Yardley Wealth Management, LLC

Is Inflation Haunting Your Dreams?

Michael Garry Yardley Wealth Management — Wed, 13 Oct 2021 14:47:31 +0000

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Is Inflation Haunting Your Dreams?
Part 2: What We Can Do About It

Our last piece covered the recent uptick in Inflation and what to make of it in a historical context. For investors, it’s important to take a step back and look at the big picture before acting on breaking news. But what if Inflation does get out of hand, and stays that way for a while?

The Federal Reserve has been suggesting rising rates should wane. We hope they’re right. But we also know the future remains uncharted. Nearly any outcome is possible, and none is inevitable. This means diversified investing remains our preferred strategy for being prepared for whatever the future holds.

Explaining Inflation Doesn’t Predict It.

If higher Inflation does materialize, will it arrive sooner or later? Will it be moderate or severe? Brief or prolonged? Forecasts vary widely, because we often forget the academic evidence that informs us: Even excellent explanatory models rarely serve as effective predictive models.

For example, scientists can readily explain why earthquakes occur, but our ability to forecast times, locations and severities remains shaky at best. The same can be said for Inflation. We can explain its intricacies, but accurate predictions remain as elusive as ever. There are simply too many variables: COVID-19, climate change, political action, the Federal Reserve, other central banks, consumer banks/lenders, consumers/borrowers, employers/producers, employees, investors (“the market”), sectors (such as real estate, commodities, and gold), the U.S. dollar, global currency, cryptocurrency, financial economists, the media, the world, time … and YOU.

Each of these could throw off any predictions about the time, degree, and extent of future Inflation. Besides, as an investor, you really only have control over the last two: You, and your time in the market. What will you do with your time?

Because We Don’t Know, We Diversify.

It stands to reason: Some investments seem to shine when Inflation is on the rise. Others deliver their best results at other times. Because we never know exactly when Inflation might rise or fall, we believe an investor’s best course is to diversify into and across various investments that tend to respond differently under different economic conditions.

For example, until earlier this year, value stocks had been underperforming growth stocks for quite a while. You may have been tempted to give up on them during their decade-plus lull (during which Inflation remained relatively low). And yet, when Inflation is high or rising, value stocks have tended to outperform growth, as has been the case year-to-date.

Another example is Treasury Inflation-Protected Securities (TIPS) versus “regular” Treasury bonds. Neither is ideal across all conditions. But if you hold some of both, they can complement each other over time and across various inflationary rates.

In short, if you’ve not yet done so, it’s time to define your financial goals, and build your personalized, globally diversified portfolio to complement them. If you’ve already completed these steps, you should be positioned as best you can to manage higher Inflation over time, which means your best next step is most likely to stay put. This brings us to our next point …

Stocks vs. Inflation: It’s a Knock-Out.

Provided time is on your side, the stock market is your greatest ally against Inflation.

Over time, global stock market returns have dramatically outpaced Inflation. For example, as reported by Dimensional Fund Advisors, $1 invested in the S&P 500 Index from 1926–2017 would have grown to $533 worth of purchasing power by the end of 2017, after adjusting for Inflation. Had that same dollar been held in “safe” one-month Treasury bills over the same period, it would have grown to an inflation-adjusted $1.51.

That T-bill growth is not nothing, and welcome relief during bear markets. That’s one reason we advocate for maintaining an appropriate mix between wealth-accumulating and wealth-preserving investments. But what’s “appropriate”? It depends on your personal financial goals. The point is, as long as you have enough time to let your stock allocations ride through the downturns, you can expect them to remain well ahead of Inflation simply by being in the market.

It’s important to add, no fancy market-timing moves are required or desired when participating in the stock market. In fact, moving holdings in and out at seemingly opportune times is more likely to detract from the vital, inflation-busting role stocks play in your portfolio. In the words of Nobel Laureate Eugene Fama: “The nature of the stock market is you get a lot of the return in very short periods of time. So, you basically don’t want to be out for short periods of time, where you may actually be missing a good part of the return.”

What If You’re Retired?

So far, so good. But not all your wealth is for spending in the far-off future. What if you’re depending on your portfolio to provide a reliable income stream here and now? If you’re retired, (or you have other upcoming spending needs such as college costs), eventual expected returns offer little comfort when current Inflation is eating into today’s spending needs.

Again, you can’t control Inflation, but you can manage your own best interests in the face of it.

Engage in Retirement Planning: Along with a globally diversified investment portfolio, you’ll want a solid strategy for investing for, and spending in retirement. For example:

Asset Location: Among your taxable and tax-favored accounts, where will you locate your stocks, bonds, and other assets for tax-efficiently accumulating and spending your wealth?
Spending: How much can you safely withdraw from your investment portfolio to supplement your other income sources (such as Social Security)?
Withdrawal Strategies: Which accounts will you tap first, and then next?

Revisit Your Retirement Planning: Especially when Inflation is on the rise, it’s worth revisiting your existing investment and withdrawal strategies. What are the odds your current portfolio won’t deliver as hoped for? We typically use odds-based “Monte Carlo” simulations to ask this critical question and guide any sensible adjustments the answers may warrant.

Don’t Panic: What if Inflation is taking too big a bite? A common misstep is to abandon your carefully structured investments in pursuit of short-cuts. For example, it may be tempting to unload high-quality bonds and pile into gold, dividend stocks, or other ways to seek spendable income. Unfortunately, we believe such substitutes detract from effective retirement planning. The goal is to optimize expected returns and manage unnecessary risks in pursuit of a dependable outcome. As such, we suggest avoiding dubious detours along the way.

How Can We Help?

While anyone can embrace the strategies we just described, implementing them can be easier said than done. Plus, there are more steps you can take to defend against Inflation, near and far. Examples include engaging in additional tax planning, annuitizing a portion of your wealth, tapping lines of credit like a second mortgage, optimizing Social Security benefits, and more.

If you have any questions, we hope you’ll contact us today to discuss these and other retirement planning actions worth exploring. After all, making the most of your possibilities is always a smart move, whether or not Inflation is here to stay.

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Is Inflation Haunting Your Dreams?

Michael Garry Yardley Wealth Management — Thu, 07 Oct 2021 00:05:56 +0000

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Part One

Is Inflation Haunting Your Dreams?

What We Know

Michael J. Garry, Esquire, CFP©, MBA Founder & CEO

Has the specter of inflation got you spooked? Recent headlines are filled with sightings. In this two-part series, let’s take a closer look at what to make of all the commentary and what you can do about it as an investor. First and foremost, we caution against succumbing to fear or panic in the face of inflation. As usual, careful planning remains your best guide.

What Is Inflation?

Inflation is the rate at which a currency loses its purchasing power as prices increase over time. So, say a cup of coffee cost $1.00 twenty years ago. If the average annual inflation rate had been 2% between then and now, that same pour would now cost you $1.49. Various goods, services, and sectors often experience different rates of inflation at different times, but general inflation is usually calculated based on the Consumer Price Index (CPI), or a similar broad pricing index.

Recent headlines have been reporting a noticeable uptick in inflation. Superlatives like “best” and “worst” grab the most attention, so outlets have been abuzz with reports of how a 5% May consumer pricing surge was “the biggest 12-month inflation spike since 2008.”

Putting Inflation in Proper Context

Before you read too much into these recently rising numbers, it’s worth remembering their context. We’re comparing May 2021 to May 2020, when we were still deep into what The Wall Street Journal called a “screwy” pandemic economy. The WSJ explained, “If a company takes a hit in one year and then gets back to normal the next, it can look like its profits are soaring when in fact they are just getting back on track.”

Zooming out even further, the Federal Reserve’s 10 Year Break-Even Inflation Rate is one common estimate of the market’s expected average annual inflation rate for the next 10 years. As of mid-June, that rate stood at 2.3%. That’s up from the lower 1.2% rate expectation from mid-June 2020, but it’s still not eye-popping.

Which leads to another important point: Not all inflation is bad. In fact, a bit of inflation goes hand in hand with economic growth and reasonable interest rates for lenders and borrowers alike. A 2% annual inflation rate is typically considered a desirable norm for greasing the wheels of commerce, without destroying the working relationship between currencies and costs.

What if Inflation Runs Amok?

And yet, while inflation has its purposes, it’s concerning if it goes on a rampage. When it does, uncertainty has spiked as well, wreaking havoc on commerce, the economy, job markets, real estate, and financial markets. (Deflation—the opposite of inflation—can also upset the economy if prices drop too precipitously.)

Investors who were around in the 1970s may remember the last time the U.S. experienced red-hot inflation, and what it felt like when it spiked to a feverish 14.8% in 1980.

The New York Times described it as an era when “prices of real assets like houses, gold and oil soared. Average mortgage rates exceeded 17 percent, and interest rates on bank certificates of deposit approached 12 percent. It was hard to know whether a 5 percent pay raise was cause for celebration or despair.” While 12% CD rates may sound great, when interest and inflation rates are comparable, the real returns from even high-interest CDs essentially become a wash.

