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Put Together a Professional Team to Help You Reach Your Goals

As you work toward achieving your goals in life, you will need to make moves that contain financial, tax and legal elements, so you may want to get some help – from more than one source.

Specifically, you might want to put together a team comprised of your financial advisor, your CPA or other tax professional, and your attorney. Together, this team can help you with many types of financial/tax/legal connections.

 

For starters, you may decide, possibly upon the recommendation of your financial advisor, to sell some investments and use the proceeds to buy others that may now be more appropriate for your needs. If you sell some investments you’ve held for a year or less and realize a capital gain on the sale, the gain generally will be considered short-term and be taxed at your ordinary income tax rate. But if you've held the investments for more than a year before selling, your gain will likely be considered long-term and taxed at the lower, long-term capital gains rate, which can be 0%, 15% or 20%, or a combination of those rates.

 

On the other hand, if you sell an investment and realize a capital loss, you may be able to apply the loss to offset gains realized by selling other, more profitable investments and also potentially offset some of your ordinary income. So, as you can see, the questions potentially raised by investment sales – "Should I sell?" "If so, when?" "If I take some losses, how much will they benefit me at tax time?" – may also be of importance to your tax advisor, who will need to account for sales in your overall tax picture. As such, it’s a good idea for your tax and financial advisors to communicate about any investment sales you make.

 

Your tax and financial advisors also may want to be in touch on other issues, such as your contributions to a retirement plan. For example, if you are self-employed or own a small business, and you contribute to a SEP-IRA – which is funded with pre-tax dollars, so the more you contribute, the lower your taxable income – your financial advisor can report to your tax advisor (with your permission) how much you’ve contributed at given points in a year, and your tax advisor can then let you know how much more you might need to add to move into a lower tax bracket, or at least avoid being bumped up to a higher one. Your financial advisor will be the one to recommend the investments you use to fund your SEP-IRA.

 

Your financial advisor can also help you choose the investment or insurance vehicles that can fund an estate-planning arrangement, such as an irrevocable living trust. But to establish that trust in the first place, and to make sure it conforms to all applicable laws, you will want to work with an attorney experienced in planning estates. Your tax professional may also need to be brought in. Again, communication between your various advisors is essential.

 

These are but a few of the instances in which your financial, tax and legal professionals should talk to each other. So, do what you can to open these lines of communication – because you’ll be one who ultimately benefits from this teamwork.

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Who Can You Trust to Reduce Stress of Estate Planning?

To learn about on how Lisa can help you manage your finances click here!

 

When it’s time to do your estate planning – and it’s actually never too soon to begin – you may find the process, at first, to be somewhat bewildering. You’ll have many questions: What sort of arrangements should I make? Who should get what? And when? How can you address these and other issues?

You’ll need to get some help. In drawing up your estate plan, you will need to work with an attorney. And for guidance on the investments that can help fund your estate planning arrangements, such as a living trust, you can draw on the help of a financial advisor. You also may want to connect with a trust company, which can help facilitate your estate plans and coordinate the activities of your legal and financial professionals.

 

Of course, you might think that only the very wealthy need a trust company. But that’s not really the case – people of many income levels have long used these companies. As long as you have a reasonable amount of financial assets, you likely can benefit from the various services provided by a trust organization.

 

And these services can range from administration of a variety of trusts (such as living trusts and charitable trusts) to asset-management services (bill-paying, check-writing, etc.) to safekeeping services (such as providing secure vaults for jewelry and collectibles).

 

In short, using a trust company can make things a lot easier when it’s time to plan and execute your estate. A trust company can help you in the following ways:

 

Avoiding family squabbles – It’s unfortunate, but true: Dividing the assets of an estate can cause ill will and turmoil among family members. But a trust company can act as a neutral third party, thus minimizing any feelings of unfairness.

