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Rob Schultz, CFP®, PFP

May
02
Credit Report Monitoring
There are a host of sites offering free credit reports. While these companies for a fee will give you access to your credit report and monitor changes, if you just want access to the report the website set up by the three providers www.annualcreditreport.com is all you need to keep on top of your credit history. You are entitled to a report from each carrier so if you're really diligent you could request a report from one of the three carriers every four months.  If you don't plan on applying for credit and want to protect against fraud, a tool is the credit freeze. This will prevent people from applying for credit but also may delay the process if you should need a loan for something like a car.
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May
02
Modeling a future without Social Security
When we create retirement income models, often the response when mentioning Social Security is something like "if it still exists." While we don't believe those in or close to retirement will see any reduction, there have been suggestions to means test the benefits thereby reducing payouts for those with higher incomes. Another option is to illustrate without the current cost of living adjustment. I would expect and believe it is prudent that we continue to stress test retirement income plans for our younger clients with reduced or no benefits.
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Aug
03
Comparison of individual and group long-term disability
Group long-term disability provided by your employer is a helpful benefit but this post will point out key differences. Ownership - coverage is individually owned as opposed to being leased from employer Rates and renewal - typically rates are fixed and the coverage is guaranteed renewable for individual plans where as group plans often change or can be canceled if the employer can't afford Coverage limits - Group plans are typically a fixed percentage up to a cap which can leave the highest compensated employees with less coverage as a percentage of income. Individual plans are more tailored to ones specific income Covered compensation - group plans typically cover just base compensation where individual plans can include bonus and...
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May
18
Economics of Home Solar
I finally took the plunge and decided to install solar on my house. Panels are continually improving but I figured they had advanced dramatically and future improvements would be more incremental in terms of the efficiency. As a numbers guy, the decision was primarily a financial one but not an easy one. There are so many choices and ways to pay for your energy. Here is what I found: Lease agreements - These agreements typically have the lowest down payment, often $0 where you lease the panels and pay the solar company for the electricity. I was looking for a more permanent solution. Outright purchase - This option gives you ownership of the panels and requires the largest initial outlay. Many people don't have the extra cash to front...
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Nov
11
Cap Rate - basic lingo for the real estate investor
If you don’t know the term cap rate, consider yourself a real estate beginner. A basic way of measuring the profitability and price of a property is through a term called cap rate. It is basically dividing the annual income produced by a piece of property after expenses into the value. The goal of real estate investors will be to drive both components of the equation higher through raising rents and increased value of the property. When deciding on a property, you can compare the cap rate with other investments to determine if the risk and time commitment of purchasing the property makes financial sense. Your total return will be the cap rate plus the appreciation of the building which isn’t realized until it sold.
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Nov
11
Impact investing - a new buzzword for the greater good
The difference between socially responsible and impacting investing at first was lost on me. Socially responsible investments are often difficult to define as investors often have different values and beliefs so one investment that is off-limits for you might be perfectly acceptable to another. Typical examples are defense, oil companies, and those focusing on vices like alcohol and gambling. Impact investing focuses on lending to companies that lead to job creation, food security, higher wages, better healthcare, energy efficiency, and more ethical employment practices. Impacting investing is also different from micro-loans where very small amounts of money are given to people in emerging markets starting usually one person businesses. In...
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Apr
21
3-2-1 Heloc timebomb
Did you remember that the home equity life of credit you took out before the hosing market imploded was set to amortize in ten years instead of the current interest only requirement?  No? Well you are not alone. According to Equifax and the Wall Street Journal, those loans originated in 2005 and hence amortizing this year will see an increase of over $350 a month. For areas where the housing market hasn't recovered this could mean more delinquencies on second mortgages.  Let your advisor know if you are holding on to a HELOC time bomb!
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Apr
21
Time well spent
life, values, financial
I can’t even remember one gift I got for my 12th birthday but I have vivid memories of what I did. My parents had some semi pro skaters that I am sure could use some spending cash stop by for a demonstration for me and my friends. All the gifts are long gone but my memories are still with me. This experience has influenced how I allocate funds on my kids. I am much more generous with funds for doing things than having things. I hope I leave my kids with a mind full of experiences rather than a closet full of stuff.
