Should You Have a Shared Savings Account With Your Spouse?
By Douglas Goldstein, CFP®
What’s the best way to invest with your spouse? Should you have a shared savings account or separate accounts?
Whenever I help a couple set up U.S.-based brokerage and investment accounts, I ask whether they want a “joint” account, or whether they want to keep their money separate.
Shouldn’t couples always invest together?
In an ideal world, spouses would combine both their personal and their financial affairs. But given the complexities of today’s family structure, one account type doesn’t meet everyone’s needs. Some couples enter matrimony on equal financial footing, while others have children from previous marriages, and debts from the past. Before deciding on the structure of the account, therefore, consider each party’s assets, obligations, and needs. Money should not become a power tool in a marriage.
Benefits of a joint account
A joint account often makes sense as either owner can give trade orders in a joint brokerage account and write checks to withdraw money. On the other hand, bank-to-bank wire transfers require both signatories on the account to sign. In the event that one party dies, there is paperwork that the surviving spouse must sign before accessing the money. Depending on how quickly the forms are filed, and how fast a proper “release” comes, it could take quite some time before the money becomes available. A good trick, therefore, is to make sure that each spouse has access to enough funds to pay the bills for several months in the event that the joint account gets frozen.
Should second marriages set up a joint account?
Consider important factors like prenuptial agreements and the need for financial independence (which doesn’t mean financial secrets) when deciding whether to combine funds in a second marriage. Many times, spouses agree to each keep a separate account for personal investing but also a shared account for household expenses. If you’re in this situation, listen to a financial podcast on the topic of shared savings accounts: www.GoldsteinOnGelt.com/2-Marriage.
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.
Some people say the next best thing to being personally financially successful is having rich kids. However, teaching children good financial habits can be challenging. Here’s where Tom Corley and his book Rich Kids comes in handy. This is a great resource for teaching children (of all ages) about money.
The three paths to wealth
There are three paths to wealth:
Starting young
While these paths sound like they may only apply to adults, children can - and should - acquire these habits. If you give your children an allowance or if they have a job, they should save part of their income.
Your wallet shouldn’t be the sole source of your kids’ income; encourage them to work and learn the powerful life lesson of self-reliance. Whether your child babysits, walks the neighbor’s dog, or gets a regular part-time job with a tlush (paystub), he or she learns personal and financial responsibility. Children who internalize these lessons are less likely to grow into dependent adults… who expect their parents to pay off their debts.
To find out more about rich habits and how to teach them to your children, listen to my discussion with Tom Corley on The Goldstein on Gelt Show at: www.GoldsteinOnGelt.com/RichKids.
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.
Note: After reading the following true story, try the free Investment Evaluation Tool to determine if you are invested more aggressively than you should be. Details for accessing the tool are below.
When I talk with people about how they should structure their U.S. investment accounts, one of the common questions I ask is how long do they plan to keep the money invested. Folks who see themselves as “long-term” investors can often take on the added risk of the stock market.
What about long-term investors who don’t need growth?
I recently met with a couple who were good earners, solid savers, and on top of it all, had inherited a sizeable amount of money. They told me that they thought they should invest mostly in the stock market.
“Why do you need to take on the added risk of stocks?” I asked.
They felt that they should invest for growth because “that’s what everyone does.” I told them that even though the media and popular websites might tell people that they must invest in the stock market if they’re long-term investors, it’s not always true. In fact, there might be a much better way for them to invest. Rather than focusing on growing their money in the long term, they could consider improving their life in the short term.
I explained that they could convert some, or all, of their portfolio into investments that would produce regular income and then they could cut down the number of hours they worked. Alternatively, they could use some of that extra income for enjoyable expenses like vacations and renovations.
“I’m surprised you say that, Doug,” the wife said. “I assumed you would tell us to invest in the stock market.” I replied that people should invest not only based on their tolerance for risk, but also on their specific needs.
Is your portfolio invested more aggressively than it should be? Try the free “Investment Evaluation Tool” at www.Profile-Financial.com/investment-evaluation or call (02) 624-2788. Consult with a financial advisor before investing to better evaluate the risks, costs, and potential benefits given your specific situation. An investment suitable for one person may not be suitable for another.
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.
Is Panic the Best Reaction to a Drop in the Market?
By Douglas Goldstein, CFP®
As an investment advisor who helps olim manage their American brokerage accounts, I’m often asked, “Why should I invest in the stock market when it only goes down?”
If you believe that the stock market only goes down, then putting your money in stocks is a big mistake. The people who tend to make money in the stock market aren’t investing for the short term. They realize the market can, and sometimes does, drop, but their long-term time frame allows for plenty of opportunity for the market to recover. If you’re trying to grow your wealth and believe that the economy will strengthen, the stock market offers many possibilities. Remember: “possibilities” does not mean guaranteed gains; it includes the very real chance of loss.
Folks who can’t tolerate volatility should avoid the market. This doesn’t mean that you have to panic, sell everything, and bury your treasure in your backyard. There are investing opportunities that aren’t based on stocks that may be appropriate for those with a lower risk tolerance.
One trick to avoid panic
A well-diversified portfolio is in a better position to weather market drops. If you only invest in a few stocks and those sectors are weak, your losses will be larger than if your investments were spread out among more sectors/stocks. Diversification is a good tool for mitigating risk, and allows those who otherwise may have a lower risk tolerance to stay invested in the market.
