The Wealth Advocate

2009-07-08T07:43:00.000-07:00

The Nine Most Common Mistakes People Make in Planning Their Financial Future.

Mistake one — Failure to launch Most people spend more time planning their vacation than they do planning their financial future. To the extent most people have done any planning, it’s typically been on a piecemeal basis, and usually they receive different advice from different people at different times, with none of them referring to what the others may have done. It’s recommended one person act as coordinator and catalyst.

Mistake two — No systematic investment plan
One should try to save and invest 10 percent or more of one’s gross income monthly. The older people get, the closer they are to retirement, the greater the “more” should be. Most people are about three months away from bankruptcy. After setting aside three to six months’ income in liquid assets or cash value as a cash cushion to fall back on, a fixed amount should be invested every month to take advantage of dollar cost averaging.

Mistake three — Insufficient diversification
“You shouldn’t put all your eggs in one basket.” It’s generally considered wise to diversify investments and not to be dependent, for example, on one company’s stock, etc.

Mistake four — Inadequate disability insurance
My clients’ most valuable asset is earning power. Group disability insurance is seldom adequate, so one should acquire individual disability insurance, which is “portable,” and, if personally owned, provides income tax free benefits under current tax laws.

Mistake five — Inadequate life insurance
As a rule of thumb, for each $100,000 of income earned about $1,000,000 of income-producing capital is needed to produce $60,000 annually for a family. For most people, this means life insurance, since they don’t have other large amounts of income-producing assets. TIME (Taxes, Inflation, Mistakes, and Emergencies) makes the amount of capital needed much larger than most people would imagine. My clients are not be overly dependent on group term life insurance. It is costly, inflexible, not portable and probably won’t be available when it’s most likely to be needed — after age 65.

Mistake six — No estate plan
Most people do not have a will or trust, or what they do have is out of date. It is important to note it’s not how much is left to heirs, but how much is left for heirs. Estate taxes and related costs may ultimately take forty to fifty percent of an estate unless arrangements have been made to use life insurance proceeds to pay them.

Mistake seven — No business continuation plan
If my client owns a business, whether as a sole proprietor, a partner, or a shareholder in a closely held corporation, a business continuation plan is be in place to off-set any complications that may occur in the event you retire, die, or become disabled.

Mistake eight — Not utilizing selective compensation plans
For business owners and key executives, there are many selective compensation plans that can be tailored to provide supplemental pension and family protection benefits.

Mistake nine — Depending too much on employer sponsored plans
The only real security is that which we provide for ourselves. To count on lifetime employment with one company is foolhardy, regardless of the company’s stability.

For more information on any and all of the above call me at 610-695-8748 or send me an email at roy@yourwealthadvocate.com. You can learn more about me at http://www.yourwealthadvocate.com.

Creating a Successful Retirement Planning Strategy

2009-06-15T14:40:00.000-07:00

Ask yourself these questions before setting out to plan for retirement.

A. What does your retirement mean to you?

Stop working and go on permanent vacation?
End your current career so that you can go and do your lifes work?
Just switch careers and have on with income and more free time.
other

B. How much money do you think you will need to retire.

What lump sum
What monthly income or annual income
Will you collect social security
Will you inherit money.
Will you be selling off assets(rental properties, vacation homes etc.)

C. What exact date would you like to see yourself in retirement.

D. What financial resources have you set aside to draw from and how sure are you that they last the rest of your life.

Do you have a 401K (or 403B if in public sector)from a previous employer.
Do you have an IRA from yourself or your spouse.
Do you have an inheritance coming.
Does you company have a defined benefit plan.
Do you know what your social security benefit will be.

E. Will you need to plan for health insurance besides Medicare?

Is Long Term Care a concern?
Do you have health issues that need to be planned for?

F. Do you need life insurance to protect estate from excessive taxation?

These are a few questions to get you started. If you want to see a more comprehensive list please call me at 610-695-8748 or send me an email at roy@yourwealthadvocate.com.

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When Will the Market Recover?

2009-03-16T12:31:00.000-07:00

Often clients or prospective clients ask me when the market will return to normalcy. When in fact it is normal. The very nature of the free market is to fluctuate as all knowable information is factored into the price.

