Author Archives: Michael Cochell

Michael Cochell

About Michael Cochell

Michael Cochell is associate vice president of Jacob Gold & Associates. For the last 14 years, Cochell has helped thousands of households organize and manage their personal financial affairs in the areas of banking and finance. He is an investment adviser representative and is registered with FINRA and holds Series 7, 63, 65 licenses, and is a graduate of Arizona State University.

economy

Politics or Economics?

Within the last few years we’ve experience a major cross over between politics and economics. Is this a good or a bad thing? Many economists believe that more political intervention can negatively affect the natural growth of the economy. While others believe that the U.S. could not have survived the 2008 “great recession” without the government’s assistance. Nor, would we be able to sustain future growth unless we continue to have the governments support.

It’s obvious that our global economy is more involved politically but how much do we rely on our government relationships and policy to control our economic growth. I believe our society understands that we need government support in many aspects of our economy but when control becomes a liability, it certainly poses the question of when should the government pull back? As much as we rely on monetary policy to tighten or loosen our money supple, hence, increase or decrease growth in our economy, the political party battles is becoming more of a distraction. Hopefully, decisions that need to be made will be address in a responsible manor and actions will be taken in affect.

Recently, the United States government shutdown for the 18th time, this is primarily due to political party differences. Yet, another political battle between the Democrats and Republicans spark uncertainty in the markets. Although, government issues don’t seem to be directly affecting the markets at this time, it can influence institutional and individual investors to re-direct strategies short-term. Events such as this have become an ongoing concern and come October 17th we may have another issue regarding the debt ceiling. These political disagreements hopefully will begin to focus on what is needed to improve our society and economic environment. Rather than continuing to use situations such as these for political gain and finger pointing.

As a financial advisor, I meet with my clients on a consistent basis to review their accounts and investment strategies. During the last few years, I’ve noticed an emphasis on our changing government environment of the U.S. and less on saving properly for the future.  There has been so much noise about political and economic issues that we’ve missed some of the fundamental ideas of saving for retirement. Changes such as healthcare, entitlement benefits, inflation, and life expectancy are a major aspect of planning, but without having a responsible strategy of saving many investors limit their success for retirement.

Hopefully, as we move forward, the media, investors, and educators will focus on the importance of actions and responsible saving strategies. Working with clients, I find that having a well diversified portfolio that fits ones investment risk and time horizon is critical. However, continuing to stay focused on investor’s objectives through political and economic uncertainty has been more challenging within the last few years.

 

Michael Cochell  is associate vice president at Jacob Gold & Associates Inc.  This information was prepared by Michael Cochell of Jacob Gold & Associates Inc. and is for educational information only. The opinions/views expressed within are that of Michael Cochell of Jacob Gold & Associates Inc. and do not necessarily reflect those of ING Financial Partners or its representatives. In addition, they are not intended to provide specific advice or recommendations for any individual. Neither ING Financial Partners nor its representatives provide tax or legal advice. You should consult with your financial professional, attorney, accountant or tax advisor regarding your individual situation prior to making any investment decision

 

 

 

 

 

market volatility

The Impact of Market Influences

Many investors often question what influences the markets and what influences are most critical to pay attention to. There is no easy answer because there are several factors that can manipulate the markets and no one particular factor controls the direction. It’s a combination of several influences such as corporate performance, government- monetary policy, geopolitics, and investor psychology. Also, today’s media attention is much broader, and with the internet individuals and institutions have access to more information at greater speeds. The fundamentals are still the same as they were years ago, but the access to information has significantly changed.

Corporate performance is a vital influence on the stock market and can be one of the major factors of market shifts. The primary driving force of a company stock is based on the company’s performance or other wise known as its corporate earnings. So it’s important for investors to understand that corporate performance, whether it is negative or positive, can impact the markets. Especially if a negative or positive trend occurred through out the same sector.  A recent example of this was just a few years ago during the housing bubble, we experienced significant growth in real estate companies, a few years later we experienced the very opposite as the real estate sector plummeted.

Another direct influence is by government, monetary policy can tighten, loosen or change interest rates to slow growth or increase growth of our economy. For example, by tightening policy and raising interest rates we can reduce the amount of money in our financial system (restricting growth). Whereas, by loosening policy and reducing rates, we maybe able to spark growth in our markets and increase borrowing.

Our government has the control of changing our markets through policy and interest rates but we also can experience market shifts through geopolitical changes as well. New government regulations, trade policy, and global relations can open or close the doors to growth in our markets. This has become a key factor in the last few decades as we’ve become more of a global economy and countries now rely on each other more.

 

Most of these factors can be controlled in some way but our investor sentiment about the markets changes as a result of these influences. Investor sentiment is a critical piece in sustaining a healthy economy so keeping close tabs on investor psychology is important. Typically, we are either quite optimistic or very pessimistic about the markets. As a result, investors will either sell or buy depending on how investor’s feel. This usually can be seen during times of a bear market or a bull market.

These are just some of the primary reasons why our markets may shift and will continue to in our future. I find it best to understand a client’s particular situation and clearly identify specific goals to help weed out the factors that can influence decisions.

 

Michael Cochell  is associate vice president of Jacob Gold & Associates. This information was prepared by Michael Cochell of Jacob Gold & Associates Inc. and is for educational information only. The opinions/views expressed within are that of Michael Cochell of Jacob Gold & Associates Inc. and do not necessarily reflect those of ING Financial Partners or its representatives. In addition, they are not intended to provide specific advice or recommendations for any individual. Neither ING Financial Partners nor its representatives provide tax or legal advice. You should consult with your financial professional, attorney, accountant or tax advisor regarding your individual situation prior to making any investment decision.

 

Reviewing Investments Annually

Re-balancing an investment portfolio?

When it comes to rebalancing an investment portfolio in today’s economic arena it can be very confusing to choose the right method. Most money-management firms and independent financial advisors use different rebalancing strategies so it’s important to know what approach they use and how often. I also find that many investors focus on their investment holdings and performances, which are important, but remember to keep in mind that you may need to consider rebalancing occasionally. Specifically, pay extra attention to those investments that are designated for long-term planning or are being used for current income. Typically the longer the investment horizon the greater risk the portfolio can drift.

Let’s first look at what we mean by rebalancing. Rebalancing, typically consist of adjusting an investments allocation to meet the risk level and objectives of the target asset allocation. Due to market ups and downs, an allocation can drift either becoming more risky or more conservative. This is important to know because it can change how the portfolio may perform as well as shifting the investor’s objectives. For example, if a portfolio became more weighted in equities then it may provide for more growth but can also increase downside risk. On the other hand, if a portfolio shifted too conservatively then it may reduce the potential growth in the portfolio, limiting opportunity.

Some financial advisors seek to rebalance quarterly, every six months, or annually. Others may use a percentage change in the portfolio as a trigger to rebalance. For example, if a portfolio shifts more than 5 % or 10% the advisor or institution may re-adjust the allocation. There is no particular correct method, but having a strategy is a way to help keep your investments in-line with their original purpose. Like any strategy, choose a method that works for you and try to stick with it. This can help to stay objective about your investments and not let emotions influence decisions.

Keep in mind, rebalancing is only one aspect of monitoring a portfolio but it can be a critical piece if over looked for long periods of time. Of course, investors may have different styles of investing so working with a financial professional may help investors plan properly, including implementing a rebalancing strategy.

(No investment strategy, including asset allocation, or rebalancing can guarantee a profit or protect against loss in declining markets. The process of rebalancing portfolios may carry tax consequences so consult with your tax professional).

 

Michael Cochell is the Associate Vice President of Jacob Gold & Associates Inc. Contact him at 480-998-4653 or by email at mcochell@jacobgold.com.

home.prices

Housing, how should we look at it going forward?

During the last two years the country has experienced an upward shift in the housing market. How does this affect home owners today? For years, home owners have typically viewed real estate as one of their largest assets. However, we’ve learned during the last housing bubble, it can also be our largest liability.

The housing downturn that started in 2007 got home owners to view real estate in a very different way, specifically, those who planned on using their equity to help support their retirement. When it comes to financial planning it’s important to consider all aspects of growth assets as well as liabilities. There must be a balance and the understanding that our assets can become a liability.

