Purposeful Strategic Partners
I work with clients to help them live their great life, both now and in the future. Financial planning isn’t about sacrificing today for tomorrow; it’s about giving purpose to your money. I guide clients in exploring the lifestyle they want to achieve now, the goals they have for their future, and how best to use their financial resources to accomplish both.
Throughout the planning process, the focus is on providing education and ensuring you understand how you’ll meet your goals and are comfortable with the plan. The goal isn’t to impress you with big words or confuse you into agreeing with a recommendation. The goal is to provide you with transparent advice without conflicts of interest.
I begin your planning process by understanding your life goals, and then develop recommendations to help you achieve them. Every plan and every recommendation is designed with one goal in mind: to get you to your goals.
Planning takes on an integrated approach, which considers your entire financial picture. Planning goes beyond investments and retirement to incorporate all of your goals and includes cash flow analysis, tax planning, college funding, risk management, career development, debt management, estate planning, and more.
FIDUCIARY & FEE-ONLY
As a Registered Investment Advisor, I chose to be held to the highest fiduciary standard in the industry. I am required to serve my clients' interests first in all aspects of planning and to fully disclose potential conflicts of interest. This isn't just a policy, it's a legal obligation.
As a fee-only financial planner, I only accept compensation directly from my clients for the advice I provide. No product sales. No commissions. No referral fees. No other hidden kickbacks.
In addition to being a financial advisor, I’m also a tenured professor of Business at El Camino College in Los Angeles. I hold an MBA and recently passed the rigorous CFP® exam. I have also had a unique perspective on the last two market downturns, having been a Vice President at a credit union in 2008 and the Director of Marketing for an internet technology firm in 2000.
My journey to becoming a financial planner began with me rejecting being a financial planner. In the early- and mid-2000, a long-time friend of mine asked me to join him at Merrill Lynch as a financial advisor – I turned him down multiple times.
Shortly after the 2008 credit crisis, I began instructing college Personal Finance courses. Watching the incredible impact the course had on students' lives is what finally sparked an interest in joining the financial planning profession. But I wanted to join a profession, not an industry.
Teaching is a profession, because it is dedicated to improving the lives of the students, not enriching the professors. Sadly, what I saw in much of financial planning was an industry that created products and hired sales representatives to push the products. But I also saw a noble version of financial planning as a service profession where a trusted adviser helped guide clients toward their life goals.
MBA, Azusa Pacific University
Professional Financial Planner certificate, UCLA
If this was the planner's only suggestion your gut was correct, you are probably not working with the correct adviser. It sounds like the planner is an investment-only person who doesn't work with clients in a comprehensive way. A planner should look beyond investments and look at your whole financial picture, you long-term, and short-term goals.
Although I don't have enough information to give you advice, here are some alternatives to consider regarding options for investing the money. These are just ideas to consider, and you will want to work with a comprehensive planner to determine which ones will be best based on your other life goals, tax situation (the Roth may not have been good tax advice depending on other factors), risk tolerances, and desired lifestyle. Keep in mind, I am focusing on how to make the money work for you as I believe that is what you are looking to learn. And these are only ideas, they may not be right for you and your fiancé.
INVEST MORE AGGRESSIVELY
I don't have any information about your portfolio's asset allocation, but it is usually a safe bet there is opportunity to invest some of your portfolio more aggressively. (I'm not talking about betting it all on Bitcoin) A good financial planner can look at your total financial picture and identify how much of your investment portfolio can be allocated toward higher risk, higher return investments. Investments in emerging market stocks, small-cap stocks, mid-grade bonds, or specific market sectors can all yield higher returns and are appropriate investments for a person of your age. The key question, of course, is how much to allocate toward these investments.
If you want to swing for the fences, you can do that just make sure it is with 'extra' money. Let's assume out of the $7,000 you currently save, you only need $5,000 each month to save toward your goals. The extra $2,000 monthly can be invested for higher returns without endangering your retirement, emergency fund, or other financial goals. Investing in an ETF which invests in micro-cap stocks, high-yield bonds, distressed assets, frontier market stock, or other similar asset class. Just be sure you can afford to lose a significant portion of this money, as the higher returns come with a heightened risk of loss.