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Apr
20
Facebook lets you choose an executor for your digital estate
facebook, estate planning
We often think about putting our houses in the trust or providing a safety deposit box key to a loved one but who will handle your digital assets after death. To name a legacy contacts at Facebook, go to your security settings and edit the legacy contact. You can add a friend to act in this capacity and it gives you the choice to notify them or not. In addition, if you are the family member responsible for uploading irreplaceable family pictures to a website such as Flickr, it would be wise to let a family member know your login information.
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Apr
20
529 plan distributions to lower your golf handicap
Tags: 529,golf
In the unfortunate circumstance where your 18-year-old child who you have groomed to go to college decides to take a shot at being in a band instead of attending your alma mater what you do with their 529 plan? You can of course transfer the balance to another child within the family or an often overlooked option is transferring to yourself. There are several golf schools in the US which qualify for student loans and therefore they are eligible institutions four 529 plan withdrawals. There are two schools in Southern California located in Temecula and Carlsbad. To determine if the school is eligible you can search the Department of Education’s website. While most parents are not in the enviable situation of having extra money for college,...
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Feb
27
Interest rates - Look out not up
As I write this, the chairwoman of the Federal Reserve is speaking on policy and painfully answering the partisan questions of the Senators in front of her. The dual mandate of the Federal Reserve is to encourage full employment in the US economy while controlling inflation around their 2% target. With the recent decrease in the unemployment rate and inflation under control, it appears that they been fulfilling their mission. Predicting interest rate has proven to be one of the more difficult tasks for economists. With that being said my opinion is that we experience lower rates for longer than the consensus expects. I believe the interest rates on short-term borrowing are likely to increase with less effect than the longer term issues. The...
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Feb
27
Can you spell EFC on the FAFSA?
We are entering the season when parents of college age parents start completing the FAFSA form with the hope of catching a small amount of money from the murky pond of financial . aid. This is no small task with over 100 inputs.(105 to be exact). That being said, the questions are straightforward with most easily answered off the top of your head plus having your tax return in front of you.  For those who usually file extensions, you must either file your return or go back and revise the estimated numbers after a return is filed. Don't delay as some states award aid on a first come basis. What else can you do: Spend savings of the child early so it won't be included on prior years forms. Ideally spend in before thier junior year so it...
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Dec
01
Risks to Consider in Retirement Defined
There are several risks to consider when developing a plan for managing your assets in retirement. Not all people will have equal exposure to these risks, yet it is important to keep these risks in mind when developing a retirement income strategy. Longevity Risk is the risk that you will outlive your savings and available income. Entitlement Risk is the risk that government programs such as Social Security or Medicare will not offer sufficient protection for retirement. Excess Withdrawal Risk is the risk of an individual drawing down assets too quickly and undermining their retirement income plan. Market Risk is the risk of losing invested wealth, temporarily or permanently, either because of a market downturn or poor return on...
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Dec
01
MANAGING YOUR ASSETS IN RETIREMENT - STRATEGIES
There are several income producing strategies that can be used in combination with the underlying investments. There is no guarantee any of these strategies will be successful. Speak with a financial professional to determine which strategy best fits your goals and risk tolerance. Some of the most common retirement income strategies are: Systematic Withdrawal Plan (SWP) – regular payments from your investment account at either a variable or fixed amount until the account value is exhausted. The assets in this approach are invested in securities which carries market risks. Negative market returns early in a SWP can have severe negative impacts during later retirement years. The Bucket Approach – breaking up retirement into distinct time...
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Oct
24
Calculated risk and the Royals in the World Series
In reflecting on the last two weeks in the market which have been quite volatile, we are reminded how much uncertainty there is in the world. At the beginning of the season the Royals were about a 50 to 1 shot to win the World Series with the Washington Nationals, who are watching from home, as the favorites. Volatile times lead us to go back and examine why we are investing. It reaffirms our belief in segmenting money based on the time you expect to need the funds available. Our approach typically consists of an emergency fund containing a multiple of six months of expenses with some variability depending on stability of income.  These funds are not expected to grow much, but we count on them to be there in an emergency. We then look at...