After the 1980 high-water mark, the Volcker-era Federal Reserve tamped inflation back down. So younger investors have heard of but never experienced such steep inflation for such an extended time. Despite occasional alarm bells, inflation has mostly continued to hit the snooze button for decades. At least so far.

Next Up: What Can You Do About It?

What if inflation does get out of hand, and stays that way for a while? Depending on who you heed, the possibility ranges from unexpected, to possible, to a near certainty. In our next piece, we’ll cover why forecasts remain as fuzzy as ever, and how investors can best prepare for whatever may happen next. As usual, prudent planning is preferred over-rash reaction.

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5 Steps for Creating a Financial Plan

Michael Garry Yardley Wealth Management — Fri, 24 Sep 2021 15:00:20 +0000

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5 Steps for Creating a Financial Plan

In a year of epic surprises, investors have taken a ride with the stock market’s volatility, found ways to cope with new realities and living in the midst of a pandemic, turned more attention than usual to the ongoing civil unrest, and continue to speculate regarding the meaning of 2020’s unprecedented voter turnout and the presidential election. Given these extraordinary events and the fact that year-end 2020 and new year 2021 are likely to remain volatile, Michael Garry, CFP®, AIF®, attorney and founder of Yardley Wealth Management, LLC, urges investors to take a hard look at their personal finances and investments and devise a plan, because the uncertainty of the markets is the only thing that remains constant.

Pennsylvania financial advisor and attorney, Michael Garry, offers tips investors should follow in the “New Normal” While financial advisors have always urged careful long-term planning for their clients, now is an even more critical time to reassess and define a plan for forging ahead in the “new normal” when it comes to personal finances and money management.

Garry offers the following advice for investors who are shell-shocked and don’t know where to turn in taking the first step in creating a financial plan:

Have a plan. Action and inaction both have consequences. “It’s a harsh, unforgiving world and you can’t wing it anymore (if you ever really could). That doesn’t mean you need a 50-page financial plan. It does mean that you need to know the likely consequences of your action, or inaction, regarding your personal finance and investments,” said Garry.
Keep your taxes low. Taxes matter more than ever. “In what looks to be a low return environment where it seems taxes must go up, investors need to keep more of their investment returns. That means utilizing taxable accounts, tax-efficient and tax-managed equity funds, and tax-free muni funds,” Garry said.
Don’t reach for yield. “A lot of the fixed income market is risky, and you can lose everything. Any security offering more than a few percentage points above government bonds and insured CDs should come with a huge warning label and be avoided unless you know the risks and can afford them – that’s not most people,” said Garry.
Avoid bets on sectors or individual stocks. “While individual stocks have always been risky, the seemingly random way that the Covid-19 virus has made winners and losers out of various companies and industries that seem on the surface closely related should give you real pause before you plunk down your hard-earned money on something that is really just a bet,” said Garry. “We do not know the next shock that will throw the markets into turmoil. We know the markets will always come back, but we do not know which industries or stocks will come back with it,” Garry added.
Diversify. “Your accounts should not just be a collection of tech companies or U.S. large-cap growth stocks. I do not know how many times I have seen people’s accounts that had just the S&P 500 and the Total Stock Market Index, and that is it. The returns from those two holdings will be essentially the same in good markets and bad. They have been great lately, but that never lasts,” said Garry. “Be prepared for when things change by having small company stocks, foreign large and small company stocks, maybe emerging market stocks, and for most people, investment-grade bonds, through mutual funds and/or exchange-traded funds, not individual holdings,” Garry added.

“If history is any evidence, the market will continue to rise (and fall) after current world events have resolved. Even after the market downturns of both the Great Depression and the Great Recession, the stock market has continued to rebound over time. Be prepared with a long-term financial plan to weather the ups and downs of any market,” concluded Garry.

ABOUT YARDLEY WEALTH MANAGEMENT, LLC AND FOUNDER MICHAEL GARRY

Yardley Wealth Management, LLC is a fiduciary-driven wealth management and retirement planning firm, based in Yardley, PA. Founder and CEO Michael Garry is a CERTIFIED FINANCIAL PLANNER practitioner (CFP®) and an Accredited Investment Fiduciary® (AIF®). Garry formed a law firm, Yardley Estate Planning, LLC, to work in conjunction with his wealth management firm and provide estate planning services to Pennsylvania and New Jersey residents. Yardley Estate Planning is a law firm dedicated exclusively to estate planning, which includes planning for and addressing legacy, inheritance, and tax issues; and drafting wills, trusts, living wills, powers of attorney, and other estate planning tools and documents.

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5 Financial Advisor Hacks: A Cheat Sheet for People Saving For Retirement!

Michael Garry Yardley Wealth Management — Tue, 25 May 2021 16:00:16 +0000

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5 Financial Advisor Hacks: A Cheat Sheet for People Saving For Retirement!

By Michael J. Garry, Founder/CEO
Yardley Wealth Management

Don’t Get Distracted

The 24-hour news cycle can be a bit insane these days, especially in 2020 when the pandemic dominated the news and murder hornets were on the way. Many crazy things happen from day-to-day, but bad financial mistakes can be made when we are preoccupied. Keep your mind on the things in life you have control over and filter out the rest of the noise.

Don’t Stop

It’s hard to start saving again once you’ve stopped. You can’t make up for the contributions you didn’t make. You will also have missed the opportunity to buy funds when they are off, sometimes far off, their highs. When the pandemic is over, you’ll have missed a great option. The compounding effect over time is impressive, and missing out on that would be a real shame.

Contribute To Your Future Happiness

If your 401(k) match is being reduced or is no longer available, and you aren’t already contributing the most significant amount, you should increase your contribution to offset it. Even if there is a lot of volatility ahead, your returns will be better for it and your retirement more secure.

Look Ahead

The best thing people can do is plan for their retirement. Most don’t. They wing it, and maybe it will work out, and perhaps it won’t. If you plan, you actually have a better idea if it’s going to work and what you need to change if it looks like it’s not going to. Don’t be passive in your retirement planning. Take charge of it.

Keep Making That Green!

To augment your retirement savings, you can continue to work part-time in retirement. This is a smart idea if you’re concerned about running out of money too soon, and it can also help with boredom. If you don’t want to work, you might look for other ways to make money in retirement, such as buying and renting out assets or investing in a local company. Bear in mind that you’ll have to pay taxes on these forms of income, and if you don’t have a regular paycheck, you’ll have to try to put money aside yourself. Consider setting aside money for taxes in a separate savings account, so you don’t waste it.

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Worried about your future Social Security benefits? Fleshing out current concerns and common myths.

Michael Garry Yardley Wealth Management — Mon, 26 Oct 2020 16:00:48 +0000

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https://bit.ly/2Tdq2SC

Social Security Retirement Planning

Worried about your future Social Security benefits? Fleshing out current concerns and common myths.

By Michael Garry Yardley Wealth Management October 26, 2020

Social Security is one of the most popular government programs of all time, and it’s one that enjoys wide support across the population. Around 65 million Americans will receive more than $1 trillion in benefits during 2020, according to the Social Security Administration (SSA). Yet understanding exactly how this program works, as well as the best time to start taking benefits, isn’t always easy. Rumor and miscommunication around this program result in confusion about Social Security, especially in an election year.

I had the opportunity to share my thoughts on Social Security with Tracey Longo at Financial Advisor Magazine for her article Advisors Concerned As Covid Speeds Projected Social Security Shortfall. She posits that the Social Security Trust Funds are expected to see shortfalls starting in 2031, three years earlier than expected, according to a new forecast from the Congressional Budget Office (CBO). Without Congressional intervention to shore up the funds, the SSA will need to cut benefits to retirees and beneficiaries as much as 25% in 11 years, CBO said.

I’m quoted as saying: “I’m in denial. I don’t believe it will happen. Congress could cut benefits that much, but I don’t think any politician will if they hope to get re-elected.” I’m not worried about any cuts being as steep as 25%, but rather, I would expect to see marginal cuts for the highest earners—if any at all. And, if we realize a shortfall in five to eight years, I might start to worry and we’ll make adjustments.

