Monthly Archives: February 2013

Preparing for the inevitable

The Suffolk New-Herald has a nice article on our books: Before I Go and Before I Go Workbook.

 

Suffolk New-Herald

 

During a quarter-century in the financial planning industry, one thing Arie Korving has noticed is that clients age at about the same rate that he does.

“As time went on, I have gotten older and clients have gotten older,” he said Tuesday in the boardroom of his North Suffolk-based firm Korving & Co., where he and son Stephen Korving offer advice on investment strategies, asset management and financial planning.

“As a result, I had the opportunity to basically work with them in the area of estate planning, taking care of them when someone in the family died.”

Arie Korving has written a book and accompanying workbook: “Before I Go: Preparing Your Affairs For Your Heirs.”

It’s basically a distillation of his experience helping clients financially plan for the day when they are no longer around. Information is gleaned from experience that also included a stint with UBS.

Chapters in Korving’s book deal with health care decisions during a “final illness,” planning for a funeral, financial accounting, financial management, balancing income and expenses, and reviewing plans annually.

The accompanying workbook allows one to create a record of their plans for surviving family.

“What this book is really designed to do is give people an opportunity to do that pre-planning — put down on paper … what the income is going to be, what are the expenses of running a household, (and) where are all the family’s investments,” Korving said.

“Those are the kinds of things wills and trusts really don’t go into.”

Both books are listed at $14.95, but prices vary on Amazon.com and from Barnes and Noble. They are also available from Korving’s office, Suite 800, 1510 Breezeport Way.

Call 638-5490 for more information.

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Accounts: Herd Is the Word

The Wall Street Journal has a good article on keeping track of your finances in retirement.  One suggestion that makes a lot of sense, and not just for retirees, is to consolidate your retirement accounts.

Consolidating your accounts will make it easier to monitor returns, rebalance your portfolio, diversify your assets and take required distributions. Another plus: It will be easier to update your address, email, bank routing numbers and beneficiaries.

At Korving & Company, we have brand new book that is specifically designed to gather all that information that you need for your beneficiaries.  For a copy, call us at 757-638-5490.

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With Stock Prices Soaring, Investors Fear Another Crash

There is an old saying on Wall Street: “Once a cat sits on a hot stove, he won’t sit on a cold stove either.”  Investors have been slammed so many times in the last decade that they are convinced that there is another crash coming.  From the Wall Street Journal

Like Lucy with her football, forever enticing Charlie Brown to one more kick, Wall Street is waving at Main Street yet again and shouting, “Have a little faith—try me one more time.”

The Dow Jones Industrial Average this month briefly crossed 14000, for the first time since the boom of 2007.

For the broader Standard & Poor’s 500-stock index, the recent surge is even more historic. The S&P, which touched an ominous intraday low of 666 during the crash six years ago, has surpassed 1500. The first time it broke that barrier was April 2000—the peak of the dot-com era bubble.

Since then, the market has collapsed twice and recovered twice. Each time, the S&P 500 has made it just over the 1500 line before plummeting. Will this time be any better?

Our crystal ball is broken and we have no unique insight into the future of the markets over the near term, but we believe that after more than a decade of marking time, at some point the markets will head for higher ground, permanently.  And that will be just about the time that Charlie Brown decides that he’s never going to kick the football again.

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More Firms Roll Out Roths

Via the Wall Street Journal

Many employers are planning to add a Roth 401(k) option to their offerings of corporate benefits in the next 12 months, a new survey suggests, making it easier for workers to save money that can be withdrawn tax-free in retirement.

A provision in the tax law enacted in early January gives workers a chance to stockpile more tax-free earnings—but only if their employers’ 401(k) plans include a Roth option, along with the ability to move assets workers already have saved in tax-deferred 401(k) accounts.

This is a major benefit for young and even middle aged employees.

The attraction: While workers converting tax-deferred savings would have to count the assets converted as ordinary income, and pay an upfront tax bill, future earnings and retirement withdrawals generally would be tax-free. And even though Roth 401(k)s generally require mandatory retirement distributions starting at age 70½, retirees could roll the assets into Roth individual retirement accounts to avoid them.

