Posted by Mark Zaifman on Mon, Feb 06, 2012 @ 04:41 PM
It's that time of year again - time to start thinking about taxes - and tax deductions.
Consumer advocate Clark Howard recently posted a list of the 12 red flags that will get you audited by the IRS, which is the short and sweet version of Kiplingers IRS Audit Red Flags: The Dirty Dozen. Both articles are must reads - if you are short on time, go to Clark's edited version - but if you have the time, check out Kiplingers article which goes into more depth and explanation. (don't miss the New Tax Changes for 2012 link at the end of the article - it's available on the Kiplingers site for $6.)
My 2011 blogpost on tax deductions is worth revisting - in it, you'll find relevant links including The Most-Overlooked Tax Deductions and if you are a business owner Business Expense Tax Deductions.
As an FYI, my background is in tax accounting, so if you'd like a complimentary consultation, don't hesitate to contact me through the link below.
Image credit RVW
Posted by Mark Zaifman on Thu, Feb 02, 2012 @ 07:52 PM
For years, great thinkers and spiritual leaders, past and present, have written about money and spirituality. Often illustrated are step-by-step instructions on how to tap into and access your spiritual power to manifest abundance into your life.
Books such as Think and Grow Rich by Napoleon Hill, The Seven Spiritual Laws of Success by Deepak Chopra, The Power of Intention by Wayne Dyer and Living in the Light by Shakti Gawain are just a few examples that open your mind to a new way of manifesting abundance into your life.
What all these books have in common is the link between your thoughts and your ability to manifest your desires. For when you view yourself as a powerful spiritual being that has the divine capacity to manifest and attract all you need or desire, then working with a financial planning firm called Spiritus is likely going to be a good fit.
My Journey of Spiritual Growth
Throughout most of my twenties, my relationship with money was challenging on many levels. In college, I majored in accounting, not so much because I loved accounting, but because I thought it might help me deal with my money stuff. I was dead wrong - actually, coming out of college and being assigned to high net-worth clients only made the situation worse and my relationship with money that much more challenging.
My attempts at healing my relationship with money early on met with short lived success. Time passed, and self declarations of ‘mission accomplished’ were common refrains heard by my friends. But invariably, as if my evil twin suddenly took control of my emotions and brain, I was back to old self-destructive habits around money.
It was also in my mid-to-late twenties that I found myself fortunate and grateful to be in business for myself and earning a healthy income. Yet like pouring water into a bucket filled with numerous holes, the money came gushing in but gushed out even faster. Why, I kept asking myself, am I able to earn so much money yet feel powerless in terms of holding on to it? What was it about my relationship with money that had me twisted up in knots?
My Relationship with Money
I can still remember the day I was driving home from Philadelphia, listening to NPR and hearing Vicki Robin , co-author of Your Money or Your Life, being interviewed about her newly published book. It was the first time I ever heard anyone use the phrase ‘relationship with money’. I quickly pulled off I-95, parked my car and continued to listen to this fascinating woman describe the steps to transform your relationship with money and achieve financial independence. I wasn’t quite sure what it all meant, but intuitively Vicki’s message resonated with me, it felt like fate that I just happen to be listening to the radio for her interview and I knew one thing for sure- I was in- big time.
Like anyone that’s read this seminal book on money and committed themselves to the tough inner work required for transformation, for me, it was an enlightening journey of self discovery and worth every precious second of life energy. What you can achieve as a result of this work is not only authentic and sustainable financial freedom, but the greatest gift of all, true peace of mind.
What Your Money or Your Life did for me was help heal my relationship with money and build a strong foundation for future prosperity. It gave me the courage to confront my money shadow and once and for all, put an end to my financial cycle of boom and bust. Now I was ready for the next step.
Seeing Myself as a Powerful Spiritual Being
As much time and energy as I have devoted to working and continuing to work on my relationship with money, my focus now is on discovering more about the spirituality of money.
Writing about the link between spirituality and money and how to connect to and harness this powerful energy will be the focus of many blogs moving forward. What’s inspired me to discuss this topic much more than usual has to do with my clients.
As part of my introductory comprehensive financial planning questionnaire, I ask all new clients to review and prioritize a list of values. Over the past 3 months alone, from a list of ten values, every single new client has listed spiritual growth as their number one value. That tells me all I need to know. The time is right to have a broader discussion on this intriguing topic. Let’s get to work.