Also, there are myths about Social Security that have been circulating for months. I thought I’d share what I hear as the most common Social Security myths with you here:

One common myth is that illegal immigrants can come to America and start to immediately collect Social Security. That is not true. Immigrants who are legal residents are entitled to Social Security, but they need to work and contribute for 10 years, just like everyone else.
Another misconception is that you should take Social Security right away because you aren’t going to live very long and you are going to leave a lot of money on the table. Sure, if you have a diagnosis or medical condition where your doctor doesn’t think you are going to live very long, go ahead and take your benefits early. Otherwise, wait. You only have to live to your mid-70s or so to make waiting the better choice and every year you live longer you get that higher benefit.
Another common misconception is that you really don’t get any extra benefits for waiting to take your benefit. You really do get the extra 8% per year after you’ve reached your full retirement age. You also get added benefits for waiting from age 62 to age 65.
One myth is that Social Security benefits don’t amount to much. For most people, Social Security benefits make up a sizable percentage of their retirement income.
A final misconception is that the system is bankrupt and no one is going to get their benefits or that people under a certain age won’t get theirs. While there always seems to be a future funding shortfall for Social Security, it’s a political problem, not a math problem. If we get close to insolvency, our politicians will somehow find the political will to solve it, like they have in the past.

Please contact us if you’d like to discuss your financial plan. As always, hang in there.

My name is Mike Garry, and my company is Yardley Wealth Management, LLC. We are a fiduciary, fee-only financial planning, and wealth management firm in Yardley, Pennsylvania (that’s in Bucks County).

Our law firm is Yardley Estate Planning, LLC, and is in the same place. We only do Estate Planning work and I am licensed in Pennsylvania and New Jersey.

If you’d like to talk about this or anything else, please reach out: 267-573-1019, mgarry@yardleywealth.net or @michaeljgarry

If you’d prefer to watch videos, click on the hyperlinks for the: Yardley Wealth Management and Yardley Estate Planning YouTube channels.

If you would like our other written content:
YWM E-Newsletter: https://yardleywealth.net/newsletter-sign-up/
YEP E-Newsletter: http://yardleyestate.net/subscribe/

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Is COVID-19 affecting your Retirement Planning? Here’s what you should do.

Michael Garry Yardley Wealth Management — Wed, 07 Oct 2020 13:35:26 +0000

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Is COVID-19 affecting your Retirement Planning? Here’s what you should do.

Retirement Planning Financial Planning Risk

https://money.usnews.com/money/retirement/iras/articles/retirement-planning-mistakes-to-avoid-during-coronavirus

This year has been a real eye-opener for many pre-retirees and retirees. Over their lifetimes, most people have heard warnings and advice from retirement advisors about various aspects of their plans. The warnings are typically based on a combination of data and anecdotes and often didn’t hit home or inspire urgency. But the COVID-19 pandemic compressed many events into a short period and affected the entire country. Suddenly, the concerns weren’t theoretical or something to worry about years from now. A long stock market boom also overcame a lot of gaps in plans, or seemed to. When the market indexes dropped quickly in March, the status of many plans suddenly seemed more perilous.

I had the opportunity to share my thoughts with journalists from three top publications on retirement planning in the pandemic, including Rachel Hartman at US News in Retirement planning mistakes to avoid during coronavirus, on what I saw as some of the key problems 2020 revealed in many retirement plans and how you can solve them.

The best thing to do is to avoid panicking and making drastic changes to your plan. The world is changing quickly and we are not sure how things are going to pan out. If you have an established saving and investing plan, stick with it for now. Your timeline might need to change because of the underlying economic consequences of the pandemic, but don’t make rash moves.

Unless you can’t pay for food and shelter, you should not postpone funding your retirement during a pandemic, especially if you are only 5 years into funding it.

It’s hard to start saving again once you’ve stopped. You can’t really make up for the contributions you didn’t make and you will have missed the opportunity to buy funds when they are off, sometimes far off, their highs. When the pandemic is over you’ll have missed a great opportunity. The compounding effect over time is amazing and missing out on that would be a real shame.

If you learn that your 401(k) match is being reduced or is no longer available, and you aren’t already contributing the maximum amount, you should increase your contribution to offset it, especially now while markets are off their highs. You can buy mutual fund shares much cheaper now. Even if there is a lot of volatility ahead, your returns will be better for it and your retirement more secure.

As always, the best thing most people can do is to actually plan for retirement. Most don’t. They wing it and maybe it will work out, and maybe not. IF you plan, you actually have a better idea if it’s going to work (and what you need to change if it’s looking like it’s not going to). Don’t be passive in your retirement planning, take charge of it.

Please contact us if you’d like to discuss your financial plan. As always, hang in there.

Our law firm is Yardley Estate Planning, LLC, and is in the same place. We only do Estate Planning work and I am licensed in Pennsylvania and New Jersey.

If you’d like to talk about this or anything else, please reach out: 267-573-1019, mgarry@yardleywealth.net or @michaeljgarry

If you’d prefer to watch videos, click on the hyperlinks for the: Yardley Wealth Management and Yardley Estate Planning YouTube channels.

If you would like our other written content:
YWM E-Newsletter: https://yardleywealth.net/newsletter-sign-up/
YEP E-Newsletter: http://yardleyestate.net/subscribe/

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What is a SEP IRA? Understanding the benefits and details of a SEP IRA before committing to this retirement savings vehicle.

Michael Garry Yardley Wealth Management — Mon, 14 Sep 2020 13:00:03 +0000

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What is a SEP IRA? Understanding the benefits and details of a SEP IRA before committing to this retirement savings vehicle.

Retirement Planning, Income Taxes

https://money.usnews.com/money/retirement/iras/articles/what-is-a-sep-ira

If you own a business and want to save for retirement, consider setting up a simplified employee pension individual retirement account. A SEP IRA can help both you and your employees set aside funds for the future. However, make sure your company and your long-term goals are a good match for this type of account.

I had the opportunity to share my thoughts on SEP IRAs with Rachel Hartman of US News & World Reports for her fine article titled, “What is a SEP IRA?” She lists much of the basics in her article, including Contribution Limits, Tax Benefits, as well as how to open a SEP IRA and the deadlines for “S” Corps (9/15) and “C” Corps (10/15). Since we have some deadlines coming up, I thought I’d promote her article again here in my blog. Here are my thoughts about SEP IRAs from the perspective of a business owner.

Advantages of SEP IRA:

The advantages of a SEP IRA are that compared to other business retirement plans, they are much cheaper and easier.
There is less paperwork and fewer forms; there is no need to hire a pension administrator or file Form 5500.
You can also open and fund your plan later than you can with other employer retirement plans.
SEP-IRAs don’t require annual contributions and the employer can decide each year whether to fund the accounts, and if so, how much to fund them, up the annual limits.
Employers must contribute the same percentage of salary to each employee.

Disadvantages of SEP IRA:

The main disadvantage of SEP IRAs is that they don’t allow the employee to save in them. Only employer contributions are permitted. So, the employee cannot save as much in a tax-qualified way as they could if their employer adopted a 401k.
They also don’t allow loans, so employees can’t borrow against the balance of their accounts.

SEP-IRAs are used mostly in businesses with few relatively paid employees where the employees might not have much of an ability to save on their own. Employers also tend to use them when the cash flow of the business varies from year to year and the business owner is afraid to commit to a 401k.

With a SEP-IRA, the employer can open and fund accounts up to the tax filing deadline, including extensions. So, employers often open their initial SEP-IRAs when their CPA is doing their taxes and the CPA makes them aware of the tax benefits.

As you know, this year the deadline for 2019 contributions were pushed back to July 15^th. If you filed for an extension, the deadline is September 15^th for “S” Corps and Partnerships and October 15^th for “C” corps and individuals. Check with us for more info on how a SEP-IRA could fit into your overall financial plan.

Please contact us if you’d like to discuss your financial plan. As always, hang in there.

My name is Mike Garry, and my company is Yardley Wealth Management, LLC. We are a fiduciary, fee-only financial planning, and wealth management firm in Newtown, Pennsylvania (that’s in Bucks County).

Our law firm is Yardley Estate Planning, LLC and is in the same place. We only do Estate Planning work and I am licensed in Pennsylvania and New Jersey.

If you’d like to talk about this or anything else, please reach out: 267-573-1019, mgarry@yardleywealth.net or @michaeljgarry

If you’d prefer to watch videos, click on the hyperlinks for the: Yardley Wealth Management and Yardley Estate Planning YouTube channels.

If you would like our other written content:
YWM E-Newsletter: https://yardleywealth.net/newsletter-sign-up/
YEP E-Newsletter: http://yardleyestate.net/subscribe/

The post What is a SEP IRA? Understanding the benefits and details of a SEP IRA before committing to this retirement savings vehicle. appeared first on Yardley Wealth Management, LLC.

The Best 401(k) Funds for Millennials and Why You Should Invest in a Mix Now

Michael Garry Yardley Wealth Management — Mon, 24 Aug 2020 16:00:48 +0000

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The Best 401(k) Funds for Millennials and Why You Should Invest in a Mix Now

FINANCIAL PLANNING, INVESTMENTS

There’s an old saying that time is money. For millennials saving for retirement, time is on their side when it comes to making money with long-term investments in the stock market. Born in the early 80s through the mid-90s, this generation can weather market volatility better than investors closer to retirement. Millennials, categorized as those aged 18-37 years of age, can even be well-served by market downturns because dips offer buying opportunities. For millennials considering stock market investing, it’s important to also keep living expenses, student debt and emergency savings in mind when trying to balance personal finances, according to writer Matt Whittaker of US News & World Report.

