We are forever indebted to those who gave all, so that we might be free.
Memorial Day is a federal holiday for remembering people who died in our country’s armed forces. Observed every year on the last Monday of May, Memorial Day is celebrated in lots of ways.
Regardless of how you are celebrating, it’s important to remember those who served our country. Especially those who died for it. As a wounded soldier in the Korean War originally remarked, “All gave some; some gave all.”
As President Reagan said about America on Memorial Day, 1983:
“We owe this freedom of choice and action to those men and women in uniform who have served this nation and its interests in time of need. In particular, we are forever indebted to those who have given their lives that we might be free.”
Origins of Memorial Day
Memorial Day is a day of remembrance for soldiers who died in the service of the US military. It arose originally after the Civil War, which claimed more lives (750,000) than any war in American history. In fact, it was because of the large number of Civil War deaths that the first national cemeteries were established.
By the late 1860s, various communities began holding spring-time tributes to the many fallen soldiers. Citizens recited prayers and decorated the graves with flowers. The first Decoration Day occurred in 1868. On that
first Decoration Day, General (later President) James Garfield spoke to crowd of 5,000 that decorated the graves of the 20,000 Civil War veterans at Arlington National Cemetery. As Garfield said of the Civil War dead, “For love of country, they accepted death.” By the early 20th century, both Southern and Northern states celebrated Decoration Day together.
Decoration Day was originally celebrated on May 30th, a date chosen because it was not the anniversary of any particular battle. In 1968, however, Congress passed a law that established Memorial Day as the last Monday in May, thus creating a three-day weekend.
All told, over 1.35 million American soldiers have died serving our country, about half of them in
combat. In addition to the 750,000 Civil War dead (both sides), we lost 117,000 in World War I and 406,000 in World War II. We lost 37,000 soldiers in the Korean War, and 58,000 in Vietnam. These numbers do not include the over 1.5 million soldiers who have been wounded but lived.
Military combat deaths are not just distant memories, however. Combat veterans walk among us, as do families of recently deceased soldiers.
Since 2006, 15,851 active-duty personnel and mobilized reservists have died while serving in the U.S. armed forces.
Celebrations of Memorial Day
Memorial Day is not only a day of solemn mourning and reflection. It is also a day to celebrate the family, freedoms, and joys that our soldiers helped to preserve. In large and small cities across the country, people will celebrate Memorial Day with parades. High school and college marching bands will march. Floats and cars will carry local officials, honored guests, veterans’ groups, youth groups, and other people and decorations. There will, of course, be picnics and other gatherings of family, neighbors, and friends.
On Memorial Day, we can and should thank those among us who are veterans. We can and should remember those who are no longer here. Thank you to all the veterans who served our country.
And be proud of those who served.
After the Nest is Empty
Save and Invest
When your children are grown and leave home, you are released from being the financial “provider”: No more bills for everything from food and clothes to visits to the dentist. Along with this “freedom” may come immediate temptation to spend your “extra” money on the things you have been waiting for over the child rearing years.
Instead, you should purge that urge to splurge! Now is the time to put a sizable portion, if not all, of that extra money away in a savings and investment plan earmarked for your retirement.
Add Up Your Savings
Figure out just how much those tuition bills and other child rearing expenses have cost you. A potential smart move is to save and invest that much for at least the next several years. If you feel you just can’t resist splurging on yourself before retirement, make up a short-term savings goal list to reward yourself at intervals along the way.
The important point is to make sure the extra dollars do not land in your general budget where they can disappear all too quickly, eaten up by a meal out here and a “we-deserve-a-little-luxury” purchase there.
Check Some Facts, Reduce Your Tax
At this stage of life it is also wise to assess whether you are taking full advantage of every opportunity to reduce your tax bills. The number of dependents you can claim will drop; are there additional deductions you can claim to replace them?
After your children have flown the nest, take the time to evaluate your personal financial situation and make adjustments as needed.
Cohabiting? How to Tread the Tricky Waters of Pooled Finances
For a variety of reasons, many couples, regardless of age, may find themselves living together for a period of time as unmarried partners. If you find yourself in this situation, it’s important to make conscious decisions about how to handle personal and household finances because unmarried partners lack many protections the law extends to married couples. If you and your partner pool your financial resources, there are no divorce courts, regulations, or uniform legal guidelines to separate your combined assets if your relationship ends. So before wading into this uncharted territory, it’s worth taking a moment to consider the following questions:
- If you and your partner merge your finances, will this be limited to household expenses, or will you share income, as well?
- How will you share household bills—equally or according to each partner’s income or use?
- Will you hold joint checking and credit card accounts?
- How will you handle retirement planning for the long term?
Treading Tricky Waters
Joint bank and charge accounts may carry some drawbacks for unmarried couples. Each partner is fully responsible for the entire amount of any joint debt. Creditors can seize funds in a joint account to satisfy one partner’s debt. And, if one partner depletes the funds in a joint account, or fails to pay for his or her credit card charges, this could damage the other’s credit rating.