Real estate investments are illiquid and because of this we must be more cautious when including it in our retirement plan. As a financial advisor, I typically do not consider the equity in a client’s real estate as a primary source for retirement or the possibility of selling the asset for short-term planning. As we’ve seen in the last few years those who needed the equity from their home for retirement had difficulty in getting to it due to low home values. This can put a significant strain on retirees when they fall short for their retirement goals.

Real estate has certainly taken a turn and home owners are starting to feel better about their home values. Hopefully the market will continue to improve as this may give home owners more choices for life changing events such as selling for a new job opportunity, down sizing or upgrading their home, and moving for a better location, especially retirement.

In short, our real estate will move upward and downward but experiences such as the recent housing bubble will change how we think about investing, selling, or buying. Remember, to look at all aspects of assets and liabilities and the possibility of change. Taking this approach will help investors to plan for a level of unexpected markets, allowing us (as investors) to be more prepared for market shifts.

Michael Cochell is associate vice president for Jacob Gold & Associates Inc. Contact him at 480-998-4653 or mcochell@jacobgold.com.

economy

Do we have a clue of what financial stability is?

It’s been nearly 5 years since we experienced the “Great Recession” and still we struggle to find the answers to stabilize the markets.  Since the recession we have experienced stricter bank regulations, continued government spending, high unemployment, struggling homeowners, and consumer confidence is still low.

The crisis was tragic and because of its severity we are still afraid of a second recession. This fear can make it very difficult for our markets and investors to feel whole again. Although, our markets are reaching new highs, the fundamental are questioned.

Does our financial stability depend on new market highs? Hopefully not, since it’s nearly impossible for new market highs to continue all the time. So where does financial stability stem from. Economists and professional opinions differ as to the best way to achieve financial stability. Some think that having a strong and powerful government controlling our markets is good because it provides direction. Some examples are stricter regulation, government support (Bail-outs), government funding, and tax reforms. On the other hand, others believe that government intervention is hurting the natural growth of the economy. Some say that our economy is like a living organism and allowing it to develop and grow on its own may be the best stimulus.

The standard definition of stability reinforces the idea of being constant, reliable, and resistance to change and deterioration. These are all characteristics that if applied and considered appropriately may help our economy reach a place of financial stability.

As we evolve and really take a look at areas of our financial system it will be important to have constant oversight for our global markets. One example of a recent change is the development of a new group, organized in 2009 called the Financial Stability Board. Originally it was the Financial Stability Forum founded in 1999. However, due to the 2008 recession leaders of the G20 countries requested a change to increase the membership to assist in effective oversight and monitoring of the global financial systems.  This organization seeks to cover the following areas of the financial system:
• assess vulnerabilities affecting the financial system and identify and oversee action needed to address them;
• promote co-ordination and information exchange among authorities responsible for financial stability;
• monitor and advise on market developments and their implications for regulatory policy;
• advise on and monitor best practice in meeting regulatory standards;
• undertake joint strategic reviews of the policy development work of the international standard setting bodies to ensure their work is timely, coordinated, focused on priorities, and addressing gaps;
• set guidelines for and support the establishment of supervisory colleges;
• manage contingency planning for cross-border crisis management, particularly with respect to systemically important firms; and
• collaborate with the IMF to conduct Early Warning Exercises.

Hopefully with organizations such as these it will help strengthen our oversight and assist us in creating a more stabilized financial system.

Michael Cochell is sssociate vice president of Jacob Gold & Associates Inc. Contact him at 480-998-4653 or by email at mcochell@jacobgold.com.

economy

What can the U.S. Count on for Future Growth?

2012 was a smoother ride than expected for the markets. However, it was and will continue to be turbulent in the political arena. Hopefully, economics and politics will be able to work together and define a path that will create a stable environment for everyone. There are many exciting advances in different areas of our economy today that may provide positive momentum for us in the future. Some of those areas that investors may want to pay attention to is real estate, energy, and manufacturing.

Real estate in our country can have an impact on growth as well as how consumers spend. Including, not only the purchasing of new and resale homes but household items such as appliances, furniture, landscape items, and materials for home remodels. It’s been nearly 6 years of experiencing a decline in the real estate. Home owners and investors have been keeping an eye out for a change to a positive direction for real estate. Are we here yet? Based on some data from the S & P Case Shiller Index we are starting to see some stability in several areas of real estate. (The S&P Case Shiller Index is a leading financial service technology solution of data from the Federal Housing Finance Agency) source: Fiserv, Inc. This data indicates improvement and are expected to see housing grow for 2013 and 2014.

Energy is another sector that is improving and may provide the U.S. with opportunities for energy independence. This may help the U.S. harness a substantial source for oil and gas which can help control pricing. This is a great opportunity, however it will take years of continued research and development as well as technology improvements before the U.S. can benefits from these resources. With patience and technology enhancement in the next few years the U.S. has the potential to have the available resource of energy to support our country for decades. It can also create a profitable opportunity for exporting for the U.S.

Another area of improvement is manufacturing. The U.S. is on the brink of developing a power house in the manufacturing sector. We’ve seen many well known companies move a portion of their manufacturing back to the U.S. Some of these include companies like Airbus, Michelin, Starbucks, Dow Chemicals, Caterpillar, GE, and Ford Motor Company This is most likely caused due to an increase of labor cost and lack of stable energy source in places like China. We will continue to import and export resources but having more control of manufacturing in U.S. can provide improvements in employment, lower exporting cost, and over all benefits for the U.S. economy.

 

This information was prepared by Michael Cochell of Jacob Gold & Associates Inc. and is for educational information only. The opinions/views expressed within are that of Michael Cochell of Jacob Gold & Associates Inc. and do not necessarily reflect those of ING Financial Partners or its representatives. In addition, they are not intended to provide specific advice or recommendations for any individual. Neither ING Financial Partners nor its representatives provide tax or legal advice. You should consult with your financial professional, attorney, accountant or tax advisor regarding your individual situation prior to making any investment decisions

 

 

market volatility

Market Volatility For Investors

There are many perspectives to market volatility that investors can research, monitor and learn about. Some of these forms of volatility include actual historical volatility, actual future volatility, historical implied volatility, current implied volatility and future implied volatility. This can be very confusing so let’s look at the most commonly used in investing historic volatility for our discussion.

Volatility can be defined as the size and frequency of the fluctuation in the price of a particular stock, bond or commodity (source: Barron’s Business Guide, Fourth Edition, Jack Friedman). As investors, it’s important to have some understanding about volatility in the marketplace as well as how some investment classes have done in the past. Please keep in mind that past performance is no guarantee of future results. However, with research about a particular investment or asset class, it can help provide more understanding about the level of volatility within an investment.

When measuring volatility, investors may want to factor in a short-term or long-term analysis for their investment strategy. This is important and will vary per investor due to their investment time frame. For example, the Standard & Poor’s 500-stock index for the last 20 years has been able to earn just above nine percent return on average. Although, the five-year average for the S&P 500 stock-index is just below three percent. As we can see, the time frame of investing can impact one’s portfolio. So it’s important to consider the length of time for each investment — whether it’s a retirement account, a college savings plan or non-retirement money slotted for short-term use.

Another way that investors may try to reduce volatility in their portfolios is to invest in different asset classes. This way the investments are not limited to one area or sector of the markets. Also, by having a combination of different investment strategies in different classes, it may limit some potential volatility. It is important to know that using diversification as a part of your investment strategy neither assures nor guarantees better performance and cannot protect against loss in declining markets.

Investors typically have assets for different purposes, like retirement, kid’s education or personal saving. So having a strategy for each of them and factoring in the amount of volatility that is comfortable should be a consideration. In many cases, working with a financial profession can assist investors with this, and I also highly recommend reviewing the investments and strategies on a consistent basis.

For more information about market volatility, visit jacobgold.com.