I had an opportunity to share my thoughts with Whittaker on the best 401(k) funds for millennials for his piece for US News & World Report. In his article, 7 of the Best 401(k) Funds for Millennials, Whittaker details seven of the best 401(k) funds for millennials saving for retirement.

I suggested two additional retirement funds for millennials that should’ve made the list: iShares Core S&P Total U.S. Stock Market ETF (symbol ITOT) and iShares Core MSCI Total International Stock ETF (symbol IXUS). The former is an ETF that tracks the performance of the entire U.S. stock market and the latter tracks the performance of large, medium, small and emerging market stocks outside of the U.S. If you combine the two, you can have a global allocation and decide how much to allocate to foreign stocks.

Too often investors look to just the S&P 500 for their U.S. stocks and that’s not diversified enough. You wind up overweighting the largest U.S. growth companies. Sure, that has worked the last 10 years, but over time it’s better not to be concentrated in mostly large growth stocks. By buying ITOT you still get those stocks, but a smaller percentage of them. You also get the newer and smaller companies that make up the rest of the U.S. market and the value companies, which over time have outperformed their growth counterparts.

The other thing investors do is overlook foreign stocks, especially emerging market ones. When buying IXUS you get exposure to both developed and emerging market companies of all sizes. Sure, the U.S. has outperformed most of the world the last ten years, but historically, U.S. and foreign stocks have performed the same, just doing better over different time periods. Over the last century, the U.S. has outperformed in 5 decades and foreign stocks the other 5. Remember in 2010 when people were bemoaning the lost decade in stocks? It wasn’t the case if you owned international stocks, it was just a lost decade for U.S. stocks.

The expense ratios are .09% for ITOT and .03% for IXUS and they can be bought commission-free and the spreads on each average only $.01.

The good news is that even with the economic downturn caused by the coronavirus pandemic, millennials are still the most optimistic of any age group about the investment returns they expect in the coming years, a survey has found. Millennials likely have the capacity to take more risk than older generations, given they are further away from retirement, and so may expect higher investment returns in order to “compensate for the additional risk.” Millennials also could be influenced by investors’ political outlook, inflation and interest rate expectations or even their country’s response to the coronavirus pandemic, as well as other factors.

Please contact us if you’d like to discuss your financial plan. As always, hang in there.

Our law firm is Yardley Estate Planning, LLC and is in the same place. We only do Estate Planning work and I am licensed in Pennsylvania and New Jersey.

If you’d like to talk about this or anything else, please reach out: 267-573-1019, mgarry@yardleywealth.net or @michaeljgarry

If you’d prefer to watch videos, click on the hyperlinks for the: Yardley Wealth Management and Yardley Estate Planning YouTube channels.

If you would like our other written content:
YWM E-Newsletter: https://yardleywealth.net/newsletter-sign-up/
YEP E-Newsletter: http://yardleyestate.net/subscribe/

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The Importance of Talking with Your Kids about Finances When Times are Tough

Michael Garry Yardley Wealth Management — Fri, 31 Jul 2020 13:00:18 +0000

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The Importance of Talking with Your Kids about Finances When Times are Tough

FINANCIAL PLANNING, FINANCIAL MANAGEMENT

The recent news on job loss is staggering. Unemployment rose higher in three months of COVID-19 than it did in two years of the Great Recession. According to the Pew Research Center, the unemployment rate is higher than officially recorded, more so for women and certain other groups. If you think those kinds of headlines are frightening for you to read as an adult, imagine the impact that your financial insecurity has on your children. I feel strongly that parents need to be honest and straightforward with our children, at an age-appropriate level, when it comes to our feelings about money.

I had an opportunity to share my thoughts on speaking to children about finances during these difficult times with Gabrielle Olya for GOBankingRates.com. In her article, 10 Reasons Why Talking To Kids About Money Is More Important Than Ever, Olya details why we need to have honest conversations with our kids about money.

It’s very important for parents to discuss financial issues, especially difficulties, with their children. For one thing, kids of all ages know we are in unusual times and most want to talk about it. If you are also having personal financial difficulties, most kids by middle school-age, are going to know that something is up with you. Many will blame themselves or others for your increased stress level.

Kids could likely see the impact of job loss in real time, within your household or even parents of friends and family members. It can be an opportunity to discuss the “we are all in this together” motto that can help make cutting back on expenses a family affair, and also allowing them to be part of figuring out where the household can save on costs. If you don’t discuss it, it can lead to all sorts of anxieties around money. And, lessons learned during these difficult times can help kids and their parents have a healthier relationship with money when times get better and when the kids grow into having their own families.

As for how much or what exactly you should discuss, it depends on their age and maturity. For younger kids, you can speak more generally and say that there’s more uncertainty than there usually is with your job or income or investments. For older kids, you can also let them know that tough times will come and go and that we all have to face those tough moments in our lives. Tell them you are facing them now and trying to come up with the best solution you can. Be honest, but balance it with good news around finances, like how people are coming together during a time like this to help each other.

Teach them that tough times aren’t something that can be totally avoided, even for adults. If they see you addressing your difficulties head on, being open and honest and willing to talk about them, you are providing them a great lesson. If parents have these conversations about financial implications, it can help kids take back a sense of control. It will be much easier for them to confront their own financial crises as they get older.

In the short run, if your difficulties lead to changed life circumstances, let your kids know what they are. If your kids have a heads up that something may not be right, again, they will be better able to handle it and might even be able to help the family figure out a solution together. Not addressing things with them will make matters worse, and things are already bad enough for a lot of folks and their children.

Please contact us if you’d like to discuss your financial plan. As always, hang in there.

Our law firm is Yardley Estate Planning, LLC and is in the same place. We only do Estate Planning work and I am licensed in Pennsylvania and New Jersey.

If you’d like to talk about this or anything else, please reach out: 267-573-1019, mgarry@yardleywealth.net or @michaeljgarry

If you’d prefer to watch videos, click on the hyperlinks for the: Yardley Wealth Management and Yardley Estate Planning YouTube channels.

If you would like our other written content:
YWM E-Newsletter: https://yardleywealth.net/newsletter-sign-up/
YEP E-Newsletter: http://yardleyestate.net/subscribe/

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Is Financial Planning a Pandemic Necessity?

Michael Garry Yardley Wealth Management — Fri, 10 Jul 2020 13:00:38 +0000

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Is Financial Planning a Pandemic Necessity?

By Michael Garry Yardley Wealth Management

Financial Planning magazine just released their annual tech survey and a corresponding article: Tech Survey 2020: Advisors losing faith in planning software. I was honored to be interviewed by the reporter and included with the other tech-savvy advisors who weighed in. The journalist and I discussed the tools that Yardley Wealth Management uses to help put together a financial plan for our clients. The reporter shared that their survey results showed that many advisors were cutting back on financial planning software, perhaps as a way to cut costs. Financial planning, and the software involved, is at the heart of our business, and we’ve worked with all our clients to build plans tailored to their specific needs; thus, we have no plans to cut out financial planning and the related software needed from our business model.

At the end of our conversation, the reporter asked if we were experiencing an uptick in use of planning software during the current times of crisis. I shared with him that we were spending all our time rebalancing, tax-loss harvesting and fielding client questions that, given everything else we have going on, we don’t have time to create new financial plans right now.

The beauty of creating a plan is that it can help get our clients through the ups and downs of the market – even those caused by a global pandemic. Yardley clients already had professionally-developed financial road maps in place, so we are for the most part sticking to those plans.

I thought my answers from the article mentioned above might provide some food for thought:

I had a client for whom we did a financial plan in February. He called during the second week of March because he thought his plan would need to be updated, based on the facts that his account values were down and that he had gotten laid off from his job, likely leading him to retire a little earlier than he had hoped.

I explained to him that we had used the scenario in which he would retire immediately because he had hoped to work until next year, but wasn’t sure he’d be able to. In the MoneyGuidePro scenario that we looked at, we had also shown him how bad timing would impact his retirement. His bad timing scenario showed that even if his portfolio was down 20% this year, and a further amount next year, his plan still looked pretty good. At the time of our call, his accounts were down about 20%.

It was nice to show that planning actually can work and be a useful tool for guiding decisions and feeling confident about them even in uncertain economic times.

Please contact us if you’d like to discuss your financial plan. As always, hang in there.

Our law firm is Yardley Estate Planning, LLC and is in the same place. We only do Estate Planning work and I am licensed in Pennsylvania and New Jersey.

If you’d like to talk about this or anything else, please reach out: 267-573-1019, mgarry@yardleywealth.net or @michaeljgarry

If you’d prefer to watch videos, click on the hyperlinks for the: Yardley Wealth Management and Yardley Estate Planning YouTube channels.

