 

Note: Due to industry regulations on communication, we are unable to allow for public comments on this blog. Please feel free to email me your questions and/or comments to kathy@fishandassociates.com. Thank you.

Securities and Investment Advisory Services offered through NFP Securities, Inc., Member FINRA/SIPC.  NFP Securities, Inc. is not affiliated with Fish & Associates.

 

 

What Holds You Back?

 

I have been a long time teacher and practitioner of yoga.  In yoga the term Samskara is defined as generalized patterns as well as individual impressions, ideas or actions.  Repeating the actions mentally, emotionally and physically reinforces them, creating a “groove” so to speak that is difficult to change.  Think of the groove running water creates through a landscape.  It can take the power of an earthquake to change its course. 

 

Samskaras, or patterns can be both good and bad.  What does this have to do with you and your money?

 

There are many deeply embedded habits developed around issues with money that can be difficult to change.  Believing that you deserve to go out and spend everything you earn without saving for your future, spending money you don’t have, and charging on a credit card to “feel better” are examples of money “Samskaras.”  Not spending or hoarding money, chastising a partner or monitoring every penny spent by your partner, “just because,” is another destructive behavior that can put a great strain on a relationship. 

 

The first step to changing destructive habits or creating new ones is recognition.  Any behavior around money that you’re either ashamed of later or that causes major problems in your relationship is worth exploring and making an effort to change.

 

What you believe becomes your reality.  This conclusion has been found in multiple psychological studies performed on the topic.  If you believe you deserve to spend money you can’t afford to spend or that you don’t have enough money to save for your future, you will continue to create a future that may cause regret.  Mahatma Gandhi said “a man is but a product of his thoughts – what he thinks…he becomes.”

 

If you recognize any negative or destructive behavior, commit to change. Discuss and make a plan with your partner, seek outside advice – do whatever it takes.  You can change these patterns and create a new positive future. Start the discussion today.

 

”The philosophy of the rich and the poor is this: the rich invest their money and spend what is left. The poor spend their money and invest what is left.”

 

Note: Due to industry regulations on communication, we are unable to allow for public comments on this blog. Please feel free to email me your questions and/or comments to kathy@fishandassociates.com. Thank you.

Securities and Investment Advisory Services offered through NFP Securities, Inc., Member FINRA/SIPC.  NFP Securities, Inc. is not affiliated with Fish & Associates.

 

 

 

 

No One Can Predict the Future

 

As the Dow reaches new highs, I see behavioral patterns in investors that can often lead to irrational decision making.  Humans have a tendency to act and react emotionally on both greed and fear. When the markets move swiftly in either direction, people get excited or scared and can lose sight of why they are investing in the first place, and bad decisions may be made.

 

Consider the fact that as an investor, if you take the time to plan and determine the most important things you want to accomplish in life, there is a required time commitment that coincides with obtaining these long-term goals.  There is a disconnect that occurs when people respond to external stimuli (i.e., what the market or politicians are doing today) and make decisions based on these occurrences. 

 

No one can predict the future.  Having a written plan and knowing what you are trying to achieve can provide a deterrent to irrational decision making.  I feel as a financial planner this is one of the primary services that we provide to our clients.  We work to keep people on track and help them avoid the knee-jerk reactions that could prove to be detrimental to achieving the most important goals in life. 

 

Doug Lennick, CFP, quoted, "Too many financial professionals try to predict the future.  It's a fool's game."

 

 A financial plan can help you prepare for whatever happens.  For example, if you need money in the next few months or year, you will have an appropriate place to take it from.  If you're saving in an investment with the goal of growth for future income, you keep that money off limits for short term needs. 

 

The reason most couples argue about money is that they haven't verbalized and written down what they want for their future.  The process of having this discussion with your significant other, of planning and dreaming about what you want your future to look like, is the first step in taking control of your financial life.

 

We can't predict the future but we can make educated guesses and monitor and make changes as necessary, as life continues to unfold before us.

 

Note: Due to industry regulations on communication, we are unable to allow for public comments on this blog. Please feel free to email me your questions and/or comments to kathy@fishandassociates.com. Thank you.