 

Providing greater control – When you establish an arrangement such as a living trust, administered by the trust company, you can give yourself great control over how you want your assets distributed. For example, you can specify that a certain child receive portions of your estate spaced out over several years – a move that may appeal to you if you think this child might not be ready to handle large sums all at once.

 

Saving time and effort – As mentioned above, when you work with a trust company, you can let it do all the “legwork” of coordinating your plans with your financial professional, tax advisor and attorney. And these professionals are used to dealing with trust companies.

 

Gaining Protection – Trust companies assume fiduciary responsibility for your financial well-being – which means that your best interests will always be considered in each service and transaction performed.

You can choose from among a variety of trust companies, large and small. Before choosing one, you may want to check out the services and fees of a few different firms. In any case, as you move toward that time of your life when estate planning becomes more essential, talk to your attorney, tax advisor and financial professional about whether using the services of a trust company might be right for you.

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Women May Need to Make Extra Financial Moves

To learn about on how Lisa can help you manage your finances click here!

 

International Women’s Day will be observed on March 8. Around the world, special events will celebrate the cultural, social, political and economic achievements of women. However, this last area – economic progress – is one that still causes concern, and rightfully so, because women still face gender-related challenges. How can you deal with them?

 

To begin with, you need to recognize the nature of these challenges. While many factors are actually responsible for women facing more economic pressure than men, two stand out in particular:

 

Gender wage gap – It’s still around, despite some progress toward equality. The U.S. Census Bureau has found that full-time, year-round working women earn about 80% of what their male counterparts earn. Other studies show a slightly smaller gap.

 

Caregiving responsibilities – Women typically take more time away from the workforce than men, both to raise children and then, later in life, to take care of aging parents. These absences can result in lost wages, lower Social Security benefits and fewer contributions to 401(k) and similar retirement plans.

So, given these realities, what can you do to improve your own financial outlook? Here are a few suggestions:

 

Increase your contributions to your retirement plan. Every time your salary goes up, increase the amount you contribute to your 401(k) or similar retirement plan. At a minimum, put in enough to earn your employer’s match, if one is offered. These plans offer potential tax-deferred earnings, and since your contributions are typically made with pre-tax dollars, the more you put in, the lower your taxable income.

 

Invest for growth. Some studies show that men may invest more aggressively than women – though not necessarily more successfully. However, while you do need to invest wisely, you can’t ignore the need for growth. Consequently, you should consider including a reasonable percentage of growth-oriented investments in your retirement and other investment accounts, with the precise amount depending on your individual goals, risk tolerance and time horizon.

 

Look for income even while serving as caregiver. Of course, you may never become the primary caregiver for your elderly parents – but even if you do, it doesn’t necessarily follow that you must forego all earned income. If it’s possible, you could seek to go part-time at your current job, or request some type of telecommuting arrangement. And as long as you have some earned income, from somewhere, you can still contribute to an IRA.

 

Manage retirement plan withdrawals carefully. Once you’re retired, possibly to become a full-time caregiver, you can take penalty-free – though still taxable – withdrawals from your 401(k) as early as age 55, provided you meet certain conditions. Once you’re 59-1/2, you can take penalty-free withdrawals from a traditional IRA, though the money will be taxable. While you can withdraw contributions you made to a Roth IRA at any time, tax- and penalty-free, you’ll have to wait until 59-1/2 to take out your earnings free of taxes and penalties. And you’ll need to find a sustainable withdrawal rate so you can reduce the risk of depleting these accounts too early.

 

As a society, we are still working toward equality for all people – including economic equality. As a woman, however, you can’t afford to wait until that day arrives, so you need to be proactive in seeking and maintaining your financial security.

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The Right Insurance Can Meet Both Short- and Long-term Needs

If you’re going to achieve your important financial goals, you’ll need to build an appropriate investment portfolio. But that’s only part of the story – because you also need to protect what you have, what you earn and what you’d like to leave behind. That’s why it’s a good idea to become familiar with the various types of insurance and how they can address short- and long-term needs.