If you would like our other written content:
YWM E-Newsletter: https://yardleywealth.net/newsletter-sign-up/
YEP E-Newsletter: http://yardleyestate.net/subscribe/

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Mindset Mastery Podcast by NAPFA: “Anything is Possible” with Michael Garry

Michael Garry Yardley Wealth Management — Tue, 07 Jul 2020 16:21:31 +0000

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Mindset Mastery Podcast by NAPFA: “Anything is Possible” with Michael Garry

This past month, I had the honor of being interviewed by Marie Swift for the NAPFA Mindset Mastery podcast about life lessons learned from completing an IRONMAN Triathlon. I enjoyed speaking with her about how the skills I learned in achieving my goals and staying on track for the IRONMAN translate to serving my clients in my practice, Yardley Wealth Management.

In the podcast, I discuss how I am keeping in touch and building rapport with clients as we move through the COVID-19 pandemic, how I keep my mindset strong as we continue to “walk through the wind”, and why I decided to take on the IRONMAN challenge (Bonus: how the financial planning process is similar to participating in an Ironman event). After watching me finish the IRONMAN, my clients know I’m going to do whatever it takes to help them to achieve their goals and stay on track. I am a committed person and will absolutely not give up.

Listen in as I share my story and encourage listeners to keep their mental focus sharp, especially during these trying times. https://napfamindsetmastery.libsyn.com/episode-05-anything-is-possible-with-michael-garry

My name is Mike Garry, and my company is Yardley Wealth Management, LLC. We are a fiduciary, fee-only financial planning, and wealth management firm in Newtown, Pennsylvania. (That’s in Bucks County).

Our law firm is Yardley Estate Planning, LLC, and is in the same place. We only do Estate Planning work and I am licensed in Pennsylvania and New Jersey.

If you’d like to talk about this or anything else, please reach out: 267-573-1019, mgarry@yardleywealth.net or @michaeljgarry

If you’d prefer to watch videos, click on the hyperlinks for the: Yardley Wealth Management and Yardley Estate Planning YouTube channels.

If you would like our other written content:
YWM E-Newsletter: https://yardleywealth.net/newsletter-sign-up/
YEP E-Newsletter: http://yardleyestate.net/subscribe/

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Why We (Still) Use DFA Funds

Michael Garry Yardley Wealth Management — Thu, 25 Jun 2020 15:00:32 +0000

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Why We (Still) Use DFA Funds

Recently, a journalist asked me why Yardley Wealth continues to use the mutual funds available through Dimensional Fund Advisors (DFA). While Vanguard is probably familiar to you as the giant mutual fund family known for its low costs and passive indexing approach, DFA is also a low cost fund family that uses passive investing, and emphasizes small cap and value investing based on what is known as the “Fama and French Three Factor Model.” Only professional financial advisors can access DFA, whereas anyone can access Vanguard’s funds. As a result of the interview, I was quoted in this article,

The Quarter of Reckoning at Dimensional Fund Advisors (RIA Intel, May 20, 2020).

Two weeks prior, I had a question from a client about how his investment portfolio had performed compared recently to the Dow Jones Industrial Average or “The Dow.”

I thought that the answers to these questions would make a useful blog post. So here goes …

At our firm, Yardley Wealth, we take a long-term perspective. We look at long-term expectations for various stock and bond returns and build portfolios around those for our clients.

We don’t care what is doing best right now or in the most recent past. Okay, well, that might not be totally accurate. Let me explain: We do care and stay informed on what is going on in the world, but we don’t change our strategy from the one that has worked best for our purposes for the past 100 years.

The Dow is a price-weighted average of 30 old-ish U.S. companies. People follow it because it was the first widely-known stock index, and it was owned by the newspaper that people looked to for financial information. It’s not really a great measure of how the markets are doing, though. Comparing your own portfolio against it over any period, especially a short one, doesn’t really mean anything. Looking at The Dow (or any stock market index) should never make you feel good or bad because it is not a relevant comparison to a globally diversified portfolio.

The Dow has no small company stocks, no foreign stocks, no emerging market stocks and of course, no bonds. It is also price-weighted, not market cap weighted.

A company with a higher stock price influences the Dow index more than a stock with a lower price. That actually makes no sense because the price doesn’t mean anything at all. A stock can have a higher stock price but ½ as many shares outstanding so be worth ½ as much as another company, but it would influence the movement of The Dow more just because of that higher stock price.

Please take a look at the following slide. It explains a lot of what we do and why our clients are invested the way they are. Here are the relevant takeaways:

Stocks beat bonds over most, but not all, timeframes. The longer the timeframe, the more likely stocks are to outperform bonds.
Value beats growth over most, but not all, timeframes. The longer the timeframe, the more likely value is to outperform growth.
Small company stocks beat large company stocks over most, but not all, timeframes. The longer the timeframe, the more likely small company stocks are to outperform large company stocks.
Highly profitable companies beat lowly profitable ones over most, but not all, timeframes. The longer the timeframe, the more likely highly profitable companies are to outperform lowly profitable companies.

Looking at these factors and how they influence long-term returns, we build portfolios that take advantage of them. Compared to the market as a whole, our clients are over weighted stocks – specifically: value stocks, small company stocks and the stocks of profitable companies.

Looking at the chart again, it shows that over any 1-year period, our clients are aligned with a portfolio that is likely to do pretty well and, over most 10-year periods, they are highly likely to do so. Over a timeframe as short as a couple of months, I don’t know how they are going to do, and I’m not concerned with that. I’m concerned about long-term growth and that’s why we do things the way we do them here at Yardley Wealth.

While each of the four factors, noted above, will likely improve your returns over long periods of time, using all of them will often increase the reliability of performance. Remember, the good long-term results of these factors have persisted even though they haven’t been seen too often the last 10 years, so we will keep using them. Please see the next chart, which shows how integrating (a) size, (b) value and (c) profitability can increase the reliability of outperformance in an investment portfolio.

Please contact our office if you have any questions and we’ll be happy to discuss. Meanwhile, let’s all stay healthy and keep our eyes on the horizon. Down markets and health issues, while vexing at any given moment in time, do not last forever. We are strong in our convictions and encourage you to be, too. Hope you get a little extra sunlight in your day — Vitamin D and fresh air is an important element in a healthy, balanced life — especially right now.

Our law firm is Yardley Estate Planning, LLC, and is in the same place. We only do Estate Planning work and I am licensed in Pennsylvania and New Jersey.

If you’d like to talk about this or anything else, please reach out: 267-573-1019, mgarry@yardleywealth.net or @michaeljgarry

If you’d prefer to watch videos, click on the hyperlinks for the: Yardley Wealth Management and Yardley Estate Planning YouTube channels.

If you would like our other written content:
YWM E-Newsletter: https://yardleywealth.net/newsletter-sign-up/
YEP E-Newsletter: http://yardleyestate.net/subscribe/

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Should Pre-Retirees Take a New Look at #Retirement Income?

Michael Garry Yardley Wealth Management — Fri, 29 May 2020 10:00:51 +0000

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Should Pre-Retirees Take a New Look at #Retirement Income?

By Michael Garry Yardley Wealth Management May 21, 2020

I recently was interviewed for an article in a national publication on retirement income, given the current market and job losses. I thought my answers might provide you some food for thought. Hang in there.

Question: Does the COVIC-19 crisis (market declines along with job losses) mean retirement is more in peril than even before? Plenty of advisors tell clients to “work longer” to achieve their desired retirement outcome, but has that advice quickly become outdated, with job cuts?

Retirement for many Americans is more in peril than ever because of the COIVD-19 crisis. For most Americans, working longer and living on less are the only viable options. The only other real variables that go into your standard of living in retirement are the amount of assets you have and your return on them, and you can’t really do anything about those at retirement. So, while working longer is going to be more difficult with so many people out of work and the economy in free fall, you can’t magically get a better return or have more assets. Delaying Social Security is something that for most people will make a major difference in their standard of living in retirement. Of course, most people have to work to delay taking it.

Question: Does the 4% withdrawal rule make sense?

Yes, the 4% withdrawal rule still makes sense. It was never meant to be a law of nature like gravity. Mr. Bengen just wanted to find out what was a generally safe withdrawal rate in retirement. Despite the fact that we hear stories every year about whether it still works, it still does. It doesn’t mean that you can always take 4% out of your portfolio adjusted for inflation and expect to have a safe retirement. It means that looking at past results, doing that worked most of the time, and the time period studied had some really bad periods of time in it, too – like the Great Depression and World War II. It will still work most of the time. If you are retiring at a bad time or have unexpected expenses, you should make some adjustments. A minor one that most can do is to not automatically increase their distributions every year for inflation. Save them for when you need them.

Question: Should pre-retirees be looking at guaranteed sources of income, such as annuities?