OPEN A HEALTH SAVINGS ACCOUNT (HSA)
If you have access to a High Deductible Health Plan, an HSA could be a way to boost your retirement savings. HSAs allow you to take a tax deduction now and also pay no taxes later when you withdraw the money for qualified medical expenses. As a result, they really are a tax-free investment account. The trick with HSAs is to have enough money to invest the maximium (nearly $7k per year in 2018) and also pay for all of your medical expenses from your paycheck so you don't touch the HSA money. This article explains the benefits of health savings accounts in more detail.
Make sure you understand the costs of the health plan you choose howeve, and that you like the plan doctors. A high dedutible health plan means you will be paying much more out of pocket for your medical expenses and you will want to undestand the worst-case scenario before making this decision.
SAVE UP FOR A DUPLEX/TRIPLEX
Investing in Real Estate can provide a steady income from rent, capital appreciation from the value of the property, as well as providing for a nice home for you and your spouse. A duplex is a house with two living units, which is often the easiest way to enter into owning investment real estate. If you live in one of the units you know that 50% of your tenants will always pay on time. Then you only need to manage the other tenant. Keep in mind, real estate is very time consuming, and you will want to make sure you are comfortable with the lifestyle of a landlord. Collecting rent is fun, but getting a call at 2 a.m. because your tenant clogged the bathroom isn't fun. Still, if you make the purchase correctly you can have your tenants pay for a signficant portion of the mortgage and enjoy the appreciation of the house value. And rental income will naturally increase over time based on both inflation and paying down the mortgage.
You could also explore a Triplex (three units) or Quadplex (four units) but you will have more work with managing the tenants and dealing with problems. The advantage, however, is you are more likely to see possitive cash flow from day one. I would not recommend going larger than a quadplex as the laws for apartment complexes are much less landlord-friendly. Most states make the cut-off at 4 units in a building, so staying below your state's cut-off is usually advantagous for a new real estate investor.
SAVE UP TO START A BUSINESS
If you or your fiancé have ever been interested in starting a business, now would be the time to start one. You have no kids, no debt, no mortgage, and strong incomes meaning you have the ability to bounce back quickly if the business doesn't work. A business is a high risk investment, but nothing generates wealth better than business ownership. Keep in mind, being an entrepreneur takes a special kind of mindset and carries with it significant stress. So while it can be a road to wealth, it can also cause financial and marital problems. I would not recommend this unless one of you already had a desire to be a business owner and have something you are passionate about.
BUY A HOUSE
This might seem strange as I was focusing on things which make you money, but a house can provide you with the opportunity to lock in your housing costs at today's prices. While the cost of a house will actually set you back a bit financially, over a twenty year period your incomes will increase significantly, but your mortgage will stay the same. While the rental rates are rising around you, your housing costs will have been locked in.
If you have any questions or want to explore things in more detail please feel free to ask.
There are three ways to purchase Treasury notes directly; through a brokerage, a bank, or directly from the U.S. Treasury at https://www.treasurydirect.gov. Buying it directly through the U.S. Treasury will mean it is a noncompetitive bid purchase, so if that is a requirement, you will need to use a broker or a bank. There may be a fee with buying them from a bank or brokerage firm, but it likely won't be significant. As with all services, you will want to shop around to see what value each company provides and at what cost.
The amount you are looking at purchasing is significant, so it is probably worthwhile talking with a fiduciary financial adviser to get advice on the return expectations, opportunity cost, and risks of such a move. While most people think of Treasury Notes as risk-free assets, that is only partially true. While they are considered free from default risk, they still carry other risks such as interest rate risk and inflation risk.
