​Focus on your overall approach during times of short-term volatility.
 
As an investor, it can be tempting to get caught up in daily news headlines. Consider how news about the election and COVID-19 vaccines have moved the markets over the past several weeks. But having a financial strategy can help you ignore short-term volatility and focus on your long-term vision.
 
As you know, investing is a process based on your goals, time horizon, and risk tolerance. Interestingly enough, it’s also a process that may help you prepare for life’s financial challenges.
 
For example, did you know that only 44 percent of workers have estimated how much income they would need in retirement? What is more, only 36 percent have calculated how much money they would need to cover healthcare expenses.
 
Creating a financial strategy means thinking about the bigger picture, including a variety of issues like monthly income needs, handling unexpected expenses, and preparing for healthcare costs. People who take a “do-it-yourself” approach can quickly find themselves overwhelmed by all the variables they need to consider.
 
If a current event or headline has caused you to reconsider your financial strategy, please give us a call. Sometimes, a newsworthy event can require a new approach. But many times, it may just be a “speed bump,” a momentary blip that is already factored into your long-term vision.

What are the keys to prepare to grow wealthy together?
 
When you marry or simply share a household with someone, your financial life changes—and your approach to managing your money may change as well. The good news is that it is usually not so difficult.
 
At some point, you will have to ask yourselves some money questions—questions that pertain not only to your shared finances but also to your individual finances. Waiting too long to ask (or answer) those questions might carry a price. In the 2019 TD Bank Love & Money survey of consumers who said they were in relationships, 40% of younger couples described having weekly arguments about their finances.
 
First off, how will you set priorities? One of your first priorities should be simply setting aside money that may help you build an emergency fund. But there are other questions to ask. Should you open joint accounts? Should you jointly title assets?
 
How much will you spend & save? Budgeting can help you arrive at your answer. A simple budget, an elaborate budget, or any attempt at a budget can prove more informative than none at all. A thorough, line-item budget may seem a little over the top, but what you learn from it may be truly eye-opening.
 
How often will you check up on your financial progress? When finances affect two people rather than one, credit card statements and bank balances become more important. Checking in on these details once a month (or at least once a quarter) can keep you both informed, so that neither one of you have misconceptions about household finances or assets. Arguments can start when money misunderstandings are upended by reality. 
   
What degree of independence do you want to maintain? Do you want to keep some money separate? Some spouses need individual financial “space” of their own. There is nothing wrong with this approach.      
     
Can you be businesslike about your finances? Spouses who are inattentive or nonchalant about financial matters may encounter more financial trouble than they anticipate. So, watch where your money goes, and think about ways to pay yourselves first rather than your creditors. Set shared short-term, medium-term, and long-term objectives, and strive to attain them.
   
Communication is key to all this. Watching your progress together may well have benefits beyond the financial, so a regular conversation should be a goal.

If an investor chooses a non-human financial advisor, what price could they end up paying?
 
Investors have a choice today that they did not have a decade ago. They can seek investing and retirement guidance from a human financial professional or put their invested assets in the hands of a robo-advisor.
   
What exactly is a robo-advisor? Robo-advisors are a class of financial advisors that provide financial advice or investment management online with moderate to minimal human intervention. They offer digital financial advice based on mathematical rules or algorithms. Signing up walks the user through a series of questions, and based on their responses, creates portfolio choices for the investor.
 
Which begs the question: why would you trust your finances to a robo-advisor?
 
Robo-advisors are an attractive option for those just starting out investing. Some robo-advisor accounts offer very low minimums and fees and can be a solution for younger investors who want to "set it and forget it."
 
Even so, less than 8% of investors responding to a survey from data analytics firm Hearts & Wallets said they had used a robo-advisor. Out of the $43 trillion in the North American wealth management market, an estimated $410 billion is invested with robo-advisors. That number may grow to $830 billion by 2024.
 
The inherent problem is robo-advisors lack the human element to ask questions and dig deeper. Investors in all life stages appreciate when a financial professional takes time to understand them and their situation. A software program struggles to gain that understanding, even with input from a questionnaire.
   