Pre-retirees should only be looking at guaranteed sources of income like annuities if they have a very low risk tolerance for volatility in the stock and bond markets. Many of the products sold are expensive, lock your money up for years or forever and will have a hard time beating a 50/50 or 60/40 investment mix, adjusted for inflation, over long periods of time. Most of the people looking at them don’t understand the guarantees because too often the people selling them act as if the increase in the Guaranteed Withdrawal Base in some products gives returns like CDs. It does not.

Question: Do you have an anecdote about clients you’ve advised, re: changing the strategy at this point? (I understand you can’t name names)

We had clients in recently who were looking to retire later this year and had just figured they’d take Social Security. We advised that they wait to take Social Security and use some of their investments instead to fund their retirement for the few years before they turned 70. They were surprised because all of their friends took it once they retired. We showed the software projection where their odds of a successful retirement according to our software went from 58% to 84% just by making that one change.

Our law firm is Yardley Estate Planning, LLC, and is in the same place. We only do Estate Planning work and I am licensed in Pennsylvania and New Jersey.

If you’d like to talk about this or anything else, please reach out: 267-573-1019, mgarry@yardleywealth.net or @michaeljgarry

If you’d prefer to watch videos, click on the hyperlinks for the: Yardley Wealth Management and Yardley Estate Planning YouTube channels.

If you would like our other written content:
YWM E-Newsletter: https://yardleywealth.net/newsletter-sign-up/
YEP E-Newsletter: http://yardleyestate.net/subscribe/

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Who is buying negative yielding bonds?

Michael Garry Yardley Wealth Management — Thu, 07 May 2020 08:00:04 +0000

The post Who is buying negative yielding bonds? appeared first on Yardley Wealth Management, LLC.

Click the image above to watch video

Who is buying negative-yielding bonds?

My name’s Mike Garry, and my company is Yardley Wealth Management. We’re a fiduciary, fee-only financial planning and wealth management firm in Newtown, Pennsylvania. That’s in Bucks County.

You may have heard by now that there are bonds selling in the world with negative interest rates. And when I say bonds, I mean more than $15 trillion of mostly European government and some corporate bonds. Now, what does that mean? It doesn’t mean that you get a bill for the bond when you cash it in, it means that almost all of them were in the secondary market, meaning that people paid a premium for the bond to be able to get the yield, I mean, to get the coupon that they got, and then when the bond matures, they’ll get it back at par.

Now, people think all the time, “Well, who would buy a negative- yielding bond?” We get them all the time. We get people transferring bonds that they bought themselves, and they think they’re getting a coupon yield, but they’re not looking at the overall yield to maturity. You know, a bond will pay them $1,000 when it matures, but they paid $1,200, and they did it because they get, like, a 5% coupon. But the reality is, it’s not a great investment, and they’re hard to sell.

Anyway, if you have any questions about negative-yielding bonds, please give us a call, (267) 573-1019, or reach out to us on social media. Thanks.

If you’d prefer to watch videos, click on the hyperlinks for the: Yardley Wealth Management and Yardley Estate Planning YouTube channels.

If you would like our other written content:

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When is Small-Cap Value Coming Back?

Michael Garry Yardley Wealth Management — Tue, 28 Apr 2020 08:19:55 +0000

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Click image above to watch video

When is small-cap value coming back?

Mike Garry and my company’s Yardley Wealth Management. We’re a fiduciary, fee-only financial planning and wealth management firm in Newtown, Pennsylvania. That’s in Bucks County.

Small-cap value. When is it coming back? I don’t know. But small-cap value compared to the other asset classes in the US and most of them abroad has returned more than all the others in a time in the years that we have good data, and that includes not performing better than other asset classes the last ten years. It has been outperformed by US large-cap by a good amount. Is that, do we think that large-cap will now forever yield more or return more than small-cap. Could happen? I don’t know. Usually, this time is different is a mistake in the investing world, and I also think that small-cap value is riskier, and relative to its earnings, it’s cheaper.

And when you make investments, usually when you pay less per expected earnings for anything, you buy an apartment building to rent out or some sort of a gas pipeline. Anything, you buy, is there any potential cheaper? That generally works out better. Not all the time. So I would not be surprised if that ten or twelve years of under-performance turns around, but I don’t know. Always interesting to see. Anyway, my name is Mike Garry. You want to talk about this? Please give us a call, (267) 573-1019 or reach out to us through the social media channel where you’re seeing this or our website and thanks.

If you’d prefer to watch videos, click on the hyperlinks for the: Yardley Wealth Management and Yardley Estate Planning YouTube channels.

If you would like our other written content:
YWM E-Newsletter: https://yardleywealth.net/newsletter-sign-up/
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How to Keep Your Money Safe #madoff #ponzi

Michael Garry Yardley Wealth Management — Fri, 20 Sep 2019 19:02:43 +0000

The post How to Keep Your Money Safe #madoff #ponzi appeared first on Yardley Wealth Management, LLC.

I saw an article recently saying that a lot of small advisory firms don’t have a backstop for if a financial advisor does something wrong.

The article suggested that there should be rules for more errors and omissions insurance for advisors. The reason being that a lot of advisory firms are small businesses that don’t have money to handle financial claims against them.

The article interviewed some clients of advisors who lost money through Ponzi schemes or bad investments.

I guess the idea of the article is that if you are cheated by an advisor at a big bank, brokerage firm or insurance company, the big firm will be able to handle and pay your claim, even if the individual advisor doesn’t have the money to pay it. Whereas if you are cheated by a solo advisor working for himself, he probably doesn’t have that much money and should have insurance.

There are a couple of points I’d like to make. First, yes, I think advisors should have a lot of insurance. I carry a lot. The second point is that that coverage is for Errors and Omissions of the advisor and the firm. It doesn’t insure you against crimes the advisor commits. If the advisor steals from you, whether at big bank or solo shop, the insurance coverage isn’t going to help.

If you want to make sure that your advisor is not going to steal from you, it’s actually pretty easy.

First, don’t write a check out to your advisor. Make it out to the custodian. So the check should be made out to Schwab, TD Ameritrade, Vanguard, or some other big custodian you’ve heard of.

If your advisor says, he’s starting a new fund, decline. Say “no thanks.” If you really want to invest in the fund (and you shouldn’t), wait until the fund is up and registered, and you can buy it through the big-name custodian.

Don’t write a check out to your advisor’s name or the name of their firm.

Use a well-known custodian and use a limited power of attorney with the well-known custodian’s forms and make the check payable to the well-known custodian. Don’t make the check out to the advisor. It’s really that simple.

Recently my friend Greg Phelps wrote a terrific article called “How to find a financial advisor you can trust in 5 steps.” This article is chock-full of solid advice when trying to choose a trustworthy adviser.

Our law firm is Yardley Estate Planning, LLC and is in the same place. We only do Estate Planning work and I am licensed in Pennsylvania and New Jersey.

If you’d like to talk about this or anything else, please reach out: 267-573-1019, mgarry@yardleywealth.net or @michaeljgarry

If you’d prefer to watch videos, click on the hyperlinks for the: Yardley Wealth Management and Yardley Estate Planning YouTube channels.

If you would like our other written content:
YWM E-Newsletter: https://yardleywealth.net/newsletter-sign-up/
YEP E-Newsletter: http://yardleyestate.net/subscribe/

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Don’t get too Conservative in #Retirement

Michael Garry — Fri, 13 Sep 2019 18:43:56 +0000

The post Don’t get too Conservative in #Retirement appeared first on Yardley Wealth Management, LLC.

A big mistake many retirees make is that they get too conservative. They think that once they turn 60 or 65, they should just have cash and CDs, or maybe T-Bills. That is not an appropriate investment strategy.

It is, maybe, if you have enough money and can afford it. If you have few demands on your portfolio.

Most people can’t afford that. They are going to need to have some riskier assets, whether stocks, or stock funds, or ETFs, and bonds or bond funds.

You need to have an appropriate allocation. What is that? One that will allow you to achieve your goals while also allowing you to sleep at night. Sometimes it’s hard to find the appropriate balance and sometimes what is appropriate changes.

It’s something you can explore, and you can explore it with us. What you shouldn’t do is try to avoid any short-term volatility, because most people need it.

Not everybody does, and if you’re in a place where you don’t need it, hey, that’s great, and kudos to you. That’s not most of our clients.

Our law firm is Yardley Estate Planning, LLC and is in the same place. We only do Estate Planning work and I am licensed in Pennsylvania and New Jersey.

If you’d like to talk about this or anything else, please reach out: 267-573-1019, mgarry@yardleywealth.net or @michaeljgarry

If you’d prefer to watch videos, click on the hyperlinks for the: Yardley Wealth Management and Yardley Estate Planning YouTube channels.