Securities and Investment Advisory Services offered through NFP Securities, Inc., Member FINRA/SIPC. NFP Securities, Inc. is not affiliated with Fish and Associates.

 

“Investors have few spare tires left…”

“Think of an image of a car on a bumpy road to an uncertain destination that has already used up its spare tire. The cash reserves of people have been eaten up by the recent market volatility.”... Mohamed El Erian, CEO of PIMCO

We always hear the word volatility used in the media, by financial advisors and planners like me, but what does it really mean to you as an investor in dollars and cents? Sometimes a picture is worth a thousand words.

                       Low Volatility                                             High Volatility
                            Plan A                                                             Plan B
Year       Growth of $100,000    Annual Rtn.    Growth of $100,000     Annual Rtn.
1                    $110,000                             10.0%                     $134,000                       34.0%
2                    $115,500                               5.0%                     $121,940                        -9.0%
3                    $131,670                             14.0%                     $153,644                       26.0%
4                    $143,520                               9.0%                     $129,061                      -16.0%
5                    $162,178                             13.0%                     $169,070                       31.0%
6                    $165,421                               2.0%                     $167,380                        -1.0%
7                    $185,272                             12.0%                     $197,508                       18.0%
8                    $214,916                             16.0%                     $173,807                      -12.0%
9                    $227,811                               6.0%                     $210,306                       21.0%
10                  $257,426                             13.0%                     $227,313                         8.0%
                      Average Return                 10.0%                                                             10.0%
                      Compound Return              9.9%                                                               8.5%
                      Standard Deviation           4.5%                                                           18.6%           
  
Hypothetical portfolios for illustrative purposes only. Diversification does not assure a profit or protect against a loss.

This illustration looks at a low volatility vs. a high volatility portfolio.

The average rate of return is the same but the end result show that a lower standard deviation portfolio can compound at a higher rate of return and create more wealth over time. The longer the time period, the more pronounced the end result will be.

Most of the advertising done by investment companies show the average rate of return and may not explain the underlying volatility.

Here is another important point. A portfolio that goes down 50% requires 100% appreciation to get back to even.

In comparison, a portfolio that is down 8% only requires a recovery of about 9% to get back to even.

The greater the loss, the smaller the base on which your earnings can compound.

Yr     Growth of $100,000     Annual Return        Growth of $100,000     Annual Return
1                   $50,000                         -50.0%                                   $92,000                       -8.0%
2                   $54,500                           9.0%                                  $100,000                        9.0%

You can see from this example it would take years to get back to the original investment.

If you or your spouse is handling your own investments, make sure you both understand the risks you are taking on with your investment strategies.

If you don’t understand, or are unsure how to measure your portfolio’s risk, you may benefit from getting a second opinion or evaluation. The money spent with a professional could save you thousands of dollars in the future.

Knowledge is the power and you should understand the “whys” of how each investment made its way into your portfolio and the “how” of how this investment will help you meet your long term investment goals.

Securities and Investment Advisory Services offered through NFP Securities, Inc., Member FINRA/SIPC. NFP Securities, Inc. is not affiliated with Fish and Associates.

To Risk or Not to Risk…


“October is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, March, June, August, December and February”….Mark Twain

All investments carry some type of risk. Today, I am going to focus on risk as it is measured by standard deviation (SD). Go on, keep reading. I hope I can make this an understandable concept!

Let’s use the example of choosing to invest between Product A and Product B. Product A has an expected rate of return of 4% with an SD of 2%. This means that about 2/3* of the time, this investment is expected to return between 2% and 6% (plus or minus 2%).

Product B has an expected return of 10%, but the expected SD is 20%. This means about 2/3 of the time Product B should return -10% to +30%.

In dollars, a $10,000 investment in Product A would be expected to grow in the range of $10,200 to $10,600 (again 2/3 of the time) over a one year time period. Product B’s return would result in a range from $9,000 (a $1000 loss) to $13,000. Product B has a greater reward potential but also greater loss potential than Product A. It is clear that Product B is “riskier.” Note: 1/3 of the time the gains and losses are even greater.