For starters, consider life insurance. You may have important long-term goals, such as leaving an inheritance for your family and providing resources for your favorite charities. You may be able to fulfill some of these through the death benefit on your policy.

 

You can also purchase life insurance to help fill the gap between the amounts you have saved and what your family would need if you died unexpectedly. Thus, insurance can pay for liabilities (such as a mortgage, car payments, student loans and other debts), education expenses (such as college for your children) and final expenses associated with your passing.

 

Next, consider disability insurance. If you were injured or became ill and couldn’t work for a while, the loss of income could be a big problem for your family members – in fact, it could disrupt their entire lifestyle. Even a short-term disability could prove worrisome, while a long-term disability could be catastrophic. Your employer might offer short-term disability insurance, and that could be enough – but do you really want to take that chance? To protect your income if you were out of work for an extended period, you might need to supplement your employer’s coverage with your own long-term disability policy. Long-term disability insurance, which generally kicks in after you’ve used up your short-term benefits, may pay you for a designated time period (perhaps two to five years) or until your reach a certain age, such as 65. Long-term disability insurance likely won’t replace your entire income, but it can go a long way toward helping you stay “above water” until you recover.

 

You may also want to think about long-term care insurance. Despite its name, a long-term care policy could meet either short- or long-term needs. On the short-term end, you might need the services of a home health care aide to assist you in your recovery from an injury such as a broken hip. On the other end of the long-term care scale, you might someday need an extensive stay in a nursing home, which can be extremely expensive and which isn’t typically covered by Medicare. But in either case, you might be able to benefit from a long-term care insurance policy, or possibly a long-term care rider attached to a life insurance policy. And the earlier you take action, the better, because long-term care insurance, in particular, generally becomes more expensive the older you get.

 

This list of insurance policies, and the needs they can help meet, is certainly not exhaustive, but it should give you an idea of just how important the right insurance coverage can be for you – at almost any stage of your life.

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Your Financial Advisor Can Do Some "Life Coaching"

To learn about on how Lisa can help you manage your finances click here!

 

Life coaches – not surprisingly – strive to improve the quality of life of their clients. And financial professionals essentially embrace the same mission. So, if you decide to hire a financial advisor, you should expect to receive some “coaching” as you work toward all your important objectives, such as sending your kids to college, enjoying a comfortable retirement and leaving a legacy that can benefit the next generation.

 

What tips from life coaches might you also get from your financial advisor? Here are a few:

Create a plan. A life coach can help you create a plan for your future, taking into account your career aspirations, relationships, hobbies, charitable activities and so on. And a financial advisor will also take a “holistic” approach by looking at many elements – including your age, income, family responsibilities and desired retirement lifestyle – to create a long-term investment strategy. Of course, you may need to adjust this strategy in response to changes in your life, but it can still serve as an overall map on your journey toward your financial objectives.

 

Identify and prioritize goals. A life coach will help you identify and prioritize your life goals, whether they are personal or professional. And your financial advisor can help you do the same with your financial goals. For example, your goal of retiring comfortably at age 65 may take precedence over your wish to purchase a vacation home. As such, you will need to focus your efforts first on the retirement goal, and then, if it appears likely that you will meet that goal, you can devote the resources necessary for your vacation home by the mountains or the sea. You may even be willing to accept a lesser goal, such as renting, rather than owning, your vacation residence.

 

Move beyond your comfort zone. A trained and experienced life coach can help you recognize your perceived limitations – and move beyond them. For instance, if your new job requires that you make many presentations, but you are nervous about public speaking, your life coach may offer techniques to help you get past this fear – to move you out of your “comfort zone,” so to speak. This same scenario could play out in your interactions with your financial advisor. If you happen to be a cautious and risk-averse person by nature, you might be inclined to bring those same traits into the investment arena. But a competent financial advisor – one who truly has your best interests in mind – will likely warn you that you will have trouble achieving your financial objectives if you try to avoid all risk by sticking exclusively with so-called “safe” investments, which do not offer much growth potential. Instead, your advisor will help you incorporate your risk tolerance, along with your time horizon and your short- and long-term goals, to help shape an investment mix appropriate for you. Such a mix may well include those "safe” investments, but it would also contain a reasonable percentage of growth-oriented ones.