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Oct
24
Conrad 30: Opportunity for foreign medical graduates
The Conrad 30 program, named for Sen. Kent Conrad of North Dakota is meant to address physician’s shortages in primary care in rural and urban areas by granting visa waivers. There are many parallels to the technology industry where foreign graduates are trained in the US and then due to immigration restrictions, must return to their home country leaving the US with a “brain drain.” To qualify for the program, graduates of US residency programs must have an offer of full-time employment and serve for a period of no less than three years. These are physicians which the institution failed to recruit an American citizen for. Some of the states allow for specialists but the focus is primary care and general psychiatry. An immigration lawyer...
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Oct
24
Vertical integration of affordable care organizations (ACOs)
The consolidation of hospitals owning private physician practices is not showing a reduction in the price and actually increased costs for the privately insured according to researchers at Stanford University(2001-2007). There is a fear that increased bargaining power from these new collectives will swing the pendulum of power too far in the direction of hospitals and ACOs. The question still to be answered is if the ultimate benefit of higher quality of care results in better outcomes and therefore longer-term savings.
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Sep
22
Scotland: If had a vote it would be NO
Today Scotish nationalists are asking their voting population(as young as 16 years old) to vote for separation from England. While I don't normally chime in with my political opinion I think it is rather obvious what a destabilizing effect a yes vote would have on the region. The Yes Vote camp doesn't think they get their fair share of representation or respect or Pounds from London. Even if true, the single issue of currency should lead Scots to a No. England would not allow a territory that just seceded from them to use their currency and he process to join the euro is lengthy. That leaves them without a currency and Wisky only goes so far. Hopefully we will see a No vote but the polls are a toss up at this time.
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Sep
17
Columbia, Egypt, and Indonesia: Oh my!
With approximately half the stock market value being concentrated in the US, it is no surprise that we Americans tend to invest the majority of our assets in our home country. This is called "home country bias" and occurs in most countries. This strategy is a fine for Americans but remember that the US ranked #33 in returns in the 10 year period ending December 31, 2013 (Source Morningstar). The top performers were Columbia, Egypt, Indonesia, Philippines, Peru, Mexico, Brazil, Denmark, Malaysia, and the Czech Republic. There have been more than a few scary headlines from these nations although their markets did very well. The takeaway is that one should consider staying globally diversified and that negative headlines and market performance...
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Sep
17
Hank Williams and Fayed
Writing from 30,000 feet on my way home from Nashville I wanted to share an interesting observation. There are a noticeable amount of Egyptians in Music City. Time and time again at my hotel, I would see a name tag and it would give Egypt as the origin of that employee. In small talk, we learned they came to America for the freedoms we offer over other countries including those of Europe.  It gave me pride to be an American living in a country who is thought of so highly by young people coming from Damascus. It also made me worried that I hope we can live up to the hype of this nation of ideas and freedom. I am pretty sure we can, despite a few bad apples.
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Sep
17
Where are the Billionaires
A recent report by Forbes mapped out the worlds billionaires.  This exclusive club has 1,587 members of which 512 are in the US and Canada.  Asia has grown to #2 with 403 and Europe third with 343. Latin America, Russia, and other countries round out the list.  I find this impressive that the relatively young America leads the list and shows the power of a nation founded on ideas where multiple cultures come together as one. Notice the lack of members from repressive countries that experience fighting between separate groups within the same territory are vastly underrepresented.
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Sep
17
Social Security Planning for the Same-Sex Couple Post DOMA
In California where my office is located, same sex couples have the same rights to Social Security Benefits as any other married couple. With this new benefit available, which claiming strategy is best? Opposite sex couples may have been planning for the range of options for many years but for many same sex couples this type of advanced planning was not even on the radar.  For those in their early 60s, this is an important discussion to have with a financial advisor. We run an optimizer that shows various payments from the government based on life expectancy. There is no “rule of thumb” since every ones earnings history, budget in retirement, and life expectancy mix is different. The Social Security Administration isn’t much help either....
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Sep
17
Where is your index Putin its money?
In July, MSCI the creator of many popular indices created two new indices that invest globally while excluding Russian companies.  This highlights the difficult nature of an index fund which includes multiple countries.  In a global world with many suspect heads of state, it is important to peel back a layer and see what you actually own.  Russian markets have actually done well after stumbling last year but are likely to be volatility as the world watches the KGB cowboy in Moscow.