Another consideration to think about: if you had to liquidate your funds to raise money, you may have to sell your investment for less than your original investment. Understanding this concept is very useful in helping you determine what an appropriate investment would be.

The moral of this blog is to make sure you fully understand the risk you are taking before you make an investment. If you have the time and the temperament to take on risk, that is okay. The objective is to have all the facts in order to make the most informed decision.

In my next blog we will discuss the meaning of volatility.

*In statistics, the 68-95-99.7 rule — or three-sigma rule, or empirical rule — states that for a normal distribution, nearly all values lie within 3 standard deviations of the mean. About 68.27% (2/3) of the values lie within 1 standard deviation of the mean. Similarly, about 95.45% of the values lie within 2 standard deviations of the mean. Nearly all (99.73%) of the values lie within 3 standard deviations of the mean.

Note: Due to industry regulations on communication, we are unable to allow for public comments on this blog. Please feel free to email me your questions and/or comments to kathy@fishandassociates.com. Thank you.

Securities and Investment Advisory Services offered through NFP Securities, Inc., Member FINRA/SIPC. NFP Securities, Inc. is not affiliated with Fish & Associates.

Road Blocks to Creating Wealth


Do you have a substantial amount in savings, but lack confidence and knowledge when it comes to investing? This blogs for you!

As a Generation X , 90% of Gen X (those born between 1965 – 1982) are saving in their retirement plans at work, but only 15% said they knew they were on track to create the income they would need down the road, when they can’t or don’t want to work full time any more. If you are between 30 and 44, most of you have plenty of time to make a plan and create a way to monitor your progress. If you don’t have an end goal in mind, it is difficult to know if you are on track or not.

I often see young people come into my office that are saving appropriately, but their investment allocation is much too conservative to have their dollars working to help them grow their income account over time.

Have you heard of the “rule of 72”? It is basic financial concept that illustrates how many years it will take to double your money.¹ Let me give you a hypothetical example. Let’s say you are 30 years old, you have saved $50,000 and it’s earning 2%. By the time you are 66, the $50,000 would grow to $100,000 (72 divided by 2=36).

Let’s assume you invested in a diversified portfolio (small, medium, large companies around the world and some bonds in a hypothetical portfolio that we assume you average 7% rate of return. Now, according to the rule of 72, your money doubles about every 10 years. In dollars, you would have accumulated over $500,000 in the same 36 years. This of course is just a hypothetical example. My point is how you diversify your investment may have a huge impact on your future income. It could be the difference of $4,000 per year in retirement vs. $20,000 from the same starting point.

If this makes sense to you but you’re not sure how to apply it to your own personal situation, take the time to meet with an advisor or take a class on investing. Maybe start a group of other like minded friends and do an investment work club and ask an advisor to come in and facilitate to make sure you understand the why’s and how’s of what you’re doing in your 401k and other investments.

¹ 72 is divided by the interest percentage per period to obtain the approximate number of periods required to double the investment.

Note: Due to industry regulations on communication, we are unable to allow for public comments on this blog. Please feel free to email me your questions and/or comments to kathy@fishandassociates.com. Thank you.

Securities and Investment Advisory Services offered through NFP Securities, Inc., Member FINRA/SIPC. NFP Securities, Inc. is not affiliated with Fish & Associates.

Create a Budget – Make a Plan

Are you trying to get your spending under control? Are you in the position that you realize that you need be saving more, but need the basic skills needed to put together a plan to map your future? If this resonates with you, read on…

Many women struggle with money management. First, get rid of any guilt you may feel about what’s happened in the past. You can’t change the past and it’s important to focus on what you can do right now, in the present. I am addressing this blog to a group of our population known as Gen X.

As a generation, the Gen-X’ers (those born between 1965 and 1982) have a propensity to spend more than they earn (40%), and not surprisingly, the majority (60%) don’t even have an emergency fund.

If you are in this or a similar situation, whether you are single or are in a committed relationship, take the time to sit down and really look at your spending patterns.

In order to save you have to pay yourself first, or make yourself one of the line items on your automatic bill pay. If you wait until the end of the month to save what’s leftover, this will never happen.