Whether it’s self-improvement or your financial future, you can benefit from good coaching – so take full advantage of it.

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Financial Gifts for Valentines...of All Ages

To learn about on how Lisa can help you manage your finances click here!

Valentine’s Day is fast approaching. This year, consider going beyond the flowers and chocolates and think about providing financial-related gifts to your loved ones of all generations. 

Here are some gift possibilities to consider:  

For your spouse or partner – Your income – both today and in the future – may be essential to the ability of your spouse or partner to maintain his or her lifestyle and even to enjoy a comfortable retirement. Consequently, you need to protect that income and be prepared to replace it. So, why not use Valentine’s Day as an opportunity to review your disability and life insurance? Of course, you don’t have to evaluate your insurance needs and add new coverage all in one day, but the sooner you act, the more you can relax in the knowledge that you’ve helped give your spouse or partner a more secure future.  

For your children or grandchildren – If you want your children or grandchildren to go to college, or to receive some type of technical education that can help them launch a good career, you may want to provide some type of financial assistance. And one education-funding vehicle you might want to consider is a 529 college savings plan, which offers tax advantages and high contribution limits. Plus, it gives you, as owner, considerable flexibility – you can always change beneficiaries if the child or grandchild you had in mind decides not to go to college or a technical school. (Be aware, though, that a 529 plan can have financial aid implications, so, at some point, you will want to discuss this issue with a financial aid counselor.) 
Another financial “gift” you could give to your children is a bit more indirect, but possibly just as valuable, as a 529 plan – and that’s the gift of preserving your own financial independence throughout your life. If you were to someday need some type of long-term care, such as an extended nursing home stay or regular visits from a home health aide, you could find the costs extremely high. Medicare typically pays few of these costs, so you will likely need to come up with the funds on your own. You can go a long way toward protecting yourself from these expenses – and avoid having to burden your grown children – by purchasing long-term care insurance or some type of life insurance with a long-term care provision.  

For your parents – One of the best gifts you can give to elderly parents is to help make sure their estate plans are in order. This is never an easy topic to bring up, but it’s essential that you know what responsibilities you might have, such as assuming power of attorney, to ensure that your parents’ plans are carried out, and their interests protected, in the way they’d want. Toward this end, you will need to communicate regularly with your parents – and if they haven’t drawn up estate plans yet, you could arrange for them to meet with the legal, tax and financial professionals necessary to help create these plans. 

Just as the definition of “love” is broad enough to include all the people most important to you, so is the range of financial gifts you can give your loved ones. Start thinking about these gifts on Valentine’s Day – and beyond. 

 

Edward Jones is a licensed insurance producer in all states and Washington, D.C., through Edward D. Jones & Co., L.P. and in California, New Mexico and Massachusetts through Edward Jones Insurance Agency of California, L.L.C.; Edward Jones Insurance Agency of New Mexico, L.L.C.; and Edward Jones Insurance Agency of Massachusetts, L.L.C.

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What Can Investors Learn From "Big Game" Teams?

To learn about on how Lisa can help you manage your finances click here!

 

In February, TV stations the world over will broadcast the most-watched U.S. football game of the year. But sports fans aren’t the only ones viewing this “big game,” held in Atlanta this year. The two teams competing are watched closely by the teams that didn’t qualify. That’s because these teams can learn a lot from the contenders. In fact, “big game” teams can teach some valuable lessons to many groups and individuals – including investors. 

