Stock Market Update March 2023

Stock Market Update March 2023

Stock Market Update | February 2023

In this stock market update Steve discusses the new phase of the bear market, the fear and greed index, the financial markets, the happiness index and more.

This video was recorded on March 7, 2023.

WWM Financial is an SEC Registered Investment Advisor

The opinions expressed in this program are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security. It is only intended to provide education about the financial industry. To determine which investments may be appropriate for you, consult your financial advisor prior to investing. Any past performance discussed during this program is no guarantee of future results. Any indices referenced for comparison are unmanaged and cannot be invested into directly. As always please remember investing involves risk and possible loss of principal capital; please seek advice from a licensed

What’s Included In a Financial Plan

What’s Included In a Financial Plan

What’s Included In A Financial Plan?

A well-written financial plan can mean the difference in your financial success. With it, you’ll be less likely to make poor financial decisions.

Despite the importance of a personal financial plan, many people don’t know what to include in their plans.
Financial planning is highly personal. This means that while plans feature similar ingredients, the quantities, when they’re added, and how they blend will vary based on your unique situation.

So, to give you a clear picture of what goes into a financial plan, let’s look at some of the most common elements:

1. Net Worth Statement

The first thing to include in your financial plan is an overview of what your financial situation looks like.
You can do this by performing an asset evaluation to determine your net worth. Start by taking an inventory of all of your assets (investment properties, bank accounts, valuable personal properties, etc.). You’ll need to determine the market value of all your assets.
After valuing all of your assets, you’ll need to take an inventory of all your liabilities (debts).
You can then calculate your net worth by deducting your liabilities from your assets’ value.
If your liabilities outweigh your assets, don’t fret. This is common when you’re just starting out, especially if you have student loans and a mortgage.

2. Financial Goals

Your financial goals are the next item to include in your financial plan.
Think about goals such as saving a down payment for a home, buying a car, paying off your student loans, kids’ college savings, retiring early, and other stuff that you’d like to accomplish.
These goals are the driving force of your financial plan. They will motivate you to follow through with your financial plan.
Decide how much money you’ll need to meet each of these goals. When your financial goals are crystal clear and have a number attached to them, your plan becomes more effective.

3. An Investment Strategy to Get You There

Once you have an idea of your financial goals and how much you’ll need to set aside to achieve them, your next step will be to create an investment strategy to help you meet each goal.
Design your investment strategy based on your personal goals, risk tolerance, and time horizon.
If you have a lengthy time to save, it might make sense to be more aggressive with your investment choices. If you’re approaching retirement, you might choose to be conservative in your selections.
After deciding the strategy you’ll take, jot down a personal investment policy statement to guide you when choosing your investments.
You can then select your investments while making sure to diversify as you build a portfolio.

4. Budgeting and Savings Plan

You cannot build wealth without having a handle on your expenses and knowing what you can save.
If you haven’t already, create a personal budget to track and categorize your monthly income and expenses. Adjust your spending as necessary and plan how to tackle high-interest debt, such as credit cards. Dedicate whatever’s left over to build your emergency fund then start working toward other goals.
A good financial plan should also have a savings plan. This is a plan for how much money you need to save from your income every paycheck or month to realize your goals.
Setting aside more money while you’re young with fairly low expenses is a smart choice. If you’re older, you’ll want to figure out how much you’ll need to set aside to retire comfortably.
A good rule of thumb is to save at least 20 percent of your monthly income.

5. Debt Management Plan

When used wisely, debt can be an excellent financial tool. But it can also be a drag.
Whether you have credit card debt, student loans, or other “toxic” high-interest debt, a debt management plan can help you to complete your debt payments quickly, allowing you to retire without continuing payments.
If you’re unsure where to start, a financial advisor can help educate you about debt and the various strategies you can use to manage or pay down debt.

6. Emergency Fund

While it’s impossible to plan for all risks, having an emergency fund to help you in case of an injury, illness, job loss, or another expensive event can help you stay within your goals and objectives.
Putting cash away for emergency expenses is the bedrock of any financial plan. Doing this can help you avoid tapping your savings account to make ends meet.
You can start small — 500 bucks is enough to cover small repairs and emergencies so that an unexpected expense doesn’t run up credit card debt.
Your next goal could be a thousand bucks, then one month’s daily living expenses. Continue increasing your target gradually until you have 3-6 months’ worth of basic living expenses stashed in a separate savings account.

