CS31

Cents & Sensibility #31

Cents & Sensibility is written by John Scherer. John is a financial author, speaker and owner of Trinity Financial Planning.  Copies of previous editions are archived at www.trinfin.com.   Feel free to share Cents & Sensibility in whole or in part, as long as you include complete attribution, including live website link if used in an email or on a website.

July, 2010

The first article is a reprint of the one that appeared in last July's Cents & Sensibility.  Some truths are universal and worth repeating.  Please do take time to reflect on what exactly Independence Day means as an American.
 
Following that is a very timely article in this wedding and graduation season written by Alliance of Cambridge Advisors colleague Karen Folk.  Karen is a previous resident of Madison who now runs a thriving fee-only planning practice in Urbana, IL.  She recently added a partner to her practice and is in a growth mode after years of not accepting new clients, so if you know anyone in southern Illinois, especially college professors, who would benefit from unbiased financial advice have them check out Karen's website www.karenfolk.com.

This month's issue finishes with another installment of Snippets, with some especially interesting tidbits about gold and taxes.

Please forward this newsletter to others who would benefit from reading it.

 "Posterity: you will never know how much it has cost my generation to preserve your freedom. I hope you will make good use of it." ~ John Quincy Adams

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This Cents & Sensibility will cover:

1. The Most Important Sentence Ever Written in the U.S. History
2. Giving the Gift of a Financial Planner
3. Join us for a FREE 45 minute Webinar
4. Snippets According To... 

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The Most Important Sentence Ever Written in the U.S. History

"And for the support of this Declaration, with a firm reliance on the protection of divine Providence, we mutually pledge to each other our Lives, our Fortunes and our sacred Honor."

Take some time this Independence Day to reflect on how much our forefathers risked to establish this great nation, and ask yourself what values you hold so high that you would be willing to risk everything you have in its defense.

And don't forget to thank a veteran for fighting on our behalf to preserve the independence and liberty that Thomas Jefferson and the rest established for us 234 years ago.

And what country can preserve its liberties, if its rulers are not warned from time to time, that this people preserve the spirit of resistance? Let them take arms. The remedy is to set them right as to the facts, pardon and pacify them. The tree of liberty must be refreshed from time to time, with the blood of patriots and tyrants. ~ Thomas Jefferson 

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Giving the Gift of a Financial Planner
by Karen F. Folk, Ph.D., CFP®
Urbana, IL
 
The season of graduations and weddings will soon be upon us. Suppose you gave a different kind of gift to new graduates starting out in their first job or to newlyweds merging households and finances. What if your gift was a chance to build their financial awareness by meeting with a trained expert?
 
Financial planning is an investment. It costs money. But its potential returns are many-a chance to get a handle on current problems with spending, debt, and investing, and an opportunity to diffuse fear of financial issues by learning about them in a way that's tailored to individual needs. The gift of a meeting with a planner who provides unbiased guidance, even on just the basics of financial fitness, could pay off for years to come.
 
If you are working with a financial planner yourself, your advisor may be willing to do a onetime review of the basics. Many planners have such programs designed especially for recent college grads or newlyweds. Looking for an advisor in a different part of the country? You can find members of the Alliance of Cambridge Advisors through the "Find an Advisor" feature at www.acaplanners.org. Many ACA members offer a onetime financial review, and some can provide meetings by phone and computer connection with clients in other geographic areas.
 
Here are some questions you should ask about a prospective financial planner:
 
What is your background? Find out how long the planner has been in practice and his or her certifications. A Certified Financial Planner™ professional has a minimum of three years experience and has completed a comprehensive course of study at a college or university offering a financial planning curriculum approved by the Certified Financial Planner Board of Standards. Certified public accountants (CPAs) with the Personal Financial Specialist (PFS) designation have also completed comprehensive training in financial planning.
 
What services do you offer? Generally, financial planners cannot sell insurance or securities products such as mutual funds or stocks without the proper licenses or give investment advice unless they are registered with state or federal authorities. For an introductory session, a planner who offers financial planning advice on a range of topics and does not sell financial products is the best source of unbiased review. Ask what topics a financial fitness session will cover. For young people just starting out, the discussion should include building an adequate emergency fund, protecting against risks, handling consumer debt, how to start saving for a home purchase, and how to go about tax-advantaged investing.
 