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Sep
02
Sitting tight: Why electing a lump sum payout may not make sense
One of the most difficult analysis that a financial advisors can be asked to make is whether a client should take a lump sum or a monthly pension. Most pensions are covered by the Pension Benefit Guaranty Corp. (PBGC) which aims to ensure promised payments from an employer. The premiums for retirement plans to participate in the PBGC are going up dramatically by 2016.  This cost seems to be motivating employers to offer lump sum buyouts in higher frequency as I've seen an increased amount come across my desk this year. While the numbers vary for each person and situation, here is the analysis I recently used for a client who was still working. The former employer offered three options: 1) take a lump sum payout 2) collect a reduced amount...
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Sep
02
Balancing a First Time Home Purchase with a Mountain of Students Loans
Today’s graduating resident or fellow faces a daunting challenge of managing an average of $157,944 in student loan debt according to the College Board, with saving for a down payment on a home.  In today’s lending world a minimum 20% of the purchase price is often required.  Recent graduates are often saddled with high-interest loans typically in the high 6% range.  Prioritizing whether to save for a down payment or aggressively pay down the student loan debt is one of the most common questions I am approached with.  While common sense would dictate that you would want to retire high-interest loans before saving for a house, most young physicians do not want to wait until their fifties to make a home purchase.  The compromise is to make...
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Aug
15
Kaiser Permanente ROTH 401k
For those Kaiser physicians employed by SCPMG in Southern California, you have an election to make regarding your 401(k) which is also referred to as the TSR plan. You might have received some information from human resources on the mechanics and the bullet points below reflects my views on the practical application of a Roth 401(k) within the Kaiser system. Ø  At the partner level there are three plans. The 401(k) plan and the Keogh plan which are funded by the physicians and the Common plan(pension) which is funded by SCPMG. Currently, the benefits of all these plans when paid out in retirement are taxable income. You can see the problem this might create. Retirees expect to be in a lower tax bracket but when you factor in the pension...
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Feb
14
The markets are off and running in the year of the horse
In the Chinese year of the horse, things have been a little difficult out of the gate. Below are some key points on where we stand as of mid-February. The volatility experienced in the equity market at the opening of 2014 is well within the historical range. Investors may be surprised by recent volatility because it follows a year when developed market equity returns were exceptionally high and volatility was unusually low. The presence of volatility keeps investors grounded and mindful there are risks to investing. The recovery from the global financial crisis is continuing, however political risks remain. While global growth is expected to be slow but positive, Europe is shifting to a recovering environment. Most notably Germany...
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Oct
23
Creating a Social Security online account
Not everyone may know, but the Social Security Administration (SSA) ceased mailing annual benefits estimate statements in April 2011.  By suspending mailing for all workers over age 25, SSA has saved approximately $70 million each year in printing and mailing costs.  Although SSA eventually plans to resume the mailing of statements to people age 60 and over, as it currently stands, everyone age 18 and over must set up a personalized online account to access the following information. Estimates of your retirement, disability, and survivors benefits; Your earnings record; and The estimated Social Security and Medicare taxes you've paid. If you receive benefits or have Medicare, you can: Estimates of your retirement, disability,...
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Oct
14
Government Chaos- What you need to know
Key Takeaways  Expect near-term volatility and concern over the debt ceiling and government shutdown Volatility should provide some valuation opportunities We expect the market to continue to make progress over the longer term, given the stronger health of the economy in the US and globally We believe Fed tapering likely will be on hold until the government theatrics subside Eventual tapering by the Fed should signal that the economy is improving and inflation is under control, which we believe should lead to continued strength in the equity markets Government is being held hostage by the two parties, which is expected to have a negative impact on growth and the economy.  When compared to the last government gridlock in...
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Securities and investment advisory services offered through Royal Alliance Associates, Inc., member FINRA/SIPC and a registered investment advisor. Additional investment advisory services offered through NWF Advisory Services Inc., a registered investment advisor not affiliated with Royal Alliance Associates, Inc. Certain insurance products offered through New World Financial & Insurance Services, Inc., an entity not affiliated with Royal Alliance Associates, Inc. or registered as a broker/dealer or investment advisor.



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