Information Age

We are in so much of an "on demand" information age that the market volatility is greater than it was when you had to wait for the financial news in order to hear about where a certain stock or bond closed for the day.

What is Reality?

Reality is that as long as we have the government trying to control the economy the market will probably act in an inverse manner. The reason for this as I see it is that it creates uncertainty in the market and thus the market will fall and prices will drop accordingly.

If you want more information and to discuss your personal information please call me at 610-977-2422 or email me at info@yourwealthadvocate.com.

My website is http://www.yourwealthadvocate.com

How Did We Do Last Year?

2009-02-13T07:34:00.001-08:00

Navigating the waters of the investment world are becoming harder and harder for the investor. Last year we saw great declines in the market and the largest mutual funds had huge redemption's and losses as well. If you look at the net outflows of these funds it indicates the panic that has enveloped many investors. It also reflects the credibility of the fund managers who are supposed to be great at stock picking and market timing. The primary reason for this panic is the lack of coaching and clarity about what they are doing and why.

Let me elaborate and enumerate the losses on this...

Here is a sampling of some of the largest funds and the negative outflows of money from their funds;

American Funds -19.7 Billion
Dodge and Cox -12.24 Billion
Fidelity - 40.16 Billion
Putnam - 14.39 Billion
Templeton - 21.49 Billion

This is only a sampling of the largest fund families that had outflows, all of this while our model although didn't escape losses had inflows of 150 million of new investors' money because of our coaches who helped their clients answer the 20 must answer questions to finding peace of mind.

We helped our clients remain disciplined and stay in the markets so they can reap the rewards that this market is going to eventually give us. Now is the greatest time to re balance in order to take advantage of bargain basement pricing. It is a fact that the greatest returns come the year after and down market. So we must remain in the market and stay with our investment philosophy allowing free markets do their job. We are in a period where we are paying for the risk we take by being in the market so we can get the returns we deserve when the market returns to upside volatility.

To learn more about how we coach our clients and help them discover their true purpose for money and truly live a life of abundance and not a life of scarcity visit my website http://www.yourwealthadvocate.com/ or call me at 610-695-8748 or email me at roy@yourwealthadvocate.com.

Are We headed for a Depression?

2009-01-15T08:36:00.000-08:00

NOT!

If you watch and listen to the media hype they will give you all of the data they have mined out of the negative statistics they can find and show you how we are headed for the second great depression. I have done my own research and have found the real truth about what is currently the state of affairs with the markets.

Lets take a look at then versus now.

First of all lets take a look at the GDP or the amount of products produced and how much it is up or down. During the depression the GDP was down an average of 27%, currently we are up .5% thats a big difference if we are headed for a depression. Hmmmm.

Second wholesale production during the depression down 52% currently we are down 2% thats a big difference if we are headed for a depression. Hmmmm.

Third unemployment a big factor in the economy infact probably the largest influencer of spending in the economy during the depression was 37% that was during the time when the largest employers were manufacturers. Currently our unemploynment is 7.2% in a mostly service economy. Another big disparity versus the depression. Hmmmm.

Fourth factor the CPI or Consumer price index during the depression was -27% currently we are at a plus 4%. Wow big difference huh. Hmmmm.

Fifth factor, bank failures during the depression 44% currently we haven't had any because there are systems in place protecting us from bank failures which were instituted because of the Great Depression.

Sixth Factor, how about US Exports. During the depression we were at -66% Currently we are at + 15%.

The fact is that The Great Depression taught us how to deal with down economic markets and how to improve them and there are systems in place to hold up the market. So the real issue is how to deal with the psychological side of the down market because if you can deal with that then you can stomach the ups and downs the market throws at us. It is for this reason that the market is unpredictable and we can't control it that I have chosen to coach clients through these times so that they can reap the rewards that the market will pay back. We should look at times like this as prepaying for the lobster dinner that we are about to consume, and be happy about that.

If you are interested in more information on how I work and how I can help you through these tough psychological markets you can call me at 610-977-2422 or email me at roy@yourwealthadvocate.com.

You can always visit my website at yourwealthadvocate.com for the latest videos and information concerning the market.

Diversification on Steroids

2009-01-08T07:02:00.000-08:00

Are You Diversified?