The closer you get to retirement age, the more challenges you may face with a robo-advisor. The software continues to evolve and understand retirement investing. After 50, people have financial concerns far beyond investment yields. Investment management does not equal retirement preparation, estate strategies, or risk management.
 
Many investors are taking advantage of a hybrid model that has emerged. Per the Hearts & Wallets research study, more than half of investors use robo-advisors only as an extension of their existing wealth manager. Once their balance reaches a certain threshold, investors may transition to working with an actual financial professional.

It appears the traditional approach of working with a human financial professional may be hard to disrupt. The opportunity to draw on experience by having a conversation with a professional who has seen his or her clients go through the whole arc of retirement is essential.
 
These responses point to uncertainty about the process of financial and retirement strategies. The process is quite worthwhile, quite illuminating, and quite helpful. It is not just about improving "the numbers," it is also about discovering ways to sustain and enhance your quality of life.

Here are some things you might consider before saying goodbye to 2020.
 
What has changed for you in 2020? For many, this year has been as complicated as learning a new dance. Did you start a new job or leave a job behind? That is one step. Did you retire? There is another step. Did you start a family? That is practically a pirouette. If notable changes occurred in your personal or professional life, then you may want to review your finances before this year ends and 2021 begins. Proving that you have all the right moves in 2020 might put you in a better position to tango with 2021.
   
Even if your 2020 has been relatively uneventful, the end of the year is still a good time to get cracking and see where you can manage your overall personal finances. 
 
Keep in mind this article is for informational purposes only and is not a replacement for real-life advice. Please consult your tax, legal, and accounting professionals before modifying your tax strategy.
  
Do you engage in tax-loss harvesting? That’s the practice of taking capital losses (selling securities worth less than what you first paid for them) to manage capital gains. You might want to consider this move, but it should be made with the guidance of a financial professional you trust.1  
  
In fact, you could even take it a step further. Consider that up to $3,000 of capital losses in excess of capital gains can be deducted from ordinary income, and any remaining capital losses above that amount can be carried forward to offset capital gains in upcoming years.1
  
Do you want to itemize deductions? You may just want to take the standard deduction for the 2020 tax year, which has risen to $12,400 for single filers and $24,800 for joint. If you do think it might be better for you to itemize, now would be a good time to get the receipts and assorted paperwork together.2,3
   
Could you ramp up your retirement plan contributions? Contribution to these retirement plans may lower your yearly gross income. If you lower your gross income enough, you might be able to qualify for other tax credits or breaks available to those under certain income limits.4
  
Are you thinking of gifting? How about donating to a qualified charity or non-profit organization before 2020 ends? Your gift may qualify as a tax deduction. For some gifts, you may be required to itemize deductions using Schedule A.4
 
While we are on the topic of year-end moves, why not take a moment to review a portion of your estate strategy. Specifically, take a look at your beneficiary designations. If you have not reviewed them for some time, double-check to see that these assets are structured to go where you want them to go, should you pass away. Lastly, look at your will to see that it remains valid and up to date.  
  
Check on the amount you have withheld. If you discover that you have withheld too little on your W-4 form so far, you may need to adjust your withholding before the year ends.
  
What can you do before ringing in the New Year? New Year’s Eve may put you in a dancing move, eager to say goodbye to the old year and welcome 2021. Before you put on your dancing shoes, consider speaking with a financial or tax professional. Do it now, rather than in February or March. Little year-end moves might help you improve your short-term and long-term financial situation.
 
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.
 
Citations
1.  Investopedia.com, April 18, 2020
2.  NerdWallet.com, July 17, 2020
3.  Investopedia.com, May 22, 2020
4.  Investopedia.com, July 14, 2020

​3340 Tully Rd, Suite B4, Modesto, CA  95350  |  t: 209.857.5207  |  f: 209.857.5098  | www.blomandhowell.com

Dear friends,
 
I am excited to write to you today to share some exciting news that recently occurred at Blom & Howell Financial Planning.
 