If interest rates rise over the next few years, the market value of your portfolio will decline if you have to sell the notes prior to maturity. With a 10-year maturity, these notes are going to be impacted singnificantly by any potential increases in market interest rates. Similarly, with interest rates at their current lows, inflation could significantly eat away at the true value of this portfolio over the next decade. I am NOT saying this is a bad investment, as I have no idea what your goals are nor what the rest of your portfolio looks like. I do think, however, it will be important and benefit you to have a full understanding of how these and other risks could impact the portfolio so you are comfortable with the potential downsides.
There is definitely a chance you filled out the tax form incorrectly. While it is possible that the foreign income could have caused a swing,it seems unlikely to be that dramatic based on the amount of foreign income you earned. The tax credit should have taken care of the foreign income taxes owed. This is an area where you should definitely have a CPA and possibly a financial planner in your corner.
At your income, it is likely that having a CPA will pay more in tax savings than the cost. Additionally, a comprehensive financial planner could identify other ways to save on taxes going forward. (CPAs are historians by nature, while planners look forward. So the CPA minimizes taxes from last year, while a good planner should help with the future years).
While saving money by doing things yourself is often a good idea, most people don't have the expertise to get the most out of things like taxes and investing. A professional will pay for their fee many times over, if they are good at their job.
While there are some differences between the plans, it is the underlying investment options and fees which should really drive this decision. Each of the plans will have predominantly the same tax advantages; so instead look at the types of investments and the expense ratios of the funds you have access to in the 401(k), 403(b), 457(b) and 401(a) plan.
If your 401k plan has significantly cheaper fees and better investment options, then you should max out the 401k first ($18,500 in 2018) before looking to invest in the other plans. 403b and 457 plans, for example, often limit you to investing in high cost annuities, which will have a hard time outperforming cheaper investment options net of fees.
If all the plans have similar investment options and fees, then I recommned funding the 457 plan. These plans allow you to take penalty-free withdrawals before age 59 1/2. If you retire young, the 457 can be a beneficial source of income while you wait to have access to your 401k and IRA plans. You will still have the normal income taxes which are due on withdrawals at any age, the same as a 401k.
I also recommend talking with your financial advisor who is managing your Vanguard mutual fund. They should be knowledgable about the account details and be able to give you more accuarate advice based on your entire financial picture. If they aren't able or willing to offer advice on your entire financial picture, you may wish to consider if working with a different advisor would be better for your comprehensive financial plan.
Yes, this will in fact improve your credit score. Your score is calculated based on a number of factors, and this change will impact two of them; capacity and mix of credit. Your capacity is determined by the amount of revolving debt (like credit cards) you have divided by the total limits you have on the revolving debt. By paying off the credit cards (and keeping them open), you will increase your capacity by lowering your revolving debt. The second factor is improved because the credit score treats certain loans as good and certain loans as bad. Credit card debt is treated less favorably than a personal loan by the credit score. Make sure if you do this, that you lock the credit cards away so you won't use them. Go to 100% paying with cash at least until the personal loan is paid off.
Generally, though, you will not want to make this decision based on what it does to your credit score. Make sure by getting the personal loan you will improve your overall financial situation. The credit score increase should be a nice added bonus and not the reason you make this decision. You can determine if your overall financial situation will be improved by answering three questions:
- Is the interest rate on the personal loan lower than the credit cards?
- Will this enable me to pay off the debt faster?
- What is the chance that I will rack up more credit card debt in the future (you can't say no chance)?
If the answer to the first two question is YES, and the answer to the third is a low chance of using your credit cards again, then you will want to do this. Keep in mind, there are financial coaches who might be able to help you, as well as taking a Personal Finance class at a local community college.
Once you have the loan paid off, keep pushing forward by using the monthly loan payment money to take another step forward in your financial foundation. For example, if the personal loan was a $600 monthly payment, keep making the payment but to another financial goal. The following are some of my favorite places to consider.
- Use the money to build up an emergency fund so you can make it through a financial suprise.
- Contribute the money into your 401(k) or an Individual Retirement Account for your retirement.
- Put the money into savings for a major goal such as buying a house or purchasing your next car with cash.