Mandala image by Omnos
Posted by Mark Zaifman on Tue, Jan 24, 2012 @ 10:16 AM
Since the stock market crash of 2008, investors of all stripes, but especially boomers, have had a love-hate relationship with the market. When the markets are relatively calm and trending up, we love the markets, when the opposite is true, we hate the stock market.
I’m purposely using words like love and hate to illustrate a point. These are powerful words that in turn create powerful and impactful emotional responses. And if there’s one area of life that truly benefits from rational decision making as opposed to emotionally based decision making, it’s the world of investing.
Now take it a step further. Here we are in 2012, with an estimated 10,000 baby boomers in the U.S. turning 65 every day for the next 10 years. A large portion of these boomers were so freaked out by the 08’ crash that they pulled their funds out of the market and have yet to get back into the market.
And where’s all this money parked? Some estimate it to be in the $2 trillion category and the vast majority of it is sitting in savings, checking, money market and CD accounts earning about 1-2% interest per year.
Avoiding Risk Can be Risky
From an emotional point of view, I understand fully and completely why the 08’ crash would have investors scared silly to get back into the market. And I understand further that observing the volatility in the stock market last year would reconfirm your decision to avoid any risk with your money.
That said, unless your investment portfolio is in the multi-million dollar range, avoiding risk all together will not only be extremely risky to your overall financial well being, it can wreak havoc with your plans for retirement. That’s because if we assume an annual core inflation rate of 3% and you’re earning say 1-2%, the value of your investments purchasing power is actually going negative each year, meaning, playing it too safe is actually quite risky to your overall financial security.
Most of us find it difficult enough in ‘normal’ times to take a long-term approach to investing. So when prices are rising and falling 2% a day and all the news is doom and gloom, seeking a safe harbor in the storm is a very appealing and emotionally satisfying response. That’s why we’ve seen so much cash pour into the safest and lowest earning assets available.
Rethinking your Financial Objectives
Yet when the storms do eventually blow over, we’ve seen much of this money make its way, albeit little by little, back into the stock market. Yet something strange is happening to this usual virtuous cycle. The money that was pulled out of the market in 08’ has stayed out for the most part and it appears many people have given up on the stock market entirely.
That’s not a good thing, especially for baby boomers nearing retirement. After all, in a capitalist country, owning some capital is usually a smart way to make money. If you’ve decided that, in a market as volatile as this one, the only way to win the investing game is simply not to play, I highly urge you to rethink your financial objectives.
The Importance of Being a Long-Term Investor
Many of the new clients I’ve met so far this year have had the majority of their nest egg sitting in cash. After pulling all their 401k, 403b, and IRA money out of the market three years ago, they have yet to put it back in. Although in the short to mid-term that feels comforting, is it rational to keep your money that ought to be invested for the long-term in the market earning 1-2%? The answer is no.
How much risk you need to take with your investment portfolio is a matter of serious analysis. Yet thinking you can avoid risk all together by playing it safe and earning 1-2% annually is more of a risky strategy than you can imagine.
Bottom line: From an emotional point of view, fear distorts our rational decision making process when it come to investing and greed follows behind at a close second.
If you’re someone that understands intellectually that earning 1-2% annually could be harmful to your long-term financial security yet you feel unable to break through the barrier of fear constantly confronting you, I hope you'll contact me. Together, we’ll turn your fear into faith, your faith into personal financial empowerment, and your newfound empowerment into self-confidence that will get you back on the road to financial success.
Image credit by
Jarenberg
Posted by Mark Zaifman on Thu, Jan 19, 2012 @ 07:59 PM
This week, Your Money or Your Life author, Vicki Robin posted on her facebook page,
"Just in. 2008 edition of Your Money or Your Life going back to press. Now over 75,000 in print, and former edition sold somewhere near a million. I guess the time is ripe again."
I'd say.
Published by Penguin Group, the classic book, Your Money or Your Life is still a favorite. So much so that USA Weekend included it in their "5 Personal finance reads you can bank on for 2012."