7. Retirement Planning

A retirement plan lets you save money for the golden years of your life and ensures you can meet your needs comfortably.
By using different financial options that reinforce each other, you’ll be able to create a dependable income stream in retirement. An old rule of thumb says you will need 70-80 percent of your current income in retirement.
A financial plan prepares you for key risks — such as inflation, taxes, market volatility, and the probability that you may live longer than expected.

8. Tax Planning

Creating an income and property tax plan is critical for your overall financial plan as these taxes can undermine long-term savings.
Taxes are inevitable, but you should not pay any more than necessary.
Review your tax plan annually since tax laws and regulations change every year. Take advantage of opportunities like harvesting tax losses, bunching charitable donations to offset excess income, and using Roth IRA conversions strategically.
Hire a tax professional to decipher the deductions that you may be eligible to take. This way, you’ll be able to reduce the amount that you have to pay to Uncle Sam and keep more of your money.

9. Estate Planning

This is something that a lot of people put off because they think that they have plenty of time to do it later or just don’t want to think about death.
It’s, however, important to understand that the worst can happen at any time. It doesn’t matter whether you have significant wealth or a small nest egg; everyone over 18 should at least have durable health care and financial powers of attorney in place.
If you become incapacitated and do not have a plan in place, for example, your loved ones may have trouble making vital medical decisions or accessing your bank accounts to pay your hospital bills for you.
Estate planning should also include plans for how your wealth will be distributed to your loved ones or special causes you care about after your death.
Comprehensive estate planning may include a handful of documents, such as wills, living wills, trusts, and advance directives.

10. Insurance Assessment

An insurance plan is another key component of a personal financial plan.
As you work toward building your wealth, you should also think about how to protect it.
The insurance needs of each individual will vary. Take time to evaluate your risks and determine how much insurance you need to offset each.
Your insurance needs might be affected by age, health, profession, assets, economic status, and family status.
At a minimum, include plans for your auto insurance, health insurance, disability insurance, homeowner’s/renter’s insurance, and life insurance.

Conclusion

Creating a financial plan will take some work, but the outcome can be life-changing.
Including all the elements mentioned above can lead you to greater financial health and a better future.
It goes without saying that your personal financial plan should not be static. You should treat it as a living document and review it as your life changes and your goals shift.

Contact Us

At WWM Financial, we take the time to assess your current financial situation, gain an understanding of your short- and long-term needs and goals, and put together a realistic financial plan to help you achieve everything your heart desires.

For help with your financial plan or to learn more about the services we offer, get in touch with a member of our team today. 

WWM Financial is an SEC Registered Investment Advisor

The opinions expressed in this program are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security. It is only intended to provide education about the financial industry. To determine which investments may be appropriate for you, consult your financial advisor prior to investing. Any past performance discussed during this program is no guarantee of future results. Any indices referenced for comparison are unmanaged and cannot be invested into directly. As always please remember investing involves risk and possible loss of principal capital; please seek advice from a licensed professional.

Stock Market Update February 2023

Stock Market Update February 2023

Stock Market Update | February 2023

In this market update Steve discusses the “The January Effect”, the fear and greed indicator, the indices, rates, inflation and more.

This video was recorded on February. 3, 2023.

WWM Financial is an SEC Registered Investment Advisor

The opinions expressed in this program are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security. It is only intended to provide education about the financial industry. To determine which investments may be appropriate for you, consult your financial advisor prior to investing. Any past performance discussed during this program is no guarantee of future results. Any indices referenced for comparison are unmanaged and cannot be invested into directly. As always please remember investing involves risk and possible loss of principal capital; please seek advice from a licensed

Stock Market Update | January 2023

Stock Market Update | January 2023

Stock Market Update | January 2023

In this market update Steve re-caps December and the year 2022. He discusses and provides his insight on the indices, bonds, crypto, inflation and volatility.

If you are concerned whether your financial plan is still on the right track, schedule a free 30-minute consultation here:

WWM Financial is an SEC Registered Investment Advisor

The opinions expressed in this program are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security. It is only intended to provide education about the financial industry. To determine which investments may be appropriate for you, consult your financial advisor prior to investing. Any past performance discussed during this program is no guarantee of future results. Any indices referenced for comparison are unmanaged and cannot be invested into directly. As always please remember investing involves risk and possible loss of principal capital; please seek advice from a licensed