What investment insights can you gain from observing these teams? Here are a few to consider:  

A good “offense” is important. “Big game” teams usually have the ability to score a lot of points. They can run the ball, pass the ball and move up the field quickly. As an investor, you also need to constantly seek gains – in other words, you need an “offense” in the form of an investment portfolio capable of producing long-term growth. Consequently, you will need a reasonable percentage of growth-oriented vehicles, such as stocks and stock-based mutual funds, in your holdings. Yes, these types of investments carry risk, including the potential loss of principal. But you can help reduce your risk level by holding investments for the long term – giving them time to possibly overcome the short-term drops that will inevitably occur – and by diversifying your overall portfolio with other types of investments, such as bonds and government securities, that will likely not fluctuate in value as much as stocks.


A strong “defense” is essential. In addition to having good offenses, “big game” teams are also typically strong on defense. They may give up yardage, and going against a strong offense, they will also give up points, but they still often stop their opponents from making the big, game-breaking plays. As someone with financial goals, such as protecting your family’s lifestyle and helping send your children to college, you, too, have much to defend – and one of the best defensive moves you can make is to maintain adequate life insurance. Also, to protect your own financial independence – and to defend against the possibility of becoming a burden to your adult children – you may want to explore some type of long-term care insurance, which can help pay for the extraordinarily high costs of an extended nursing home stay.  

The ability to adjust a strategy is essential. If a “big game” team is trailing, it very well might decide to switch its game strategy – perhaps they tried to keep the ball on the ground but fell behind, requiring them to throw more passes to catch up. You also will need to evaluate your progress toward your goals to determine if you may need to adjust your strategy. To illustrate: If your current portfolio is not providing you with the returns you need to retire comfortably, you may well need to adjust your investment mix to provide more growth potential, but within the context of your risk tolerance and time horizon. 

The “big game” is the culmination of a season of hard work by two teams that have achieved the highest level of success. And by applying the lessons you’ve learned from these teams, you can help contribute to your own success. 

 

Edward Jones is a licensed insurance producer in all states and Washington, D.C., through Edward D. Jones & Co., L.P. and in California, New Mexico and Massachusetts through Edward Jones Insurance Agency of California, L.L.C.; Edward Jones Insurance Agency of New Mexico, L.L.C.; and Edward Jones Insurance Agency of Massachusetts, L.L.C.

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Insurance Can Protect Your Aspirations

To learn about on how Lisa can help you manage your finances click here!

You probably already know that life insurance can protect your family if something were to happen to you. But you might not realize the many ways in which insurance can help you preserve your plans for the future – whether for yourself, the next generation, or those charitable groups you support. 

Specifically, life insurance can potentially help you address several areas, including the following:  

Help in covering final expenses – The proceeds of a life insurance policy can provide immediate funds at the time of your death to pay for your funeral costs, your debts and your final income taxes.  

Transfer wealth (with potential tax advantages) – Some wealth transfer vehicles carry significant tax consequences. But the proceeds from life insurance are typically free of income tax, so if your death benefit is $1 million, your heirs will receive the full $1 million. (Consult with your tax advisor about all potential tax consequences beneficiaries might face.)  

Provide charitable gifts – You can use life insurance in various ways to support charitable organizations. One option is to donate a policy you may no longer need. Either you or the charity would continue paying the premiums, but the charity would become both the owner and beneficiary of your policy. Alternatively, you could purchase a permanent life insurance policy and donate it to the charity, which could then use the policy’s cash value when you’re alive and receive the death benefit when you die.  

Help fund a revocable living trust – Depending on your situation, you might want to establish a revocable living trust as part of your estate plans. A revocable living trust helps you avoid the time-consuming, expensive and public process of probate. And, among other benefits, a living trust allows you to distribute your financial assets over time, and in amounts that you specify – which may be quite appealing, if, for example, you’d rather not give your children a large amount of money at once. Life insurance can help fund your living trust – you just need to name the trustee (which may well be yourself while you’re alive) as the owner and beneficiary of the policy. However, you will need to consult with your legal advisor before creating and funding a living trust.  