I was proud to be included as a contributor to the book when it was re-released back in December 2008, and am thrilled when a reader contacts me to help them in their financial life. Because of the vast reach of the book, I've been lucky enough to have worked with Your Money or Your Life readers from all across the country. Check out my map (scroll to the bottom) to see all the locations where my Your Money or Your Life clients hail from.
I'd love to 'pin' your state!
Image credit by USA Weekend
Posted by Mark Zaifman on Thu, Jan 19, 2012 @ 12:05 PM
We’re only three weeks into the New Year and hands down, almost every potential client I’ve spoken with so far is concerned about one thing and one thing only - retirement planning. More specifically, they want to know, based on their current financial picture, if they’ll be able to maintain the lifestyle they desire when no longer working for money. That, ladies and gentlemen, pardon the cliché, is the $6 million dollar question on many a boomers mind these days.
Where most of us do really well is on understanding and executing on the accumulation phase, such as saving and investing X amount in your IRAs, 401ks, 403bs, each year. We get that concept. Where things become murky for many people is when you get to the income distribution phase of retirement planning. This is when you need a long-term strategy to fill the gap between your social security and possible pension payments and your lifestyle expenses. To do that, you ask the following questions:
- How much can you safely withdraw each year from your investment portfolio?
- What’s the rate of return you’re assuming with your portfolio?
- How should you develop your investment strategy?
- Do you withdraw your cash monthly, quarterly or once a year?
- Do you withdraw the same amount each year or will it depend on your investment returns?
- What’s the defensive strategy to preserve your capital if inflation starts to increase rapidly?
3 Tips to TUNE-UP Your Retirement Plan
1) Challenge Your Assumed Investment Rate of Return
If there’s one area where people most often get into trouble, it’s when they assume too high an annual rate of return on their investments before retirement and when retired.
Instead of going high, even if there’s a good possibility that overall your investment returns come in say at 9%+ by the time you’re retired, keep in mind, retirement planning is at its core about capital preservation, also known as ‘never running out of money before you die’ as well as maintaining your purchasing power over time. It’s not about how high your potential return may actually be; on the contrary, it’s about being ultra conservative with your assumptions and assessing how low of a return you can earn pre/post retirement while still being able to reach your financial objectives.
GOAL: Start by using a 4% average annual return on investment pre and post retirement and go up from there only if needed.
2) Challenge the Amount of Investments Available for Income Distribution When Retired
The second area of retirement planning that most often gets people into hot water is calculating the amount of money available for withdrawal when retired. The most common mistake made is forgetting about your major silent partner in retirement. I’m referring to the IRS and your state income tax.
Keep in mind, anywhere from 25-40% of the money not in your Roth IRA is owed to the tax man when you start to withdraw the cash.
GOAL: Come Up with an accurate value of your investments when retired net of taxes and update annually.
3) Challenge All Your Spending and Income Assumptions and Develop a Retirement Plan
I would highly recommend that whatever assumptions you have made about your retirement plans i.e. spending, income, returns, lifestyle, travel, healthcare costs, insurance, taxes, social security, medicare, etc, that you put every one of those assumptions through a stress test.
Most people use overly optimistic projections when planning for retirement. So put those projections through a stress test by first adding 10% to the total of your projected annual retirement expenses and then decrease your projected retirement income by 10% and evaluate results. Repeat this exercise again, this time using 15% instead of 10% and evaluate results.
Bottom line: managing your money when retired requires agility, resilience and the ability to quickly adapt to changing circumstances. Hoping for the best is ok, but don’t forget, you also need to be prepared for the worst as well.
GOAL: Once a year, challenge every assumption you have made about your projected investment returns and retirement income plan. Poke as many holes in your assumptions as possible, then reevaluate and course correct if needed.
And most importantly, invest in yourself and the upcoming prime years of your life by not flying blind into retirement. Instead, plan to win by developing a strategic retirement plan that details step by step, how you’re going to arrive at your desired destination.
I wrote an e-book called The New Retirement Planning, 7 Essential Steps to a Great 21st Century Retirement Plan. You can download it FREE here.
Images credit Hub
Posted by Mark Zaifman on Tue, Jan 17, 2012 @ 06:21 PM
According to the Transamerica Center for Retirement Studies, a measly 8% of employed women feel they are building a sufficient retirement fund. One of the main reasons for this is that women aren't talking about retirement planning.