Some savvy investors think that because they have allot of stuff that they are adequately invested in the market and diversified. But have they really checked their portfolio to make sure that their holdings are correlated with dissimilar price movement and that they are in every sector and market that they possibly can?

Don't let the media and brokers talk you into an investment (ie. mutual fund) and convince you that this investment gives you diversification and safety. Most mutual funds are unsuccessful in fact 85% fail. In 2008 FIDELITY MAGELLAN Fund, one of the premier mutual funds in the country was down 50%, so even the most respected and previously successful funds have had problems last year.

Harry Markowitz who wrote his doctoral thesis in the 1950's and won the Nobel prize for it in 1990 came up with Modern Portfolio theory. The basis for his theory was that through proper diversification and negative correlation you can reduce risk by combining these strategies and that you can make your portfolio a more efficient and predictable.

A structured portfolio composed of no load indexed mutual funds consisting of over 14000 holdings in 39 countries is what you need to accomplish thourough diversification. We take this one step further by looking at several other variables promoted by academics of the markets and implementing them as well. My clients are enrolled in such a program and are on the road to getting peace of mind with their investments and money and to leading an abundant life as opposed to one of scarcity. This is what I help them succeed in as a coach.

In order to know if your portfolio is properly diversified and to access the amount of risk, you will need to analyze it using the Free Market Investment Analysis. From this you can determine the specific risk or standard deviation (a measure of risk)for your portfolio. Then you can look at the asset categories which comprise it and determine if the risk is justified for the returns you are getting. Or, if you can improve your situation by either reducing the risk for the same return or increase returns for the same amount of risk.

If you are interested in looking at your portfolio to see if you are getting the returns you deserve based on the amount of risk you are taking you should call my office for a Free Market Investment Analysis.

For more information about these and any other services I provide visit my website at http://www.yourwealthadvocate.com/ or call me at 610-977-2422.

Stock Picking and Why it doesn't Work

2008-12-09T09:57:00.000-08:00

Here is a video of Kenneth French an academic who came up with Efficient Market Theory and a Nobel Prize talking about stock picking and why it doesn't work. This is a fundamental policy in what our portfolios are developed from.

For more information about developing a successful portfolio without speculating and gambling with your money go to my website http://www.yourwealthadvocate.com or call me at 610-695-8748 to reserve a spot in my next seminar.

Commentary on Government Interventions and Bailouts

2008-12-07T11:24:00.000-08:00

Misunderstanding of How Wealth is Created

2008-12-04T10:06:00.000-08:00

Wealth is created essentially by executing transactions in order to create profits for the seller and value for the buyer. There are four types of transactions that people perform as I will discuss briefly.

Win-Win Transactions.

These are the transactions that occur where the buyer and the seller both take away an advantageous benefit from the transaction. For example; if someone was looking for a piece of equipment for their business that would increase productivity so they could make more money and the seller of that equipment could sell it to him/her at a profit, you could say that both parties won in the transaction. This is the fundamental basis of capitalism, a law of supply and demand with both parties able to extract wealth from the situation.

Win-Lose Transactions.

Here is where a consumer is forced to buy a product or service where there is only one party to the transaction that actually comes away with a benefit. Quite often this occurs in socialistic countries where the government forces a worker to work for a very low wage so that the government or a specific group will benefit. However overall this is not benefiting society overall.

Win-Constant Transactions.

This transaction is when one party to the transaction benefits and the other remains in the same place as where he/she started without any loss or benefit. So this would be like a seller selling a product or service for no profit and the buyer receiving a good value for the product they are buying.
Lose-Lose Transactions.

Here is where both parties lose, usually both parties are forced into the transaction by some outside force and neither will benefit.

But how is wealth created?

Wealth is created by someone creating value! Two and half million years ago someone carved a rock into a circle and created a wheel which changed the way humans lived their lives, a real value was created. When Alexander Graham Bell created the telephone he did so with the intention of helping the people with hearing loss how to improve their hearing. He didn't realize that his invention would change mankind and how he communicates.

Wealth is created most times by creating order out of chaos thus improving the life of the user. Therefore the user is willing to pay for the product or service that is valuable his/her life. In today's world entrepreneurs are the best equipped to do this and they are the biggest supporters of our economy, which is held up by the Free Market or the law of supply and demand.