If you would like our other written content:
YWM E-Newsletter: https://yardleywealth.net/newsletter-sign-up/
YEP E-Newsletter: http://yardleyestate.net/subscribe/

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Don’t Retire Too Early #FIRE

Michael Garry Yardley Wealth Management — Fri, 06 Sep 2019 17:51:29 +0000

The post Don’t Retire Too Early #FIRE appeared first on Yardley Wealth Management, LLC.

I want to talk to you today about something that may seem counter-intuitive.

I’m a financial advisor and I want people to get into great financial shape. Even though I want people to enjoy retirement, I don’t necessarily think that people should retire fully from work at a young age.

Some data shows that early retirees are at special risk for cognitive decline. Other data shows a loss of social networks. Neither of those sound like golden years.

A study from 2018 showed that men in the month they turned 62 have a 2% mortality bump compared to the previous month. (They didn’t show that same effect for women.)

I could go on.

My point is that the goal of retirement planning is to prepare to be able to retire. If you do that, you can do things you want to do. You can handle crises, you can live a nice life. Just don’t necessarily stop working at a young age. That really might not be a good idea.

My name is Mike Garry, and my company is Yardley Wealth Management. We are a fiduciary, fee-only financial planning, and wealth management firm in Newtown, Pennsylvania. (That’s in Bucks County).

Our law firm is Yardley Estate Planning, LLC and is in the same place. We only do Estate Planning work and I am licensed in Pennsylvania and New Jersey.

If you’d like to talk about this or anything else, please reach out: 267-573-1019, mgarry@yardleywealth.net or @michaeljgarry

If you’d prefer to watch videos, click on the hyperlinks for the: Yardley Wealth Management and Yardley Estate Planning YouTube channels.

If you would like our other written content:

YWM E-Newsletter: https://yardleywealth.net/newsletter-sign-up/
YEP E-Newsletter: http://yardleyestate.net/subscribe/

The post Don’t Retire Too Early #FIRE appeared first on Yardley Wealth Management, LLC.

Establishing Residency in Florida for Tax Purposes? #Taxes #Nexus

Michael Garry — Mon, 26 Aug 2019 17:46:34 +0000

The post Establishing Residency in Florida for Tax Purposes? #Taxes #Nexus appeared first on Yardley Wealth Management, LLC.

We live up here in the Northeast, close to some high-tax states, like New Jersey and New York. A lot of people from around here move to Florida when they retire. It has no state income tax and can save them a lot of money.

Pennsylvania has a relatively low state income tax, but New York and New Jersey are relatively high.

Over the years, I’ve heard people with different stories say how they would spend half a year plus a day in Florida to establish residency or something along those lines. Depending on where you’re moving from, it may not be that easy, but it may be.

Now there is an app for that.

Actually, there are multiple apps for that. Two that I saw in an article on the subject – Monaeo and TaxDay – are apps that help you track where you live and help you document to the IRS where you’re spending your time. They also know the residency rules of the various states.

Interesting stuff.

My name is Mike Garry, and my company is Yardley Wealth Management. We are a fiduciary, fee-only financial planning, and wealth management firm in Newtown, Pennsylvania. (That’s in Bucks County). Our law firm is Yardley Estate Planning, LLC and is in the same place. We only do Estate Planning work and I am licensed in Pennsylvania and New Jersey.

To talk about this or anything else, please reach out: 267-573-1019, mgarry@yardleywealth.net or @michaeljgarry

If you’d prefer to watch videos, click on the hyperlinks for the: Yardley Wealth Management and Yardley Estate Planning YouTube channels.

If you would like our other written content:
YWM E-Newsletter: https://yardleywealth.net/newsletter-sign-up/
YEP E-Newsletter: http://yardleyestate.net/subscribe/

The post Establishing Residency in Florida for Tax Purposes? #Taxes #Nexus appeared first on Yardley Wealth Management, LLC.

Stay in the Market #MarketTiming #AssetAllocation

Michael Garry — Mon, 19 Aug 2019 17:39:51 +0000

The post Stay in the Market #MarketTiming #AssetAllocation appeared first on Yardley Wealth Management, LLC.

I saw a recent article by Larry Swedroe about how the distribution of stock returns is different than most people think. Stocks average about ten percent a year, and they have for the last ninety years.

Those returns numbers are real, but those returns are bunched. A lot of the upside and downsides are contained within a small number of months. About ten percent of the outstanding months have attributed all of the returns.

There are a couple of big lessons here. One is – you can’t be out of the market. You need to have a disciplined approach to investing, and it’s not all or nothing, it’s whatever is the right allocation for you at the time. You should stay at that allocation and not deviate from it.

The other is if you are going to do tax loss harvesting, don’t wait thirty-one days to buy the same fund back, but buy a comparable fund, so you aren’t out of the market.

If you decide to sell a fund to take a loss, buy something that’s similar and buy it right away so that you’re in the market so that you don’t have to be out of the market for those thirty days because that could be when the markets provide their returns.

If you’d like to talk about this or anything else, please reach out: 267-573-1019, mgarry@yardleywealth.net or @michaeljgarry

If you’d prefer to watch videos, click on the hyperlinks for the: Yardley Wealth Management and Yardley Estate Planning YouTube channels.

If you would like our other written content:

YWM E-Newsletter: https://yardleywealth.net/newsletter-sign-up/
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The post Stay in the Market #MarketTiming #AssetAllocation appeared first on Yardley Wealth Management, LLC.

Henry Bloch – What an Inspiring Story! #Taxes #Entrpreneurship

Michael Garry — Mon, 12 Aug 2019 17:19:15 +0000

The post Henry Bloch – What an Inspiring Story! #Taxes #Entrpreneurship appeared first on Yardley Wealth Management, LLC.

I saw an obituary recently for Henry Block, of H&R Block fame. He died an old man. There are a couple of things that I found interesting and inspiring about his life story.

He had a company that was doing taxes and payroll and he was going to stop doing taxes. The guy selling him his newspaper ads gave him a good deal on an ad and convinced him to run it.

They happened to run the ad at the exact same time that the local city branch of the IRS stopped doing free tax returns. Between running the ad and the luck of their timing, they had two-hundred thousand dollars in revenue in just a couple of months. From an ad for doing tax returns for five dollars! I can’t imagine how busy that office must have been, but it’s amazing to me, and that started the ball rolling.

The other part of the story is that they had an office in New York that they were going to shut down. It was too much work to go back and forth to Kansas City. Somebody offered to buy it from them, and they couldn’t agree to terms. So they decided to just franchise it. It’s crazy. Not that much later they wound up with thousands of franchises, and that’s what they became famous for and what made him a wealthy man.

Anyway, if you’re out there hustling, plugging away, keep working hard and hopefully that same sort of serendipity or good luck will come after all the hard work.

If you’d like to talk about this or anything else, please reach out: 267-573-1019, mgarry@yardleywealth.net or @michaeljgarry

If you’d prefer to watch videos, click on the hyperlinks for the: Yardley Wealth Management and Yardley Estate Planning YouTube channels.

If you would like our other written content:

YWM E-Newsletter: https://yardleywealth.net/newsletter-sign-up/
YEP E-Newsletter: http://yardleyestate.net/subscribe/

The post Henry Bloch – What an Inspiring Story! #Taxes #Entrpreneurship appeared first on Yardley Wealth Management, LLC.

Mean Reversion is Real – Know What it is?

Michael Garry — Sat, 20 Jul 2019 09:42:57 +0000

The post Mean Reversion is Real – Know What it is? appeared first on Yardley Wealth Management, LLC.

An important concept about investing is that the various asset classes have different expected returns. We expect those returns and plan around them.

Of course, it’s rare that an asset class lands exactly on its expected return in any given year. It might happen, but it’s rare. Most years most returns are above or below their expected returns. Over time, those annual returns turn into the average, or mean, long-term expected returns for each type of asset.

A related concept in investing is something called mean reversion.

If you have a few particularly good years in a row in some asset class, above the mean returns for it, we don’t expect a new normal expected return. Rather, we expect that you will likely get some bad years in a row, to come back to that average. Likewise, if something performs less than expected for a few years, we’d expect it to outperform to revert to its mean return.

So, if you expect small cap to outperform large cap, like it has since forever, but it hasn’t for several years, what do you think happens next? Do you think that history has been turned upside down or do you think that small cap will outperform to get back to normal? I’d look for small cap to outperform. The four most dangerous words in investing are “this time it’s different.”

I recently saw an article saying there was risk in the market with everything up this year. Well, all those asset classes were down last year, so it’s exactly what you’d expect to see.

Mean reversion happens. Stocks and bonds, and the different types of them have their expected returns. Over long periods of time, you’re going to get those returns. Over short periods of time, returns are going to be all over the place, but then things will revert to the mean.

So if everything’s great one day, or one year, or for five years, expect things to be not so great after that. If things are terrible for a couple of years, they will get better.