So to remedy the problem, and based on it's research, the Center for Retirement Studies came up with some questions that family, friends and advisors can ask women to get them started with talking about retirement.
Financial Planning.com is where you can find a summary of the survey, but if you are interested in reading the full 37 page Annual Transamerica Retirement Survey, you'll find it here - Women: Let’s Talk About Retirement.
Image credit Chez-Sugi
Posted by Mark Zaifman on Wed, Jan 11, 2012 @ 12:00 PM
Can you guess the average age at which we are at our mental sweet spot?
Personal finance expert Jane Bryant Quinn wrote an article titled Losing Your Grip the January-February 2012 AARP bulletin, citing a Harvard study on financial decision making called Age of Reason. In her article, Jane makes the case for people over the age of 60 to consider turning over financial decision making to an expert.
The 4 steps Jane suggests those over 60 putting into action are:
- Getting your documents together including a Durable Power of Attorney, Will, Living Will, Health Care Power of Attorney and up to date beneficiary forms.
- Get a second opinion from someone you know such as an adult child, a financial advisor or a long time capable friend.
- Read the fine print before buying a variable annuity with a nursing home waiver.
- Help your advisor to protect you by considering having on file with them an 'incapacity letter'.
Jane says that preparing for retirement is only part of the picture and that the next step in preparation is the reality that your thinking won't be as clear in the future as it may be today.
So what is that age at which our knowledge and agility are in optimal performance and in perfect balance? According to the above referenced study, 53.
Image credit Hakan Dahlstrom
Posted by Mark Zaifman on Thu, Jan 05, 2012 @ 02:32 PM
How much money does it really take before we consider ourselves to be rich? Based on net worth and income, this infographic by Mint.com, which is based on a recent Gallup poll reveals just what we Americans believe the 'rich index' is.
Some of the answers regarding income are really interesting:
How much money would you have to earn annually to consider yourself rich?
A - $150,000 (all Americans)
A - $150,000 (men)
A - $100,000 (women)
A - $200,000 (college graduate)
A - $100,000 (college non-graduate)
See full infographic here
This whole survey gets me thinking about the 'enough' factor, our relationship with money and the bigger question of what being rich really means.
Unless you’ve taken the time to honestly contemplate how much is ‘enough’, you’ll be buffeted by forces that have one aim in mind; keeping you striving but never arriving.
There is nothing wrong with working hard, playing by the rules and winding up ‘rich’. But if your desire is to feel
financial freedom sooner rather than later, than the sooner you decide on your ‘number’, your number in this context being the amount of money you wish to accumulate by the time you retire, the sooner you’ll arrive at your destination.
And remember, being rich is a state of mind. I come in contact with potential clients all the time that have accumulated millions of dollars. And at the same time I meet potential clients that haven’t accumulated anything close to that amount. And it’s often the case that the people I meet with a lot less feel much ‘richer’, so to speak, than the person with the large bank account.
Infographic by Mint.com
Posted by Mark Zaifman on Thu, Dec 29, 2011 @ 05:07 PM
This is the time of year people often start thinking about getting their financial house in order. So if creating a personal financial plan is on your list as a personal and financial goal to accomplish in 2012, you won’t be alone. As you survey the landscape of fee-only financial planning options available, keep this in mind;
Creating and implementing a comprehensive financial plan that
- optimizes your cash flow and investments;
- aligns your money with your values;
- provides you a smart and strategic financial roadmap that’s easy to understand and implement;
has the potential to be one of the best investment decisions you’ll make in your life.
And I'm not the only one who considers financial planning to be an 'investment' decision. A few weeks ago, I met with a couple that I’ll call Lory and Ben, who were in need of fee-only financial planning. Both of them were long time do-it-yourselfers and had previously worked with an insurance sales person that called himself a ‘financial consultant’.
It turned out that every financial challenge they presented to this financial consultant/sales person had a one-size fits all solution - that being an overpriced, high commission crappy annuity to purchase. No surprise there. Many commission payouts to sales reps that masquerade as financial planners are in the 10% range.
Yes, ten percent - you read that right. If you purchase a $100K annuity, in many cases the commission that gets paid to the sales person is 10% of face value or $10,000. That commission is protected by what’s called an “early surrender charge”. But don’t get me started on annuities, commissions and conflicts of interest- back to the couple...
