Launching the Younger Generation to Financial Success

There are many personal finance activities that we engage in as adults that are almost second nature, from working to saving to borrowing and building credit. We’ve compiled some simple actions you can take (and when) to increase your child’s financial success as they mature.

Grade School Age +
1. Encourage them to get experience with a job (in or outside the house)
> Let children get experience managing their own cash flow – learning about how much money comes in (and when), how to spend wisely, and how to save for future expenses both large and small.

Junior High/High School Age
1. Help them open their own checking & savings account (& obtain a debit card)
> In addition to learning about how to manage money with a bank, this is a critical step before engaging in any future lending.
> Provide experience for managing money the way most of us do today (digitally).

2. Open a secured credit card (or make them an authorized user on your card) – build credit!
> Building credit is an often-overlooked aspect of setting young people up for financial success.
> A secured credit card allows you to build your credit with significant guardrails in place
– Allows for building credit with very low (and secured) credit limits
– Available to people with poor or no credit
> To start, authorizing a child as a user on your card may be a good way to allow them to learn to make purchases, build & manage credit, while still allowing you to monitor their spending and ensure their success.

3. Go through a tax return with your teen
> At school, kids learn a lot – however, as you may have experienced in your own life, the intricacies of a tax return is not one of them. Help your younger generation understand what taxes they are paying & why.

College Age
1. Understand the difference between “good” debt & “bad” debt
> With credit, comes the need to discern how to use credit wisely. Teaching young people the difference between high interest rate credit cards, auto loans, and federal/private education loans is critical to making informed decisions about debt.
> Review the costs and benefits of particular schools & majors when determining when (and how much) to borrow for school – it’s critically important as college costs & student loan debt continues to balloon.

2. Take them to a meeting with your financial advisor
> Be open about your financial journey & allow them to learn from your successes & failures.
> Make the most of the resources available to you – we would be more than happy to help be a part of your young person’s financial success.

A Different Way to Invest in Our Tumultuous World

Everyone loves a good story. It’s what keeps you hooked watching a movie or reading a book…it’s also what keeps investors committed to poor investment solutions. Investors like a good story that keeps them engaged, and that story usually involves a savvy manager. But there is a different narrative—written by financial scientists.

Now, academic finance isn’t exactly an engaging story. However, it has changed the face of investing and market analysis for every investor. In the 1960’s, University of Chicago romance-language-scholar-turned-economist Eugene Fama and his protégé’s (namely, Michael Jensen of Jensen’s Alpha performance measurement “fame”)  first used the power of advanced computing and the capital asset pricing model (CAPM) to price securities and study what impacts returns. Their breakthroughs in finance led to an understanding that, on average, mutual fund managers don’t outperform the market, as well as the idea that there are other factors in the marketplace that contribute to investment returns.

Enter: Evidence-based investing Read more

Recession-Proof Your Retirement Portfolio

Sharon Allen, CEO and Co-Founder of Sterling Wealth Management was recently interviewed by Money Magazine about tips for investors to prepare their portfolios for retirement. Click here to read more: | Money https://swmi.co/moneymag-recession-proof-portfolio

Market High…Market Top?

In case you hadn’t noticed, the S&P 500 index has reached record territory, and the Nasdaq has crossed over the 5,000 level.  At 2,166.89, the S&P 500 finished above the previous high of 2,130.82, set on May 21, 2015.

We’ve waited more than a year for the market to get back to where they were before the downturn this January, before Brexit, before a lot of uncertainties in the last 12 months.  The market top itself is an uncertainty; after all, many investors regard market tops warily. green stock chart guy holding up

When stocks are more expensive than they have ever been, the talking heads begin to have heated discussions around whether or not it may be time to sell and take your profits.  However, if you followed this logic and sold every time the market hit a new high, you’d probably have been sitting on the sidelines during most of the long ride from the S&P at 13.55 in June 1949, which was the bull market high after the index started at 10.  New highs are a normal part of the market, and it is just as likely that tomorrow will set a new one as not.  In fact, overall, the market spends roughly 12% of its life at all-time highs.

We all know that the next bear market will start with an all-time high, but we can never know which one in advance.  Market highs do not necessarily become market tops.  Let’s see if we can all celebrate this milestone without the usual dose of fear that often comes with new records.

Sources:

https://www.forbes.com/sites/shreyaagarwal/2016/07/11/sp-500-closes-at-record-high/?utm_source=yahoo&utm_medium=partner&utm_campaign=yahootix&partner=yahootix#7f74bf29721d

Allen Addresses Advisers on Working with Breadwinner Women

This May Sharon Allen spoke at the national Financial Advisor Invest in Women conference in Dallas, Texas. She facilitated a panel of experts as well as shared her own expertise regarding the concerns and needs of Breadwinner Women in our society. Drawing from the national research from the Family Wealth Advisor’s Council, of which Sharon is a member, she focused on the resulting data highlighting the challenges and opportunities financial advisors need to be aware of when serving women investors. “I was honored to be asked to be a part of the conversation around this very important topic,” says Allen. “Despite a growing awareness of differences in the needs of women, our research shows that the financial services industry still needs to do a much better job in truly partnering with women investors.”

Sharon Allen, CFP(R), CTFA is the Co-Founder and President of Sterling Wealth Management, a fee-only wealth management firm. She has an exceptionally collaborative approach in working with her clients, and has a particular interest in the challenges facing women of wealth. Sharon has co-authored a paper on the Sandwich Generation Woman titled Caught In the Middle: How Does the Sandwich Generation Woman Not Get Squeezed?.