Dollar Cost Averaging

With the Stock Market down almost 33% (at the time of writing this article) since the beginning of the year, the unfortunate truth is most people have lost significant funds. This means that for many families they will have to delay their retirement, take significantly less income, or go back to work.

With losses around, one term you will probably hear from an investment advisor is “Dollar Cost Averaging” (DCA). To make money in the stock market you want to buy low and sell high. This isn’t new information. Ideally and historically the Stock Market generally trends upwards netting you growth which is how you make money. However there are times (such as now) when the stock market makes a decline; which is precisely the time when DCA “works best”. Because the stocks are lower in price now than when you originally purchased them you can buy more to bring your “dollar cost average” down.

For example, let’s say you originally purchase a stock of XYZ company. 100 shares for $10ea = $1,000. Down the road that stock suffers and the price goes down to $5ea. If you were to buy another 100 shares it will now only cost you $500, so you have 200 shares with total cost of $1,500 which on average costs you $7.50. So, now, instead of needing the stock to reach $10 to become whole, you only need it to reach $7.50, which means if it reaches the full $10, you’ve made money.

While dollar cost averaging is a viable strategy to help minimize/recoup losses, there is a big flaw in this thinking. That flaw is that you aren’t making any money on your original investment until you are back to whole. You are only making money on the new money you are putting in. This is its biggest disadvantage. That is why I prefer to use indexing strategies.

While it is true, with indexed strategies you have less opportunity for growth, but they have the trump card since you are guaranteed to never lose any money. Therefore, you never have to wait for the market to rebound to “get back to whole”. Instead, you are always making money. Let’s look at a basic indexing strategy with how the stock market works. With this strategy you will receive a return based on the market but it will never exceed 9%, and you are guaranteed to never lose a dime. In the chart below, the blue columns are assuming a $10,000/yr annual contributions (to simulate DCA strategy), while the green column is lump sum investing.

With indexing, while everyone else is rebounding trying to become whole, you are gathering that huge upside for even more growth! Let me ask you, which side of the chart would you rather be on? Protecting Yourself from Disaster Unfortunately, protecting yourself is a priority that will never go away. In fact, it becomes increasingly important each year as there are more things than ever before to protect yourself from. The lack of preparation from families across the globe has made this abundantly clear. While there are many things to protect yourself from, today we are going to be focusing on financial protection. More specifically, we will be talking about protecting yourself from loss of Income.

The first of these protections is protecting yourself and your family from a loss of income. There is no doubt that someone’s ability to generate an income is their biggest asset. The three biggest culprits that take away someone’s ability to produce an income: Death, disability and job loss. According to a survey by bankruptcy companies, 78% of bankruptcies are caused by a loss of income. In my opinion, that is 78% too high, since there are simple things that families can do to prevent this from happening. Death is hard to predict and has terrible consequences both financially and emotionally. Many people don’t like to plan for this as it is a sad topic, and no one wants to think about themselves dying.

The second one is Disability (short and long term). Most people ignore this as they think that they will be protected from worker’s compensation or SS Disability, but that is just not the case. Worker’s compensation only protects you if you are hurt on the job. SS Disability can be hard to qualify for and could take 2 years or more before it kicks in.

The last major cause of income loss is job loss. This is one I don’t really talk about much since it rarely happens but people lose their jobs for a variety of reasons. From being laid off, to having to care for loved ones, and company collapse. Companies collapsing usually only happen in severe economic conditions such as the Great Depression, the Great Recession of 2008, and 2020’s Corona Virus.

There are three great tools you can use to protect yourself from these things. The first is disability insurance (DI). There are two types of disability insurance (long term and short term). This insurance is low cost and can be used to replace your income for a preset amount of time in the event that you cannot perform the functions of your job. It is important to note that you do not have to be permanently disabled to qualify. The other good news, is that it doesn’t matter what caused your inability to work (so long as it wasn’t criminal activity). If you are disabled and can’t do your job, the insurance will pay out. The second thing you can use to protect yourself is an emergency fund. I recommend 3-6 months income. Too many people resort to using credit cards which just creates a snowballing debt problem that becomes hard to get out of. However, if you had access to a fund of money that you can use to take care of all your expenses for 3-6 months, it makes you so much more flexible. Corona’s financial impact wouldn’t be a scary thing anymore. The last one is my favorite tool, Life insurance. Life insurance is the “Swiss Army Knife” of financial vehicles. It accomplishes so many great things. Life insurance when set up correctly, can replace an income from a loved one if they pass, can provide an emergency fund to draw from, and can provide extra funds in serious illnesses. Additionally, if you don’t have to use it, (or you repay what you use) you can use it to fund a college education, or generate a tax-free income in retirement!