Investing for retirement Using IRA, Roth and 401(k) Plans

Investing for retirement Using IRA, Roth and 401(k) Plans

Investing for retirement Using IRA, Roth and 401(k) Plans

For the past 20 years, most individuals have saved and invested for retirement on their own because company pension plans are largely a thing of the past.  Living on Social Security alone during retirement isn’t appealing for most of us, since the maximum benefit is around $40k/year for 2022.1 But how much and where should we invest for retirement?  The short answer: Most individuals should be saving and investing about 15% of their income into a retirement savings/investment plan such as an IRA or 401(k) or 403(b), or some combination.2

Companies typically offer some form of retirement savings plan with employee contributions coming directly out of their paychecks.  These are many times 401(k) or 403(b) plans but could also be 457 or deferred compensation plans, depending on the employer and type of business.  Many but not all companies will match a specific percentage of their employees’ contributions, which if you’re lucky enough to have this option, you should be taking advantage of it because this is “free money”.  Investment options for these types of retirement savings plans are generally selected by the employees from a pre-defined list of 15 to 50 mutual fund or similar options.  The IRS does set annual contribution limits for the employee portion, which for 2022 is $20.5k for employees under age 50 and $27k for employees aged 50 or older.3

Many but not all companies will match a specific percentage of their employees’ contributions, which if you’re lucky enough to have this option, you should be taking advantage of it because this is “free money”

If you work for a small company, or for yourself as an independent contractor, you may not have a company-sponsored 401(k) or 403(b) or 457 plan available.  In this case, you could set up a Simplified Employee Pension, or SEP, plan if you own your own business or work for yourself as a consultant or entrepreneur.  Small companies sometimes do offer a SIMPLE plan, which operates much like a 401(k) but has lower annual contribution limits and requires employers to match at a specific safe-harbor level.  But if none of those is available, employees can contribute to their own Individual Retirement Account, or IRA, set up directly with a brokerage firm or bank.  Annual IRA contribution limits are even lower than the others mentioned, and sometimes higher income individuals may be prohibited from making contributions altogether (e.g., Roth IRA) or may lose the tax deduction (e.g., traditional IRA).  Investment options in IRAs are virtually unlimited, with most any stock, bond, ETF, or mutual fund available.

when it comes to saving for retirement, sooner is always better than later

But later, in retirement, all monies distributed from these plans are considered taxable income.  The tax benefit comes on the front end when contributions are made.  Once a retiree turns 72 years old, Required Minimum Distributions (RMD’s) apply, necessitating withdrawals be taken according to an IRS table.

In contrast, Roth IRAs do not provide a front-end tax benefit, meaning employee contributions to Roth IRAs are not deductible.  But unlike traditional IRAs, Roth IRA distributions come out tax-free during retirement if the Roth account has been in place for 5 or more years and the employee is 59 ½ years old or older.  Roth IRA tax benefits are accrued on the back end, meaning during retirement when distributions are taken to supplement Social Security income.  Today many employer-sponsored retirement plans also allow employee 401(k) contributions to be designated as Roth.  This is an excellent way to build up a large retirement account which may be available tax-free in retirement.  And because monies inside a Roth account have already been taxed, no RMD’s are generally required.

Which is better – Traditional or Roth?  Both, actually!  Using either or both retirement savings/investing vehicle is better than not saving/investing at all, and when it comes to saving for retirement, sooner is always better than later, and higher contributions are always better than lower.  If I were advising a 25-year-old employee just starting out and making $50k per year, I’d suggest building up the Roth 401(k) and/or Roth IRA as much as possible since a tax deduction now isn’t as critical at this juncture.  But if my client was 58 years old and making $650k annually, I’d suggest they use all the tax deductions they can get right now, because they’re in a very high tax bracket already.  This means using a traditional 401(k) or IRA for this client would be my suggestion.

1 Social Security website https://faq.ssa.gov/en-US/
2 What Percentage of your Salary Should go Toward Retirement?, Investopedia, by Tim Parker, March 30, 2022
3 401(k) Contribution Limits Rising Next Year, by Jackie Stewart and Elaine Silvestrini, Kiplinger, September 23, 2022

More Articles Written By Scott

Scott MCClatchey, CFP®

Scott McClatchey is a wealth advisor and CERTIFIED FINANCIAL PLANNER™ with WWM Financial in Carlsbad, CA, an SEC-registered investment advisor. He can be contacted by phone on 760-692-5190 or by email at  scott@wwmfinancial.com .

WWM Financial is an SEC Registered Investment Advisor.