Analyze what you spend on entertainment, clothes and other discretionary “stuff”. You may be very surprised at how much money is wasted that could help you start a new financial future.

If you are in debt, make a vow to yourself to pay off the debt. Set up a goal and look at it every month. Write it down. I will pay off my debt in xx months. If you are single, find a friend or a trusted colleague to help keep you on track. Remember a goal with no end date is nothing more than a dream.

Don’t procrastinate another day. If you need help or encouragement, send me an email. When I was 34 years old, I was over $40,000 in debt, a single mom, and my income was less than what I owed. It can be done if you are committed to a better future for yourself and your family.

Today I am a successful business owner and have met my goal of being one of our firms tops clients.

If you’ve achieved the enviable goal of being debt free and have accumulated a comfortable savings account, we will address the next steps in my next blog.

Note: Due to industry regulations on communication, we are unable to allow for public comments on this blog. Please feel free to email me your questions and/or comments to kathy@fishandassociates.com. Thank you.

Securities and Investment Advisory Services offered through NFP Securities, Inc., Member FINRA/SIPC. NFP Securities, Inc. is not affiliated with Fish & Associates.

“Some Day My Prince Will Come…or Not”




Young girls, teenagers, and college students are bombarded with images of getting married to the perfect guy, finding Mr. Right, and being taken care of by a man from an early age.

There are plenty of great female role models out there, but I am amazed at how many capable, intelligent young adult women do not start planning for their own future because they are waiting for Mr. Right to come along and take care of them!

Don’t get me wrong, women have come a long way. But I see many young women that put off dealing with their financial issues because they are waiting for a man who makes enough to take care of all their future needs. The reality is, Prince Charming may never come, or may not be the breadwinner you are looking for. This lack of self awareness often drives women to under earn, over spend, and push off taking control of their finances into the future.

There is nothing wrong with the desire to meet prince charming, but don’t ignore or postpone taking control of your life in the hopes that someone else will come along and solve your problems.

If you are in a low paying job, don’t waste your time and energy looking for a high earning man. Evaluate what you want out of life and figure out what you need to do to earn more money.

If you need inspiration, go out and buy the book “The Secrets of 6 Figure Women” by Barbara Stanny. It is an informative and empowering book.

Our earnings limitations are usually a result of our belief systems. If you have the desire to be more than you are today, earn more than you earn today, you may start feeling guilty or uncomfortable, thinking that somehow you don’t deserve it. The negative thought processes of using vocabulary that include, “I can’t”, “I won’t” or “I don’t,” can become self fulfilling prophecies. As Buddha observed, “All things that we are, arise from our thoughts.

Twenty three years ago when I entered the financial services business, I was scared to death. It was a struggle to come out of my comfort zone and enter into unknown territory. I had to tell myself I had unlimited potential. I told myself I could take care of myself and my daughter financially and would help others do the same. Did I believe this at first? No, but I wrote down positive affirmations, I wrote what my future would look like. I would recite positive affirmations in the shower. I knew being financially secure and independent was possible. I just had to squelch the voice in my head that tried to defeat me.

In my case, the pain of divorce forced me into action and I knew I had to go outside my comfort zone to change my life. The pain of a financial challenge is often the catalyst for taking action.

If you are facing a challenge, write down what your future will look like with you in charge!

Make a poster board (or use Pinterest) to post pictures of the positive things you will have in your future and a loving partner can be one of those. Look at it every day.

Take ownership and control and believe that you, and only you, can make the necessary changes to have a brighter future in which you are in control. Find a successful woman to mentor you so that you can affirm that what you want out of life is within your reach.

The beauty of this life is that all things are truly possible as long as you believe and are willing to work. In the words of my father, “the harder you work, the luckier you will be.”

I invite you to share your story with me on how you changed your life or how you plan to in the future.

Take charge!!



Note: Due to industry regulations on communication, we are unable to allow for public comments on this blog. Please feel free to email me your questions and/or comments to kathy@fishandassociates.com. Securities and Investment Advisory Services offered through NFP Securities, Inc., Member FINRA/SIPC. NFP Securities, Inc. is not affiliated with Fish & Associates

Lump Sum Pension – Is it right for me?