As an unmarried partner, you also face unique difficulties when it comes to retirement planning, since you may be ineligible for two key sources of retirement income that many spouses depend on—spousal benefits from both Social Security and defined benefit pension plans.
Before combining your finances, it’s a good idea to have a candid, in-depth discussion of your financial values and goals. Only by addressing these issues honestly, will you have a solid basis for making financial decisions?
An Ounce of Prevention. . .
Before opening a joint checking account, select one that requires both signatures for withdrawals. Have a clear understanding of what expenses the funds will cover. Keep detailed, up-to-date records of the contributions you each make toward shared expenses; otherwise, verification of these contributions may be difficult, if the relationship ends. And, if you do part company, close all joint bank and credit card accounts as opposed to just dividing them up.
Remember, you are each fully responsible for all charges on a joint account. Besides, keep in mind that it’s important to establish and maintain your own separate credit history.
When it comes to retirement planning, unless you have a written agreement or irrevocable trust that will withstand a permanent separation, you may want to consider yourself as a single individual and plan accordingly. However, if you should decide to plan for retirement together, here are some strategies to look at: Investigate the possibility of joint and survivor benefits; designate each other as the beneficiary of life insurance policies and qualified retirement plans; and cross-own life insurance policies.
Another step worth considering is a domestic partner agreement. This is a legal contract between unmarried partners that can clarify the sharing of income, expenses, and property. It outlines each partner’s ownership rights and states his or her intentions for the distribution of his or her property if the relationship ends or if one partner dies. However, the acceptance of these agreements varies from state to state. Therefore, be sure to consult a qualified legal professional for your unique circumstances.
Look Before You Leap
There are many options unmarried couples can choose to handle their finances. The least complicated and “safest” approach may be to keep your finances separate. However, this isn’t always convenient, and it may not promote trust in relationship building. But, by understanding the concerns you may face as an unmarried partner, and speaking with your trusted advisors, you’ll be in a better position to determine the appropriate decisions to make for your financial and emotional well-being in this type of domestic arrangement.
How to Raise Financially Responsible Children
It’s never too young to build your child’s financial foundation. It is important to start as early as possible helping children understand the value of money and the responsibilities that go with it. By gradually introducing your child to financial matters, you will provide the opportunity to become involved with money directly. Here are some ideas to help build your child’s financial foundation:
- Take your child with you when you cash your paycheck, make regular savings account deposits, or go grocery shopping. Demonstrate how to prioritize buying decisions and save money for future goals.
- Allow your child to handle his or her allowance independently. However, to teach your child self-discipline around money, stick to a set schedule for paying your child’s allowance.
- Present opportunities for earning extra cash to spend as your child wishes, and remember to reinforce the importance of saving at the same time.
By showing your child ways to manage money early on, you will be building your child’s financial foundation for the future.
Dreaming of Owning a Second Home? The start of summer brings aspirations of owning that special spot
Summer is here and with it are fanciful dreams of owning a second, seasonal home. Maybe it’s a beachside bungalow or a mountain cabin or a lakefront cottage with a front porch and a sweeping view of the sunlight on the water. All of them no doubt sound enticing, but fulfilling this dream takes attention to detail and a firm vision of your long-term goals.
Two financial factors may help bring your summer daydreams closer to reality: the long bull market rise (despite some notable and recent slides) and interest rates that remain historically low.
Yet in addition to housing costs and interest rates (not to mention your lifestyle preferences, the home’s location and conditions of the real estate market), you should take many considerations into account before purchasing a second home.
If the factors add up right for you now, owning a vacation home may bring years of happiness. But if the time isn’t right, re-evaluate your long-term goals to see if you can buy this home in the future and avoid a ton of hassles today.
Issues to explore:
Location, location, location: Heeding the first rule in any real estate transaction, think about how far you wish to travel from your primary residence or business (and the travel costs involved), the natural or recreational opportunities, economic history and current conditions of the new region and state and property taxes.
Financial preparedness: Ensure that the new home won’t compromise or threaten your long-term financial goals. If you have a chronic illness or medical needs, for example, you want your income, assets and savings to cover those costs first. A financial advisor may be able to help assess your preparedness and guide your strategy to buy a second home while keeping your long-term goals on track.
Count all costs: The true cost of owning a vacation home goes beyond the purchase price and mortgage interest rate (if you choose to obtain a loan.) Maintenance, utilities, property and state taxes, prices of seasonal activities, weather concerns and insurance all change constantly and add up quickly. Consult with a real estate agent as well as with a tax professional as you evaluate these variables.
Investment, rental property, legacy or fun house: If interested in this property purely for investment, think about improvements the home may require, the availability of skilled help in the locale and the economic history and vitality of the community. Also, consider how long you want to or must retain the property to get a reasonable return on investment.
Tax implications arise if you hope to derive income from renting your vacation home (a tax professional can enumerate them). Renting your property may force you to incur some additional expenses and repairs from tenants’ damage, for example.
If you hope to simply treasure time at a second home and escape for solitude, recreation or making memories, the new place can potentially turn into your retirement home. Is that attractive to you? Do you hope one day to make your vacation home a legacy to be handed down for generations or is your interest more short-term?