When the government steps in to support the company that is not providing value to the public then a false economy will result and the government will eventually collapse. We saw this with the fall of socialistic countries like Russia and North Korea. Unfortunately we are seeing that currently that there is no company that is too big to fail like the big 3 automakers.

History has shown that democracies fail because of loose fiscal policy and that eventually leads to socialism and the policies of those like Karl Marx, who wanted one individual to control the markets.

I believe along with my successful clients that Free Markets Work and that the market will factor all knowable information into the price and it is impossible to foresee future events that will affect the price however over the long term the short term chaos in the market will eventually provide wealth to those properly diversified with their investments and are focused on the long term.

For more information about my company visit my website http://www.yourwealthadvocate.com/

disclaimer

Dysfunctional Investing

2008-11-19T07:59:00.000-08:00

Stop the Insanity

My firm exists to fight the insanity of dysfunctional investing. It has been written in all of the Wall Street publications and consumer publications on how to BEAT the market. They are just patronizing the people who like to get the rush of trading in the market.

I say this is the same as going to the casinos and playing one of the many games to stimulate this same rush. You might as well be playing blackjack or craps. The phenomenon is like a drug that satisfies an addictive habit.

Why not invest using the proven theories of Nobel prize winning academics like Henry Markowitz who discovered Modern Portfolio theory and take them to their most extreme efficiencies which are more predictable and less risky.

Lets stop the insanity of trying to BEAT the market and instead lets go with the market and take advantage of the full returns available and position ourselves so that our risk is calculable and not a crap shoot. I work with my clients to get them peace of mind with their investments by helping them answer the 20 must answer questions for achieving peace of mind with their investments. Once they are able to start answering these questions they are on their way to getting what they want out of life and their investments.

For more information go to my website http://www.yourwealthadvocate.com/ or call me at 610-977-2422.

disclaimer

Don't React to Media Hype

2008-11-15T14:14:00.000-08:00

Following the Media...

If you are stressed trying to get the scoop on all of the noise out there in the media maybe you should think about what has been happening over the last 6 months. Remember that the media needs to fill up pages of their websites/publications in order to sell advertising. If you keep following their stories and act on the current media report you can get caught up in the frenzy. And that's exactly what they want. I suggest that you should keep a handle on the big picture.

A few months ago if you were watching and following you might remember that folks were reporting that commodities were going through the roof and that was the place to be. The more the media hyped the commodities the more various mutual fund providers came out selling their commodity laden funds.

As we look at the commodity market today these speculative reports are now looking a little less attractive with the spiraling down of oil and other hot commodities. In fact Bloomberg data reported in October that commodities in October posted their biggest monthly decline since at least 1956.

The media now explains this surge and decline of prices as a bubble bursting of the market. Yet a few months back, the argument from many of the same publications was that commodities' growth was perfectly justified by the fundamentals and suggested that small investors should get in line to buy.

As prudent investors we should be aware of the media hype and what can appear to be of great significance at the time can vanish from a favored view. As the free market factors the information in the prices will fluctuate but we must remember that the long term view should be our mantra because the short term view is only a blip on a much larger radar screen.

As I mentioned earlier the primary reason for these stories is to fill the space they need to publish their media.

It doesn't do investors any good to be reacting to what they read or see everyday in the media because it has been proven that the markets will do their job and produce positive results over the long term as long as their portfolios are properly diversified.

Darkest Hours Create Inspiration

2008-10-22T06:22:00.000-07:00

Although the markets may be tanking they are flushing out what can't survive in order to prime the system for future success. Some of the things that will happen are:

Bureaucrats will lose their jobs and flood the employment market and some of them will become entrepreneurs by starting their own consulting companies.
Businesses will trim the fat in their businesses to become more efficient.
New creative products and services will emerge in order to make us more efficient with our tasks.
The market will reallocate resources to their highest use
Markets will create companies that create more value, new and better companies will evolve.
This will be the biggest extinction level ever known of inefficient markets and companies.
Investors will learn that capitalism is good and realize that the markets are efficient on their own.

In looking for a silver lining in all of the disruption in the markets one should see that we are already in a business climate of consolidation ala the financial industry, the auto industry and many small businesses that will get gobbled up by their more efficient competitors. And from all of this consolidation the market will be strong and ready to grow into a greater market than we have experienced in the recent past.