The most popular tools
Common investment tools for diversifying risk include using mutual funds, ETFs (Exchange Traded Funds), and money managers. Some of these approaches follow a “low volatility” model that can help to protect you on the downside, though they do not actually eliminating risk. Other tools can actually leverage your investment, making a move even faster than the market. If you bet in the right direction, that can be great. But beware… leveraged funds will drop faster than the market if it falls. Make sure you speak with a qualified investment advisor before doing any investing.
To find out more about some of the different tools that people use to invest both using stocks and other tools (bonds, bond funds, etc.) watch the videos at www.Profile-Financial.com/FAQ-videos.
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.
How to Solve this Common Problem with American Brokerage Accounts
By Douglas Goldstein, CFP®
I often receive calls at my office from people who say that their U.S. investment advisor asked them to change firms. It’s not because they don’t meet the minimum balance requirements. Rather, it’s just because they have chosen to live overseas.
For various regulatory reasons, several large investment companies in the United States have decided to stop servicing clients who live abroad, many American olim included. Stringent legislation designed to prevent terrorism, money-laundering, and other criminal activities has made it much harder for U.S. brokerage firms to deal with cross-border finance. For this reason, some firms that used to work with U.S. citizens living overseas have decided that it is no longer worth their while to do so. Despite the legislators’ intentions to hurt terrorists, many law-abiding citizens who live overseas are also feeling a negative effect from the war on terror.
If you’ve recently gotten a phone call or a letter from your mutual fund company or brokerage firm in America, don’t worry. There is a solution (other than selling your assets and transferring to Israel – an especially tax-disadvantageous move if you own American tax-deferred accounts like IRAs).
How to easily transfer your account to another American brokerage firm
Not every American brokerage firm rejects multi-nationals. Indeed, some major companies embrace the potential of overseas business. You can easily transfer your account to a company who welcomes Americans with foreign addresses. Just fill out an “account transfer form.” Within a short period of time, your old firm can simply transfer the assets to the new firm and you can continue with all of the same types of investments (and tax-beneficial accounts like IRAs) that you’ve always done. In any case, it is a good opportunity to review your investment portfolio.
If you’re not sure why your current advisor has said goodbye to you or if you want to find out how easy it would be to transfer your account to a more Israel-friendly firm, use this interactive form at www.profile-financial.com/interactive.
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.
What You Need to Know When Blending Two Families
By Douglas Goldstein, CFP®
Many second marriages are the blending of two families, not just two people. This situation raises various questions about child support, how to divide household bills, and inheritance issues. To ensure a smooth financial union, make sure to discuss these issues before the actual ceremony takes place.
Sign on the dotted line
A financial prenuptial agreement detailing which assets belong to whom and which funds will be used for specific purposes such as children’s college funds and weddings is critical in second marriages. Both spouses should use their own lawyer and the couple should meet with a financial advisor who has experience with blended families to discuss the fairest ways to protect their financial responsibilities and their children.
Joint and separate accounts
Sometimes it makes sense to keep three separate bank accounts in second marriages: his, hers, and joint. Individual accounts can continue to support previous financial commitments (child support, tuition, etc.) and a joint bank account can cover the shared expenses of your new joint life.
Plan your endgame carefully
Some of the most difficult family disputes are between children and stepchildren over a deceased parent’s assets. Should the children from the first marriage share an inheritance with step-children from the second marriage? Obviously these issues need to be handled on a case-by-case basis, depending both on the financial status of both sides pre- and post-second marriage, and the ages of separate and shared children.
To avoid bickering over assets and family heirlooms, estate planning is crucial. There are various ways to make sure that everyone is taken care of, from stating specific beneficiaries on your life insurance policy to creating a trust with a lifetime clause for the surviving spouse, but with your children as heirs. Titling investment accounts properly can ease inheritance (as well as tax) issues.
If you are in your second marriage and haven’t yet discussed these issues with your spouse, now is the time. Consider updating your adult children as to the result of the conversation, so there will be no surprises. Contact your financial advisor today to see if there are any changes that need to be made with titling bank accounts or updating beneficiaries.
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.
Why You Need to Think Big and Start Small to Get Rich
By Douglas Goldstein, CFP®
One of the most effective ways to achieve your financial goal is to develop good habits. Here’s what you need to know:
Rome wasn’t built in a day
Acquiring good financial habits does not happen overnight. First, you need to decide what you want to change, such as your spending or saving habits, budgets, etc. Whatever you decide to change, make sure you are beginning with a small step. Habits built on small, but steady, steps take hold quicker and last longer than sudden drastic changes.
One small target at a time
If you want to become less extravagant and more careful about spending your money, start by writing down what you spend every day for a week. When you have done that, think of which of your regular purchases are unnecessary. Rather than dropping them all at once, gradually phase them out of your shopping list, one item at a time, week by week. At first this may be difficult for you, but each time you successfully save some money and reduce your spending you will find it easier to progress.
Similarly with saving, start by saving a small amount monthly, and then increase it until you are saving a sizeable amount on a yearly basis. To make sure you actually implement your savings plan, make sure to implement the habit of paying yourself first, before other bills. That way, putting money into savings will become as much of a habit as paying your electric bill.
For more about changing your habits, listen to my interview with James Clear, author of Transform Your Habits at www.GoldsteinOnGelt.com/james-clear.
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.