Please join me in congratulating my friend and colleague, Michael Howell, who recently received the CERTIFIED FINANCIAL PLANNER™ designation.
 
Becoming a CFP® professional is one of the most difficult and stringent processes in the financial services industry, as I am sure Michael can attest. To become certified, candidates must meet education and experience requirements, as well as pass the difficult and comprehensive CFP® Certification Exam before they can call themselves a CFP® professional.
 
Successful passage of this exam requires a deep knowledge and understanding in areas of retirement, investing, education, insurance, taxes, and estate planning.
 
Furthermore, the CFP® professional makes a commitment to the CFP Board to abide by standards set forth in CFP Board’s Code of Ethics and Standards of Conduct. They are also held to a fiduciary standard of care, committing to serve the best interests of their clients at all times.
 
I have known and worked alongside Michael for eight years and have played a part in his understanding and growth in this industry. Without reservation I can say he loves to provide guidance and counsel in all areas of his client’s financial planning as it relates to their objectives.
 
This is just another area in which we are committed to you, our clients, here at Blom & Howell Financial Planning.
 
We know financial planning is a dynamic process and means something different for every family and we are committed to providing you a high standard of financial planning to the best of our abilities.
 
Please join me in congratulating Michael Howell. If you’d like to send him well wishes, his email is michael@blomandhowell.com.
 
 Best Regards,

Gary G Blom

It’s never too late to start.
 
The hardest part is getting started. Even though more than half of U.S. households have some form of investment in the stock market, many new parents may still find that creating a financial strategy is the last thing on their minds. And who can blame them? After all, new parents have a million concerns to keep in mind on top of any unexpected financial pressure that may arise. But for young families with discretionary income, creating a financial strategy may be easier than they realize.1
 
Remember that investing involves risk, and the return and principal value of investments will fluctuate as market conditions change. Investment opportunities should take into consideration your goals, time horizon, and risk tolerance. When sold, investments may be worth more or less than their original cost. Past performance does not guarantee future results.
   
What’s your end goal? What expenses do you anticipate in 5, 10, or even 15 years from now? These can be tough questions to answer while raising a family.
 
Establishing your investments’ goal or goals is one of the many ways your financial professional can help. Before your first meeting, jot down all the financial questions you can think of – no matter how silly they may seem to you. These answers can help define your family’s short-term and long-range financial goals.  
  
Once you start, try not to stop. If you have already started investing, congratulations may be in order! In getting an early start, you have taken advantage of a powerful financial asset: time. However, don’t overlook the power of consistency. For some, consistent investing may be the most realistic pathway to pursuing their financial goals.
 
For those who haven’t started, that’s okay too. Remember, it doesn’t always take a lump sum to begin. Even auto-depositing $100 a month into an account is a step toward your family’s goals. And who knows? As your family’s circumstances change, you may be able to contribute even more over time.
 
There is no “one way.” The point is that there isn’t a single, one-size-fits-all solution for young families that are looking to invest in their future. Financial professionals also know this and can help craft a strategy suited to your risk tolerance, goals, and financial situation.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.
 
Citations.
1. PewResearch.org, March 25, 2020

It depends on your goals, time horizon, and risk tolerance.
 
"Will I outlive my retirement money?" That's one of the top fears for people who are starting to prepare for their retirement years.
 
So I have to chuckle a bit when I see headlines that say, "Here's how much money Americans think they need to retire comfortably."1
 
$1.9 million is the number, according to a nationwide survey of 1,000 employed 401(k) participants by a well-known financial services company. In 2019, the same survey reported the number was $1.7 million. But this year's pandemic increased the total by $200,000.2
 
Is $1.9 million a realistic figure for retirement? It's hard to say. The survey didn't ask participants how they arrived at that figure or what information they used to draw that conclusion.
 
Determining how much money you need in retirement is a process. It shouldn't be a number that you pull out of thin air.
 
The process should include looking at your current financial situation and developing an approach based on your goals, time horizon, and risk tolerance. The process should take into consideration all your potential sources of retirement income, and also may project what your income would look like each year in retirement.
 