 

For the small percentage of folks out there that are still offered a pension by your employer (≈20%), lump sum vs. lifetime income requires a full analysis and should be done thoughtfully and thoroughly.

It still amazes me that people will come into our office to have a plan done to see which option to choose, and they follow up with, “I’m retiring next week or at the end of the month.” This is hardly enough time to fully analyze a situation to determine the best way to go.

If you go to a financial person and they are willing to answer that question at the first meeting, don’t walk but run out the door and get another opinion.

Why? Because you only get to make this decision once, and if you make the wrong decision it could cost you hundreds of thousands of dollars over your lifetime. There are a number of considerations to be made before you can make an educated decision.

Here are a few of them:

1. How is your health (and spouse’s)?

2. What benefits will your spouse be eligible for in the future?

3. What are your income needs?

4. Do you have aging parents / a child that needs ongoing financial support?

5. Have you discussed long-term care and health insurance costs in retirement?

6. Do you have other investments that offer future inflation protection?

7. Does the pension offer a cost of living adjustment?

8. Can your spouse live comfortably off of the reduced pension amount at the first death?

9. Do you carry life insurance? How much is it for and how long will it last?

These are just a few of the questions we explore before making a recommendation on what is best for each situation.

For those cost conscience folks out there who don’t want to spend the money on a financial plan, think again. It could be the best investment you can make to secure your financial future.

If you have specific questions, feel free to email me at kathy@fishandassociates.com.



Note: Due to industry regulations on communication, we are unable to allow for public comments on this blog. Please feel free to email me your questions and/or comments to kathy@fishandassociates.com. Securities and Investment Advisory Services offered through NFP Securities, Inc., Member FINRA/SIPC. NFP Securities, Inc. is not affiliated with Fish & Associates

Don’t Sign on the Dotted Line of Your Spouse’s Plan

Signing off on your spouse’s pension options without fully understanding them could cost you thousands or even millions of dollars over your lifetime.

There are many pensions in trouble today due to underfunding of their liabilities; and it has become exceedingly more common to offer employees a lump sum option. The other option is a lifetime income benefit.

Let’s look at two scenarios. We will start with a lifetime income option. John and Ellen were married for 25 years when John was offered an early retirement. John worked in the pension department of a Fortune 500 company. When he told Ellen they were going to take the single life option because it offered the highest payout, she signed off on the decision without a thought. His reasoning was that they were in their 50s and needed more income now in case he decided not to go back to work. She assumed that because he dealt with this in his job he would “do the right thing.” Whether this was a malicious decision or he thought it didn’t matter, he was later diagnosed with a terminal illness and Ellen was faced with the reality of losing $50,000 per year in income at his death. It was too late to buy insurance because he was now uninsurable. What was the cost to Ellen’s future? Assuming an interest rate of 4.25% and a life expectancy of 25 years, she lost the equivalent of $760,000 by not reviewing all the options.

All pensions are required to offer some type of survivor benefits, and they will always be a reduced amount because it is covering two lives instead of one.

More importantly, it is an IRREVOCABLE decision.

That means, it can’t be changed. I have spoken with a friend who currently works in a pension department and he said it is not uncommon for this to happen even today, when non-employee spouses are required by law to sign off if they waive the survivor benefit. “I didn’t understand” or “he didn’t explain the consequences,” are not excuses and you will not win a lawsuit and have the decision changed.

The moral of this story – this is your financial future and though it may be “ours” today, death and divorce happen. Insist on getting a second option before making a potentially life altering decision.

In the next blog, I will discuss the lump sum option.

Note: Due to industry regulations on communication, we are unable to allow for public comments on this blog. Please feel free to email me your questions and/or comments to kathy@fishandassociates.com. Securities and Investment Advisory Services offered through NFP Securities, Inc., Member FINRA/SIPC. NFP Securities, Inc. is not affiliated with Fish & Associates.

Should’ve, Could’ve, Would’ve

Finances are one of the leading causes of arguments among couples, trumping children and chores!

