Charleston Wealth Management Advisors

Charleston Wealth Management Blog

March Madness college basketball is in full swing, and no matter what team you cheer for, it's an exciting time of year. When I watch many of the games, I can't help but see the strategy behind the game. Believe it or not, there are a number of similarities between a successful sports team and a successful financial plan.


Game management is much like portfolio management, and just as there are nervous parents watching the games, there are a lot of nervous investors watching their portfolios.

Within a basketball team, there are many different positions that play different roles, each just as important as the next. The same is true with a financial portfolio. Various investment vehicles play different roles, and an investor's money should be diversified among them. Think of a basketball team with only point guards on the roster . . . that team would not be very effective, would it? A portfolio should include a mix of investments: some that help an investor capture upside gains, and some that are “safe money” helping to protect an investor from losses.



A portfolio of just CDs might be safe, and a portfolio of all stocks might capture gains, but neither one is an effective long-term winning strategy.

Also, a successful team must adjust to what is happening on the court. If the opposing team is able to make all of their three-point shots in the first half, a team may need to adjust their defense to guard those outside shooters. Or, if a team is winning by a few points in the last few minutes, they may want to slow down their offense and use more time with each possession.


Similarly, being able to adjust the financial game plan is one of the most important tools for a successful investor. Think of it this way: is it smart for those who had significant losses in their portfolio in '08, to simply stick with the same plan moving forward? I would argue it makes sense to make some changes. Learn from what worked (or, in many cases, what didn't work) and adjust the plan to be more successful moving forward.


But great teams owe their success to more than the individual players and their ability to adjust to changing game situations. They also have great coaches and a process that works. I believe that the most successful investors also follow a process. By doing so, most avoid making emotional decisions that often result in mistakes.


Which brings me to my last point, every player must have faith in the engineer behind the process and the game plan: the coach. The coach uses his experience, his expertise and his general game knowledge to design a successful strategy. And the players know that everything the coach does is to help his players improve their skills and win the game. In the world of investing, this same role is filled by a financial advisor. With their industry knowledge and experience, advisors can put together custom game plans to help their clients reach their goals.


It is just as important for an investor to have the same confidence in their advisor that every basketball player has in his coach.

When it comes to your financial strategy, don't ever walk into a game without a plan. The old adage that the quality of your preparation determines the quality of performance hold true here too. Make sure your portfolio is prepared for whatever is coming its way.

This content created by Rick Durkee in conjunction with Fusion Capital Management.


We have written a few articles recently about parents trying to help their children become financially responsible adults. We’ve talked about young kids, high school aged kids, even early adult aged kids. Many people think that parents are so vigilant about their kid’s financial future because they love them and want them to be successful.



But deep down, all of us parents know that a few decades down the road, the tides will turn, and it will be those same kids that will be charged with protecting the parent’s well-being.

We all know that somewhere down the road the balance of dependency will shift, and our children will be responsible for all the things that we once did for them: drive us to the store, make us our meals, and so on. Most of us are experiencing this first hand with our parents as we shift into being the caretakers for them. It can be a very hard and stressful job, considering parents don’t often feel comfortable depending on us, and still see us as the behinds they used to change diapers on.


One of the most important aspects of becoming involved in your parents’ lives is understanding and managing their finances. This can be a big sticking point on what I just described, with our parents not wanting us to dictate their budget or expenditures, but it’s important that you get involved early and often in your parents financial planning.


Some parents try to avoid discussing their personal finances with their kids, so it could be helpful to start the discussion by asking your parents for advice on your finances. That gives you a window into the decisions they have made, and allows you to give them bits of advice you think they would find useful, without hurting any egos. Once that window is open, there are a handful of things you need to discuss about your parent’s financial situation and plans in order to comfortably and responsibly plan for their future.


All parents have their super clever secret hiding spots where they keep all their important files and documents.

If you are lucky enough that your parents remember where these super clever secret hiding spots are, than you are a step ahead of most of us. It’s important that you ask them where many of their important documents are located. These are things like their will and living-will, life insurance policies, information on their financial accounts, financial power of attorney and more. Knowing where these are kept is critical because a) you know your parents actually have the documents and b) you know where they are in the case of an emergency.


Another important piece can seem like an uncomfortable subject, but the earlier you talk to your parents about their long term care, the less expensive it will be for both them and you. Like any insurance, long-term care insurance is cheaper if you buy it when you’re younger and healthier. Even with parents as young as 50-years-old, planning for the financial strain that long-term care can present is a conversation worth having.


Social Security is blanket that covers a lot of people in their retirement plans, but it’s important for your parents to determine when they should be tucked in.

The point at which a person should begin to collect Social Security benefits depends on a few details, details which you should ask your parents about. It’s important that you ask how much they have saved in various contribution plans such as a 401(k) or IRA. Also, find out how much they can expect to receive from a possible pension. The funds available to them in these accounts can drastically affect the point at which they should apply for Social Security benefits.