A significant figure like $1.9 million does little good if you're uncertain what it means for your retirement years. We can help you develop a retirement strategy and show you investment ideas designed to help you pursue the retirement of your dreams.
 
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.
 
Citations.
1. FoxBusiness.com, August 4, 2020
2. Pressroom.aboutshwab.com, August 4, 2020

You may be surprised to learn what is and is not covered.

​If you have a homeowners insurance policy, you should be aware of what this insurance does and does not cover. These policies have their limitations as well as underrecognized perks.
 
Some policies insure actual cash value (ACV). ACV factors depreciation into an item’s worth. If someone makes off with your expensive camera that you bought five years ago, a homeowners policy that reimburses you for ACV would only pay for part of the cost of a new equivalent camera bought today.1
 
Other policies insure replacement cash value (RCV). That means 100% of the cost of an equivalent item today, at least in the insurer’s view.1
   
Insurers cap losses on certain types of items. If you lose an insured 42” flat-screen TV to a burglar, the insurer could reimburse you for the RCV, which is probably around $300. An insurance carrier can handle a loss like that. If a thief takes an official American League baseball (say, from the 1930s signed by Babe Ruth) out of your home, the insurer would probably not reimburse you for 100% of its ACV. It might only pay out $2,000 or so, nowhere near what such a piece of sports memorabilia would be worth. Because of these coverage caps, some homeowners opt for personal floaters – additional riders on their policies to appropriately insure collectibles and other big-ticket items.1
 
Did you know that losses away from home may be covered? For example, you have your laptop with you on a business trip. Your rental car is broken into, and your laptop is taken. In such an instance, a homeowners policy will frequently cover a percentage of the loss above the deductible – perhaps closer to 10% or 20% of the value above the deductible rather than 100%. However, if you have cash stolen during a trip, most insurance policies put a limit on what they will reimburse you for; typically, around $200 to $250.1
 
Your location affects your coverage and your rates. If you live in an area with more frequent property crime, your insurance carrier might cap its reimbursements on some forms of personal property losses. The insurer might even refrain from covering certain types of losses in your geographic area. The best thing to do is to review your policy carefully to make sure that, if the unthinkable happens, you have adequate coverage.1
 
Do you have a home-based business? If you do, damage and losses to your residence, resulting from or linked to your business activity, won’t be covered by your homeowners insurance policy. The same holds true for a personal umbrella liability policy.2
 
Having a separate, discrete business insurance policy to protect your home-based company is important. Without such a policy, you have inadequate coverage for your business. If a visiting client has a bodily injury claim, or an employee at your residence file a workers’ compensation claim, you could end up losing your home.2  
 
Read the fine print on your policies. Recognizing the basic limitations of homeowners insurance is critical. You should know what is and is not covered to address a weak spot(s) before it becomes a major issue.
 
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting, or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax, or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation,  nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and not illustrative of any particular investment.
 
Citations.
1 - USNews.com, May 14, 2020
2 - TheZebra.com, April 22, 2020

Some good reasons to retain it.
 
Do you need a life insurance policy in retirement? One school of thought says no. The kids are grown, and the need to financially insulate the household against the loss of a breadwinner has passed.
 
If you are thinking about dropping your coverage for either or both of those reasons, you may also want to consider the excellent reasons to retain, obtain, or convert a life insurance policy after you retire. Take these factors into account and consult with your financial professional before making a decision.
 