Securities and investment advisory services offered through ING Financial Partners, Inc. Member SIPC. Jacob Gold & Associates, Inc. is not a subsidiary of nor controlled by ING Financial Partners, Inc. This information was prepared by Michael Cochell of Jacob Gold & Associates, Inc. and is for educational information only. The opinions/views expressed within are that of Michael Cochell of Jacob Gold & Associates Inc. and do not necessarily reflect those of ING Financial Partners or its representatives. In addition, they are not intended to provide specific advice or recommendations for any individual. Neither ING Financial Partners nor its representatives provide tax or legal advice. You should consult with your financial professional, attorney, accountant or tax advisor regarding your individual situation prior to making any investment decisions.

Proactive Investing vs. Reactive Investing

Proactive Investing Vs. Reactive Investing

There are different styles and strategies investors may follow when investing. These style-driven approaches can change over time due to personal and economic experiences, such as our recent recession. Some of these strategies include quantitative influences, qualitative influences, aggressive to conservative investing, and short- and long-term investing. These are just among a few different ways to approach investing in our economic world. However, each of these styles can be directed by either being proactive or reactive.

Taking a proactive approach to investing encourages investors to actively plan, and — as much as possible — anticipate change and take control of situations, rather than only adjusting to change. Of course, this isn’t easy, but often it can be very beneficial to investors. Being proactive also requires discipline, objective thinking, responsibility and strategy. Whereas, a reactive style brings out emotions and may allow investors to be overly influenced by the media when making decisions. If not careful, this can be unsettling for investors.

Like any concept, there are pros and cons; however, in this case, I believe that a proactive approach is much better than being reactive. Mistakes can’t be completely avoided, but may be reduced. Unlike a proactive approach, reactive approaches can get confusing as to when to make decisions and to what degree. Also, when an investor is reactive, his or her decisions can change in a short period of time — then change again and again. At this point, decisions may become based on media information and not the investor’s ideas.

We can’t plan for everything. Many events are out of our control. Having a reasonable balance of proactive investing behavior with some degree of reactive decisions can be beneficial to making investment decisions. For example, a well-thought-out plan can take a wrong turn due to external factors, such as losing a job, medical issues or a divorce. At this point, an investor may become a reactive investor and may need to make some serious decisions about his or her investments or retirement plan. This is normal and will occur occasionally, but it’s important to revert back to being proactive at some point when working toward one’s financial goals.

Financial planning is challenging and has many variables to consider, so it is important to review your plan on a regular basis. Also, it may help to work with a financial professional.

For more information about proactive investing and reactive investing, visit jacobgold.com.

Securities and investment advisory services offered through ING Financial Partners, Inc. Member SIPC. Jacob Gold & Associates, Inc. is not a subsidiary of nor controlled by ING Financial Partners, Inc. This information was prepared by Michael Cochell of Jacob Gold & Associates, Inc. and is for educational information only. The opinions/views expressed within are that of Michael Cochell of Jacob Gold & Associates Inc. and do not necessarily reflect those of ING Financial Partners or its representatives. In addition, they are not intended to provide specific advice or recommendations for any individual. Neither ING Financial Partners nor its representatives provide tax or legal advice. You should consult with your financial professional, attorney, accountant or tax advisor regarding your individual situation prior to making any investment decisions.

Reviewing Investments Annually

Reviewing Investments Annually: Review The Past, Prepare For the Future

It’s that time of year again when the holidays are right around the corner, and everyone is looking forward to family time, bright lights and festive attitudes. However, it is also a time for investors to begin preparing for 2013, finalizing plans for 2012, and acting on any last minute tasks such as IRA contributions, Roth contributions, Required Minimum Distributions (RMDs), 401(k) contributions and estate planning updates.

These are only some of the options investors can review each year. Reviewing investments is something I practice and highly encourage with my clients. It helps to keep them on track with planning, updating and making changes. In fact, it keeps investors in check much like having an annual medical check-up.

Throughout our lives, we are constantly preparing for the future. Having evolved into a planning society, we plan marriages, having children, our careers and family vacations. We have learned that having plans in place is important. It is also important to have a process in place to monitor and evaluate a plan’s progress. A plan is only as good as the actions taken to reach its goal; this is why annual “check-ups” are needed.

Having a process in place helps organize planning and assists in adjusting or implementing new strategies. Taking the time to prepare for the future, plan and take action are key ingredients for individuals when investing. I would also recommend working with a financial professional or someone you trust who can review past, existing and future strategies. This can help investors to be objective about their decision making and keep them on track to meet their goals.

After setting some goals and implementing a plan, we then must keep an eye on our constantly changing economic environment. Some examples of changes happening in our economic environment:

  • 2013 corporate sponsored plans are scheduled to allow a new max contribution of $17,500 (an increase of $500.00)
  • traditional IRA contributions are scheduled to allow a $5,500 contribution (an increase of $500.00)

These are huge changes that can have a serious impact on current plans. Hence, having an annual review of personal and financial plans can help investors remain informed about new regulations and opportunities.

This year is a very important year because of the presidential elections, possible tax changes and retirement contribution changes. Although we can plan, there are still a lot of unknowns. In my experience, there are many factors that are out of our control. With that in mind, as investors, it is important to be mindful of our objectives and goals, and review them on a consistent basis.

For more information about reviewing investments, visit jacobgold.com.

Securities and investment advisory services offered through ING Financial Partners, Inc. Member SIPC. Jacob Gold & Associates, Inc. is not a subsidiary of nor controlled by ING Financial Partners, Inc. This information was prepared by Michael Cochell of Jacob Gold & Associates, Inc. and is for educational information only. The opinions/views expressed within are that of Michael Cochell of Jacob Gold & Associates Inc. and do not necessarily reflect those of ING Financial Partners or its representatives. In addition, they are not intended to provide specific advice or recommendations for any individual. Neither ING Financial Partners nor its representatives provide tax or legal advice. You should consult with your financial professional, attorney, accountant or tax advisor regarding your individual situation prior to making any investment decisions.

Soaring College Cost and Financial Planning

Soaring College Cost And Financial Planning

Parents and students today should seriously consider saving for education cost early on. The cost of college tuition is becoming very expensive, specifically if your child is considering attending a private or out-of-state college. These costs have increased nearly 30 percent in the past decade and will most likely continue in the years to come. The cost of a four-year degree at a major university when in 2010-2011 was $21,675 per year — including total tuition, room and board*.

Although these numbers look pretty scary, there are actions we can take now to help our children when the time comes for college — for example, starting a college savings plan and being proactive by saving on monthly, quarterly or annual basis. This can make it easier to absorb the cost of education. I would recommend spending some time on research or speaking with a financial professional to assist in making a decision on the best solution to save for college. Keep in mind, cost usually includes tuition, room and board, books, uniforms, and in some cases transportation.

When there’s a plan in place, parents will usually share their goals with family and friends. This can motivate family and friends to gift money to children for their future education rather than toys. It can also show others that education is important, and by sharing the planning with their children, it may help plant the seeds to furthering their education.

Saving for our children is usually at the top of the list when it comes to financial planning. However, many times parents may feel that putting away for their child’s education is more important than their own retirement. I remind them that they should fund their own retirement saving first, then consider saving for education. There are many options to assist students entering college such as loans, scholarships, and government programs.

Retirees may have social security to help with retirement, but most of the financial burden of retirement is our responsibility. Therefore, remember our kid’s education is important, but it’s critical to prioritize financial planning appropriately. We should first save for retirement, then plan for our children’s education.

*SOURCE: U.S. Department of Education, National Center for Education Statistics. (2012). Digest of Education Statistics, 2011 (NCES 2012-001), Chapter 3.)

For more information about financial planning for your children’s eduction, visit jacobgold.com.

Securities and investment advisory services offered through ING Financial Partners, Inc. Member SIPC. Jacob Gold & Associates, Inc. is not a subsidiary of nor controlled by ING Financial Partners, Inc. This information was prepared by Michael Cochell of Jacob Gold & Associates, Inc. and is for educational information only. The opinions/views expressed within are that of Michael Cochell of Jacob Gold & Associates Inc. and do not necessarily reflect those of ING Financial Partners or its representatives. In addition, they are not intended to provide specific advice or recommendations for any individual. Neither ING Financial Partners nor its representatives provide tax or legal advice. You should consult with your financial professional, attorney, accountant or tax advisor regarding your individual situation prior to making any investment decisions.