The opinions expressed in this program are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security. It is only intended to provide education about the financial industry. To determine which investments may be appropriate for you, consult your financial advisor prior to investing. Any past performance discussed during this program is no guarantee of future results. Any indices referenced for comparison are unmanaged and cannot be invested into directly. As always please remember investing involves risk and possible loss of principal capital; please seek advice from a licensed professional.

What is a Financial Plan

What is a Financial Plan

What is a Financial Plan

By Scott McClatchey, CFP®

I’m a CERTIFIED FINANCIAL PLANNER™, or CFP®, meaning I help clients create plans to meet their major financial goals (e.g., retirement, start new business).  The key element is a Financial Plan, which forms a roadmap to and through retirement or whatever financial goal(s) a client has established.

Although many insurance agents and investment advisors claim to be “financial planners”, they specialize in insurance or investment management and don’t have the educational or experiential background required to practice true financial planning, as delineated by the CFP® Board of Standards https://www.letsmakeaplan.org/how-to-choose-a-planner/why-choose-a-cfp-professional .

To create a financial plan, CFP®’s first gather client information such as investment, Social Security, pension, and annuity statements, if applicable, insurance policies, work and tax information, spending profiles, and family details.   Financial plans are goal-centric, meaning client goals drive the planning exercise and ultimately determine retirement readiness and margin-of-safety.  Most clients need help establishing their goals, or at least adding breadth, specificity, and reality.  Consequently, part of my planning process is discussing potential goals with clients and helping them refine and quantify their goals.

The “big-one” is how much retirement income is needed.  This is a critical planning variable and one I look at from a couple different perspectives.  How much is the client spending now, during her/his working years?  Is the client following a budget?  Most aren’t, so I typically improvise by factoring down their pre-retirement income (e.g., plan for 80% of working income throughout retirement).  Retirement income is also one of the many scenarios I run, meaning once the baseline financial plan is established, I vary the level of retirement income to see how various spending levels impact the plan.

In all, I run between 25 and 35 different scenarios, which collectively provides a “stress-test” while helping clients understand their margin-of-safety.  Scenarios vary unknowns like inflation, rate of return, Social Security filing strategies, lifespan, long-term care needs, as well as retirement income.  Each scenario results from running 1,000 simulations – called a Monte Carlo simulator – to determine the probability of success.  Planners have software tools to help run these simulations.  Retirement is considered successful when clients don’t run out of money before running out of time – i.e., they don’t burn through their investments before passing away.

The “big-one” is how much retirement income is needed.

If the primary goal is a successful retirement, the plan will assess a client’s readiness prior to retirement and form an action plan to get them on track for those who don’t already have adequate margin-of-safety.  Do they need to save and invest more, work longer, reset their income goals, change the way they’re currently investing, do part-time work during retirement, or some combination?  Once someone has retired, a financial plan can still be valuable as a statistical decision-making tool, providing a framework for making important financial decisions.  I’ve developed and applied financial plans to many client decisions over the years, sometimes helping clients decide if they have enough money to move to another state, purchase a boat or RV, start a new business, fund a planned giving program, or retire in another country.

Retirement is considered successful when clients don’t run out of money before running out of time – i.e., they don’t burn through their investments before passing away.

Creating a financial plan can help individuals and families in many ways, transcending retirement planning while serving as a statistical decision-making framework.  If interested in having a customized financial plan developed for you, make sure you’re working with a CERTIFIED FINANCIAL PLANNER™, or CFP®, to ensure you’re getting solid planning and suitable advice.

More Articles Written by Scott

Scott McClatchey, CFP®

Sustainable Investing Becoming Mainstream

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Sustainable Investing Becoming Mainstream By Scott McClatchey, CFP® Doesn’t it seem like every advertisement or press release includes the word “sustainable” these days? Everyone is bragging about reducing their carbon footprint or converting to renewable energy...

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Decrypting the Investment Industry Puzzle

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Scott MCClatchey, CFP®

Scott McClatchey is a wealth advisor and CERTIFIED FINANCIAL PLANNER™ with WWM Financial in Carlsbad, CA, an SEC-registered investment advisor. He can be contacted by phone on 760-692-5190 or by email at  scott@wwmfinancial.com .

WWM Financial is an SEC Registered Investment Advisor.

The opinions expressed in this program are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security. It is only intended to provide education about the financial industry. To determine which investments may be appropriate for you, consult your financial advisor prior to investing. Any past performance discussed during this program is no guarantee of future results. Any indices referenced for comparison are unmanaged and cannot be invested into directly. As always please remember investing involves risk and possible loss of principal capital; please seek advice from a licensed professional.