I don’t want any of my friends, neighbors or loved ones to suffer from one of these things, when there are easily preventable measures you can take. Please give me a call today so I can help you craft a plan that will best protect you and your family.


You know that feeling you get when you have so much to do and no time, money, or energy left to do it? We call that stress. Stress is the mental and/or emotional duress that is caused by a lack of time, energy, skill or resources to do something that needs to be done. Study after study has shown that stress is one of the biggest enemies of a healthy life. So why do we have it? Why don't we just, "say no" to stress? If only it was that easy! That is the very idea of stress! Here are some strategies to make it more manageable.

Number one: Work/home life balance. We have all heard that you should keep your work and home life separate. I would challenge you to do what you can to separate them, but if you can't, use this technique. Give yourself 1 hour every day to spend with your family. This is true family time. No work allowed. If you have to schedule it, schedule it. Never miss it! I guarantee that you can find 7 hours each week to spend with your family. If you feel you can't spare the time, think of it this way... If someone told you they would pay you $100,000 to meet with them an hour a day doing something you love, would you find the time? Of course you would! It is no different! Work is not worth losing your family, and I promise it won't collapse in that time. By doing this, you will reap great benefits! Spending time with loved ones is one of best stress relievers and rejuvenation techniques (in most cases), and will lead to greater joy in your life.

Number two: Get enough sleep! Stress definitely has the upper hand here. Stress causes you to lose sleep, which causes more stress. Sleep is vital to your health. Inadequate or poor quality sleep can negatively affect your mood, energy level, attitude etc... Getting proper sleep will not only reduce stress, but will make you be more properly equipped to deal with the stress you do face. If you need help sleeping find a relaxation technique that works for you.

Number three: Exercise. Not only is exercise good for your physical health, it is also important to your mental health. Exercising gets your blood flowing and releases endorphins which will improve your mood, and help you sleep better. Plus, if you are frustrated and angry it is a healthy way to let it out.

Number four: Let it out. Listen to music, laugh it off, drink tea, and/or use breathing techniques. All of these things are known to lower your stress and are enjoyable. The key is to allow yourself to relax.

Number five: Phone a friend. This will get you to talk yourself through it and help you formulate a plan. They may have advice that will help you through it easier; they are a fresh set of eyes on the situation. Plus, they can help you to "let it out." Including in this is get help. Sometimes things can't be solved alone.

Number six: Get Help. Some things cause stress that you don't know how to properly deal with. Contact an expert. For example, one of the most common cases of this is finances. Talk to someone who can help you get out of debt, save for the major life events, and relieve all of your financial worries. If you are struggling from any kind of financial stress, give me a call today and let me help you!

All in all, stress is a detrimental part of your life that will only hurt your life. I hope you can use at least one of these techniques to live better!

The Mortgage Trap

If you have been reading my articles/listening to my advice you will have heard the term “found money”. What I mean by that is I help families “find the money” to accomplish their financial goals. One of the many strategies I have learned is utilizing home equity. Many people are not comfortable with this strategy since, they have been told by their parents that the path to success is going to college, getting a good job, buying a house, paying it off as fast as possible, saving a little bit of money along the way and they’ll be fine. Honestly this was rock solid advice for our parents and grandparents. However, times have changed since this advice was constructed around the great depression. Today it’s outdated…

One of the biggest obstacles to this is debt; student loans, car notes, credit card debt etc… People can’t save like they used to, (or at least don’t know how to). This is the mortgage trap…paying off your home as fast as possible.

Before I continue, we need to establish the definition of home equity. Home Equity is the difference in what you owe on a home and that of the total value. For example, if you have a home valued at $500,000 and you owe $300,000 on that home, then you have $200,000 of equity.

So let’s assume you have that $200,000 in equity. Is that equity doing anything for you where it’s at? No. Your home will increase/decrease in value based on the market. Therefore, equity has no rate of return. From a financial standpoint, does it ever make sense to have money sitting there doing nothing for you? What better use can you think of for this money? Could you use it to pay off Credit Card debt. The average family has between 10-20k in credit card debt. The average interest rate on that debt? Approx. 12-18%. IF you were to take a HELOC/refinance (home equity line of credit) what interest rate could you get…4-7%? Does it make sense to pay 12-18% when you could be paying 4-7%? Quick math. 20k @ 18% = $3,600 interest charge. 20k @ 7%= $1,400. That would save you $2,200/yr in interest. That’s almost $200/month! If you used that money to start saving for your future, how much better off would you be?