Are Your Investments Safe Or Risky?

Risky Investments: How Much Of Your Porfolio Is Risky?

It’s been only four years since our Great Recession, and the investment world has changed drastically. Many investors are thinking, planning and attempting to grow their wealth more cautiously. In many cases, it’s not about growth but preserving what one already has.

It wasn’t long ago when general planning of life was much simpler. We live in a constantly changing world of politics, finances, technology, healthcare and social integration. These elements will continue to change, so we must understand and take control of our decision-making.

When making financial decisions it is important to know how much of a portfolio is considered risky and how much of it may be considered less risky.

There is no investment that is 100 percent safe, but there are some that can be less risky than others.

Most investments can be analyzed by considering three different factors: an investor’s potential loss of principal, loss of purchasing power, and illiquidity.

An investor’s risk tolerance will vary from person to person. When factoring the amount of risks within investments, it is critical to understand the investment and the risk for potential loss. We also need to be aware that our dollars today will most likely be worth less in the future; therefore, our purchasing power is at risk. Some investments that have surrender costs or are tied to investment strategies, such as real estate, can restrict the liquidity needs of investors. This is another form of risk that investors must be aware of, specifically when considering long-term investments. Generally, the greater an investment’s possible reward over time, the greater its level of price, volatility or risk.

Remember, the important factor is to have clear goals so that investment strategies will fit within the risk you’re willing to take. These goals should involve not only the growth potential, but also the amount of safety within the investment. Investing a portion in more risky investments allows for growth, and having a portion in less risky type of investments helps reduce risk within a portfolio. Using diversification as part of your investment strategy neither assures nor guarantees better performance and cannot protect against loss in a declining market.

Another way to consider investments in a portfolio is to identify the investments that clearly do not fit within the guidelines of your safety level. These should be excluded right away. Avoiding big mistakes is a form of safe decision-making. Some examples are: avoiding long-term surrender investments, avoiding investments you don’t understand, and lumping all of your investments in one type of strategy or institution.

We consider risk in our lives in many ways and it is important to consider risk in our financial decision-making. We must look at the big picture and refrain from only considering the potential return because those results can quickly change. Identifying specific goals can make it much easier for investors to choose appropriate investments for their needs. Goals help us keep investments on target, avoid making big investment mistakes, and refrain from investments that are not appropriate for our needs.

For more information about risky investments, visit jacobgold.com.

Securities and investment advisory services offered through ING Financial Partners, Inc. Member SIPC. Jacob Gold & Associates, Inc. is not a subsidiary of nor controlled by ING Financial Partners, Inc. This information was prepared by Michael Cochell of Jacob Gold & Associates, Inc. and is for educational information only. The opinions/views expressed within are that of Michael Cochell of Jacob Gold & Associates Inc. and do not necessarily reflect those of ING Financial Partners or its representatives. In addition, they are not intended to provide specific advice or recommendations for any individual. Neither ING Financial Partners nor its representatives provide tax or legal advice. You should consult with your financial professional, attorney, accountant or tax advisor regarding your individual situation prior to making any investment decisions.
Investment Style

Do You Have An Investment Style?

Many investors rely on their expertise, or their advisors’ expertise, to develop and follow an investment style. These styles are important and can help provide direction and assist in making investment decisions. Investment styles are developed based on many factors, including age, gender, income, family, wealth, tax situation and previous investment experience. These factors play important roles when developing an investment style and should be considered thoroughly.

One of the most important factors to consider when determining an investment style is the investor’s objective. For example, the portfolio of an investor whose main objective is growth (accumulation phase) may differ significantly from the portfolio of any investor whose main objective is capital preservation (income phase).

The majority of investment choices available, be they equities, bonds, or financial derivatives, follow their own particular investment style. It is important for investors to understand each to ensure they fit into their style. A financial professional can help with research and help determine the appropriate style for an investor and his or her needs.

Most money managers typically focus on a few dominant styles, including active vs. passive investing, growth vs. value, bottom-up vs. top-down, and technical vs. fundamental analysis.

An active investor’s primary focus is to outperform the market by picking various individual stocks. On the other hand, passive investors may consider investing in an index fund designed for long-term results. An active strategy consists of timing the buying and selling of different stocks in hopes of beating the ups and downs of the market. The passive approach is very hands-off and relies on market performance alone.

One can also qualify an investor as having a growth or value approach to investing. Typically, growth styles seek investment in companies expected to have a 15 percent to 25 percent increase in earnings. Value investors, on the other hand, tend to lean more toward companies offering bargains or “cheap” shares compared to current earnings.  Growth style investments tend to be more volatile than value investments. Many money managers may combine both styles for diversification.

Bottom-up or top-down approaches are also important to understand and consider in one’s investment style. A bottom-up approach focuses on a particular company’s fundamentals. One example may be the performance of a company’s earnings (price/earnings ratio). A top-down approach will look at the macroeconomic picture, considering inflation and consumer spending, then choosing to invest in a particular industry.

Investors may also decide whether their investment style fits a technical or a fundamental approach. When applying a technical style, money managers will use charts, price and specific economic data to identify patterns related to a particular stock investment. An investor who uses a fundamental approach will analyze actual financial accounting data as well as the profitability of a company to determine what stocks to have in his or her portfolio.

These are important factors to understand and can help investors identify which investment style best suits them. Keep in mind that an investor’s style will most likely change as his or her objectives change. Constant monitoring of investments is critical to success and helps to avoid style drift.

For more information about investing and investment style, visit jacobgold.com.

Securities and investment advisory services offered through ING Financial Partners, Inc. Member SIPC. Jacob Gold & Associates, Inc. is not a subsidiary of nor controlled by ING Financial Partners, Inc. This information was prepared by Michael Cochell of Jacob Gold & Associates, Inc. and is for educational information only. The opinions/views expressed within are that of Michael Cochell of Jacob Gold & Associates Inc. and do not necessarily reflect those of ING Financial Partners or its representatives. In addition, they are not intended to provide specific advice or recommendations for any individual. Neither ING Financial Partners nor its representatives provide tax or legal advice. You should consult with your financial professional, attorney, accountant or tax advisor regarding your individual situation prior to making any investment decisions.
value of money

Time Value Of Money And Planning

Understanding the general concept of the time value of money can help consumers plan appropriately for future needs and today’s wants. This concept applies to how a consumer may save, invest and make decisions on lending needs.

Many of us are familiar with the idea that the earlier one starts saving the more he or she will have in the future. This may be the case, but it’s also important to be familiar with present value of money and debt, future value of money and debt, and the beginning period and ending period of saving.

When a consumer considers how these concepts work together, it can provide the consumer with the valuable information needed to effectively plan for the future. A good example is credit card debt. If one were to calculate the length of time and amount of finance interest paid to credit card companies by only paying the minimum payment, it would shock most of us.

Saving for future needs is important. We must understand that the dollars we save today (present value of money) will most likely be worth less in the future. So how can we make decisions to save and take advantage of time value? Let’s consider a scenario of saving for retirement in an IRA (Individual Retirement Account) annually. Investors have a choice to save at the beginning (beginning period) of each year rather than saving at the end of the year (ending period of investing). Using this strategy, an investor can earn more on his or her money by contributing the same dollar amount annually at the beginning of the year rather than at the end of the year.

Investing consistently and taking advantage of different types of accounts sponsored by employers, deferred-tax saving retirement accounts and after-tax saving accounts can help consumers plan for retirement. Many employers offer match savings, as well as company contribution, just for signing up for the employer retirement plan. It’s important to take full advantage of the match. Also, some plans offer both a Traditional (pre-tax) deferred saving as well as (after-tax) Roth saving plan. Each of them has specific benefits, and if used properly, they can be a valuable piece of a consumer’s planning strategy. Keep in mind that withdraws prior to age 59-1/2 may result in a 10 percent IRS tax penalty, in addition to any ordinary income tax. IRA and Roth IRA accounts can also be used in addition to employer sponsored plans.