What is it about money that causes so much strife?

Whether it is savings (too much or too little), unexpected expenses, disagreements on needs versus wants, most problems can be traced back to a lack of communication.

People think others “should” respect their needs and desires, that they “could” be more understanding, and if they “would” just agree with you, misunderstandings could be avoided. In other words, we all want things our own way.

We often project our beliefs on our spouses without giving them the opportunity to present their opinion or view on a subject.

Let me use myself as an example. When I married my husband, my daughter was attending a private catholic school. (If you read my past blogs you are aware I was deeply in debt after my first marriage ended). My husband, Kelly, suggested we send my daughter to public school and put the tuition money toward helping me pay down my debt. We had a few arguments about this before we actually sat down and discussed why this was so important to me. I went to catholic schools my whole life….I attended an all-girls catholic high school and felt my education really helped to shape my character, my ethics, and helped to empower me as a woman. In other words, a private education was an important part of my core values. I wanted my daughter to have an experience that would be equally beneficial and I was willing to pay for that. I had considered the cost of education as part of my plan to pay off my debt, which I successfully accomplished ahead of schedule. My husband attended public schools and received an equally good education. Once he realized why attending a private school was so important to me and he accepted it, there were no more arguments. He may not have understood or agreed with me 100%, but he was willing to accept it.

It is unfair to expect your spouse to agree with all of your needs or want because you think he or she “should.”

A marriage is a partnership that requires compromise and sometimes sacrifice. Good open communication can help you to understand each other and decrease the arguments around all things financial.

The next time you are having a disagreement about a financial matter and you think, “I wish he or she would, could, or should do something” just because it is what you want, take the opportunity to pause and ask yourself why you feel this way? Consider discussing the pros and cons of whatever it is you are arguing about and take the time to understand your partner’s viewpoint first.

Note: Due to industry regulations on communication, we are unable to allow for public comments on this blog. Please feel free to email me your questions and/or comments to kathy@fishandassociates.com. Securities and Investment Advisory Services offered through NFP Securities, Inc., Member FINRA/SIPC. NFP Securities, Inc. is not affiliated with Fish & Associates.

Does Financial Stress Make Men Fat?


This headline from one of my financial planning journals caught my eye this morning. According to a study conducted by AVIVA USA (an insurance company) and the Mayo Clinic, the results suggest “stress caused by finances might cause men to gain too much weight”.

Other findings included that 2/3 of the men in the study reported they were very stressed and the biggest contributor to their stress was personal finances. Weight gain from stress is one the many side effects of stress in our society.

Even though a high percentage of men admitted finances were the main cause, half of these men said they do not discuss their finances with others (including a spouse), and only 1 in 5 of these men work with a financial advisor.

If you are a woman who is married and thinks that your husband is “taking care of business” it might be a good time to take the lead and initiate a conversation with your spouse or significant other. Many men feel it is their duty or obligation to be responsible for the finances of the household, including investments, even if they don’t have a clue what they are doing. This may prove to be detrimental to his health and your financial future. And your spouse is unlikely to admit this to you voluntarily. Men place a lot of value on being perceived as intelligent and many men think that they “should” know how to invest successfully to prepare for the family’s future.

My challenge to you is to find a financial planner that you are comfortable talking to and then to approach your spouse about getting a second opinion, to determine if you are on track as a family.

I suggest you first schedule a time with your spouse to have a conversation about your finances. Dig deep. Ask how he feels about his investment strategy, about his job about the amount of money that you may owe. Admit to your spouse if you don’t understand investments and share any feelings of stress that you have around money. Let him know it is not his sole responsibility to know everything about money , or to shoulder the burden of your family finances. Talk about his expertise in his chosen field and point out that the average person couldn’t perform his job with any level of expertise, and you don’t expect him to have full knowledge of tax, law, investments, insurance and other complex financial topics.

You can introduce the concept of going to a financial advisor to see what areas might possibly be improved upon. A second set of eyes can help to uncover potential blind spots.

By helping your spouse to realize that you don’t expect him to know everything about finances, you open the possibility of taking a real source of stress out of his life and improve his health in the process.