This is just one of the many great uses of home equity. For more information, the other strategies, and to see if this is right for you call my office today.

Remember: This strategy is very complex and has a lot of underlying factors. Please talk to an expert before using this to make sure it’s done properly and in your best interest.

Secure Act & You

The Setting Every Community Up for Retirement Enhancement (SECURE) Act was signed into law on December 20, 2019 and has been effective since January 1, 2020. This act has made some very significant changes to 401(k), 529 plans (college funding), RMD’s and the rules regarding inherited Regulated plans.

RMD’s (Good news) The first change they made is the delay of Required Minimum Distributions (RMD’s). Previously, RMD’s started when an individual reached age 70.5; under the new law (for people born after July 1,1949) they won’t have to take a distribution until they reach age 72. Note: those who have already started must continue to take those distributions.

Regulated Plan Changes (Good news) One positive change they made to regulated plans is they now allow and encourage annuities as a safe money vehicle available for use in 401k’s. There were also several changes increasing the benefit for employers to start 401ks for their employees. 401k’s also allow for a penalty-free withdrawal of $5,000 to help cover the costs of adopting/having a child. Additionally, up to $10,000 annually of your 529 plan can be used for qualified student loan repayment.

Inherited IRA = TAX BOMB (Bad news)

With the new changes, the Stretch IRA is no more, but what does this exactly mean for you? It means Inherited IRA’s have one of the worst vehicles to pass on to a non-spousal heir. Basically, instead of being able to take payments throughout the heir’s lifetime (spreading out the taxes), they now have to take out all the money by the end of 10 years. Now, because this money is taxed when it is distributed instead of when it is deposited, (Regulated plans are tax-deferred), they now have a massive tax bomb that they can’t really plan for. (Note there are some exceptions to this. Visit the IRS’s website for the full list.)

What do all these changes mean to you?

Planning for retirement and legacy is now more important than ever if you don’t want to leave a financial mess to your heirs. There are so many options out there (such as the ROTH IRA, and others without income limits) that you can use to adjust to these changes. Additionally, we now have more options when accumulating for retirement income. I highly recommend, you talk to an advisor to review your situation and make sure you are still on the right track to meet your goals.

3 Tips to Help You Sleep at Night

There has probably been a time in your life where no matter how tired you became; you still were not able to fall asleep. This may have been going on for several nights sporadically, over a week period, special occasions, or has been continually going on for much longer. Hopefully, these tips I'm about to share will help you sleep better at night. DISCLAIMER: The advice I am giving is from my personal experiences or those that I talk to. It should not be used to replace a licensed physician's advice.

Before we begin, let me address an elephant. The first step of getting a good night sleep is good mental health. If you suffer from depression, sleep apnea, or other condition that is causing you to regularly not sleep at night, please do not feel embarrassed to go to a licensed professional. It is not taboo; it is a serious condition that may require extra help to treat. This does not make you weak.

First thing we will talk about is breathing and meditation. One cause of lack of sleep is not being able to relax at the end of the day. With all the stresses of everyday life, it can be hard to turn your mind off when it is time to sleep. A good way to help this is to meditate. You can find strategies all over the internet. Another way is to control your breathing.

Purposefully take slow, deep breaths (If it helps count them). It will slow your heart rate and give you something else to think about than your stresses helping you fall asleep.

The next thing to help you sleep is stability and consistency. Your body has an internal clock, it is referred to as the circadian rhythm or circadian clock. this clock regulates the periods of sleepiness and wakefulness. Jet lag occurs because "real time" changes from the internal clock. To help your circadian cycle, avoid eating within 2 hours before bed, bright lights before bed, heavy exercise, (as these are all natural resets throwing off the time your body thinks it is) and try to go to bed at the same time each night. If you struggle with this, consider setting an alarm and stick to it.

Finally, make sure you are comfortable. Researchers believe it is best to sleep in a dark, cool room with light ambient noise and a warm bed. If you suffer with cold feet/hands, consider wearing socks/gloves to sleep. Also, be sure to regularly maintain your mattress and pillows. (Average life span of a bed is 5-10 years). Finally, if you and your partner's bedding style varies, consider making the bed with two twin sets so as to make sure no one steals covers and both can achieve their ideal setting. (If it looks tacky you can cover it with your regular sized comforter.)

Sleep is a very important part of maintaining a healthy lifestyle. Hopefully, the tips in here will help you to fall asleep quicker and sleep more soundly. You will appreciate the difference!


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