The traditional employer plan and individual retirement plans allows consumers to save on a tax deferred basis; however, he or she will need to account for ordinary income taxes during distributions. Where as, Roth contributions allow for after-tax contributions and tax-free growth and withdraws. By combining these options, and starting sooner rather than later, consumers can take advantage of the time value of money as well as using all options available.

As consumers, it’s not only important to take advantage of the time value of money by investing early, but it’s also important to manage debt in a similar way. Present debt and future debt are key ingredients to manage and can make or break consumer’s future plans. By applying the same concepts to debt management, one can see the value of using time as a way to structure debt for the consumer rather than the financing institution. For example, be wary of committing to long-term debt. When committing to long-term debt, consider a plan to payoff the debt early by making additional payments. Applying the time value of money in this case will save consumers a lot of money in the long run and reduce debt sooner. Also, keep in mind that lower interest rates will help save consumers finance cost. A little extra planning can greatly benefit consumers.

These concepts can be very valuable with practice, practice and more practice. Consumers can become experts in controlling their way of using time value of money and planning for future needs. For more information, visit jacobgold.com.

Securities and investment advisory services offered through ING Financial Partners, Inc. Member SIPC. Jacob Gold & Associates, Inc. is not a subsidiary of nor controlled by ING Financial Partners, Inc. This information was prepared by Michael Cochell of Jacob Gold & Associates, Inc. and is for educational information only. The opinions/views expressed within are that of Michael Cochell of Jacob Gold & Associates Inc. and do not necessarily reflect those of ING Financial Partners or its representatives. In addition, they are not intended to provide specific advice or recommendations for any individual. Neither ING Financial Partners nor its representatives provide tax or legal advice. You should consult with your financial professional, attorney, accountant or tax advisor regarding your individual situation prior to making any investment decisions.
Economic concepts

Understanding Economic Concepts, Applying In A Global Perspective

Within the past few decades we have become a global economy, which adds great opportunity but also risk. Our global economy is affected by many more factors today and is connected deeply with other countries. How does this affect the United Sates?

It can affect us in many ways. Before analyzing our global economy it’s important to understand the basics of economics and apply them today in a global perspective. Even though, government and other country’s policies differ, it is still important to understand the basic concepts.

Some of the key economic concepts to be familiar with are: supply and demand, fiscal policy, monetary policy, economic indicators, business cycles, inflation, deflation and stagflation.

Supply and demand

In regards to supply and demand, the supply is the amount available of a particular good or service, and the demand is what buyers are willing to pay for that particular good or service.

The price of the good or service is the primary element that can control the supply or demand of the good or service. Typically if a business lowers the price of a good or service the demand will increase. Whereas, by raising the price of a good or service, the demand will decrease.

Fiscal and monetary policy

Fiscal policy is another major influence in our economy. This is when the government, under the direction of congress, influences our economic activity by taxing, borrowing or spending. Monetary policy on the other hand, controlled by the Federal Reserve, can increase or decrease the U.S. money supply. The Federal Reserve has many tools to assist with monetary policy:

1) Reserve requirement for banks
2) Increase or decrease the discount rate
3) Open-Market Operation (the purchase and sale of U.S. Treasury securities)
4) Margin requirements

With these tools the FED can act immediately to tighten credit or encourage it. Many times both fiscal and monetary policy are used together to control inflation in the hopes of having real economic growth.

Economic indicators

Our economic activity can be measured by several factors and by using some leading indicators we can get a better feel on its activity. Some indicators that are important to track are: the average weekly hours of manufacturing production workers, average weekly new claims for unemployment, building permits for new housing, stock prices and our nation’s money supply. These allow us to see trends in our economic activity.

Business cycles

For many years economist have used business cycles to learn about trends in the market place. Typically, they can track expansion and contraction activity. Through research and historical market studies we have been able to provide an estimate on the time frame that our economy is in an expansion period or how long it has been in a contraction period. This may help investors to understand what stage we are at in the business cycle (Peak or Trough).

Inflation, deflation and stagflation

Next is understanding how our economy may react to an inflationary, deflationary or stagflation period. Each of these is very different and will cause our government, consumers and investors to treat their money differently.

During an inflationary period, we will experience a general increase of prices. This process will decrease the purchasing power of our U.S. dollar, hence, will slow spending. Whereas, in a deflationary period we will experience the opposite and see a decrease in the general level of prices. Usually consumers will spend more during these times. Stagnation is another concern and occurs when the production of a good has become stagnant and the price continues to rise. This can be very dangerous and cause an economic recession or even a depression. All of these must be in balance. If they get out of hand they can cause major shifts in our economy.

Having a general understanding of economic concepts can help investors learn about why our economy shifts and some of the important factors that need to be considered when investing in our evolving global economy.

For more information about the economic concepts discussed in this column, visit jacobgold.com.

Securities and investment advisory services offered through ING Financial Partners, Inc. Member SIPC. Jacob Gold & Associates, Inc. is not a subsidiary of nor controlled by ING Financial Partners, Inc.This information was prepared by Michael Cochell of Jacob Gold & Associates, Inc. and is for educational information only. The opinions/views expressed within are that of Michael Cochell of Jacob Gold & Associates Inc. and do not necessarily reflect those of ING Financial Partners or its representatives. In addition, they are not intended to provide specific advice or recommendations for any individual. Neither ING Financial Partners nor its representatives provide tax or legal advice. You should consult with your financial professional, attorney, accountant or tax advisor regarding your individual situation prior to making any investment decisions.
financial institutions - bank

Understanding The Function, Purpose, Regulation Of Financial Institutions

The functions and regulations of financial institutions have changed since our most recent recession and will likely continue to be governed at a higher level going forward. This is critical for the success of our future economy.

Financial institutions help provide opportunity for our economic growth and improve our living standards. They do this by assisting as a liaison for those who have savings (dollars) and those who have a need for capital. Institutions typically will raise dollars from other institutions or individuals then loan those dollars to other entities at a cost (interest rate). This is how financial institutes help aid the flow of money through our economy.

There are several types of financial institutions, such as banks, credit unions, brokerage companies, insurance companies and trust companies — all of which have different primary functions and assist with the transferring of funds from investors to companies in need of funds.

Banks

Banks are corporations with a state or federal charter, which can accept deposits, invest in securities and make loans to businesses or individuals. Loans are considered to be the most valuable assets for commercial banks and deposit accounts are their main liability. Some banks may provide other financial services for its members. Banks are regulated on a federal level and have government protection for their depositors (FDIC insurance).

Credit unions

FDIC insures depositor accounts for commercial banks and most non-bank thrift institutions, such as credit unions. Credit unions have similar services as banks but are focused more for small savers and checkable type of transactions. They provide lending services and are owned by their members.

Brokerage companies

Brokerage companies are large corporations and are an intermediary to investors and investment companies. They offer financial services typically to buy and sell stocks for clients.

Insurance companies

An insurance company is another type of financial institution that offers investment vehicles for investors along with other products which may provide financial protection by way of insuring businesses or individuals.

These financial institutions are the backbone of our economy. With improved regulation, we hope they will continue to prosper and develop a strong foundation for our country.

For more information about the financial institutions discussed in this column, visit jacobgold.com.

Securities and investment advisory services offered through ING Financial Partners, Inc. Member SIPC. Jacob Gold & Associates, Inc. is not a subsidiary of nor controlled by ING Financial Partners, Inc.This information was prepared by Michael Cochell of Jacob Gold & Associates, Inc. and is for educational information only. The opinions/views expressed within are that of Michael Cochell of Jacob Gold & Associates Inc. and do not necessarily reflect those of ING Financial Partners or its representatives. In addition, they are not intended to provide specific advice or recommendations for any individual. Neither ING Financial Partners nor its representatives provide tax or legal advice. You should consult with your financial professional, attorney, accountant or tax advisor regarding your individual situation prior to making any investment decisions.

