Financial Fitness Videos

IRA and retirement

Too Many IRAs

I find clients have multiple retirement accounts to manage. In many cases, these plans were rolled over into several IRAs.

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Today, I share my personal story about a loved one and life insurance.

My personal story begins with my wife passing away a couple years ago from breast cancer.  Unfortunately, the old way of thinking is you insure the breadwinner for much more than you do for your spouse or significant other. At the time, I was not full considering the loans, mortgage, other debt. What I would like to pass on to you is to consider life insurance parity.

I had much more life insurance than I did for my wife. I realize now that this was a mistake. My spouse’s life was not less valuable than mine.  It was equal. And with all the debt that I incurred from her medical bills, taking a work break was not an option. I would have loved to take time to grieve. Being self-employed it was very difficult to do that. So what I would like to do is pass along to you is what I have learned through personal experience. Needless to say, it was a rough few years.

When we sit down together, I will pass along my experiences, personal and professional, so you do not have to go through what I went through. We will plan in advance for life’s contingencies.

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Did you ever think you could have too much of a good thing?

A lot of clients and potential clients have accumulated stock options for the companies they work for. That is both a good and a bad thing. When you have stock options and the market does well and company does well, you feel invincible. That can be a good or bad thing. You have to realize that bad things can happen to good companies – as bad things sometimes happen to good people.

For example, if your stock drops 50%, you can lose 50% of your investment return. Think about if you are near retirement and suffer a large loss. What would that do to you? You might not have enough time to recoup your investment loss.

At the risk of showing my age, you might recall Enron. That was the darling stock of the internet bubble. Enron was an energy company with many employees. Unfortunately, due to illegalities and mismanagement, stock holders took a big hit. In 1997 the stock was over $90. By the end of 2001, Enron stock was worth less than a dollar. Think if you had your money tied up in that stock. In another example, in 2008, Bear Stearns stock at the start of the financial crisis, was valued at $100. It came crashing down. Within months, the stock was at $10. Think about how you would react, if something like these situations happened to you.

I am not saying you should not own stock in your company. But there are ways to go about it – through proper risk analysis, diversification, and asset allocation.

When you sit down with me, we will review your portfolio to reduce your exposure in your overall financial plan.

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