Co-ownership: The more might seem the merrier when owning a vacation home, so you can split costs, but make sure you iron out what happens if one owner can’t pay the agreed-upon share of expenses.
Consider forming a limited liability company (LLC), which exempts you personally from legal and financial liabilities of ownership. With the LLC owning the property, details are outlined from the beginning in case someone runs into financial trouble. Another option may be for an individual or couple to own the property and rent to others.
If you want to create a legacy, a trust can facilitate passing the property from generation to generation with the least confusion. Discord created with the other owners may outweigh the benefit of sharing the mortgage payments, taxes and other expenses, however.
Regardless of what you decide, consult an attorney to fully understand the implications of your decisions. When you’re thinking about a second home, your heart and head must work together so you meet all your needs.
How Eddy Financial may help: As your advisor, we may help assess your preparedness and guide your strategy to buy a second home while keeping your long-term financial planning goals on track. In addition, we can serve as a quarterback in organizing all your other advisors – lawyers, CPAs, real estate professionals, etc. – in order to gather all details, opinions and research.
So, if the warmer days of summer are enticing you to look at those dreamy summer homes, please reach out to us for a complimentary consultation.
Because like all financial decisions, the further out we plan your goals, the more successful your journey.
Eddy Financial, LLC does not provide tax or legal advice.
How long until I double my investments?
The rule of 72 is an easy way to estimate how many years it will take to double your investments at a given rate of return, or allow you to estimate what percentage return you need over a specific period of time. It’s a lot easier than pulling out a calculator to do the compound interest formula. It works for annually compounded interest and estimating, as long as the percentage return is under 20%
Rule of 72 Example:
Hypothetical Rate of Return: 10%
72 divided by rate of return: 72/10 = Years to double investment: 7.2 years
|Rate of Return||6%||7%||8%||9%||10%||11%||12%|
|Years to double money||12||10.2||9||8||7.2||6.7||6|
Set a time Goal to Double Your Investment
Years to Double Investment : 6
72 divided by years: 72/6 = Rate of Return to reach goal: 12%
This is an easy way for you to review your investments to see if they are on track with your current investment strategy.
Are you on track?
If not, you may want to restructure your investments to capture an appropriate measure of expected investment returns based on your appetite for risk.
How do you do that? Contact us and we’ll be happy to provide a second opinion on your current investment strategy.
The above rates of return are for illustrative purposes only and do not attempt to predict actual results of any particular investment.
Are you earning 15% or more on your portfolio?
If you are, congratulations, BUT … you may not be diversified enough to help protect yourself from the next market correction.
As advisors, one of our fundamental jobs is to partner with clients to assess their tolerance for risk and make sure their portfolio is constructed in a way that reflects their individual outlook and circumstances.
We tend to see an uptick in new client inquiries when the market is more volatile. In recent years, as the market has generally done well, most investors have not seen significant market declines in their portfolios. However, if you or your advisor have not constructed your portfolio according to some of the tenets of asset allocation, you may be in for a rude awakening when the market dips.
It bears repeating that no one can predict when the market might turn, or why or how dramatically it may spike back up when it does. As always, we counsel against shifting your portfolio in reaction to near-term forecasts or results.
So, how can you prepare?
First, if you don’t feel comfortable going solo, please reach out to someone who can help. Both Andrew and Bob are CERTIFIED FINANCIAL PLANNER™ certificants, which we believe should be the minimum bar you should require when considering an advisor. In addition, we hold the Chartered Financial Consultant® and Chartered Life Underwriter® designations. Lastly, Andrew holds the Accredited Investment Fiduciary® designation. We believe knowledge is essential to providing superior service.
Second, when is the last time you had a conversation with your advisor about your personal goals and risk assessment? Did you really consider what a 30% market downturn would mean to you? If you have a 20-year investment time horizon, maybe you would consider it just a blip on your investing radar. If you are closer to retirement, maybe it would truly affect your lifestyle?
Some other questions to consider:
Market Risks – Are you fortifying your exposure to market risks and expected investment returns with enough lower-risk holdings (e.g. fixed income/bonds)?
Personal Risk Tolerance – Have you been through past bear markets? Does your current portfolio mix of safer/riskier holdings accurately reflect what you learned?
You can prepare for the next down market by having a well-planned portfolio in place today – one you can stick with throughout any market upheaval. It should be structured to capture an appropriate measure of expected investment returns during good times, and allow you to pass what we call the “sleep test”. If you are worrying about your portfolio too often (e.g. perhaps you lie awake thinking about it), you may have decided to take on too much risk for your personal circumstances. A change may be in order?
When is the last time you’ve thought about your portfolio from this perspective? If it’s been a while – or never – let’s talk. Because there’s never a better time than today to ensure you are well prepared for tomorrow.
Disclosure: There is no assurance that a diversified portfolio will produce better returns than an undiversified portfolio, nor does diversification assure against market loss. A plan of regular investing does not assure a profit or protect against loss in a declining market. You should consider your financial ability to continue your purchase through periods of fluctuating price levels. Past performance is no guarantee of future results.