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Stock Indexes

As you become more financially sophisticated, you will find that many investment managers compare their performance to a various indexes.  Here are a few of the most common stock indexes:

  • The Standard & Poor’s 500 Index – The S & P 500 index,
    The S & P 500 index consists of 500 stocks chosen on the basis of industry, market capitalization, liquidity and other factors.
  • The Dow Jones Industrial Average (DJIA) – popularly known as the Dow,
    This index consists of 30 significant stocks traded on the New York Stock Exchange (NYSE) and the NASDAQ.
  • The Russell 2000 Index,
    This index consists of 2,000 small company stocks
  • Wilshire 5000 Total Market Index (TMWX),
    This index measures the stock performance of all US headquartered equities. includes equities of more than 7,000 companies
  • The Nasdaq Composite Index,
    The index consists of stocks of more than 5,000 companies traded on Nasdaq.
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Hiring a Financial Advisor: Clues from the Receptionist

At “Average Joe’s” blog there was an interesting set of things that people should look for when interviewing a financial advisor.  The first point he made was that interviewing a someone to help you manage your money could be nerve-wracking.   So the atmosphere should be calming.

If you’ve ever met with a financial professional, you know how nerve-wracking that first meeting can be. First, you’re unsure of the qualifications of the expert, you don’t know anything about their operation, but mostly, you’re not sure if you’ll like her.

Let’s give you some clues to look for when you have that first meeting. OG & I have visited plenty of financial advisory offices and can give you an insider’s look.

Here’s a summary:

  • There should be a welcoming, warm receptionist
  • You should be offered a beverage or a snack
  • The reception area should be soothing and calm; no blaring TVs
  •  I want an advisor who has pride in their operation and gives top customer service without being over-the-top.

Good advice.

Looking for a financial advisor?  Check us out.

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Cash in not trash

In today’s ultra-low interest rate environment, investors are temped to consider cash a useless assets as part of a portfolio.  Nothing could be further from the truth. 

The heyday of cash was in 1981 when cash, in money market funds, returned 15.58%.  The low point for cash is now.  The point about cash is that although it earns virtually zero at this point, its value will not decline and it provides the powder to enable the smart investor to take advantage of the next great buying opportunity.  Cash should always be one of the asset classes in a well diversified portfolio.

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Paying it forward

The December 2012 issue of Financial Planning featured an article about funding a 529 college savings plan for grandchildren which can offer estate tax benefits for grandparents plus feel-good rewards.

Grandparent owned 529 accounts offer distinct advantages.  Grandparents concerned about estate taxes can move large sums from their estate, tax-free.  They can help trim college costs for their progeny.  And there’s security knowing that money in 529 plans can be redeemed, if necessary, often with a modest tax bill.

Questions about education planning?  Contact us.

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Oppenheimer: the risk of bonds

 

We try to make people aware that there is risk to everything, even things that are “guaranteed.” 

It’s the trend that has Wall Street abuzz. For the first few weeks of the year, investors put more money into stock mutual funds than they took out, a trend that hasn’t happened much since the financial crisis. But focusing on what’s happened since the calendar turned is missing a much bigger issue. Investors, spooked by a seemingly endless parade of potential disasters, poured and, in many cases, are still pouring hundreds of billions of dollars into so called safe-haven bonds like Treasuries, which are backed by the full faith and credit of the U.S. Government. That decision has kept many from reaping the full benefits of the stock market’s rally. More importantly, that desire to feel ‘safe’ soon could wind up doing a lot of harm.

I believe Treasuries are far riskier than people likely imagine. Indeed, Treasuries have become fairly speculative at this point.  The stated yields on most U.S. Government bonds are below the rate of inflation.  Real yields, the effective value of a bond’s interest payment after taking inflation into account, are less than zero!  To believe Treasuries will hold their value is to believe that inflation will fall or go negative, something the Federal Reserve’s money printing makes only a remote possibility.  The deflation scenario is what we call a “tail risk,” something at the far end of a normal bell curve of outcomes.

If you have questions about bonds and their place in your portfolio, contact us.

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Before I Go Book Hits the Internet

 

Glenn Reynolds, one of the most prolific bloggers in in the world and a law Professor at the University of Tennessee has been kind enough to give my books a mention.  Thanks Glenn.

IF SOMETHING HAPPENED TO YOUR SPOUSE

WOULD YOU KNOW: 

  • How to access your bank accounts?
  • What your income will be?
  • Where the will and insurance policies are?
  • How to manage the family finances?
  • Where your investments are?
  • How much it will cost to maintain your lifestyle?
  • What to do about the funeral?

 IF YOU ANSWERED “NO” TO ANY OF THESE QUESTIONS,

YOU AND YOUR SPOUSE NEED THIS BOOK.

 

 BIG GUIDE COVER 11-14-12 (4)

 

BIG WORKBOOK COVER 11-14-12 (3)

 

For an autographed copy, contact us.  ($25 for the set) or Amazon.com

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