Create a Budget

Cash Flow Management: Creating A Budget To Reach Financial Success

Tracking of cash flow dates back more than 3,000 years. Before currency existed, people would use cattle, grains, silver or other items of value as trade. These transactions, tracked on tablets or sometimes counting tokens, were used as a tool to track financial dealings. This tells us that managing trade or cash flow has been around for decades and is a critical factor when it comes to managing finances. Some important elements are creating a budget, emergency fund planning, debt management and savings strategies.

When it comes to planning for future goals, a budget can be a very useful guide to help reach financial success. A budget helps project future cash flow needs and can be a great tool to assist with preventing financial problems and increasing net worth.

Before putting a budget together, one will need to gather data on past spending and income. The budgeting process should include: estimating income, estimate of spending, and planning for savings. Begin by putting a preliminary budget in place which will include goals and priorities for each goal. Track these goals on a regular basis and make necessary changes when needed.

One of the top priorities of a budget is having an emergency fund. This is critical and is often overlooked. Many planners recommend having at least three to six months of expenses, but with the increased cost of goods and services today, many feel that six to nine months is best. Expenses should include fixed cost and variable cost. Emergency funds should be in a high liquid type of account, such as a savings or money market account.

Debt management has become a very challenging issue today. Hopefully, with the degree of issues we’ve seen in the last few years, people will see the importance of managing their debt closely.

Three common rules of debt management are: total monthly debt should not exceed 36 percent of gross income, mortgage payments should not exceed 28 percent of gross income, and consumer debt should not exceed 20 percent of gross income.

In our fast-paced society and with the current availability of credit, it can be difficult to stay within these parameters. However, using these rules as a guide and implementing them can help us get back to managing our debt within a reasonable level. Financial debt will eventually catch up to us, but before it does, we can take responsibility now to control it before it controls us.

Many people who begin to think about saving usually consider it only when they have excess or residual income. Saving should be planned as part of a budget sooner than later, not just when it’s convenient. Delaying saving usually ends up never happening or may be too late to be beneficial. At a minimum, it is recommended to save five to 10 percent of income annually. I also suggest to increasing the saving percentage every year; this will help keep up with inflation and allow investors to get a head of the saving game.

These are important factors and planning tools that can help with implementing or adjusting a financial plan and managing cash flow. The earlier an individual, household or business can start, the more likely for success.

 

Securities and investment advisory services offered through ING Financial Partners, Inc. Member SIPC. Jacob Gold & Associates, Inc. is not a subsidiary of nor controlled by ING Financial Partners, Inc.

This information was prepared by Michael Cochell of Jacob Gold & Associates, Inc. and is for educational information only. The opinions/views expressed within are that of Michael Cochell of Jacob Gold & Associates Inc. and do not necessarily reflect those of ING Financial Partners or its representatives. In addition, they are not intended to provide specific advice or recommendations for any individual. Neither ING Financial Partners nor its representatives provide tax or legal advice. You should consult with your financial professional, attorney, accountant or tax advisor regarding your individual situation prior to making any investment decisions.

Financial Statements

Using Financial Statements, Tools To Plan Your Future

Know what you have before planning the future using specific financial tools and financial statements.


There are many famous quotes about the importance of enjoying the present and not focusing too much on the past or the future. We do this in our personal lives and with many of our responsibilities, such as work, education and our finances. As a financial planner, I meet with many people seeking assistance with meeting specific financial goals and find that many times they have ideas of what they want and what they have already done. This is great, but before planning the future, it is important to know what you have now, a snapshot of your current situation. This is a critical piece, not only for individuals, but businesses, too.

Before focusing on investment news, what stocks are hot, politics and what might be a new trend in the investment world, investors should focus on understanding their current position. It is nearly impossible to determine the right mix of investments and what strategies may be appropriate without knowing this. Investors can use specific financial tools, including different financial statements, to help them identify what they have. These tools can apply to both individuals and businesses.

The first step is a data-gathering process. The second is imputing the information from various financial statements. For individuals, we would include a statement of financial position and a statement of cash flow. For business owners, we would include a balance sheet, income statement, statement of cash flow, and a pro forma statement. These are great tools that can help identify one’s financial position.

When creating a statement of financial position, one will clearly list his or hers assets and liabilities. Assets, such as real estate or other valuable items, should be considered at current market value (the price that one is willing to pay today for it). Assets should be categorized as cash and cash-equivalents, such as checking, savings, money market accounts, stocks, bonds, mutual funds and life insurance. Liabilities include credit cards, auto loans, unsecured loans, real estate mortgages, education loans and personal debts. This will provide individuals a balance sheet of assets at a particular point in time.

The next important piece is a statement of cash flow. Some of us may know this as an income statement. This statement will show inflow of income and outflow of income at a particular point in time. The inflow may include salaries, sale of assets, investment dividends, rent and bonuses. Outflows may include mortgage payments, auto payments, credit card payments, insurance, general living expenses and taxes. The statement of financial position and statement of cash flow are valuable tools to have before implementing an investment plan.

A pro forma statement is the last tool to use and includes future projections of the balance sheet and cash flow statement. This is important because as our economy and life situations change, we may need to adjustment our plan as needed. The same process also applies to business owners. However, the business entity will need to consider many more details regarding assets and liabilities, as well as inventory and staff.

Once the financial statement process has been completed, one will have a greater understanding of his or her position when beginning an investment plan. In addition, this process can improve the odds of success and allow more control in an investor’s decisions.

For more information about financial statements and financial planning, visit jacobgold.com.

Securities and investment advisory services offered through ING Financial Partners, Inc. Member SIPC. Jacob Gold & Associates, Inc. is not a subsidiary of nor controlled by ING Financial Partners, Inc.

This information was prepared by Michael Cochell of Jacob Gold & Associates Inc. and is for educational information only. The opinions/views expressed within are that of Michael Cochell of Jacob Gold & Associates Inc. and do not necessarily reflect those of ING Financial Partners or its representatives. In addition, they are not intended to provide specific advice or recommendations for any individual. Neither ING Financial Partners nor its representatives provide tax or legal advice. You should consult with your financial professional, attorney, accountant or tax advisor regarding your individual situation prior to making any investment decisions.

Financial Information

Properly Understanding Financial Information In The Media

Our society is constantly overwhelmed with financial information either by television, internet, cell phones or print media. Deciding which is best and most accurate can be very daunting for the average investor. In addition to choosing the right media source, investors also have to apply that information to their financial situation. In many cases, this can become a full time job, very challenging and requiring constant monitoring.

Minimal education is provided to us by our parents, peers or in school about how our financial system works. However, since it is an ever changing industry the information we have learned in the past may not be relevant today. Therefore, it is critical to understand what reliable information is and what may be misinformed facts.

These media sources are a critical role in today’s society but also come with some information risk. Everyone’s interpretation is different and we must realize that a percentage of the information is purely entertainment. In today’s environment, the media is influenced by marketing dollars, and understanding what may be accurate information and what may not is important to understand.

With tons of information about the financial industry — that (in many cases) is indirectly affected by other sources such as politics, government, other countries, weather, market shifts, innovations and technology — being properly informed and avoiding the “junk” information can be difficult, but must be done. As investors, we must not only focus on the investment, such as a stock, bond or mutual fund, but consider the strategies in place to account for current events.

Also, once an investor has decided on an appropriate investment strategy he or she will then manage the investments or work with a financial professional. Information is key and deciphering that information according to a situation can be difficult when creating an appropriate investment strategy as well as making changes within a portfolio as needed based on economic shifts. Many times, working with a financial professional can help investors use up to date, reliable information to meet financial objectives.

For more information regarding understanding financial information, visit jacobgold.com.

 

Securities and investment advisory services offered through ING Financial Partners, Inc. Member SIPC. Jacob Gold & Associates, Inc. is not a subsidiary of nor controlled by ING Financial Partners, Inc.

This information was prepared by Michael Cochell of Jacob Gold & Associates Inc. and is for educational information only. The opinions/views expressed within are that of Michael Cochell of Jacob Gold & Associates Inc. and do not necessarily reflect those of ING Financial Partners or its representatives. In addition, they are not intended to provide specific advice or recommendations for any individual. Neither ING Financial Partners nor its representatives provide tax or legal advice. You should consult with your financial professional, attorney, accountant or tax advisor regarding your individual situation prior to making any investment decisions.

