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As a change of pace, this quarter, we would like to “drive home” the importance of financial planning.  Before we jump into it though, we want to remind you that with the Holidays right around the corner it is important to evaluate your financial situation and your goals, while also taking into account the market and the economy in order to decide where your dollars are best suited.  As you will read in our Market Commentary on the following pages, we believe that recent market weakness has provided an opportunity as the market has pulled back over the past few weeks.  Persons who have been holding on to cash waiting for an opportunity to enter equity markets might want to consider having a conversation with us as to when and how repositioning some assets might make sense at this time.  At the same time, we understand the increase in expenditure that comes around this time of year.  Everyone’s situation is different and finding the right balance is not always easy, and that is where we can help…

The Benefits of Engaging in Financial Planning  

Last quarter we encouraged you to have a vision of what financial freedom means to you. Spending time thinking about your values and your life’s purpose in relation to your financial freedom vision is not only important, but also motivating.  Engaging in the process of financial planning can make a difference in realizing your goals and your financial freedom vision.  We rarely get where we want without a plan of action.

Financial planning offers both tangible and intangible benefits.  The tangible benefits are specific and direct answers to your questions.  They include your strategy for goals from the near term to the long term.

My employer offers a 401(k) plan at work, should I participate in it or do a Roth IRA?

My spouse died and my earnings from teaching are not sufficient, should I sell my AAPL stock or can I afford to withdraw from my IRA?

Should I pay off my student loans and credit cards or start investing for my children’s education?

I would like to set aside money for my grandchildren’s college education, what type of account should I use? Do I put my son’s name on the account?

I have been offered an opportunity to sell my business, how will this impact our retirement?

I inherited an IRA from my father, what are my options and do I have to pay taxes on the money?

I want to rely on my own savings and investing for my retirement; how much should I be investing for my retirement?

Should my spouse die prematurely, will I be financially okay?

The intangibles of financial planning are many, but the most crucial is one that a fiduciary advisor/planner must provide: OBJECTIVITY.  We are all human, and when it comes to your own goals, your investments, your money, and your ‘stuff’, you can’t help but be emotionally attached, which often leads to fearful or hasty decisions.  At some point all individuals fall along this spectrum of emotions (shown on the next page) when it comes to their investments.

4th Q planning1

 Here are some examples of decisions riddled with sentiments:

Your interest free tax refund check feels safe to you.  Meanwhile your monthly cash flow falls short for little Susie’s after school activities and piano lessons. 

You’re 15-years away from retirement age, licking your wounds after being wiped out from the recent real estate bubble, realizing that you have serious catching up to do on your retirement.  Yet, you’re distracted by the shiny BMW at the dealership with a $1,000 per month lease payment.

You have $5,000,000 in assets and want $400,000 per year.  Is this sustainable for the next 40-years?

I don’t want to lose what all we’ve worked for, but why does protecting my assets have to be so complicated?

Working with a fiduciary financial advisor/planner allows for objective, calculated assistance in making important decisions.  We can help show you different routes to navigate your concerns and achieve your goals that you perhaps have not considered, or were unsure of.  The exercise of quantifying rather than hoping or wishing will give you confidence that you are heading in the right direction or alert you to make adjustments now to course correct.

This spills over to other personal finance decisions that seem small and insignificant to you.  But we know that it is never that one big decision that makes a difference.  It is the culmination of a series of small decisions along the way that weaves the whole picture.  It’s the same if you want to stay healthy, taking one bike ride a year will not be as impactful as a plan with consistent exercise and a healthy diet.

Give yourself the peace of mind that comes from good preparation and good counsel.  You’re likely to have fewer disagreements about money and may have more time to devote to your family or other persons and things you enjoy.  Every generation— younger or older, poorer or wealthier – can benefit from financial planning.  The process will not only stretch your dollars but also stretch your financial awareness. We rarely meet anyone that doesn’t want to progress financially, yet only a few take action.

“A year from now you may wish you had started today.” – Karen Lamb

Your Allgen Financial Planners

Ana Fernandez, CFP®
Teresa Talton, CFP® Candidate