Do you have any potential conflicts of interest? It may seem like a pushy question, but the best planners expect it and are prepared to disclose any conflicts. If a planner profits from the sale of investment products to you, obviously he or she must spell that out. Ask what products the advisor is licensed to sell. A so-called advisor who makes money selling insurance or investments has a built-in motive to push a product and may not act in the client's best interest.
 
How do you feel about teaching and training? Education is one of the most valuable benefits that the gift of a financial planning session can provide. Will the advisor help your gift recipients both by covering the basics of getting started and by providing direction for further self-education?
 
It's uncommon to give a gift of professional financial advice. But compared with other wedding or graduation gifts they'll receive, the recipients will get much greater value, and benefit from your generosity far longer, than they would if you bought them a microwave.
 
Adapted from a column produced by the Financial Planning Association.

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FREE 45 minute Webinar
Wednesday July 7th, Noon Central (1pm Eastern)

"Planning for Long Term Care and Medicaid"

Guest Speaker: John L. Haslam
Wilson Law Group, LLC

The law regarding long term care in general and Medicaid specifically is constantly changing, which makes it easy for insurance salesmen to confuse and scare customers into buying insurance and annuity products.  Find out the real information about Medicaid coverage, limits and penalties as well as strategies to help offset long term care costs without the hype that accompanies a sales seminar.  This educational webinar will be presented by attorney John Haslam of the Wilson Law Group.

View webinar presentations HERE

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Snippets According To... 

...CMG Group, despite hitting an all-time high in June the real the price of gold has lost 50% of it's value on an inflation-adjusted basis over the past 30½ years.  The price of gold was $850 an ounce on 1-21-1980, equal to $2,400 an ounce today on an inflation-adjusted basis. Gold closed at $1,244 a troy ounce on 6-08-2010, an all-time nominal record close.

...the Census Bureau, more than twice as many Americans live in the Eastern time zone (48%) as in the Mountain and Pacific time zones combined (23%).

...ESPN.com, outfielder Corey Hart of the MLB Milwaukee Brewers made $3.25 million in 2009.  After a year in which he hit .260 with 12 home runs and 48 RBI's while playing in 70% of the Brewer's games, the team offered Hart a 28% pay raise to $4.15 million.  Hart rejected that offer, took the club to arbitration and won, receiving a 48% hike in pay to $4.8 million.

...the IRS, for the 17 years from 1965-1981 the top individual marginal tax bracket paid by American taxpayers was 70%, double our current top tax rate.

...the Standard & Poor's Indices versus Active Funds Mid-Year Scorecard 2009, 27% of the 2,154 US equity funds in existence five years prior had merged or liquidated as of 6-30-2009.  Ten percent of small growth funds disappeared just in the first six months of 2009.

...Freddie Mac, the average interest rate nationwide on a 30-year fixed rate mortgage was 4.79%, just off its all-time low.  From January 1978 to September 1991, the average interest rate nationwide on a 30-year fixed rate mortgage never got below 9%.
 

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NOTICE:

PERSONS attempting to find specific individual advice in this newsletter will be prosecuted; persons attempting to make financial planning decisions based on it will be banished; persons attempting to make investments based on it will be shot.

BY ORDER OF THE AUTHOR

© 2008, John Scherer.  All rights reserved. Please feel free to share Cents & Sensibility in whole or in part, as long as you always include complete attribution, including live web site link (www.trinfin.com) if used in an email or on a website. Please also notify me where the material will appear.

John Scherer and Trinity Financial Planning do not guarantee the relevancy, appropriateness, or accuracy of any outside information or links.  The information in this newsletter is based on data gathered from what are believed to be reliable sources. It is not guaranteed as to accuracy, and does not purport to be complete and is not intended as the primary basis for investment or financial planning decisions. It should also not be construed as advice meeting the particular investment or financial planning needs of any investor or reader of this material. Any reference to outside information is for your convenience only and should be treated prudently.

John Scherer is a Registered Investment Advisor and does not render or offer to render personalized investment advice or financial planning advice through this medium. This medium is limited to providing general information on my services and provides a way to contact me. Advice can only be rendered after all of the following conditions are met:

1. Delivery of a disclosure statement by advisor to client
2. Execution of an Investment Advisory and / or Financial Planning agreement between advisor and client.
3. Initial payment of the planning fee or investment advisory fee by client to advisor
4. Advisor may transact business only in states in which it is registered, or in which it is exempted from registration.

All references that might be made to an investment or portfolio's performance are based on historical data and one should not assume that this performance will continue in the future.