Investment Products

Investment Products: Which Is Best For Me?

Investment Products: Which Is Best For Me?

The financial industry continues to develop innovative products and improve services. As consumers we can feel overwhelmed when faced with choosing a product for our needs.

There are many products for different needs, and when faced with choosing one, it can be difficult. Investors have many choices and can use different avenues to invest their money. These options include stocks, bonds, mutual funds, annuities, and real estate.

Types of Investment Products

Stocks: Stocks are an equity position in a corporation that can provide the possibility of investment growth.

Bonds: Bonds, on the other hand, are a debt instrument that is issued by the state, government, city, municipality or corporation, and can repay the original investment along with interest.

Mutual fund: An investment company that pools money from many investors and invests it based on specific investment goals.

Annuities: Annuities are financial products sold by an insurance company that is designed to help reach financial goals and can provide income.

Real estate: Lastly, real estate is another option that can be used by owning property or investing in real estate investment trust.

These are only some products that can help investors fulfill their investment needs.

(You should consider the investment objectives, risks and charges and expenses of mutual funds carefully before investing. The prospectuses contain this and other information, which can be obtained by contacting your representative. Please read the information carefully before investing. Add a standard risk disclosure due to the discussion of specific investments: Investments are not guaranteed and are subject to investment risk including the possible loss of principal. The investment return and principal value of the security will fluctuate and when redeemed may be worth more or less than the original investment.)

Which investment product is right for me?

It depends on an investor’s goals, risk tolerance and time horizon. An investor should consider these factors and work with a financial professional to help decide the best product for him or her.

Each of these investment products has strengths and weaknesses depending on how they are used. It is also important to apply your personal situation and consider your objectives when deciding on an investment product.

Investors should be cautious when taking advice from marketing ads or television because these sources typically only present the product and its features. How they can apply to your specific situation is important to understand before investing. It is also critical to take the time to thoroughly analyze how each product can be beneficial and consider not only the benefits but also the potential downside risk.

For more information about investment products, visit jacobgold.com.

 

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Securities and investment advisory services offered through ING Financial Partners, Inc. Member SIPC. Jacob Gold & Associates, Inc. is not a subsidiary of nor controlled by ING Financial Partners, Inc.

This information was prepared by Michael Cochell of Jacob Gold & Associates Inc. and is for educational information only. The opinions/views expressed within are that of Michael Cochell of Jacob Gold & Associates Inc. and do not necessarily reflect those of ING Financial Partners or its representatives. In addition, they are not intended to provide specific advice or recommendations for any individual. Neither ING Financial Partners nor its representatives provide tax or legal advice. You should consult with your financial professional, attorney, accountant or tax advisor regarding your individual situation prior to making any investment decisions.

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Estate Planning: Planning Your Future

Estate Planning: Planning For The Future

Estate Planning: Planning for the Future

When planning your financial future, it is important to consider an investment strategy, risk tolerance and time horizon. These are critical aspects of building wealth.

Although many of us focus on the now, we forget about organizing our finances and personal interests upon our passing. This aspect of planning is neglected many times and can put everything at risk. As investors, we will spend many years saving and planning; we should take the steps to protect all that we have built. This can be done by arranging an estate plan that will allow you to pass on your assets to who you want, how you want, and when you want.

This type of planning may seem overwhelming, but an effective estate plan doesn’t need to be complicated. It can be broken down in two key elements. The first is having a durable power of attorney and the second is a will.

Having a durable power of attorney will allow you to manage your assets while you are still living by appointing someone to act in the event you are unable to do so. A will focuses on managing and distributing your assets after death.

In addition to these key elements, an estate plan can help avoid the problems and expenses of probate, avoid family conflicts, provide flexibility in estate management, and minimize taxes at the time of death. These are some of the benefits and why estate planning is so important. However, how does one get started on setting up an estate plan?

Most estate planning objectives can be accomplished by hiring an attorney or by using an online “do-it-yourself” approach. The cost of hiring an estate planning attorney to assist with the development and implementation of an estate plan is typically far outweighed by the benefits of recruiting experienced council. The person who decides to save money by using an online service is likely to make costly mistakes, says estate attorney Kari Meyrose of Gorman and Jones Law Firm.

“Estate planning attorneys spend many years learning the contours of estate planning rules and methodologies, and they have the ability to forecast the potential outcomes that may result from an individual estate plan,” Meyrose says.

Estate plans range from simple to very complicated, and in some cases the cost of not using an attorney may actually end up being a very costly lesson for loved ones. Either way you decide— do it yourself or use an attorney — don’t procrastinate in making a choice and take action in planning your future.

For more information about estate planning or Jacob Gold & Associates Inc., visit www.jacobgold.com.

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This information was prepared by Michael Cochell of Jacob Gold & Associates Inc. and is for educational information only. The opinions/views expressed within are that of Michael Cochell of Jacob Gold & Associates Inc. and do not necessarily reflect those of ING Financial Partners or its representatives. In addition, they are not intended to provide specific advice or recommendations for any individual. Neither ING Financial Partners nor its representatives provide tax or legal advice. You should consult with your financial professional, attorney, accountant or tax advisor regarding your individual situation prior to making any investment decisions.[/stextbox]

Key Elements to Retirement Planning

Key Elements To Retirement Planning

There are countless books, articles, and videos that discuss how to plan for your retirement — many of which can be found at universities, books written by financial gurus, business owners, institutions and professionals in the industry. If one were to Google retirement planning, there would be tons of information, multiple websites, retirement calculators and sources to learn about what to do and how to do it.

There is no one right way to plan or a single investment strategy that works for everyone. But there are some important elements to follow that can help improve the odds of retiring successfully. Some of them include investment strategies, retirement timeline, risk management and asset protection, and estate planning.

Investing has many levels that range from very risky to very conservative. An investor can choose to invest in stocks, bonds, annuities, insurance and real estate. All of these can be valuable if used the proper way and for the right purpose.

But before choosing an investment, I would recommend to complete a series of questionnaires to learn more about what may be suited for that investor. Also, having a good mix of different risk levels and different products can help provide opportunity and protection.

Another important element that should be at the top of the retirement planning list is the value of time. The earlier we start the better the odds to navigate through difficult markets and the better we can plan for life changing events. Navigating through difficult markets is very challenging and staying the course usually works to the investors favor. Having the courage to stay invested and setting aside emotional decisions is critical. Also, by starting sooner it will allow investors to take advantage of compound interest.

Risk management and asset protection can be looked at in many different ways. The most common, is protecting our loved ones by insuring them and the assets we have accumulated. Unknown events will occur from time to time and preparing for these events before they happen can make or break our retirement success. Balancing for the now as well as the future is essential.

Once we have reached our goals, investors should plan to protect their estate with the hope to pass it to their heirs. This task first begins by organizing financials and personal interest to meet one’s wishes upon their passing. The best and most appropriate way to accomplish this is to seek the services of an attorney. It is important to provide the attorney all of the necessary information and have thorough discussions of your wishes so they can be carried out accordingly.

These are important elements of retirement planning and vary per person or household. It is important to take the time to research and learn about what steps to take in starting your plan, managing your plan, and having a resolution to your estate. I recommend working with a financial professional and reviewing your plan annually.

For more information about retirement planning and investing, visit Jacob Gold & Associates’ website.

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This information was prepared by Michael Cochell of Jacob Gold & Associates Inc. and is for educational information only. The opinions/views expressed within are that of Michael Cochell of Jacob Gold & Associates Inc. and do not necessarily reflect those of ING Financial Partners or its representatives. In addition, they are not intended to provide specific advice or recommendations for any individual. Neither ING Financial Partners nor its representatives provide tax or legal advice. You should consult with your financial professional, attorney, accountant or tax advisor regarding your individual situation prior to making any investment decisions.

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Low Rate Environment

Dealing With A Low Rate Environment

Dealing with a low rate environment

Many investors watch day-to-day market performance to evaluate their investment holdings. Do I buy, do I sell, hold on, or consider other options such as sitting in cash or CDs to earn a return? There are many factors to think about. Having a low rate environment is one of them. This is a critical piece of the pie and can affect all of us for a long time, especially retirees.