Help cover long-term care costs – You may never need any type of long-term care, but if you do, you’ll find it quite expensive. It now costs, on average, more than $100,000 per year for a private room in a nursing home, according to the 2018 Cost of Care Survey, produced by Genworth, an insurance company. Medicare typically pays little of these costs, so the burden will fall on you. To avoid using up your financial assets – or, even worse, having to rely on your adult children for help – you may want to purchase insurance. Some life insurance plans offer long-term care coverage, either through a special “rider” or by accelerating your death benefit, but you might also want to consider a traditional long-term care insurance policy. 

As you can see, one of the most flexible tools you have is life insurance. Start thinking soon about how you can put it to work.


Edward Jones, its employees and financial advisors are not estate planners and cannot provide tax or legal advice. You should consult your estate-planning attorney or qualified tax advisor regarding your situation.

 

Edward Jones is a licensed insurance producer in all states and Washington, D.C., through Edward D. Jones & Co., L.P. and in California, New Mexico and Massachusetts through Edward Jones Insurance Agency of California, L.L.C.; Edward Jones Insurance Agency of New Mexico, L.L.C.; and Edward Jones Insurance Agency of Massachusetts, L.L.C.

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Review Your Fixed-income Strategy as Interest Rates Rise

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When interest rates rise, the value of your fixed-income investments, such as bonds, will typically fall. If this happens, how should you respond? 

First of all, it’s important to understand this inverse correlation between interest rates and bond prices. Essentially, when interest rates rise, investors won’t pay you full price for your bonds because they can purchase newly issued ones that pay higher rates. So, if you sell your bonds before they mature, you could lose some of the principal value. 

You may be seeing a price drop among your bonds right now, because interest rates generally rose in 2018 and may continue to do so in 2019. While you might not like this decline, you don’t necessarily have to take any action, particularly if you’re planning to hold these bonds until maturity. Of course, you do have to consider credit risk – the chance that a portion of the principal and interest will not be paid back to investors – but unless the bond issuers default, which is usually unlikely, particularly with investment-grade bonds, you can expect to receive the same regular interest payments you always did, no matter where rates move. 

Holding some of your bonds – particularly your longer-term ones – until they mature may prove useful during a period of rising interest rates. Although long-term bond prices – the amount you could get if you were to sell these bonds – tend to fall more significantly than short-term bond prices, the actual income that longer-term bonds provide may still be higher, because longer-term bonds typically pay higher interest rates than shorter-term ones. 
To preserve this income and still take advantage of rising interest rates, you may want to construct a “bond ladder” consisting of short-, intermediate- and longer-term bonds. Because a ladder contains bonds with staggered maturity dates, some are maturing and can be reinvested – and in a rising-rate environment such as we’re currently experiencing, you would be replacing maturing bonds with higher-yielding ones. As is the case with all your investments, however, you must evaluate whether a bond ladder and the securities held within it are consistent with your objectives, risk tolerance and financial circumstances. 

You can build a bond ladder with individual bonds, but you might find it easier, and perhaps more affordable, to own bond-based mutual funds and exchange-traded funds (ETFs) that invest in bonds. Many bond funds and ETFs own a portfolio of bonds of various maturities, so they’re already diversified. 

Building a bond ladder can help you navigate the rising-rate environment. But you also have another incentive to continue investing in bonds, bond funds or ETFs – namely, they can help diversify a stock-heavy portfolio. If you only owned stocks, your investment statements would probably fluctuate greatly – it’s no secret that the stock market can go on some wild rides. But even in the face of escalating interest rates, bond prices generally don’t exhibit the same sharp swings as stocks, so owning an appropriate percentage of bonds based on your personal circumstances can help add some stability to your investment mix. 

As an investor, you do need to be aware of rising interest rates, but as we’ve seen, they certainly don’t mean that you should lose your interest in bonds as a valuable part of your investment strategy.

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