The survey findings show “ there is a need for men to increase their overall health as it relates to stress, weight and their financial preparedness” I encourage you to find a financial planner that you are comfortable talking to and set up an appointment to get a second opinion. By taking the initiative yourself to interview a few advisors, you become an integral part of the process and solution. Your spouse may appreciate this more than you’ll ever know! Note: Due to industry regulations on communication, we are unable to allow for public comments on this blog.

 Please feel free to email me your questions and/or comments to kathy@fishandassociates.com.
Securities and Investment Advisory Services offered through NFP Securities, Inc., Member FINRA/SIPC. NFP Securities, Inc. is not affiliated with Fish & Associates.

5 Warning Signals for Future Financial Woes

My last blog discussed why you should have open and honest discussions about money and how it will be handled before you enter into a new life together.  Here are my top 5 red flags for potential future financial trouble. Read carefully and discuss with your partner.

1.      You discover your fiancé’s credit card debt is more than 10% of his income.  If you ask your fiancé how much he/she pays monthly and the answer is “the minimum," watch out.  You could be paying off debt for the next 10 to 20 years of your marriage.

2.      Your fiancé uses the cash advance feature on his credit cards. There is never a good reason to do this.  You pay higher interest starting from day one, whether you pay your bill each month or not.  This demonstrates impulsive behavior.

3.      Your fiancé puts everything on a credit card and does not pay off the balance each month. He uses the excuse that he will pay it off when his bonus comes in.  In the meantime, he is paying 12% to 24% interest.  As the old saying goes, patience is a virtue.  The new couch can be ordered (or whatever the purchase may be) after the bonus is paid.  Impulse buying gets a lot of people into trouble.

4.      No savings account.  If your fiancé has no savings account, no matter what their job is, that should be a red flag.  It indicates they spend all (or likely more) than they earn.  That habit is difficult to break and can cause major problems in the future, especially if you are a saver.

5.      Refusal to make a budget – this goes back to #4.  My number one rule is pay yourself first.  My number 2 rule is don’t spend more than you earn.  Some people stick their heads in the sand because they don’t want to know how deeply in debt they are!

If you have observed any of the behaviors listed below, be aware.  These can be red flag indications for future financial woes!

Note: Due to industry regulations on communication, we are unable to allow for public comments on this blog. Please feel free to email me your questions and/or comments to kathy@fishandassociates.com. Thank you.

Securities and Investment Advisory Services offered through NFP Securities, Inc., Member FINRA/SIPC. NFP Securities, Inc. is not affiliated with Fish & Associates.

Know Your Fiance's Financials

I was reading an article in a financial planning journal, titled “Couples Choose Love, Despite Financial Woes."   In the article, 32% of people surveyed by TD Ameritrade said they would call off the wedding if their partner declared bankruptcy, while 27% said they would hesitate or postpone the wedding, and 41% said they would do neither.  In other words, they would go ahead and get married.  Ladies, if you fell into the 41% who would do nothing, please read on.

One of the first steps you should take before you move in with or decide to marry someone is to discuss and be open and honest about your financial situation.

If your partner is evasive, or not willing to share financial information, this should be considered a warning signal.  I’ve said this before in my blog, but it is worth repeating, “many people are more willing to discuss their sex life than discuss their current financial situation."  Please note, just because someone is in what you perceive as a high paying position, or earns a big salary, does NOT mean they are a good stewards of money.  You have to delve in deeper to understand your partner’s money personality.

In our court system, there is a process called voir dire, which means “to speak the truth."  Schedule a time to have an open discussion about both your current situations.  It is imperative you share any financial baggage you have and uncover any financial issues your partner may have.  This will allow you to have a full understanding of what you are getting into from a financial perspective.  Why, you may ask?  Once married, your spouse’s credit rating can have a negative impact on your credit rating.  You may not be able to quality for a home loan, a car loan, or a new credit card.  A person with a bad driving record can cause your insurance to be cancelled.  These are just a few of the consequences of being involved with a partner who does not manage their finances properly.   