How does this work? The Federal Reserve, led by Ben Bernanke, along with the Federal Open Market Committee, meets eight times a year to determine the federal funds rate. The federal funds rate is influenced by the Fed in three different ways.

First, the Fed can buy Treasury securities from the market to reduce government debt. This will lower the rate.

Second, the Fed can adjust the reserve requirement that capital banks must have on their books. This may reduce the amount of loans banks offer their customers which may affect what consumers pay to borrow.
Third, the Fed sets the discount rate. The discount rate is the rate at which banks can borrow from the Federal Reserve Banks. If this is increased, it creates higher rates for consumers, which usually reduces the amount investors save. The Fed’s influence on rates affects all of us and must be considered in retirement planning.

Having a low rate environment has its pros and cons. For borrowers, it is very positive. It allows individuals and businesses to get cheap money on mortgages, credit cards, auto loans, business loans, and other related borrowing needs. As a consumer, you are able to save by paying lower interest rates and use that savings to spend more on necessities. On the institution side, companies are able to borrow from other banks and the Federal Reserve at low costs. This provides opportunities for acquisitions, mergers, and investing in their companies for future growth.

On the negative side, financial institutions that are required to meet certain deposit minimums may only yield a low return, making it more difficult to generate a profit. Banks and financial institutions earn less on their reserves. Many times, companies will increase their fees to compensate for low-interest rates, which cost consumers more.

Also, having low interest rates provides for low returns on fixed income type of investments such as CDs, money market accounts, and treasury securities. Retirees who have low debt and rely on fixed incomes are feeling the pinch more than ever. In some cases, retirees who depend on low risk returns are having to turn to equity or bond positions to offset the low rates of C’s and cash equivalents. This becomes very challenging and presents a constant balancing act for retired investors.

In today’s market, it is much more difficult to figure out the most appropriate investment for an individual, especially one that is already retired. Most retirees rely on low risk investments to generate returns that will keep up with inflation of about 3 percent. This is much more challenging to do when rates are as low as they are today. According to the Fed’s last meeting, interest rates will continue to be low (near zero) until 2013.

When rates do start to rise, investors will need to be proactive and make change to their portfolios. Learning to manage our investments according to risk tolerance and needs is a constant battle. Working with a financial professional can help guide investors through volatility and rate changes.

For more information about having a low rate environment, visit www.jacobgold.com or call (480) 998-4653.

[stextbox id="grey"]Michael Cochell is associate vice president at Jacob Gold & Associates Inc. This information was prepared by Michael Cochell of Jacob Gold & Associates Inc. and is for educational information only. The opinions/views expressed within are that of Michael Cochell of Jacob Gold & Associates Inc. and do not necessarily reflect those of ING Financial Partners or its representatives. In addition, they are not intended to provide specific advice or recommendations for any individual. Neither ING Financial Partners nor its representatives provide tax or legal advice. You should consult with your financial professional, attorney, accountant or tax advisor regarding your individual situation prior to making any investment decisions. [/stextbox]

choosing retirement plans, arizona business owners

Choosing Retirement Plans for Business

Choosing retirement plans for business owners: Today, business owners are a critical piece for the growth of our economy. They will continue to provide new innovations and venture out to other countries improving competitiveness in our global markets.

New businesses have become the backbone of our U.S growth. For this reason it is important to have support from our government, consumers and the business owners themselves.

One of the ways our business owners help support our economy is by providing jobs and retirement plans to help us plan for our future. However, choosing retirement plans, and the right one at that, for a business owner can be overwhelming and confusing. It takes hours of research and a check list of highly relevant questions to figure out the best plan for the type of business. Most of the facts include demographics of the employees such as their ages and income, along with the overall financial objective for the plan.

There are numerous plans to choose from such as: SEP’s, SIMPLEs, 401(k)’s, 403(b)’s, Solo 401(k)’s, Safe Harbor 401(k), Profit Sharing, Defined Benefit Plans, Money Purchase, and so on. In addition, add an array of non-qualified plans, and it becomes even more daunting.

For example, the SEP-IRA allows a contribution of up to 25% compensation with a limit of $49,000. It also is very easy to set up and has low administration cost. Whereas a traditional 401(k) is appropriate when a business seeks to make large contributions for the owner(s) and other partners, as well as provide an employer contribution for employees as a benefit.

The traditional 401(k) options have many benefits and allow the employer to control eligibility, match options and vest schedule. It also provides asset protection under ERISA and allows plan participants to contribute $16,500 for 2011 — plus an additional $5,500 if the participant is age 50 or older.

On the other hand, 401(k) plans may create high fiduciary responsibility for the business owner and have higher administration cost due to complex discrimination testing.

Choosing retirement plans for business is challenging, and I found that the process of elimination helps sift through the many choices; and clearly identifying what you want to achieve for you and your employee’s financial goals will narrow the choices.

As our economy continues to work though the recent recession, business owners will still provide new innovations in servicing and production of goods. We hope that as our economy stabilizes, we will see more opportunities for businesses to choose retirement plans and offer the right one to employees to help our future retirees.

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For more information about choosing retirement plans, visit www.jacobgold.com.

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Securities and investment advisory services offered through ING Financial Partners, Inc. Member SIPC. Jacob Gold & Associates, Inc. is not a subsidiary of nor controlled by ING Financial Partners, Inc.

This information was prepared by Michael Cochell of Jacob Gold & Associates Inc. and is for educational information only. The opinions/views expressed within are that of Michael Cochell of Jacob Gold & Associates Inc. and do not necessarily reflect those of ING Financial Partners or its representatives. In addition, they are not intended to provide specific advice or recommendations for any individual. Neither ING Financial Partners nor its representatives provide tax or legal advice. You should consult with your financial professional, attorney, accountant or tax advisor regarding your individual situation prior to making any investment decisions.

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Employer Retirement Plans in Phoenix, Ariz.

Employer Retirement Plans: Take Advantage Of The Best Of What’s Available

Most of us will have the opportunity to benefit from a 401(k), a profit-sharing or some other corporate retirement plan.

Typically, after accepting a position with a company, employees are given a great deal of information about their benefit options. These may include health insurance, life insurance and retirement options. This is where an overload of information can make it challenging to make the best decision. There is a definite need for further education within companies to assist employees with choosing benefits, and specifically when planning for their retirement.

In most cases, employees complete a packet for their 401(k) or other type of plan with advice from a family member, other employees or no advice at all. This is certainly not the best way to choose the right investments to help reach one’s retirement goals.

It is important to evaluate and consider many factors in choosing what type of investments make sense. One must consider his or her risk tolerance, time horizon and retirement needs. Moreover, some plans may have limited contribution amounts or investment options. These specifics make it even more difficult to understand and choose the best amount to contribute or the best investments to take full advantage of plan benefits. Some limitations may require employees to consider other resources for further retirement needs in addition to corporate plans.

Today, corporate retirement plans have improved as they have become more dynamic. Of course, using them the proper way and understanding your choices are critical to achieving maximum benefits. For example, many plans offer pre-tax contributions, after-tax contributions, a match of employee contributions (free money), loans options and asset protection.

Adding various mutual funds, bond funds, fixed accounts and target date funds to choose from can make it even more daunting when deciding what is best for each person. I highly recommend seeking the advice of a financial professional or a representative from the plan sponsor to help make the best choices for each person’s situation.

I am often asked to sift through a maze of investment options and analyze the best funds from which to choose in a company plan. Knowing the best plan and investment choices are hardly self-evident to the average investor.

Through education, guidance and a checklist of relevant questions, one can highly improve their odds of success. Choosing the right funds, the amount to contribute and when to make changes is an on-going process. It is critical to review these regularly.

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Here are some questions to consider:

  • What type of plan is offered?
  • Does the company match employee contributions, and how long before matching contributions are vested?
  • Are there additional fees for managing the accounts, and what are they?
  • Is there someone who can help with investment and contributions choices?
  • What is the maximum amount that can be contributed?

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