How to Invest When You Can’t Predict Market Direction
By Douglas Goldstein CFP®- helping olim handle their U.S. investments from Israel
If you’re thinking of investing in stocks but you’re concerned about which direction the stock market will move, here’s what you need to know:
If you are a new investor with a long-term perspective, it shouldn’t matter which direction the stock market moves in the short term. What you should know is that a bull market (up market) generally follows a bear (down) market. On average, bear markets in the United States last about 11 months, while bull markets average 32 months. In the past, the average bear market decline was 27%, while the average bull market gain was 119%, though past performance is no guarantee of future returns.
Remember that historically down markets were temporary. More importantly, not only does a bull market erase declines, but in the past, the gains of the previous bull market were extended significantly. Will it always be that way? Unfortunately, no one knows.
Diversification is key to long-term performance
The key to capturing the upside returns of the stock market while minimizing downside risk is diversification. Diversification is a strategy that recognizes the uncertainty in how stocks from various sectors will perform at any time and it tries to balance your portfolio by spreading out risk among various assets. Instead of buying dozens of individual stocks, you can diversify with index funds and exchange-traded funds (ETFs).
With ETFs and index funds, your investments can be allocated among different types of stock indexes to achieve a risk/return profile that matches your own risk tolerance.
If you work with a licensed financial advisor who understands your objectives and risk profile, you can create a diversified portfolio that is tailored to your needs. Learn more about investing in stocks by watching this 10-minute video.
Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Neither PRG nor its affiliates give tax or legal advice.
Why You Need to Talk to Your Adult Children about Your Finances
By Douglas Goldstein CFP® - helping olim handle their U.S. investments from Israel
Do you find it difficult to discuss with your adult children what should happen with your finances towards the end of your life?
If so, you’re not alone.
People don’t like thinking about their own mortality or losing control. Moreover, as family relationships aren’t always easy, discussing issues such as power of attorney, healthcare proxies, and estate planning can get very complicated. For these reasons, many families push off this conversation for as long as possible.
If you don’t speak with your adult children about your finances, they may have difficulty picking up the pieces and taking care of you and your affairs if you become too infirm to take care of yourself. The emotional and monetary effects of taking care of an elderly parent without any direction can be very hard, especially if your adult children are raising families of their own at the same time.
How to have “the talk”
The best way to let your adult children into your finances is to talk with them. If you can’t physically do that for any reason, compose a list of all your assets, where they are, what you want to happen when you’re no longer able to look after yourself, who would take care of you, and other important issues. Make sure to sign the appropriate documents so your children have the legal means to make financial decisions on your behalf (Power of Attorney, Trading Authorization, etc.)
If you have a financial advisor, invite your adult children to the attend meetings. Let them know who helps you with your finances and who to ask for reliable, objective advice when necessary. While you can’t ever know exactly how long you will live or stay healthy, taking a disciplined approach and sharing your financial situation, goals, and strategies can save a lot of heartache for everyone down the road.
For more about why sharing your finances with your adult children is so important, listen to Tim Prosch, author of The Other Talk, on The Goldstein on Gelt Show at here.
Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Neither PRG nor its affiliates give tax or legal advice.
Steps You Need to Take 5 Years before Retirement
By Douglas Goldstein CFP®- helping olim handle their U.S. investments from Israel
Will you have “enough” money to live comfortably? The months and years before retirement may be filled with trepidation and financial worries. In order to minimize financial concerns before retirement, here are some steps you should take in the five years leading up to it:
Organize your assets for tax efficiency
Most retirees underestimate the impact taxes will have on their retirement income. If you have an idea of what your retirement tax bracket will be, work with your advisor to arrange your assets in a way to create the greatest tax efficiency when you start withdrawing. Selling assets might trigger large capital gains taxes, and there may be additional taxes on pension payments.
Know your pension options
For some people, delaying taking Social Security or other pensions until as late as possible might make sense. Learn more about timing claiming benefits at: Profileperspectives.com/social-security. Be sure to check with your Israeli pension advisor in Israel about taking Bituach Leumi and withdrawing your work pension as a lump sum or in monthly payments.
Don’t be too conservative
While it may be tempting to reduce your exposure to risk-based investments pre-retirement, if you get too conservative, you could inadvertently diminish your portfolio’s capacity to generate enough income to meet your needs. A balanced and diversified portfolio of both stocks and bonds may be your best strategy for maintaining capital growth while reducing portfolio volatility. But beware of taking risks without consulting with a licensed advisor first.
Find your retirement ambition
Studies show that retirees who stay engaged and productive are happier in all aspects of their lives. Explore new interests that can be enjoyed now and more fully developed as you cross the retirement threshold. These might include volunteering, mentoring, or starting a new hobby or business.
The five years before retirement is a critical period for ensuring a smooth transition into your next stage of life. Get in touch if you’re concerned about how to handle your investments for retirement: doug@profile-financial.com.
Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Neither PRG nor its affiliates give tax or legal advice.
How to Choose the Right Financial Advisor for You
By Douglas Goldstein CFP®- helping olim handle their U.S. investments from Israel
Choosing the right financial advisor can be like seeking the right life partner. Your financial advisor needs to be the perfect match for you and your situation. Your advisor must be knowledgeable, honest, reliable, and, most importantly, have your best interests in mind.
There are many financial professionals, who all offer a range of services and expertise. How should you choose? When considering whether to work with a prospective advisor, ask yourself these questions:
Is this financial advisor qualified?
Before you set foot inside a financial advisor’s office, make sure that he is licensed and has expertise with the types of investments that interest you. You can check out his qualifications, background, and experience through the online checking facilities provided by FINRA (Financial Industry Regulatory Authority) in the United States and ISA (Israel Securities Authority) in Israel.
Who is the topic of your first meeting?
If your prospective financial advisor spends a lot of time talking about himself and his credentials, but doesn’t ask you about your investment goals and current financial situation, then choose someone else. The main subject of your first meeting should be you. A financial advisor needs to learn about you, your specific needs, goals, and the ultimate purpose of your investments.
Talking with you or at you?
When a financial advisor speaks with you about investments, make sure you understand how these investments work and why he suggested them. Not everyone understands financial jargon, so make sure everything is explained clearly. If you don’t feel comfortable asking questions, interview another advisor. During your conversation (and yes, it should be a conversation and not a monologue!), make sure that you feel comfortable. You should leave the meeting with a sense that your finances are in good hands.
What else do you need to know about finding the perfect (financial) match? For more ideas, read this: Profile-Financial.com/pick-advisor
Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Neither PRG nor its affiliates give tax or legal advice.