Could you make use of your policy’s cash value? If you have a whole life policy, you might want to utilize that cash in response to certain retirement needs. If you need extended care, for example, you could explore converting the cash in your whole life policy into a new policy with an extended care rider. This might even be doable without tax consequences. If you need additional income, many insurers will let you surrender a whole life policy you have held for some years and arrange an income contract with the cash value. You can access the money, tax free, as long as the amount that is withdrawn is less than the amount paid into the policy. Remember that withdrawing money or taking a loan against a policy’s cash value, naturally reduces the policy’s death benefit.1
 
Do you receive a “single life” pension? Maybe a pension-like income comes your way each month or quarter, from a former employer or through a private income contract with an insurer. If you are married and there is no joint-and-survivor option on your pension, that income stream will dry up if you die before your spouse dies. If you pass away early in your retirement, this could present your spouse with a serious financial dilemma. If your spouse risks finding themselves in such a situation, think about trying to find a life insurance policy with a monthly premium equivalent to the difference in the amount of income your household would get from a joint-and-survivor pension as opposed to a single life pension.2
    
Will your estate be taxed? Should the value of your estate end up surpassing federal or state estate tax thresholds, then life insurance proceeds may help pay the resulting taxes and prevent the need for your heirs to liquidate some assets.
 
Are you carrying a mortgage? If you borrowed to purchase your home or have refinanced and are carrying a mortgage, a life insurance policy may make sense. It could potentially relieve your heirs from shouldering some of or all that debt if you die with the mortgage still outstanding.2
 
Do you have burial insurance? The death benefit of your life insurance policy could partly or fully pay for the costs linked to your funeral or memorial service. In fact, some people buy small life insurance policies later in life to prepare for this expense.2
 
Alternatively, you may seek to renew or upgrade your existing term coverage for permanent life insurance. Consult an insurance professional you know and trust for insight.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting, or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax, or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation, nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and not illustrative of any particular investment.
 
Citations.
1 - Nasdaq.com, April 30, 2020 
2 - Forbes.com, May 19, 2020

This vital investment account question should be answered sooner rather than later.
 
Investment firms have a new client service requirement. They must now ask you if you would like to provide the name and information of a trusted contact.1
 
You do not have to supply this information, but it is encouraged. The request is made with your best interest in mind – and to lower the risk of someone crooked attempting to make investment decisions on your behalf.1
 
Why is setting up a trusted contact so important? While no one wants to think ill of someone they know and love, the reality is that seniors have lost an average of $50,200 to someone they know. And studies have shown that almost half of all seniors aged 65 and older manage their own finances. Statistically speaking, if you fall within this age range, you could be vulnerable to scams.1
 
The trusted contact request is a response to this reality. The Financial Industry Regulatory Authority (FINRA) now demands that investment firms make reasonable efforts to acquire the name and contact info of a person you trust. This person is someone that investment firms can contact if financial exploitation is suspected or they suspect the investor is suffering a notable cognitive decline.2
  
Investment firms may now put a hold on disbursements of cash or securities from accounts if they suspect the withdrawals or transactions amount to financial exploitation. In such circumstances, they are asked to get in touch with the investor, the trusted contact, and adult protective services or law enforcement agencies, if necessary.2
 
Who should your trusted contact be? At first thought, the answer seems obvious: the person who you trust the most. Yes, that individual is probably the best choice – but keep some factors in mind.
 
Ideally, your trusted contact is financially savvy, or at the very least, financially literate. You may trust your spouse, your sibling, or one of your children more than you trust anyone else, but how much does that person know about investing and financial matters?
 
Your trusted contact should behave ethically and respect your privacy. This person may be given confidential information about your investments. Is there any chance that they, upon receiving such information, might behave in an unprincipled way?
 
It is encouraged that your family members know who your designated trusted contact is. That way, any family member who might be tempted to take advantage of you knows another family member is looking out with your best interest in mind, which may be an effective deterrent to elder financial abuse. It should be noted that the trusted contact may, optionally, be an attorney, a financial professional, or a CPA.1
 
Your trusted contact is your ally. If you are being exploited financially or could be at risk of such exploitation, that person will be alerted and called to action.
 
As the old saying goes, money never builds character, it only reveals it. The character and morality of your trusted contact should not waver upon assuming this responsibility. If given sensitive information about your brokerage accounts, that person should not sense an opportunity.
 
Now is the perfect time to name your trusted contact. Choose your contact wisely.


This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.
 
Citations.
1 - CNBC, September 27, 2019
2 - FINRA, March 4, 2020