Lastly, you need to make sure someone is tracking, and oftentimes questioning the legitimacy of any investment opportunities they come across. We all have that sweet old aunt who proudly told everyone how she received that letter in the mail informing her that she won the jackpot in some sweepstakes and will receive the prize money just as soon as she sends in her bank account information. This is obviously a drastic example, but it’s important that you ask your parents about their investments that they have made and ensure that they aren’t involved in anything risky. Older individuals are often targeted by scammers, so it’s an important conversation to have.


Even investments that are legitimate may involve too much risk to be worthwhile for them.

When it comes to your parent’s future there is a lot to discuss, and often times, these are more pressing and timely discussions than the ones we’ve been highlighting are needed for our children’s future. Many of us have two generations, one above and one below us that we are concerned for and it’s important to make sure you get a good head start on both.

This content created by Rick Durkee in conjunction with Fusion Capital Management.

We recently wrote an article about unanticipated factors in your retirement equation. We discussed the “how much you have when you retire” minus “how much you will need in retirement” balance to determine if you will be in good shape for retirement. That previous article focused on Medicare costs fitting into that equation, but this week we want to talk about a different figure that can impact your retirement plans: Debt.

According to data from the Federal Reserve Bank of New York, older Americans are seeing much more red in their personal ledgers than they did in the past, with the amount of their debt growing for those both entering and already in retirement.

In fact, the average 65-year-old borrower has 47 percent more mortgage debt and 29 percent more automobile debt than the average 65-year-old had in 2003.

Although those two categories of debt are significant for older Americans, for the first time in history, we are also seeing senior citizens with student debt, debt absorbed by them from their children, who cannot afford to pay it.


Essentially, there has been a reallocation of debt in our society from our younger to our older generations. However, even with seniors taking on more debt, they are still considered much more capable of managing and paying down that debt than our younger folks.

If this changes, and there is evidence that large numbers of people entering retirement carry debt they cannot manage, this could cause some unease, but this does not seem to be a current concern. In fact, the older households that are carrying this debt have overall higher credit scores and more assets than we have seen in years past.

When we speak with investors, we help them understand that during the accumulation phase of our financial life cycle (building up “what we have”), we are preparing for our distribution phase (using “what we will need”). In our distribution phase, our income is usually derived from just a few sources: Social Security, pensions, and our investments. Uncle Sam often limits and, in some years, does not give any cost-of-living adjustment for Social Security; furthermore, if you don't work for the government, then you probably don't have a pension, and if you have an outdated investment strategy, then you may be losing half your assets every five to seven years.


So, when we are in the distribution phase of our financial life cycle, we need to keep our monthly expenses down as low as possible. This means limiting debt as well. It does not take a mathematician to understand that shrinking income and growing debt do not paint a pretty picture. And unlike younger people with debt, older folks have less time to play with debt balances.


But our younger generation is not off the hook. The average 30-year-old borrower has nearly three times as much student debt as the average 30-year-old borrower had in 2003.

Nevertheless, the overall debt levels for our younger generations are lower due to a decrease in home, credit card, and auto debt. In fact, according to US News & World Report, home ownership for Americans 35 and younger is at the lowest level since the government started calculating home ownership by age in 1982.


Young or old, whether we are in the accumulation or the distribution phase of our financial life-cycle, we must manage debt. So, for those of you worried about your debt levels, let me give you a few quick reminders on how to reduce or eliminate that debt.


First, it is important to know how much debt you have and to understand that debt. Separate each account by balance, interest rate, minimum payment and the number of payments you have left. Once you have done this, determine how much you can put toward paying off your debt each month. The goal for this amount should be more than the combined minimum payments on all of your accounts. (This may require some strict budgeting throughout the month.)

Next, find the debt with the highest interest rate.

After paying the minimum amount on each balance, pay all of the extra toward paying down that debt with the highest interest rate. This will help you nip the problem in the bud and keep your debt balance from rising. Your last goal is to pay off any secured debt that has just a few payments remaining.

Once you have dug yourself out of debt, don't fall back in. Oftentimes, becoming debt-free leads to the same habits and behaviors that caused the debt to grow in the first place. If lowering debt is a real goal for you, you need to commit to it. Don't let yourself backslide, especially if you are entering that second half of your retirement equation, because then you are starting over with even less time in front of you.


This content created by Rick Durkee in conjunction with Fusion Capital Management.

Coastal Financial Planning Group

78 Ashley Point Drive Suite 201 
Charleston, SC 29407

(843) 735-5065

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Investment advisory services are offered through Fusion Capital Management, an SEC registered investment advisor. The firm only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. SEC registration is not an endorsement of the firm by the commission and does not mean that the advisor has attained a specific level of skill or ability. All investment strategies have the potential for profit or loss. 

Third-party rankings and recognition from rating services and publications do not guarantee future investment success. Working with a highly-rated adviser also does not ensure that a client or prospect will experience a higher level of performance. These ratings should not be viewed as an endorsement of the adviser by any client and do not represent any specific client’s evaluation. Generally, ratings, rankings and recognition are based on information provided by the adviser. Please contact the adviser for more information regarding how these rankings and ratings were formulated.

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