How do I know this?  From personal experience.  When I was divorced 23 years ago, my husband had charged our credit cards to the max and was not paying the bills on time.  Once we were separated and ultimately divorced they became my responsibility, but the damage was already done!  I was embarrassed when I could not qualify for a car loan and when I could not refinance a 12% mortgage because of my tarnished credit history.

I managed to pay everything off, but not without irrevocable damage (temporary, but 7 years is a long time!).  This often happens post-marriage, as it did for me.  You can avoid further problems with your fiancé or partner in advance by open honest discussions.  This is the only way to make an informed decision if your partner’s money history is less than squeaky clean.

It is better to know and work through this on the front end then to regret it and suffer from the consequences.  This is serious business and it is your financial future.  Don’t take it lightly!

Check back for next week to read about the red flags to be aware of.

Note: Due to industry regulations on communication, we are unable to allow for public comments on this blog. Please feel free to email me your questions and/or comments to kathy@fishandassociates.com. Thank you.

Securities and Investment Advisory Services offered through NFP Securities, Inc., Member FINRA/SIPC. NFP Securities, Inc. is not affiliated with Fish & Associates.

No Investment is Risk Free

I’m often asked for the secret formula to successful investing. I think Peter Lynch said it best when posted the question: “How do I make money in the stock market?”  His answer was, “The key to making money in stocks is not to get scared out of them.”  In addition to not being scared out of the market, you can be rewarded for buying more shares when other investors are selling. Another key to investing is understanding all the different types of investment risks.  Even guaranteed investments like CDs that are FDIC insured carry risk.  CDs are subject to inflation risk.  If you earn 1%, inflation is 2% and you are in the 30% tax bracket.  Your CDs have a negative 1.3% rate of return.  That’s what we call in the investment business “going broke safely.”  The moral of this story is that if you are looking for an investment without any risk, stop looking.  You won’t find one.

All investments have risks – just different kinds and degrees.  So it’s important to know what the specific risks are and how they can affect your portfolio.**

Market Risk: Stock market ups and downs are unpredictable.  So market risk – the possibility that investments will lose value because of a decline in the securities markets – may be the risk you about first.  Choosing an appropriate investment strategy and sticking with it may help your portfolio survive a volatile market.

Interest Rate Risk: You may think you can avoid the uncertainty of the stock market by investing in bonds.  But bond investments have their own risks.  Changes in interest rates affect bond prices.  When rates rise, prices of existing bonds fall because older bonds are paying less interest than newly issued bonds.  Holding a variety of bonds having different maturity dates may reduce interest rate risk.

Default Risk: Bonds are subject to another type of risk – the risk that the bond issuer won’t have money to make principal and interest payments to bondholders.  Generally, investors who buy lower rated “junk” bonds are more at risk from default than investors who hold investment grade bonds.  Check an issuer’s credit rating with a bond-rating agency, such as Moody’s or Standard & Poor’s, to minimize default risk.

Inflation Risk: Over the years, the rising costs of goods and services can reduce the purchasing power of your savings.  If you invest the bulk of your money in fixed income investments, you may be at risk of not earning enough to reach your long-term goals.  Consider investing a portion of your money in investments, such as stocks, with the potential for earning higher returns to help reduce inflation risk.

Currency Risk: Adding international investments to your portfolio may provide diversification.* But be aware that currency exchange rates, foreign taxation issues, and differences in auditing and financial standards, among other things, can affect the value of foreign investments.

Play a role: You can’t prevent investment risk, but you can take steps to moderate it.  By diversifying your portfolio, you improve your chances that gains in one asset class may offset losses in another.  And, when you invest for the long term, you’ll have more time to recoup any losses.

*Diversification does not ensure a profit or protect against loss in a declining market.

**Content written by Newkirk, as distributed to Symmetry Partners, LLC.

Note: Due to industry regulations on communication, we are unable to allow for public comments on this blog. Please feel free to email me your questions and/or comments to kathy@fishandassociates.com. Thank you.

Securities and Investment Advisory Services offered through NFP Securities, Inc., Member FINRA/SIPC. NFP Securities, Inc. is not affiliated with Fish & Associates.