Although this couple had a bad experience the first time out the gate when seeking financial guidance, fortunately they were referred to me by their good friend and my dear client. That said, they’re both very intelligent, Lory has a PhD, Ben an MBA, and both have a natural skepticism about working with a financial planner.
As a couple, they have also lived quite a frugal lifestyle. So the thought of paying a financial planner to help them develop a customized comprehensive financial plan seemed extravagant. Their motivation though was driven by a large inheritance received about a year ago that was still sitting in a money market account earning around 1% interest.
Lory & Ben easily and readily admitted investing was a topic they found little interest in. They both confessed they felt guilty about not pursuing more knowledge around the world of investing so they could invest the inherited money themselves, but they found stocks and bonds dry and boring. (Truth be told, I'd bet most of my clients, if pressed on the topic, would admit the same thing. And that’s fine with me, because as crazy as it sounds, I love this stuff.)
Towards the end of our consultation, I found Lory ready and excited but Ben was not yet on board. So to my surprise, she suggests to him that the fee for developing a financial plan ought to be viewed as an investment and not an expense. I couldn’t have said it better myself and the remainder of the meeting, we reviewed all the many ways a financial plan could offer a return on investment (ROI).
Whether it’s optimizing your monthly cash flow, designing a long-term investment strategy that increases performance, tuning up your risk management strategy, playing the tax game more efficiently or simply having a strategic, step by step financial plan that details how you’re going to reach retirement - one or all of these elements combined has the potential to enrich your life, increase your net-worth and perhaps most importantly of all, offer you the peace of mind and financial integrity that comes with knowing your financial house is in order.
Why not make 2012 the year you decide to invest in your financial future? Personally, I absolutely love this time of year. Treating yourself to some much needed personal time for reflection and planning ahead is good for the mind, body and soul.
Wishing you all a very Happy, Healthy and Prosperous New Year!
Image credit Stockerre
Posted by Mark Zaifman on Fri, Dec 16, 2011 @ 02:32 PM
Yesterday, a slew of articles appeared in the news proclaiming Married Couples at a Record Low. I’m aware of the trend that younger people are delaying or reevaluating whether they want to make the plunge, and with over 50% of marriages still ending in divorce, I can understand the hesitancy.
So as we prepare to bid farewell to 2011 and ring in 2012, I find myself wondering, will money continue to be one of the major causes of couple’s calling it quits?
One obvious yet significant way you can increase the odds that you will not become a divorce statistic is by working as a team with your partner around your personal finances. That means you’re both on the same page in terms of how you spend, save, invest and earn your money.
The Power of 2
To get on the same page with your mate regarding money is easier said than done. But you have to start somewhere, otherwise conflict is just a visa bill away.
As a holistic financial planner that works extensively with couples, I love helping them find their mojo when it comes to managing their money and discovering what it feels like to have money harmony in your relationship. It’s an amazing gift to your relationship and one of the best investments you can make towards your long-term financial success. Working together as a team, being in sync and alignment with your mate, both of you rowing in the same direction and both focused on the same financial life goals, now that’s real power. My wife Pat and I refer to it as The Power of 2!
When you consider how much time throughout our lives that we spend trading our precious life energy for money and how little time we invest in smartly managing, investing and strategically planning how best to use that money, it seems crazy, doesn’t it. All those precious hours spent making money and so little time invested planning for it.
As you go about making your new year’s resolutions for 2012, how about making a commitment as a couple that you’re going to become a Power of 2 couple by once and for all, summoning the courage needed to get your financial house in order by co-creating a comprehensive financial plan that you both are fully invested in.
Working together on a financial plan will help you clarify and prioritize your financial and personal goals. It’s a time when you step back from the busyness of day to day life to take an active role in architecting your future. You’re reaching deep inside on a soulful level and sharing your deepest hopes and fears. It’s your time as a couple to plan your future, set your intentions and actively design a financial roadmap to make it all happen.
Carpe Diem
Designing and creating a comprehensive financial plan has the potential to bring you closer together as a couple than you could ever have imagined. Couples that “seize the day” so to speak, set themselves up for long-term happiness and success. At the heart of this success is the power of teamwork.
A couple that discovers how vitally important teamwork matters when it comes to managing their money is a couple I am eager to be of service to and is a couple destined to harness the Power of 2!