The Truth Will Set You Free

2008-10-20T06:41:00.000-07:00

Please bear in mind that what is going on in the market this year is the flushing out of unhealthy business practices by the greedy on Wall Street and our legistrative branch of government.

We must stay disciplined throughout these times by keeping with our plan to get market returns and rebalancing accordingly. It may seem like times are tough but a necessary form of flushing out the bad parts in the system in order to achieve our longer term objectives.

Most investors want their financial advisers to lie to them by telling them to "relax". However now is the time to be aggressive on the buying side and get equities while they are on sale. Perhaps now is a once in a lifetime opportunity to achieve incredible rates of return going forward. As long as your time horizon is for the long term you should evaluate your portfolio as such.

The link below is Warren Buffet's opinion on the Equity Markets.
Here is what Warren Buffet had to say about American Equities
Remember Capitalism still lives in our country and will prevail as long as we defend it and have faith in it!

Disclaimer

Is it Time to Panic

2008-10-16T12:24:00.000-07:00

Recent weeks have brought with them rough and rocky times relative to the stock market. Many investors are feeling the anxiety and fear that comes along with these unstable market conditions. If you are one of my clients you have one of the most prudent and well diversified portfolios imaginable.

What we are experiencing in the market right now is nothing new – it is simply market volatility at work. It is the downside risk that we all take for being in the market. Accepting this volatility is what makes investing so rewarding in the “good times.”

I know you have heard this all before, but sometimes it bears repeating…Market prices and movements are random. No one knows where the next 20% move will be, but the next 100% move is always up.

Encouraging you to sell now (or change objectives, or any type of market timing) would compromise your opportunity for long-term success. Remember that large wire houses and online brokers make these recommendations so that they can profit from increased trading induced by the fear created with the deep pockets of their marketing machines.

The reason you have an investor coach is to help you see your way through these uncertain times. It is your coach’s job to help you do the right thing and keep you on the best course for long-term investment success.

The right thing to do right now is to remain disciplined and rebalance as we have always done. Stocks are a long-term investment; short-term market fluctuations are meaningless in the grand scheme of investing.

Let me make a comparison. If the value of your home dropped due to a bad real estate market, you wouldn’t sell it at a loss just because of a temporary market drop. The same should be true for your investment portfolio.

When you are in the middle of down markets like this… it feels like it will never end – but it will.

This too, shall pass.

Investors who stay the course, remain diversified, and “tough it out” realize the rewards of rebounding markets.

To Do’s for the Prudent Investor:

Turn off the hype. Ignore the messages of chaos and panic thrown at you from the media circus.
Focus on the long term. Your goals and investment objectives for the long term have not changed… your portfolio is designed to weather market storms like this

Attend an Investor Education session with your coach… it will make a HUGE difference in your confidence and understanding of what is happening.
If you have questions or concerns, call your coach; he or she will help you do the right thing (which may be nothing at all).

Trust in the process. You are invested in 10,000 companies in 39 countries… you have incredible diversification which is designed to protect and preserve your portfolio – even in volatile and turbulent times.

I have no idea when the market will turn or change. I am confident, however, that the market will do exactly what it has always done, and investors who are diligent will reap the rewards that historically have followed down periods.

We will do everything we can to help you understand and embrace these wild and free markets, so that you can gain all rewards inherent in the system.

disclaimer

Where do we go from here

2008-10-14T07:07:00.000-07:00

Now that the government has bailed out the banks who were in trouble because of the misdeeds of congress, what will happen next. Your guess is as good as mine.

Nobody can accurately predict exactly where the market is going or where it will go because it is a total crap shoot to think this way. Emotions control the market in the short term and that is the uncontrollable aspect of the markets. That is exactly why you have seen such big swings in the markets lately. Up 900 points in one day down 500 or 600 points on another all driven by emotion.

Sound investment principals promoted by Harry Markowitz, founder of the Modern Portfolio Theory said that investment decisions should be based on the principle of risk vs. reward and these effects are measured over the long term. That being said what we are seeing is only a blip in the radar and we should stick with our goals from what were determined by our financial plan. disclaimer
For more information visit my website at http://www.yourwealthadvocate.com/