If you’d like to talk about this or anything else, please reach out: 267-573-1019, mgarry@yardleywealth.net or @michaeljgarry

If you’d prefer to watch videos, click on the hyperlinks for the: Yardley Wealth Management and Yardley Estate Planning YouTube channels.

If you would like our other written content:

YWM E-Newsletter: https://yardleywealth.net/newsletter-sign-up/
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The post Mean Reversion is Real – Know What it is? appeared first on Yardley Wealth Management, LLC.

People Could Use More #Savings and #Investments, less #Blame

Michael Garry — Sat, 13 Jul 2019 09:34:16 +0000

The post People Could Use More #Savings and #Investments, less #Blame appeared first on Yardley Wealth Management, LLC.

There have been a couple of articles in the news recently about how few assets a lot of Americans have. According to the articles, a quarter of adult Americans have no retirement savings at all and 40% of Americans would have a hard time coming up with $400 for meeting an emergency. If true, both of those things are really a shame.

You’ll see a lot of hand wringing in the press and they’ll talk about people’s poor habits, or they’ll talk about people not knowing anything about finances. Parts of those might be correct for some parts of the population.

I think the bigger issue is that not enough people make enough money. They don’t have any savings and don’t have any money stashed away for emergencies because they’re living hand to mouth and they don’t make enough money.

Wages and wealth, for the bottom half of the country, have stagnated over a generation or two, since the early 1980s. It’s a long time. Too many people aren’t making enough money. What I’d say is don’t give people a hard time. Don’t blame the victim. It would be better if these pundits would come up with policy reasons, policy suggestions, or things that people can do to make more money so that they’re not in that situation. Don’t bad mouth them saying that they’re irresponsible. Most people I see do the best they can, and unfortunately, that’s not good enough a lot of the time.

If you’d like to talk about this or anything else, please reach out: 267-573-1019, mgarry@yardleywealth.net or @michaeljgarry

If you’d prefer to watch videos, click on the hyperlinks for the: Yardley Wealth Management and Yardley Estate Planning YouTube channels.

If you would like our other written content:
YWM E-Newsletter: https://yardleywealth.net/newsletter-sign-up/
YEP E-Newsletter: http://yardleyestate.net/subscribe/

The post People Could Use More #Savings and #Investments, less #Blame appeared first on Yardley Wealth Management, LLC.

Goldman Sachs bought United Capital, how disappointing

Michael Garry — Sat, 06 Jul 2019 09:08:46 +0000

The post Goldman Sachs bought United Capital, how disappointing appeared first on Yardley Wealth Management, LLC.

Anybody see the news that Goldman Sachs bought United Capital?

United Capital is a company that over the last bunch of years has bought into a lot of advisory firms. They own parts, or maybe even all, of many different firms. Goldman Sash has now bought them.

If you’re a client of one of those firms, how do you feel about that? I’m curious because I’m not so sure that I would like it. Many of our clients come to us because they want independence, not Wall Street.

Let’s say you were a client of an independent firm a few years ago or even last year. They told you that United Capital is buying a stake in their business. It probably made you think and wonder what it was about. But, your advisor was probably still the owner or a partner and you probably figured, hey, he or she needs a financial plan too.

Now that Goldman Sachs bought the firm, that feels different. Clients who went the independent route have wound up right back on Wall Street. It makes me think that Joe Duran does not “get” what being independent is all about. I’m so glad I said “no, thank you” to them.

Maybe I’m naive, but I’m also not so sure how the deal fulfills the firms’ and United Capital’s fiduciary duty to their clients.

Switching from a fiduciary advisory relationship to one that is not a fiduciary advisory relationship or a firm that has lots of relationships that are not fiduciary advisory relationships. That doesn’t seem quite right to me.

Interesting to see how this is all going to play out.

If you’d like to talk about this or anything else, please reach out: 267-573-1019, mgarry@yardleywealth.net or @michaeljgarry

If you’d prefer to watch videos, click on the hyperlinks for the: Yardley Wealth Management and Yardley Estate Planning YouTube channels.

If you would like our other written content:
YWM E-Newsletter: https://yardleywealth.net/newsletter-sign-up/
YEP E-Newsletter: http://yardleyestate.net/subscribe/

The post Goldman Sachs bought United Capital, how disappointing appeared first on Yardley Wealth Management, LLC.

Should I use a Traditional or Roth 401(k)? #Roth #401(k)

Michael Garry — Sat, 29 Jun 2019 09:51:14 +0000

The post Should I use a Traditional or Roth 401(k)? #Roth #401(k) appeared first on Yardley Wealth Management, LLC.

A lot of 401(k)s now have a Roth option, and many clients want to know if they should choose them.

With Roth contributions to your 401(k), you don’t get the current tax deduction, but then when the money comes out, you don’t pay taxes on it. It’s tax-free; tax-free is a good thing.

It’s a complicated decision and the answer naturally depends. You need to know (or guess) if your future tax rates are going to be higher or lower than they are now.

For a lot of our clients, who have higher than average incomes, the pretax 401(k) traditional option is probably best, but it depends.

For a lot of younger or lower paid people who aren’t paying much in the form of federal taxes, the Roth option is probably best.

The first step is figuring out what your effective tax rate it. You do that by dividing your total federal income tax by your gross income. The answer is your effective tax rate. If it’s really low, like under 10%, we’d probably lean toward the Roth. If it’s really high, like over 25 or 28%, we’d lean toward sticking with the traditional pre-tax option. In between those rates, it’s more complicated.

It is something that we can help people figure out. We can look at tax rates and projected tax rates and make recommendations.

If you’d like to talk about this or anything else, please reach out: 267-573-1019, mgarry@yardleywealth.net or @michaeljgarry

If you’d prefer to watch videos, click on the hyperlinks for the: Yardley Wealth Management and Yardley Estate Planning YouTube channels.

If you would like our other written content:
YWM E-Newsletter: https://yardleywealth.net/newsletter-sign-up/
YEP E-Newsletter: http://yardleyestate.net/subscribe/

The post Should I use a Traditional or Roth 401(k)? #Roth #401(k) appeared first on Yardley Wealth Management, LLC.

Yardley Wealth Management, LLC

Is Inflation Haunting Your Dreams?

Is Inflation Haunting Your Dreams? Part 2: What We Can Do About It

Is Inflation Haunting Your Dreams?

Part One

Is Inflation Haunting Your Dreams?

What We Know

5 Steps for Creating a Financial Plan

5 Steps for Creating a Financial Plan

5 Financial Advisor Hacks: A Cheat Sheet for People Saving For Retirement!

5 Financial Advisor Hacks: A Cheat Sheet for People Saving For Retirement!

Don’t Get Distracted

Don’t Stop

Contribute To Your Future Happiness

Look Ahead

Keep Making That Green!

Worried about your future Social Security benefits? Fleshing out current concerns and common myths.

Worried about your future Social Security benefits? Fleshing out current concerns and common myths.

Is COVID-19 affecting your Retirement Planning? Here’s what you should do.

Is COVID-19 affecting your Retirement Planning? Here’s what you should do.

What is a SEP IRA? Understanding the benefits and details of a SEP IRA before committing to this retirement savings vehicle.

What is a SEP IRA? Understanding the benefits and details of a SEP IRA before committing to this retirement savings vehicle.

The Best 401(k) Funds for Millennials and Why You Should Invest in a Mix Now

The Best 401(k) Funds for Millennials and Why You Should Invest in a Mix Now

FINANCIAL PLANNING, INVESTMENTS

The Importance of Talking with Your Kids about Finances When Times are Tough

The Importance of Talking with Your Kids about Finances When Times are Tough

FINANCIAL PLANNING, FINANCIAL MANAGEMENT

Is Financial Planning a Pandemic Necessity?

Is Financial Planning a Pandemic Necessity?

Mindset Mastery Podcast by NAPFA: “Anything is Possible” with Michael Garry

Mindset Mastery Podcast by NAPFA: “Anything is Possible” with Michael Garry

Why We (Still) Use DFA Funds

Why We (Still) Use DFA Funds

Should Pre-Retirees Take a New Look at #Retirement Income?

Should Pre-Retirees Take a New Look at #Retirement Income?

Who is buying negative yielding bonds?

When is Small-Cap Value Coming Back?

How to Keep Your Money Safe #madoff #ponzi

Don’t get too Conservative in #Retirement

Don’t Retire Too Early #FIRE

Establishing Residency in Florida for Tax Purposes? #Taxes #Nexus

Stay in the Market #MarketTiming #AssetAllocation

Henry Bloch – What an Inspiring Story! #Taxes #Entrpreneurship

Mean Reversion is Real – Know What it is?

People Could Use More #Savings and #Investments, less #Blame

Goldman Sachs bought United Capital, how disappointing

Should I use a Traditional or Roth 401(k)? #Roth #401(k)

Is Inflation Haunting Your Dreams?
Part 2: What We Can Do About It